[Passed] Grant to provide liquidity using NuBot on hitBTC - the begin of modPuddle

[tomjoad]

[cryptog]

So you would request the payment of 225 NBT once the service has been delivered?

[Cybnate]

I have some belief that shareholders will continue to pay for the services they receive the way it was agreed - otherwise I wouldn’t offer full payment after the service

You are probably right, but your grant details don’t make that clear. Technically there is no obligation resulting from this custodial grant. I think you should have mentioned it as part of you verifiable grant text. But hey, we all make mistakes from time to time. Even I do ([Passed] LiquidBits term 5 grant - Automatic Liquidity Pool (ALP)) so I will support your grant.

[masterOfDisaster]

So you would request the payment of 225 NBT once the service has been delivered?

Yes.

I think you should have mentioned it as part of you verifiable grant text.

This is my first attempt in this field.
But while I planned to remove contradicting numbers from the grant, the
Liquidity volume: 1,500 NBT together with the
Ask/ Bid Reward Rate: 0.5%/day and the 30 days operation can be used to calculate the 225 NBT.

The only way to really make sure, the money is paid, is by requesting a grant (and waiting for it to pass) before the operation starts.
That’s not the route I chose.
If I provide liquidity and don’t get compensated I’ll have to explain something to the guys who provide the funds, but I’ll survive that. Before I talked with them about earning money by providing liquidity, the coins were sitting idle in wallets.
I’d consider it a lessons learned session, but don’t expect to learn this lesson here and soon.

[cryptog]

42a734a54664547d04f4cb5c292f30730451a55d verified and

Custodial Address: BBZ4h88BwYCyE9q268LoArps6eodq9PDGH
Amount Requested: 1 NBT

voted

[masterOfDisaster]

I was thinking of a fancy name.
So far every liquidity provider picked one.
@Nagalim had a nice idea:

DisasterPool promises liquidity provision

Although I find it funny, it might send the wrong signal.
But it inspired me to think about something at least remotely funny, because I heard Sunny King.

I ended up with modPuddle.
Reading it is less funny than saying it

[willy]

modPuddle

Puddle of mod? https://en.wikipedia.org/wiki/Puddle_of_Mudd

[masterOfDisaster]

Oh noes!
You exposed me!

[crypto_coiner]

voted

[CoinGame]

[masterOfDisaster]

This grant passed. Bot is prepared, hitBTC account funded and operation will start with this BTC price:

16:07:07.801 [priceTriggerTask] INFO  - Price Updated. bitfinex:1 BTC = 246.44 USD [com.nubits.nubot.tasks.PriceMonitorTriggerTask:353]

That means

• 750 NBT will be put on sell side
• 3.044 NBT will be put on ask side.

edit:
NuBot effectively started operation at

Mon Oct 12 16:16:20 UTC 2015 , 4 , 2 , 2 , 250.0,250.00000033,cf2081ac3fa0 : { SELL 250.0@0.004081} 5f70b5b4ac41 : { SELL 500.0@0.004142} d6e1fcf4ef57 : { BUY 250.0@0.004032} 629895e122ac : { BUY 498.986@0.003971}

Current status:

nud -unit=B getinfo
{
    "version" : "v2.0.1-unk-beta",
    "protocolversion" : 2000000,
    "walletversion" : 1,
    "walletunit" : "B",
    "balance" : 1.0,
    "newmint" : 0.0,
    "stake" : 0.0,
    "parked" : 0.0,
    "blocks" : 567474,
[...]
nud getliquidityinfo B | grep "BBZ4h88BwYCyE9q268LoArps6eodq9PDGH" -A 2
        "BBZ4h88BwYCyE9q268LoArps6eodq9PDGH" : {
            "buy" : 750.05,
            "sell" : 750.0

[masterOfDisaster]

The first 23 hours of - as far as I can see - flawless operation have passed.

Here’s a snapshot of the current situation:

Tue Oct 13 15:11:39 UTC 2015
[...]
nud -unit=B getinfo | grep "version" -A 8
    "version" : "v2.0.1-unk-beta",
    "protocolversion" : 2000000,
    "walletversion" : 1,
    "walletunit" : "B",
    "balance" : 1.0,
    "newmint" : 0.0,
    "stake" : 0.0,
    "parked" : 0.0,
    "blocks" : 568854,
    "moneysupply" : 4625113.6491,
    "totalparked" : 2006.33,
[...]
nud getliquidityinfo B | grep "BBZ4h88BwYCyE9q268LoArps6eodq9PDGH" -A 2
        "BBZ4h88BwYCyE9q268LoArps6eodq9PDGH" : {
            "buy" : 0.11,
            "sell" : 1511.937
[...]        
nud getliquiditydetails B | grep "BBZ4h88BwYCyE9q268LoArps6eodq9PDGH" -A 17
    "BBZ4h88BwYCyE9q268LoArps6eodq9PDGH" : {
        "1:NBTBTC:hitbtc:0.3.2_1444582453882_5ce12a" : {
            "buy" : 0.0,
            "sell" : 0.0
        },
        "1:NBTBTC:hitbtc:0.3.2_1444665981291_6022eb" : {
            "buy" : 0.0,
            "sell" : 250.0
        },
        "2:NBTBTC:hitbtc:0.3.2_1444582453882_5ce12a" : {
            "buy" : 0.0,
            "sell" : 0.0
        },
        "2:NBTBTC:hitbtc:0.3.2_1444665981291_6022eb" : {
            "buy" : 0.11,
            "sell" : 1261.937
        }
    },

[masterOfDisaster]

Liquidity status status of modPuddle

Wed Oct 14 17:36:09 UTC 2015
nud -unit=B getinfo | grep version -A 8
    "version" : "v2.0.1-unk-beta",
    "protocolversion" : 2000000,
    "walletversion" : 1,
    "walletunit" : "B",
    "balance" : 1.0,
    "newmint" : 0.0,
    "stake" : 0.0,
    "parked" : 0.0,
    "blocks" : 570389,
    "moneysupply" : 4625112.9069,
    "totalparked" : 2006.33,
nud getliquidityinfo B | grep BBZ4h88BwYCyE9q268LoArps6eodq9PDGH -A 2
        "BBZ4h88BwYCyE9q268LoArps6eodq9PDGH" : {
            "buy" : 0.11,
            "sell" : 1511.937

---

Balancing the funds initiated##

As the buy side is below 45% of total funds, balancing happens

Price:

17:49:55.528 INFO  - Price Updated. blockchain:1 BTC = 254.5 USD - [c.n.n.t.PriceMonitorTriggerTask:353]

750 NBT equivalent in BTC will be put into buy side.
Based on 254.5 NBT/BTC that equals to 2.947 BTC.

As the hitBTC sell side is much bigger than the hitBTC buy side, inter exchange balancing will be done (instead of trading the NBT into NuLagoon’s buy side).
Poloniex has at the time of balancing a significantly higher ask volume and will be used for the balancing.

Ask order target  35737.96 NBT filled of maximum 20000 NBT ( 178.69% )
Bid order target  14659.23 NBT filled of maximum 20000 NBT ( 73.3% )

---

Liquidity status status of modPuddle after balancing##

Wed Oct 14 18:10:09 UTC 2015
nud -unit=B getinfo | grep version -A 8
    "version" : "v2.0.1-unk-beta",
    "protocolversion" : 2000000,
    "walletversion" : 1,
    "walletunit" : "B",
    "balance" : 1.0,
    "newmint" : 0.0,
    "stake" : 0.0,
    "parked" : 0.0,
    "blocks" : 570433,
    "moneysupply" : 4625112.8869,
    "totalparked" : 2006.33,
nud getliquidityinfo B | grep BBZ4h88BwYCyE9q268LoArps6eodq9PDGH -A 2
        "BBZ4h88BwYCyE9q268LoArps6eodq9PDGH" : {
            "buy" : 751.69,
            "sell" : 750.0

[Nagalim]

“buy” : 751.69

You made money

[masterOfDisaster]

You made money

Between exchanging and transferring the BTC the price went up

But in fact we lost money.
The 3.044 BTC from the start are now only 2.947 BTC. The 3.044 BTC would be worth 774.698 NBT at the rate of 254.5 NBT/BTC.
23 NBT in the red on the second day.
The transfer fees are tiny, but the 0.2% fee at poloniex was paid from my own pocket, which is another 1.5 NBT.

I’m not too excited about the current balance, but about the NuBot operation in general

But fortunately I get a share of the (future) reward for the liquidity operation and the two other guys bear the risks

Minus 1.5 NBT for me.
Minus 23 NBT for the fund owners.
Operating a liquidity pool is obviously the more reliable business^^

[Nagalim]

Shareholders don’t account in BTC, they account in NBT. If we account for the 1.5 NBT fee loss, you broke even. When the price starts going down or remains stable we’ll see how much you really lose. Who’s to say the fund owners wouldn’t have sold in this time and lost out on that 23 NBT? In my opinion, funds can only be lost or gained in the moment of rebalance, and only from the perspective of NBT worth. The result will be that when BTC goes down you’ll have to account for some hard losses.

[masterOfDisaster]

It’s day two, BTC is in the last days more volatile than before, there are some more days to go.
The final balance will be after day 30 and not earlier.

[masterOfDisaster]

Only 8 days left of the current operation.

Time for a summary.

Technical part

The internet access worked well as far as I can tell.
The RaspberryPi was running fine.
The CPU load was only high during startup of NuBot, RAM consumption was moderate and nud and NuBot were running on the same RaPi.
The temperature of the RaPi remained below 40°C (in an environment of 20°C).

I had some issues with broadcasting liquidity once, and ran into another issue recently (which isn’t fixed yet).
The NuBot documentation might need some tweaks and quality management, but overall it was a great experience to work with NuBot and @desrever!

hitBTC was running reliably, the API was performing well.

That much about technical summary.
I dare say that running nud (2.0.1) and NuBot (0.3.2) on a RaspberryPi 2 works great with little effort and little energy costs (RaPi running at below 3 Watts)

Now the (preliminary) economical summary.

Shareholders don’t account in BTC, they account in NBT

That assessment is correct - from a NSR holders’ persective or from the perspective of people who prefer a stable crypto currency over volatile ones.
If it’s non-shareholders providing liquidity they might account in BTC - especially if you want to attract liquidity on the buy side!

The current liquidity situation of modPuddle is
750 NBT, 2.4 BTC

The value in NBT is still above 1,500 NBT (BTC rate at the time of writing 390 NBT):750 NBT + 2.4 BTC * 390 NBT/BTC = 1,686 NBT

If you calculate that in BTC, the funds would be worth roughly 4.32 BTC (1,686 NBT / 390 NBT/BTC = 4.32 BTC) at the moment.
Even if the complete compensation of 225 NBT would be distributed to the fund providers (which isn’t the case as I get some of the compensation for my efforts), they would end up with less BTC than before (225 NBT / 390 NBT/BTC = 0.58 BTC -> 4.32 BTC + 0.58 BTC = 4.9 BTC).

The fund providers already indicated that they are not going to provide this operation with funds for another round.
And I understand their reasoning.
They started with close to 6 BTC, half of which were converted to NBT.
From their perspective they have lost more than 1.1 BTC or above 400 USD in this month.

Considering that this operation was at a relatively high compensation rate (due to the uncertain exchange risks), I need to come to the conclusion that this operation was a total failure for the liquidity providers.
The compensation was not sufficient to provide the liquidity providers with an incentive to contine.
The only perspon who earned money from it is me, 25 NBT.
The lesson I learned is more valuable than the 25 NBT and the money was not the reason to do this - obviously.

I consider pulling funds from ALP to continue the operation as I have long ago started to calculate in NBT. I have not yet come to a conclusion with how many funds I can continue the operation and what terms I’m going to offer.

Is there demand for modPuddle on hitBTC or is Nu comfortable with having NuLagoon provide liquidity there?

[Nagalim]

If they sold half the BTC immediately, then they really came in with <3 BTC and 750 NBT. They have lost ~0.5 BTC. In return they are given 225 NBT, or ~0.5 BTC at current prices. From my perspective, they came out about even and are just sore that they did that initial sell of half their funds to get to a balanced pool. That sell technically occurred before operations began, and should not be included in the summary.

[masterOfDisaster]

Unfortunately it’s not up to me or you to tell them how they need to account that.

I’ve heard complaints about the funds being worth less (BTC) than when the operation started. They knew about that risk and they took it. They didn’t ask me to terminate the operation (of course they kew about the terms), but indicated they don’t want to provide liquidity after the 30 days.

If they had kept the ~6 BTC, they still had 6 BTC worth 2,340 USD.
I can’t deny that this is a valid perspective.

If the terms of the operation hadn’t stated very strictly that the operation continues no matter what happens, they might have pulled the funds days ago.