I have noticed that recently Poloniex has brought us the vast majority of our trading volume. 83% of trading in the last 24 hours occurred on Poloniex while we only placed 16% of our tier 1 liquidity on Poloniex. The liquidity we have there doesn’t gracefully support the volume of trading happening there. My guess is we would see an increase of volume at Poloniex if we increased the liquidity there.
What is the best way to bring liquidity there? Can we increase the incentives at Poloniex or decrease incentives (rates paid by pools) at other exchanges?
It’s an issue that I expect will come up repeatedly, so a solution that can be applied sustainably would be best. However, there are a number of people here that know more about liquidity operations than I do, so I would like to hear from such persons about how we can alter liquidity operations to allow shifting funds where they are needed.
NuBits is now frequently in the top 10 on coinmarketcap.com by trading volume. Congrats and thanks to everyone that helped make that happen. Let’s see what we can do to get even more volume.
I think we can afford to pay for more liquidity. We should do this in the individual pool grants this month, they will be coming up in the next week or so.
At one point you said we can afford 10 kNBT/month for liquidity operations, but we only spend ~8k. NuLagoon takes 5k, LiquidBits takes 1k, NuPond takes 1k, nu-pool could take 3k instead of the 1k it’s been taking. If we are trying to get extra pools on cryptsy, however, we will have to reconsider this. NuLagoon is clearly the biggest expense, but that also operates on polo.
We could lower rates in order to raise targets. As we are 100% on Nu-pool all the time, that might be a good strategy.
I’m not confident we are getting the same value from NuLagoon as the other pools, although its architecture is something we very much need and is complimentary to the other pools that operate. @henry would NuLagoon be able to help us out at Poloniex? I’m also hoping to see NuLagoon establish principles about when to move funds between tiers based on current liquidity wall ratios.
Based on the latest development of Nubits trading volume and the need of the network, NuLagoon will increase the size of tier1 fund on Poloniex today.
Nulagoon will also try to improve the management of fund tier3, adding the goal of balancing network-wide liquidity. We will post more detail about this in this week
If we incentivise fund to go to the top exchange the results will be a monopoly of a single exchange, which is very risky. I believe the series of hacks Nu exchange got early this year was partly motivated by the fact that Nu exchanges were high value targets. I don’t think we should artificially cultivate a single leading exchange, which both increases the cost if it gets hacked and increases the chance it get hacked – a squared increase of risk.
Plus, I doubt NBT/fiat LPCs are terriblly interested in NBT/BTC unless the reward is enough to counter the rate of BTC price plummet.