Liquidity provider profitability experiment

This is correct. With the other plan, shareholders would know ahead exactly what the cost will be.


I get NuPool rewards on top of that but also have to suffer any trading losses myself.

I very much like your experiment so far, but I seriously doubt that it’s worth a fixed compensation of $1,500 for two months or $750 monthly on top of the ALP compensation to buy a reduced spread for $20k volume.
And the alternative, having Nu pay 3% revenue for a NAV of $20k while not participating in a revenue above 3%, doesn’t seem fair.

I can imagine to run the fixed compensation approach (because the variable one puts Nu in an incalculable risk) for a few months just to find out, what the effect of a reduced spread on the revenue for LP is.

It might be better to use the NuPool compensation scheme for rewarding a tighter spread - for a way smaller volume.

I would expect something like:
total payment = NuPool rewards + any possible losses (payed by FLOT)
if no losses at all, just keeping the nupool reward + any possible trading profit :wink:

you can be an other NuSafe

Results as of 22/05/2016:

NBT Balance: 18,693
BTC Balance: 3.53

Simple NAV: 20,232, a 1.16% profit

Bitcoin Price Adjusted NAV: with current price of 436.40, the adjustment is -348, so 19,884, a 0.58% loss

Bitcoin Price Adjusted With Pool Payments NAV: NuPool rewards total 488, so 20,372, a 1.86% gain. Annualised and compounded rate of gain is 18%.

The major improvement of the last week is mostly due to holding mostly NuBits in a declining BTC market.


I have published a motion draft here:

Please make suggestions to change it if you like. I hope to start voting soon.

By spread 0.5% you mean a 0.0025 offset in each wall?
I like the proposal and the compensation scheme. A very good compilation of MLP+ALP :wink:
Moreover i am feeling very relaxed with your provided liquidity in Poloniex. Something i want to say about NuLagoon too, but i cannot :slight_smile:

Requesting a guaranteed compensation of 3% monthly without capping in case the NAV makes an immense loss for whatever reason will not make it to my data feed.

It would be interesting to know the results for the NAV from reducing the spread from 1% to 0.5%, but having no capping makes me shy away from it.

You receive a compensation from NuPool for liquidity already. Filling the revenue to monthly 3% is different from asking another 3% on top for reducing the spread.

You already bear the exchange default risk and get compensated by the ALP compensation.


This is what he is proposing. Am i mistaken?

from daology
"After more than a month of the experiment the actual rate of return has been 1.86%. If it were still 1.86% at the end of the first 2 months, then either FLOT or shareholders must pay me enough to make a 6.09% profit"

If he makes 10% loss, Nu needs to compensate the NAV up to 103%.
That means if the NAV goes down by 10% (10%*$20,000=$2,000), Nu needs to pay $2,600 for that month.


No one knows what happens to NAV.
That’s why I can’t put this proposal in my data feed.

It would be different, if @muchogusto did ask for x% monthly on top of the ALP compensation for reducing the spread from 1% (SAF 1.3%) to 0.5% (SAF 0.8%).

@muchogusto, I think it would be best if you created a separate thread under the motions board for your proposal. Including it in an existing thread can make the proposal hard to find or invisible to others not paying attention to this thread.

Now I use a 0.0035 offset with a 0.15 tx fee which makes a 1% spread (0.0035 + 0.0015 + 0.0035 + 0.0015 = 0.01). To make a 0.5% spread, I will change both offset values to 0.001.

So you are at more or less break-even (including the pool compensation) at a SAF (spread after fees) of 1%?
What tolerance do you have configured (before orders get moved) at 0.0035 offset and what will be the tolerance at 0.001 offset?

I added the following clause to the motion:

Thank you! That’s game-changing to get it in my data feed :wink:
I recommend to consider including a backup plan that allows you to switch back to a spread of 1% while forfeiting the 3% compensation, if the trading situation gets dire and you feel increasing the spread could help.
I mean, you guarantee to keep the orders up no matter what. Such a backup plan seems warranted.

1 Like

Here it is:

Voting has begun. The motion hash is 29d364f8677c7c955d423747fcf5005fd00f2e6b

Please have a look at the ninjaedit of my last post…