[Passed] LiquidBits term 7 grant (updated) - Automatic Liquidity Pool (ALP)

For reference CMC data from the last 3 months:

bitUSD

US-NBT

While the spread of bitUSD is much better since BitShares 2.0, the volume is more or less 0 for most of the time and only small peaks of volume, which are beaten by US-NBT even on weak days.

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CMC doesn’t report what I see as the real Bit-USD hardly at all. This is because the DEX volume far surpasses the Polo volume. If you look at the polo market on any given day the price can easily be over $1.10 and have less than 1 BTC of liquidity on either side of the books. Right now the value of a BTC in BitUSD on polo has a spread from $370 to $476 (25% spread using mean price) and if you want to buy >1 BitUSD you have to sell your BTC for $345.

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Any other more correct site that reports the price?

Nah, I mean it’s not like it’s fraudulent or anything. It’s just that you have two distinctly different markets: the DEX and the real market. Because no one wants to trade on the real market, the DEX becomes the market reporter. It’s like if NuLagoon became our market reporter for NBT, clearly we would always have a good peg (it’s a little different, but I hope you get my drift).

http://cryptoindexes.com/volatility?mode=NULL&hours=12&order=bottom&volume=5

This link is nice, but it displays volatility related to Bitcoin.
Not exactly important for US-NBT. :wink:

Right -

Mea Culpa, fronting up, not good. :sweat: There we go.

Just found out with the last LiquidBits payout that I’ve made an incredibly stupid mistake with this grant; I didn’t update the grant request totals properly for EUR and USD after the earlier changes I’ve made. Only the NBT/BTC pair amount appears to be right, the others are incorrect and too low.

The grant shows:

with up to 4.5% per month (0.15% per day) on CCEDK’s NBT/EUR pair on both sell and buy side to a maximum of 3,750 NBT on each side ( max pay-out 315 NBT/60 days)

This should have been (( 2 x 3,750 ) / 100 * 0.15 ) * 60 days = 675 NBT max pay-out. Difference 360 NBT.

with up to 4.2% per month (0.14% per day) on CCEDK’s NBT/USD pair on both sell and buy side to a maximum of 7,500 NBT on each side (max pay-out 630 NBT/60 days)

This should have been (( 2 * 7,500) / 100 * 0.14 ) * 60 days = 1260 NBT max pay-out. Difference 630 NBT

To the point, that means a total shortcoming of 360 + 630 = 990 NBT. :disappointed:

What next? There are a couple of options I can think of:

  1. Half the maximums to be able to pay the rewards for the provided liquidity over the next 60 days
  2. Raise another grant for the difference (990 NBT)
  3. A combination of lowering fees and limiting maximum rewarded amounts.
  4. Raise a new grant in 30 days and keep the settings as they are and maybe justify the current by passing a motion.

This can be combined with any other measures the Shareholders want to take for my really stupid mistake including make-goods. If it proves anything, is that I’m not an AI, just a human being with all the mistakes and lack of attention that comes with that at times :astonished:

Looking forward to some wise directions the forum members can provide in this matter.

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I believe the simplest way would be to raise another grant for the 990 NBT.

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Option 5.
Reduce the maximums of all pairs, fill the sell side gap at the NBT/BTC pair with NuBot(s) PyBot(s) in sell side mode.
Use this to continue the transition to a new liquidity provision scheme.

I know, I’m biased… :wink:

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Mod, i will take the opportunity to ask this:
how can we operate dual or sell side nubot gateways for fiat pairs? Is it possible?
especially when exchange has very low BTC/fiat liquidity. I am thinking this for a long time now!

Only in a rather complicated way.

I think so, but with a lot of effort for random providers and maybe less efforts for some of those who already do ALP.

If you provide liquidity in an ALP, you might already need to balance by withdrawing fiat from time to time.
Those who already fulfilled the complex registration requirements that are usually tied to fiat deposits and withdrawals (e.g. AML and KYC compliance) are in a good position.
I consider the ability to withdraw and deposit fiat from/to such an exchange a prerequisite.

And that’s because I can’t think of any other way to balance. FLOT can’t do that at the moment.

If you have all traded to, say, USD, and there’s no liquid BTC/USD pair at that exchange, you need to withdraw fiat, deposit it at an exchange with plenty BTC/USD liquidity (say, bitstamp), convert it to BTC to be able to trade those BTC for NBT at an exchange with BTC/NBT, NuLagoon or a T3 custodian.
This means a lot of management efforts and a lot of delay (e.g. for withdrawing and depositing fiat unless you have spare money to do that in parallel). Plus costs for the conversion.

As ALP at fiat pairs face the same problems I doubt it’s more expensive to do that with a dual side bot, albeit in a more transparent way.
I guess it’s in the end the same as for dual side (or single side) operations at crpyto pairs: in the end cheaper without ALP.
I have no idea how to do that properly with Nu funds, though.

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4 or mod’s 5

I thought the grant seemed cheap, but clearly none of us read the contracts we sign.

Just operate according to text and start up another grant proposal for the rest of the funds. Simply spell out in the grant proposal that if it doesnt pass LiquidBits will only have guaranteed funding through y date. If it has a hard time passing, that gives you another opportunity to revise and create a fresh liquidbits grant.

“Have no fear of perfection — you will never reach it” — S. Dali

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Thanks for the feedback guys, I will prepare a grant for the 990 NBT in the next few days.

@masterOfDisaster Not sure whether it is worth to change the 120 NBT /60 days for the NBT/BTC pair. If there is clear steer from the shareholders to not support NBT/BTC ALP/MLP on any exchanges except 1 or 2, I will convert it to a dual-side Pybot at no cost after this grant expires.

I still think there is value to maintain minimal liquidity (say 500 either side) on any exchange supporting NuBits encouraging decentralisation and choice for the average user to sign up with his/her local exchange till we have B&C operational providing a real alternative. The main value is in visibility and accessibility for users who are actually going to keep the NuBits in their wallets and use it to pay for goods and services. I think that is a small price to pay. I’m specifically not mentioning traders.

Do we have figures as for this primary use of NBT? users population keeping their NBT to pay for goods and services

I believe we cannot be aware of how NBT is used exactly. I mean it is in the nature of an anonymous token that you cannot tell how it is spent :slightly_smiling:
I dare to say that NBT is indeed used for goods and services but mostly indirectly through BTC and then to fiat via other services (payment processors,visa,etc)
Although it is obvious that it should be the other way around! (BTC --> NBT --> fiat )
This is where we should concentrate our efforts (NBT <–> fiat) together with the adoption of NBT for direct use by merchants.

This might indeed be able to provide a sweet spot (to have a target of few hundred USD value per side), although removing ALP completely would remove ALP operator fees, too.
Even a small ALP operation requires an operator. The operator fees are then in a bad ratio to the ALP liquidity volume.
It might still be worth it.

I posted the related figures we have recently here: NuDroid v4 - Now available on Google Play. I can’t think of anything else to provide proof of actual usage. Maybe the amount of NBT addresses with a balance larger than a few NBT?

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