Really? I think it’s one of the important responsibilities, but what about balancing the buy (and sell side) wall(s)?
And although this motion is up for voting only a few hours, very soon the FLOT might be involved in more than that: [Voting] T4 buy side / BTC - maintaining and refilling value
FSRT and JL are also on call for that. Those operations are evolving, and actually aren’t currently under contract. The NSR buyback is the contracted bit and in my opinion highest priority for FLOT to take the reins on. Of course you’re correct that FLOT should do its best to be there to balance liquidity, but I think we’ll find that using multisig in times of pressure is a lot less efficient than something like this: T3 custodians, which is essentially what JL has been doing anyway.
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108.3 BTC of tier 4 buy side funds have been transferred to 3QDWJ2yqJ5iTUg6cSpAwxx95ba3NG97hzG.
The funds are not needed at the moment because tier 1 liquidity has 42% on the buy side. If that drops below the threshold for action, I am expecting FLOT to take that action. I will increase buy support only as a backup should FLOT be unable to function.
How does FLOT feel about engaging in wholesale transactions that exceed the liquidity available on exchanges? What if someone wanted to buy 50,000 NBT from FLOT? I have had two traders approach me in the last few weeks about buying 50,000 NBT or more. They were both frustrated with low liquidity on exchanges.
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I’m not opposed to it outright – demand of such magnitude is exciting news – but it would be good to understand the level of effort.
Also I think we’d want to get a take if the community feels this is a good thing, or perhaps a missed opportunity to strengthen liquidity thru the LP’s.
A purchase of those magnitudes would likely have triggered some need to re-balance things, so proactivity may be of benefit here since the FLOT would have likely been called to order reactively.
It may have a helpful sense that if someone wants to move say 5% or more of the market cap, they should be engaging the FLOT.
@jordanlee – when it came to the initial Nu distribution as well as the B&C distribution, what is your best experience with time to execute each transaction, what percentage required followups, and how much effort was involved in customer support?
I am more concerned with security implications of any single entity acquiring more than half of total buy side liquidity ($15 -$25k currently). An owner of such fund doesn’t have to be an attacker to wreak havoc on liquidity operations – he/she only needs to be ignorant and dumps the whole lot when everyone else is selling. Of course we don’t want to shut legitimate business opportunities out.
I think in situation like this Nu should respond by declining offers to a buy offer that is more than 50% of the total buy side, and at the same time increase the NBT/BTC buy side liquidity. Nu should demand targets of fixed reward ALPs to be increased, and increase reward of fixed cost ALP, all by a factor according to how much new NBT are sold. The sell side will have to increase accordingly.
Fixed cost ALP (Nupond) has shown that LPs accept rates lower than that offered by current fixed reward pools. So I suggest increase target of fixed reward pools but lower interest rate to keep total reward the same, and do this until target cannot be reached, thereby finding out a fair market price of fixed reward liquidity.
Not technically true currently, but bter is not necessarily a neutral testing field.
I’m more concerned with the spread. Let em buy 100,000 nbt all at once as long as it’s at $1.05
Maybe this should be discussed more (better in another thread).
Anway I think the right response to more demand is increasing liquidity.
If we make sure we have the right reserve (Tier4 and 6, with the right NSR market cap), I think we should not decline selling 50k NBTs.
We should be more than happy to sell large amounts, I feel.
I agree that a rationalized set of tiers 1-6 should be happy to take any buy amount. So far tiers 1-3 are patch works and tier4 is in transition.
I feel we as a business should not pass up such an opportunity, this could be and should be great for Nubits. I do feel it’s wise to ask them why they require a large amount, if they want it for hedging then it’s very likely they might soon sell it back to us. We can ask them if they would be willing to sell it back to us directly instead of dumping it on an exchange, and if they rather sell them on an exchange inquire which one they would use so we can increase tier 1 buy side liquidity on that specific exchange.
My vote would be to do so with a spread slightly bigger than our liquidity provision currently does so the “emergency” backup liquidity that we put out is only used for huge dumps of Nubits. They way we could bring this liquidity to the exchanges would probably be some sort of gateway similar to what @masterOfDisaster is setting up for the sell side.
I agree that it sounds intriguing. As much as I’d like seeing Nu go viral, I need to raise a warning:
as long as Nu is mainly used for hedging BTC volatility AND has no deep NSR liquidity, selling an unlimited number of NBT can be dangerous.
I don’t say 50,000 NBT is too much. I don’t know the exact number. But I know that there’s a number which is too much.
Example:
Nu sells 1,000,000 NBT today. Tomorrow BTC drops 20% in price. The buyer wants to sell the 1,000,000 NBT for BTC. The value of T4 buy side (I ignore the BTC that have been there before to keep it simple) dropped by 20%. 200,000 USD value are lost by BTC volatility. Nu needs to sell NSR to retrieve BTC worth 200,000 USD.
The daytrader is happy.
As long as Nu doesn’t have the capability to store a big amount of value in a short period of time internally it remains dangerous for Nu to sell big amounts of NBT, especially in a short period of time.
Mitigating that requires e.g. NSR buybacks that don’t push the NSR price because of the tremendous NSR market depth and daily trading volume of tens of thousands of USD.
I have set up one for buy side as well anticipating the need for that 
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50,000 is still a long way off from 1 mil at once though. But I do second your concerns I think looking for ways to protect ourselves from BTC volatility are very important. We need some sort of hedging instrument although I’m not sure what would be suited for this yet.
That is what I have been thinking. Maybe NSR futures?
We’ll have to keep an eye out, futures could be a solution but also holding USD at trusted exchanges instead of BTC could be an option to partially hedge some funds.
I know where this might end, but I need repeat this proposal anyway:
Nu could consider selling NBT for NSR instead of selling solely for BTC - especially if somebody wants to buy big amounts directly from Nu!
This might be a rather philosophical topic, but I dare say that Nu can’t survive if it doesn’t evolve beyond being a hedging instrument. I say so, because Nu’s costs for providing liquidity are several orders of magnitude bigger than the earnings from fees associated with the hedging.
But if Nu can use the (temporary) revenue from selling NBT (even if they are intended to be used for hedging BTC volatility) to bolster adoption beyond hedging, it’s worth a try.
Nu really needs more (efficient) marketing. Nu is great, but the world needs to know.
It’s so good that “The Daily Decrypt” is sponsored by Nu and BCE for some weeks!
Nu needs more…
For the record: the grant to operate NuBot on Poloniex as buy side gateway passed.
If the peg on Poloniex is in danger and BTC need to be brought to market, NuBot should do that automatically if funds are deposited at the Poloniex BTC deposit address.
I don’t feel good about the fact that the Poloniex deposit address can’t be changed by the account owner.
For that reason I’m going to send the deposit address only to FLOT members instead of posting it publicly.
It will only be available publicly if the gateway gets used and funds get sent there.
If everything pans out nicely, this will never be required.
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https://alix.coinerella.com/walls/
Have I understood it correctly that we would send BTC to @zoro (for NBT?) and they would inject it to the 6519 NBT worth of BTC currently on the buy side at Poloniex?
In which case how much?
It’s not very well agreed upon yet. One can propose a transaction but it might not receive enough signatures.
I understand from @zoro’s post that he/she is willing to trade NBT for BTC to put the BTC on T1.
And this is where it gets tricky. There is no reliable historical information that I’m aware of and attempts to create a rule set for how many funds to trade in which case to achieve what goal have failed.
It seems that all relies on the discretion of the FLOT.
I don’t feel comfortable with T4 being the only layer that is able to trade NBT for BTC or vice versa (except for @JordanLee, but that only if the FLOT fails.), especially because FLOT only has one multisig address that requires 6 of 8 to execute transactions.
We must find ways to involve T3 in this process.
ALiX reports only T1 liquidity. The volume of T2+T3 (sell side) needs to be calculated by subtracting T1 from the total amount of circulating NBT.
As long as T1 is unbalanced and lacking BTC or NBT, but T2 and T3 still have sufficient BTC or NBT left, involving FLOT is the wrong measure.
T1 needs to be balanced with funds from T2 and T3.
Only if constant demand for funds from T2 and T3 that brings the overall liquidity of T1-3 out of balance, FLOT gets involved to fill the low side (T3) with funds from T4.
At the moment T2 and T3 are more or less decoupled from T1. That’s the reason for this thread:
The gateways I created to inject NBT or BTC into Poloniex T1 might send the wrong signal. This is not what the FLOT is designed to do - to interact with T1. I tried to explain it over and over: these gateways are for emergencies only and might save the peg if all else failed.
Even with a more agile FLOT subset that has 2 or 3 of 8 multisig addresses with only parts of the funds the FLOT is never agile enough to balance T1!
And to be honest: if that’s how the work of FLOT is interpreted by NSR holders, some of the FLOT members might rather sooner than later quit and some NSR holders might be dissatisfied with the performance of FLOT.
Please tell me what you think - I think it’s necessary to make NSR holders aware that the tiered liquidity model needs to be used to balance buy and sell side and that the FLOT is only used to balance uneven T1-T3 sides, ideally making deals with T3.
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