Fractional Liquidity

[Hyena]

Because of the wild fluctuations of the price of bitcoin custodians risk having the value of their buy side liquidity mauled by bitcoin’s bear market.

Here’s what could be done to reduce exposure to this risk. The trading bot should keep only a small fraction of the bitcoins on the exchange at a time. As the buy wall gets eaten, the bot should automatically buy bitcoins for USD at bitstamp and send those bitcoins to the altcoin exchange. What say you?

[Ben]

Where does the USD used to buy on the downturn come from? If custodians/liquidity pools have “spare” liquidity denominated in USD would it not be better just to put that into a NBT/USD market?

I like the idea, but it may be more complex than needed.

My opinion is that officially supported* NBT/crypto markets should be phased out in favor of NBT/fiat markets. Better to let them emerge organically, funded with day traders’ BTC and NBT.

* by custodians working at the behest of Nu shareholders

[Hyena]

Yes, ideally we would have NBT/USD pairs but if for some reason this doesn’t happen any time soon then we should find some other way.

[mhps]

Here’s what could be done to reduce exposure to this risk.

I read your original post but couldn;t find it when I wanted to study it more. It was discussed in recent thread. I think the idea can work since we have tiered liquidity anyway. The off-exchange tier should be always Nubits. But I agree with @Ben that NBT/BTC peg should be phased out.

[crypto_coiner]

My opinion is that officially supported* NBT/crypto markets should be phased out in favor of NBT/fiat markets. Better to let them emerge organically, funded with day traders’ BTC and NBT.

Absolutely.