[Passed] LiquidBits term 5 grant - Automatic Liquidity Pool (ALP)

NuShares Passed Grants
#1

Proposal RIPEMD160 hash: dd491de3ed1c69b080092d142ba13470cd398ce3

=##=##=##=##=##=## Custodian Hash starts with this line ##=##=##=##=##=##=

Custodial Address: BA9tumP4zyM1g2M8ZNieD2iAnMgdVPuQe3
Amount Requested: 2729 NBT

Funding request to operate Liquidbits.net, an automatic liquidity pool for NuBits.

The independent automatic liquidity pool (ALP, also known as TLLP) will provide liquidity on the EUR/NBT, USD/NBT and BTC/NBT markets on CCEDK.com and USD/NBT and BTC/NBT market on SouthExchange. A target of 11,000 NBT on the bid and ask side of the order books will be provided by the pool split over 3 currency pairs and 2 exchanges, resulting in a total maximum compensated liquidity of 22,000 NBT. The operation will end after sixty (60) days when a motion or grant to continue operations haven’t passed before.

Liquidity provided by users will be compensated as follows:

with up to 6% per month (0.20% per day) on CCEDK’s EUR/NBT pair on both sell and buy side to a maximum of 2,500 NBT on each side ( max pay-out 600 NBT/60 days)

with up to 5.4% per month (0.18% per day) on CCEDK’s USD/NBT pair on both sell and buy side to a maximum of 5,000 NBT on each side (max pay-out 1080 NBT/60 days)

with up to 5.4% per month (0.18% per day) on SouthExchange’s USD/NBT pair on both sell and buy side to a maximum of 1,000 NBT on each side (max pay-out 1080 NBT/60 days)

with on average 7.2% per month (0.24% per day) per month on CCEDK’s BTC/NBT pair to a maximum of 3000 NBT in total but split as follows:0.19% per day up to 1500 NBT on sell side ( max pay-out 171 NBT/60 days)0.29% per day up to 1500 NBT on buy side ( max pay-out 261 NBT/60 days)

with on average 7.2% per month (0.24% per day) per month on SouthExchange’s BTC/NBT pair to a maximum of 2000 NBT in total but split as follows:0.19% per day up to 1000 NBT on sell side ( max pay-out 114 NBT/60 days)0.29% per day up to 1000 NBT on buy side ( max pay-out 174 NBT/60 days)

using the pool’s calculations based on the Dutch auction model to allow a fair distribution of returns amongst liquidity providers. 3480.00 NBT of the requested amount in this grant will be held as reserve to make pay-outs toconnected users.

Note: the new SouthExchange pairs will be activated after a period of testing. At the time of this grant it is not clear when that is. The grant assumes that this will be 10 October when the new term starts.

Breakdown grant amount

The current grant has 1081 NBT left as of 4 Oct UTC with about 6 days to go at a current payout rate of 30 NBT on average. 6 * 30 = 180 NBT. Allowing for a minor increase there will be approx. 1081 - 180 = 901 NBT left.

Total required 3480 + 150 (fee) - 901 (left) = 2729 NBT.

Terms and conditions

Pay-outs take place every 24 hours. The minimum pay-out is 1 NBT. The spread continues to be 2% on either side with 0.0085 tolerance. Operations and pay-outs will start within 5 days after the custodial grant has passed successfully. The pool will continue to operate under the name LiquidBits.net. Remaining funds will be settled with future grants or when the pool is discontinued, burned.

Fee

The pool fee is a one-off 300 NBT and serves as a contribution for the effort of supporting the pool, the website, reporting, supporting the users and the monthly costs of operating the server including Cloudflare protection with SSL certificates.

InstructionsInstructions on how to participate in the pool can be found here: http://cybnate.github.io/index-liquidbits.html1

Disclaimer and risksThe provisioning of the pool is based on best efforts. No claims can be made by users when the pool server or client software is not available or not working properly.

Liquidity providers remain in full control of their funds throughout the operation of the pool. The pool operator won’t have access to any of the funds hence the reference to trust less liquidity pool. Therefore liquidity providers bear the full risk having their funds on the exchange and won’t be compensated by this pool on an exchange default or inability to withdraw their funds.

Liquidity providers are exposed to the risks of speculators hedging against them on other pairs than USD/NBT like EUR/NBT with the BTC/NBT pairs a particular high risk due to BTC’s high volatility. Therefore the compensation on the riskier pairs is higher.

SouthExchange is a relatively new exchange. Please do your own due diligence. This operation doesn’t endorse the use of this exchange by the NuShareholders or myself.

Finally, please be reminded of the following:

Don’t risk more than you can afford to lose!

=##=##=##=##=##=## Custodian Hash ends with this line ##=##=##=##=##=##=

Verify. Use everything between and including the <custodianhash></custodianhash> tags.

Status update

Changes in term 5 compared with term 4

  • Decreased interest on BTC pairs in line with Nu-Pool, still compensating buy side higher.
  • Decreased interest on fiat pairs to reflect the lower risk profile.
  • Decreased pool size of USD/NBT from 15000 to 10000 NBT
  • Added USD/NBT pair on Southexchange
  • Added BTC/NBT pair on SouthExchange
  • Increased tolerance from 0.0075 to 0.0085 to better approach SAF=1 on average for all pairs on both exchanges
    and enabling liquidity providers to increase their spread.
  • Changed term from 30 to 60 days

7-Oct-2015 Edit / correction in payout
There is a disturbing copy/paste error in this grant regarding the SouthXchange max- payout on the USD/NBT pair. The correct max payout should be 216 NBT/60 days. Therefore the grant total should have been 864 NBT lower. To ensure continuity of the pool I recommend to continue voting for this amount and I will pledge to burn the 864 NBT on passing of this grant.

[suspended] Cryptog's Nu data feeds - BETA
To which extent Liquidity Operation is decentralized?
[Discontinued] Cybnate's Nu datafeed - BETA
[suspended] Cryptog's Nu data feeds - BETA
#2

all good,
but the southX limits seem very very low! especially when the next adjustment will be after 2 months!

#3

The idea is to start slow on a new exchange, will need to see what the uptake will be and how stable the bots are. When in high demand in the first 20 days I can always submit a midterm grant e.g. and increase the targets.

1 Like
#4

NBT/USD on ccedk hasn’t been able to keep reaching the 5000 NBT target on either side (4698USD and 4728NBT now). Why do you think it makes sense to both lower the interest and increase the target to 10k?

Have you considered fixed cost pools? If this grant passes will Liquidbit not try fixed cost pool in the next two months?

#5

I’m hoping pools will switch over to fixed cost midterm when they see how successful it is on nupond.

You know I’m going to complain about the tolerance. The minimum tolerance for liquidbits to be in compliance with the spread regulation motion is 0.01 (1%).

2 Likes
#6

10K for both ask/bid walls. i guess 5000 in each, no change there :slight_smile:

1 Like
#7

It could be understood as 10k for buy side and also for sell side. Well that is how i understood anyway.

#8

1080/60 days gives us 5,000 NBT on each side if the rate is 0.18%/day

#9

@assistant liquidity

#10

So you have reduced a bit (1000 NBT) from Term 4 (23,000 NBT) .
What would you think about reducing even more?

#11

Hi @Cybnate

The current total liquidity in the Nu network is:

Bid: 103033.5664 NBT
Ask: 80361.2587 NBT

It is broken down in the following manner:

    Bid: 7837.6984 NBT
    Ask: 11633.9399 NBT

Tier 2:
    Bid: 0.9 NBT
    Ask: 10796.8686 NBT

Tier 3:
    Bid: 18787.6363 NBT
    Ask: 22489.152 NBT```
#12

@cybnate, you are not in favor of fixed cost pools?
(provided that they are tested and working ok.)

#13

I actually reduced a lot more on CCEDK, but allocated a part of that to the Southexchange account. Please note that I’m the only ALP actually reducing the liquidity. I hope I do set a trend, but I’m not yet prepared to cut further when there are no followers.

I think it is a step back, which appears to be required to make steps forward. The fixed cost will increase the cost to the network as most pools are underutilised. That means that the Shareholders are not paying for the remaining unused cost. With the fixed cost reward we need to be very careful regarding individual allocations to ALP as that will be the price we pay and not one cent less even if there is only 1 NBT liquidity provided on that exchange.

I still think the Dutch auction model is far better, the Shareholder only pays for actual liquidity provided and the liquidity providers compete with each other on price. However unfortunately we don’t have the knowledge, documentation and resource to fix the existing bugs in the current software. So it makes sense to step back to a model we do understand and than hopefully make the next step soon.

The only real problem we have with the current model (not the software) is that we have been too generous with the liquidity caps as we don’t have an overarching control mechanism to balance caps across exchanges. The fixed price solution doesn’t solve this, it may even have adverse effects in the short term. However I still support it as there are no better solutions presented.

3 Likes
#14

I’ve put up the LiquidBits term 5 grant proposal for voting. Please verify the original post as I have made some minor changes.

When in favor please add the following to your vote section in the client or subscribe to my datafeed.

Custodial Address: BA9tumP4zyM1g2M8ZNieD2iAnMgdVPuQe3
Amount Requested: 2729 NBT

Edit: updating OP and rehashing, made an error with the address…DONE

#15

dd491de3ed1c69b080092d142ba13470cd398ce3 confirmed

1 Like
#16

dd491de3ed1c69b080092d142ba13470cd398ce3 verified and

voted

#17
#18

@Cybnate, i understand your concerns about fixed cost pools. Then what if we combine somehow fixed cost with fixed rewards?
We can do it with different reward levels. for example:

  1. we setup a pool with max fixed cost of 2000NBT.
  2. we setup payout levels according to daily liquidity
    (for 100NBT, participants payed with 10NBT, for 1000NBT they are payed with 100NBT,etc, until reaching the max 2000NBT in final level with unlimited liquidity)
    too complex for coding? less fair than other models? high cost for NU?
1 Like
#19

Sounds complicated, but maybe simpler to code. In my opinion the Dutch auction is a very good model to do just that, but way more flexible. It just needs to be combined with the caps on the liquidity.

1 Like
#20

This can be done easily. Let me run a pool with vanilla fixed cost first, but I can make that kind of modification with just a few ‘if’ statements. I would probably do something like:
if mass<100:
newrate = 0.2oldrate
if mass<1000:
newrate=0.5oldrate
else:
newrate=oldrate

This is a blending of the fixed cost and the cooperative model:
Custodial Rules for the Static Peg with Fiat

1 Like