[Passed] Motion to create the first liquidity pool: The Nu Lagoon


#1

Motion RIPEMD160 hash: b5e709a59226b979e4cb59e6d3a3e06b506e3761

Hello everyone,

I would like to propose to create and manage the first private funded liquidity group pool: The Nu Lagoon. The Nu Lagoon will contain multiple pools. Different pool has different expected return rate and different risk. It will up to participants to participate which pool. Following are the details.

Pool A:

Participants

  1.  Pool A will accept deposit in BTC and NBT. The BTC deposit address is: **xxxxx**, and NBT deposit address is: **yyyyy**. Deposit transactions will be published.
    
  2.  The send-from address of every deposit transaction will be the address to receive fund withdraw in future.
    
  3.  Deposit less than **1000NBT** or **4BTC** will be rejected and will be returned to the send-from address (the transaction fee will be subtracted).
    
  4.  To submit fund withdraw order, participant send **0.0001BTC** or **0.01NBT** from the same send-from address of the deposit transaction to the pool’s deposit address.
    
  5.  Deposit transactions and withdraw orders sent before **10:00AM GMT every Friday** will be effect that Friday. Transactions and orders sent afterward will be effect next Friday.
    
  6.  The number of shares of participants will be: **Amount of NBT deposit / NAV in effective day** or **Amount of BTC deposit * BTC price at 10:00am in effective day / NAV in effective day**.
    
  7.  The asset of participants will be **The number of shares * NAV**
    
  8.  If participants withdraw fund, they will get **The number of shares * NAV** in NBT or **The number of shares * NAV / BTC price** in BTC.
    

Manager

  1.  The manager will process deposit transactions and withdraw orders, and report the status of the pool once after 10:00am GMT every Friday. Every Friday is an accounting day.
    
  2.  The manager will place about **10% - 20%** of fund in tier1 and tier2 on up to 2 exchanges, and run the nubots to let Nubits trade at $1 +- exchange fee rate. About **80% - 90%** fund will stay at local wallet.
    
  3.  If buy side or sell side of fund in tier1 and tier2 has less than **25%**, the manager will manually balance it by transfer fund between tier2 and tier 3 once every working day. If either NBT or BTC in tier3 is not enough for the need of balance or withdraw, the manager will convert fund from other LPC and exchange.
    
  4.  The manager will submit a custodian fee grant request **once every month**. Nu shareholders promise to pass the fee grant in 10 days. The custodian fee granted will be added into Holding of NBT and subtracted from Custodian Fee wait to be granted
    
  5.  The manager reserves the right to optimize the operation of the pool when situation changed, for example the Nubot evolved.
    

Fee and Calculation

  1.  When the pool begin operate, I will propose a motion to let Nu shareholders approve the daily custodian fee rate of 0.34%. 0.07% will be manage fee rate, 0.27% will be participant expected return rate.
    
  2.  When the total liquidity in buy side of Nu network is greater than 110% of the total liquidity in sell side for 7 consecutive days, the daily custodian fee rate will be decreased by 10% at next accounting period, and the manage fee rate and participant expected return rate will be decreased accordingly.
    
  3.  When the total liquidity in buy side of Nu network is not greater than 90 of the total liquidity in sell side for 7 consecutive days, the daily custodian fee rate will be increased by 10% until it reaches 0.34%,  the maximum of daily custodian fee rate, at next accounting period.
    
  4.  NAV of the pool will be calculated in the following formulas:
    

Total asset = Holding of NBT + Holding of BTC * BTC price at 10:00 AM - Total asset in previous accounting day * manage fee rate

Custodian Fee wait to be granted = Custodian Fee to be granted in previous accounting day + Total Asset * custodian fee rate * days

NAV = (total asset + custodian fee wait to be granted) / total number of shares


Pool B:

Pool B will be operate almost in the same way as pool A except:

  1. The BTC and NBT deposit address will be 2 of 3 multisig address and be protected by 3 operators.

  2. The custodian fee split will be different. The manager fee rate will be greater than 0.07%, and the participants expected return rate will be less than 0.27%.

I am looking for sig partners to work with me to run the pool B. Substantial Nu shareholders or community members with a reputation, if you are interested please contact me. Thank you.


The Motion Content:

I finalize the motion as follow. It is not necessary to include all the pool terms. Pool A will immediately begin operation after this motion passed. Pool B will not affect anything shareholders approved in this motion.

Motion RIPEMD160 hash: b5e709a59226b979e4cb59e6d3a3e06b506e3761

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Motion to approve the operation of the Nu Lagoon



  1. The manager(s) of The Nu Lagoon manage fund provided by pools participants, run the Nubots to support NBT peg at $1 on up to 2 exchanges, and report the status of the pool at least once a month.

  2. If buy side or sell side of fund in exchange has less than 25% of total fund in exchange, the manager will balance it by transfer fund between exchange and local wallet once every working day. If either NBT or BTC in local wallet is not enough for the need of balance or withdraw, the manager will convert fund from other LPC and exchange.

  3. Nu shareholders approve the daily custodian fee rate is 0.34%. When the total liquidity in buy side of Nu network is greater than 110% of the total liquidity in sell side for 7 consecutive days, the daily custodian fee rate will be decreased by 10% at next accounting period.

  4. When the total liquidity in buy side of Nu network is not greater than 90% of the total liquidity in sell side for 7 consecutive days, the daily custodian fee rate will be increased by 10% until it reaches 0.34%, the maximum of daily custodian fee rate, at next accounting period.

  5. The custodian fee will be accumulated in every month. The manager will submit a custodian fee grant request once a month. Nu shareholders promise to pass the custodian fee grant in 10 days. The custodian fee granted will be added to the pool. The Custodian Fee wait to be granted will be calculated as:
    Total asset = Holding of NBT + Holding of BTC times BTC price at 10:00 AM GMT accounting day - Total asset in previous accounting day times manage fee rate.
    Custodian Fee wait to be granted = Custodian Fee wait to be granted in previous accounting day + Total Asset times Custodian fee rate times Days between previous and this accounting day.


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

Thank you for your comments and suggestions for amending the motion.

henry


[PASSED] The Nu Lagoon Custodian Fee Request of Apr 2015
[PASSED] The Nu Lagoon Custodian Fee Request of Apr 2015
[Passed] Motion capping NuLagoon fees going forward
[Withdrawn] Motion to lower compensation for NuLagoon sell side
[OLD] Cryptog's datafeeds - BETA
Introducing Bitcoin.co.id - Nubits/Bitcoin with 0% Trading Fee
[Voting] The motion of the updated terms between the Nu Lagoon and Nu Shareholders
History of the Nu Network (Feedback Please)
FLOT US-NBT Operations (sell side)
[OLD] Cryptog's datafeeds - BETA
[PASSED] The Nu Lagoon Custodian Fee Request of Apr 2015
#2

Example:

5th Mar: The pool is created, Alice deposit 1000NBT by sending 1000NBT from Baaaa to yyyyy, and Bob deposit 4BTC by sending 4BTC from 1bbbbb to xxxxxx, the BTC price at 10am is 250$. Each of them get 1000 shares

6th Mar: BTC price remain $250, 250NBT is traded for 1 BTC

9th Mar: A weekend passed, another 250NBT is traded for 1 BTC, BTC price rise to $260. Bob send 0.0001BTC to withdraw his fund. He will get 1000*1.0379/260 = 3.9919BTC

10th Mar: A 27NBT custodian fee grant passed

Sample reports:


#3

very glad to read this.

Did you considered the fact that NAV is likely to decrease due to various reasons (theft, losses,bugs, BTC wild oscillations, … ) ?
There should be an explicit line that defines how losses are distributed.

When are daily profits calculated? What happens in days where there is no profit?


#4

Make sure to subtract the transaction fee, otherwise an attacker could spam you with near-zero fee transactions.

This could require that you also operate on other markets to ensure that you can fulfill those requests. For example, if the Buy side liquidity falls below 90% of its original value, and someone with large amounts of BTC invested wants to withdraw those coins, then you would need to buy these BTC on another exchange using some of the NBT funds.

So a 50,000 NBT funding will lead to a instantly accessible liquidity of 5,000 NBT, at a fee of 5,000 NBT per month roughly.

I would like to see more in Tier 1 and Tier 2 and would accept if the participants don’t have daily access to their investment.

This promise is not realizable on blockchain level and there will always be a chance that the grant will not pass. It is also an unknown to the shareholders how large the amount of liquidity (and therefore the fee) will be.

That’s why I suggested here that the pool operator declares a target funding and calculates the fees by integrating over an inverse logistic sigmoid function centered at the target, so a shifted form of this function:

With this funding strategy we have an upper bound on the amount of fees that need to be paid. The target funding can be adapted each month when asking for a new grant.


#5

Looks and sounds very promising and appealing.


#6

Liquidity pool should have at least 3 operators and use 2-of-3 multisig for the remaining funds. It is too easy to get hacked or get corrupted when handling this amount of money.


#7

Yes. NAV is likely to decrease. If there is not additional infomation, the decline of NAV is just because BTC price decreased.
10:00am is the cut of time every working day. I will begin to do all the calculation and process. I expect to spend 2-4 hours everyday to finish all the work when there is not any automatic tool to use.


#8

Yes

Agreed. May be, if the size of the pool is less than 50k, the percentage of fund in Tier1 and Tier2 could be 20%

When the custodian fee is high, there will be a lot of participants. The buy side liquidity of Nu network will increase and eventually be greater than sell side liquidity. Then the custodian fee rate will drop, forcing some of the participants withdraw their fund. Although we don’t know how large the amount of liquidity and fee rate will be, but they will reach an equilibrium point.


#9

Very good point. Based the pool operation I designed above, can you elaborate more about how 3 operators work together to do all the jobs?

I am very happy to have two more operators working with me. I am planning to spend 2-4 hours everyday on this job. Other two operators could only do the job of signing transactions, but they have to work in the same time span as me.


#10

Not sure how it could work in practice but it important to minimize the trust needed. I had in mind a scenario of shared liability where each operator had a personal stake. On the other hand I recognize the futility of those measures as we are dealing with a centralized exchange and that by definition requires a high degree of trust…


#11

I’m very pleased to see this proposal. Thank you for pioneering liquidity pools. The basic approach is clever but simple.

How will you define the send-from address if multiple inputs are used to send funds to your BTC or NBT address?

While there is an advantage to pool users to allow daily withdrawals and deposits, it may make sense to only allow entry to and exit from the pool on a weekly basis, because this would tremendously lighten your work load. Later, automation will allow more flexibility without imposing such a heavy workload.

What does everyone think about weekly entry, exit and accounting?


#12

I think even weekly is still generous. Usually if you like to make your money work a period of a month is a minimum. The main reason is the cost of administrative overheads. So reducing the transfers should reduce your operating costs and making it more attractive.


#13

They will be treated as a deposit from the address in the first input. The address in the first input will be the address to receive fund withdraw.

Yes. It is a good idea, especially at the early stage. But, I think I still need to do the fund balance work everyday, because if only 20% fund placed on exchange, there will be lots of need to balance.


#14

I certainly agree.


#15

the withdraw adress can be send in a signed message or using coin control to send only from a single address. also the weekly basis will need too much work increasing manager’s fee. multisignature is nice idea but this pool’s organisation needs trust so every participant should sent only what he/she affort to loose!


#16

The Nu Lagoon will include multiple pools. Different pool has different expected return rate and different risk. Pool A will immediately begin operation after this motion passed. Pool B will be based on multi-sig deposit address and is in preparation. In future, it is certainly possible to create Pool C with the feature of hedge against BTC price volatility. I have finalized the motion, the content of this motion applies to all the pools in The Nu Lagoon.

Motion RIPEMD160 hash: b5e709a59226b979e4cb59e6d3a3e06b506e3761


#17

voted! lets see :wink:


#18

What exactly are we voting for here? You will still need custodian grants to submit liquidity. And this:

doesn’t mean anything, if a grant passes or not is decided on blockchain level and cannot be decided prior to the actual voting. Or do you want to make a hard fork to ensure this on protocol level?


#19

I am a LPC and have an address to submit liquidity already.

The Nu Lagoon trust shareholders will act according to the motion they passed. So the service will be provided prior to service fee be granted.


#20

Thats only valid for 6 months, but right, that should be sufficient. I hope everything works out as you want. Note that the shareholders voting for this motion now are not necessarily the shareholders that have to pass your grant in 2 months.