Maybe this a good opportunity to introduce T1.1 and T1.2.
There have been discussions about it, but it was never officially agreed.
How does that look:
- T1.1 liquidity are orders at a spread of <1%
- T1.2 liquidity are orders at a spread of >=1%
I donāt see a place for T2 here, because this motion tries to regulate the spread of orders.
T2 is by definition on exchange, but off the order book.
For those who wonder whether this motion here is in conflict with
I can say that at hitBTC thereās no ALP.
The only LP there is NuLagoon (type: MLP).
Under normal circumstances the MLP were the only T1.1 operation and the NuBot gateway would operate on T1.2.
Yet my NuBot gateway at hitBTC will operate at T1.1 to gather data about the cost of a small spread.
I suppose that a smaller spread increases the cost, because a bigger spread allows to make some revenue when trading.
This revenue might be able to compensate parts of the losses from hedging, operator cost, calculatory cost from exchange default, theft, etc.
If thereās no revenue to be made at a spread of <1%, another test with an increased spread should be made.
Now that I think about it - ideally both spreads would be tested at the same time, because the time frame might play a role for the results.
What about letting NuLagoon operate as MLP on T1.1 at <1% spread while my NuBot gateway runs at T1.2 and >1%?
The amount of money would ideally be the same and both operations should start at a balance of 50/50.
Each week or fortnight the NAV of both operations can be compared.
