I don’t speak as representative - this is just my opinion as a FLOT member.
A drop of liquidity below 40% doesn’t worry me as long as it doesn’t stay for long there. And I think the (total) volume and the velocity of the change should be taken into consideration as well, but I don’t know how.
Regarding the threshold and conditions I consider action by a distributed T4 section necessary, allow me to quote from a draft I once created:
I think FLOT, FSRT or @JordanLee should not be responsible for balancing T1, but only T1-3.
I agree that the means to achieve that are not fully available yet (T3 custodians being one important part) and until they are some sort of action is required, even if only T1 is unbalanced.
The FLOT is by design to slow to balance within hours. I’m not talking of terms here. We all know what response time FLOT members have agreed to have. Not a single FLOT member is hiding behind these terms. But even if the FLOT signs as fast as possible, it might take several hours.
The recent transfer of funds to @NSRBuyback was broadcast in roughly 6 hours.
I consider that very fast.
Still it would be an order of magnitude to slow if T1 is requiring funds on one side.
The sell side can be filled easier than buy side, because the NBT multisig is 3 of 5 instead of the 5 of 8 of BTC. The NSR FLOT address is 3 of 5 as well, but doesn’t have funds and no charter when and how to use them.
Using NSR to support the peg way before BTC on T4 buy side are depleted is still being discussed controversially.
Not very easy to rely solely on the FLOT.
We all know that one drawback of the increased security that can be introduced by distributing responsibility is a slower response time and sometimes even the need to form consensus.
This is another reason why I tried to discuss about the creation of a set of thresholds and actions - to define in advance what needs to happen when; some discretion is always important, because you can’t know all in advance…
I have high expectations of different development advancements which are on the road map:
- fixed cost compensation
- T3 custodians
- NuBot/ALP integration
All should help improving liquidity providing and balancing liquidity across the tiers 1 to 3. All are not yet available.
Until they are, I fear Nu is better off paying you, @JordanLee, a compensation for your efforts in balancing liquidity than endangering the peg.
My understanding of the FLOT role is that it’s more reliable if FLOT members know in advance that they will have to sign. They can try to arrange that with other appointments and maybe even tell in advance that they won’t be available.
Signing (with all the requirements for that!) on the spur of the moment is something the FLOT isn’t really capable of.
FLOT works better with a kind of schedule.
That makes sense and it gives the FLOT time to recognize a situation that needs attention with (hopefully) sufficient lead time to arrange transactions.