[Passed] 1% Maximum Spread for ALP/MLP, Above 1% Allowed for Nu Funded Liquidity Operations (e.g. Gateways)

[masterOfDisaster]

Bump.
No love for this motion?

This motion is the only one of the competing three that supports and prolongs the current operation model.
Poloniex would be with an empty buy side for a lot of hours, if not for @zoro’s NuBot that runs at an increased spread.
Operations like these will be forbidden in the future by @JordanLee’s and @Cybnate’s motion.

Do you prefer no peg at all to a slighly decreased peg?
If yes, keep ignoring this motion and vote for @JordanLee’s or @Cybnate’s (although her motion at least is a step into the right direction ;))

[Cybnate]

Operations like these will be forbidden in the future by @JordanLee’s

That is the real worry I share with you.

and @Cybnate’s motion.

That is incorrect, shameless plug follows, (MoD hope you forgive) 10% of the total liquidity (currently about 10k on either side) would be provided at this level in my motion.

[cryptog]

As a data feed provider, I have not made my mind yet but I will make a decision today.

I think there are 2 things that we need to do from a business perpsective.

• provide a lot of very good liquidity (tight spread <=1%)
• have a way to limit our costs (bleeding) to protect ourselves (some liquidity at low quality spread )

So in that sense, I think your motion or the motion made by @Nagalim or the motion made by @Cybnate are the most appropriate.

But there is one concern: there might be some chance that most of the liquidity is provided at a low quality spread.
We need to make sure that most of the liquidity is provided at a high quality peg.
This seems to be difficult to be specified in a motion.

[Cybnate]

We need to make sure that most of the liquidity is provided at a high quality peg.This seems to be difficult to be specified in a motion.

My motion is the only one providing percentages of high (60%), medium(30%) and low quality (10%) peg, although I have to admit the percentages are a bit arbitrary but I believe a good starting point lacking fundamentals to work with. Mostly based on the actual situation except that the high quality is not there.

[masterOfDisaster]

So in that sense, I think your motion or the motion made by @Nagalim or the motion made by @Cybnate are the most appropriate.

I’m curious - what makes those more appropriate than my version? I understand that for @Nagalim’s version, which is in the end a just a much much more precise version than I drafted.

Why do you find a maximum of 2.5% sufficient to defend the peg?
@zoro’s NuBot runs close to that spread and already traded already one third of the funds in the last day.
Market awareness might require even bigger spreads than that…

2.5% is not enough for all conditions.

[cryptog]

Sorry for being unclear.
I did not mean that cybnate s version is more appropriate than yours just that it seems that the 3 other versions look more reasonable than jordan lee s version.

[Nagalim]

I had percentages. I ditched them because i realized it was impossible to implement smoothly using nubot.

[Cybnate]

As explained here the percentage doesn’t need to be programmed in NuBot gateways. Even better if they are not. They just reflect the amounts the gateway holds on behalf of FLOT. This is based on contracts of e.g. 1-3 months and should be adjusted not more than once a month. It is not a percentage that should be changed every hour of the day.

[masterOfDisaster]

Can somebody in the face of the current situation try to explain this voting behaviour?

It would be especially great to have an explanation from those who vote for one of the competing motions.
What am I doing wrong?
Why don’t you realize that all that keeps the peg on the current level is an offset far beyond what the competing motions allow?

[crypto_coiner]

Blind subscription and or whole lot of shares?

[zoro]

Currently it seems no one’s motion will pass
Do you know how data feeders are voting?

[masterOfDisaster]

You can check yourself by visiting the respective github pages.

[zoro]

MoD is voting for this proposal.
Cybnate for her’s proposal.
Cryptog for no proposal!
crypto_coiner for no proposal!

i hope i didn’t do any mistake searching github.

[masterOfDisaster]

Obviously my data feed doesn’t have many friends

@Cybnate seems to have quite some followers.

And someone (maybe multiple “someones”) with shares, that weren’t used for voting for some time, is in favour of @Jordan’s proposal.

[cryptog]

I apologize for the delay. I said on Sat that i would decide by that day.
I have not made my mind yet.

[masterOfDisaster]

What else do you need to make up your mind?
All that keeps the peg fixed above $0.95 is the gateways.
CMC speaks volumes.

$0.95 translates into an offset of up to 10% (I say “up to”, because in fact it’s not 10%, what I’ve configured in NuBot, because the sellside has a smaller offset).
This is only allowed by this very motion for exactly the reason we use the gateways at the moment: as a last line of defence.

Were @Cybnate’s or @JordanLee’s motion in place there’d be very likely no BTC left in buy side most of the time and NBT would likely have been below $0.95.
If you want evidence, zoro and me can configure a smaller buyside offset, but I’d rather not.

Why is it so hard to read and understand what I write?
Do I write to much and a “mOD filter” gets applied by readers?
I should stop caring, if only I could…

[cryptog]

There is no doubt that gateways pioneered by you have been very useful once again (a second time), in fact crucial in protecting the peg by giving a financial disincentive (increase cost of exchange because of a high spread) to traders. Traders refrained from selling back their nubits at all or a large quantity of their holdings when facing a large spread.
But going forward do we really want to prevent traders from trading back their nubits?
I think the answer is no.
Nevertheless we need some protection.
Instead of a 5% spread above and below the perfect peg 1nbt=1usd, what if we used larger spread like 10% or 20%?
It would further increase the protection of the peg while at the same time prevent the use of Nubits.
So in essence I think large spread prevent users to use nubits.
This is not what we want ultimately.
This is why i think large or medium gateways are useful for the short or mid term, buying us some time, but this is not something we want for the long term.
And this motion is for rather the long term as the one from jl or cybnate or nagalim, i understand.

So i would like to see either an upper limit in the spread of gateways and/or a limited period in which we allow for large spreads. Both would be ideal
This way it would make us work hard on trying to get a lot of reserves so we can provide always and only a below 1% spread liquidity or some kind of gurantee that we will never pass a certain limit in gateways spread (like 5%).

What do u think?

[masterOfDisaster]

But going forward do we really want to prevent traders from trading back their nubits?

Of course not!
And to provide them with sufficient supply, I created two tx to deposit 20k NBT now and 65k NBT on demand to gateways.

So in essence I think large spread prevent users to use nubits.

This is not about using only large spreads.
The proposal deals with <1% spread for ALP and MLP and above 1% only for gateways.

This is why i think large or medium gateways are useful for the short or mid term, buying us some time, but this is not something we want for the long term.

Of course we need them as the last line of defence they are now, mid-term and long-term!
And now mid-term and long-term liquidity at <1% spread would be welcome.
If that liquidity fails, gateways kick in.

So i would like to see either an upper limit in the spread of gateways and/or a limited period in which we allow for large spreads

You don’t know how dire situations can get.
I have a feeling what offset is ok for now. It sufficed to get the peg defended at the line it is.
I wouldn’t dare putting an upper limit there.
That limit needs to be set market aware.
Don’t try to limit of what you have no idea.

[cryptog]

After careful consideration, I have decided I will add this motion to my date feeds.
The reason is that we do not have the means right now to provide liquidity (funded by Nu) at only a tight spread at all time.
The main reason being that we do not have enough BTC reserves compared to the trade volume.
I think in the future, we want to reduce the ratio (reserve/outstanding nubits) while at the same time increase the ratio (reserve/nubits trade volume).
That way we can make more profits while at the same time ensuring that we can exchange more nubits for bitcoins at any time.
ALP/MLP will continue to operate at spread <=1% in this motion.
Spreads higher than 1% have been used at least twice in a crucial way once in Jan this year and a second time just now, tks to the work of @masterOfDisaster .
They have been quite useful in protecting the peg without downgrading it too much (we have had up to 0.97 usd on coin market cap)
So I think this motion is important for the time being and is a temporary measure.
The idea is to use it a few months, buying us some time, to increase the demand for NuBits drastically and replenish the buy side. Then, ideally we will design better liquidity provision schemes that will make sure that the vast majority of liquidity is provided at a spread <= 1% with a large volume .

[cryptog]

Motion hash: bd4d153bb5c2d8cd6013b77ad8780eabc7bae79e

voted