[Passed] motion to permit dual side NuBot on Poloniex

[masterOfDisaster]

The longer I thought about it, the more use I saw for a dual side bot in “active standby mode” (running, but unfunded) to replace gateways.
It’s not clear to me that I will decommision the gateways on Poloniex soon.

Upon passing of this motion I will operate a former gateway in dual side mode and reveal the deposit address, that is missing to fund it dual sided (tell NBT address of the NBT exit gateway; tell the BTC address of the NBT entry gateway).

This will not activate the compensation terms of this motion!

The other gateway will be shutdown.

In that state of transition, the dual side NuBot will keep funded and provide a buffer outside the spread for which ALP participants are compensated for.
This will not guarantee a 100% perfect intact peg, but it will create a line of defense before the spread is bigger than several percent. And if one side runs dry, it can be funded just like the gateways before.
Funds will be withdrawn to FLOT addresses in steps.
As soon as no funds are left, that dual side bot will be turned to active standby mode to provide a hardware backup for the dual bot that is subject of this motion.

[crypto_coiner]

Have a custodian run a dual side NuBot on Poloniex with Nu funds to create a buffer and support the peg.This is a band-aid solution until e.g. T3 custodians and fixed cost compensation have eased the liquidity situation and improved the reliability of the peg.Poloniex as the exchange with biggest NBT trading volume is very important for customers evaluating the peg

Makes sense – adding to my voting data feed

[masterOfDisaster]

Makes sense – adding to my voting data feed

Thank you for your understanding and your support!

[cryptog]

I think this band aid solution proposal makes a lot of sense.
I hope Nu will be able to totally avoid that before it starts paying fees (though I am not against in any way paying @masterOfDisaster for all work so far!)

6a2fdd44881be1d64ee5c03517525b52f607342c verified and voted.

By the way what would be the difference in terms of liquidity balancing and liquidity provision between providing funds to this dual side NuBot and increasing the incentives for liquidity provision to participating into Polo’s ALPs?
Aren’t Polo’s ALPs running a dual side bot?

[Nagalim]

ALPs should have a smaller spread and gateways put all the risk on Nu instead of the custodian. I’d be down to increase ALP provision on Poloniex too.

The ALPs are running a dual side bot, but not with Nu funds and at a smaller spread.

[masterOfDisaster]

increase ALP provision on Poloniex

+1

The current compensation seems to be insufficient to attract enough liquidity at Poloniex’ ALP.
From https://nupool.net/index.php/Current_rates:

ALPs should have a smaller spread and gateways put all the risk on Nu

Well spotted. Exactly for that reason should the gateways only be used in emergencies.
And if a NuBot runs permanently in dual side mode with Nu funds, it can only be cheaper than sustaining ALP, if the hedging risk gets reduced by having a bigger offset than the ALP.
The same stay true whether the funds are collateralized, provided by the bot operator (MLP), or provided by Nu.

[nmei]

Exactly to that… I pulled my liquidity from polo and Bittrex because the compensation didn’t fit the risk faced due to the btc swings.

[willy]

Exactly to that… I pulled my liquidity from polo and Bittrex because the compensation didn’t fit the risk faced due to the btc swings.

What rate would you prefer? Ye olde 0.3% per day / 9% per month?

[masterOfDisaster]

With fixed cost we could find it out

[Nagalim]

I think we’ll find that the ideal approach is CRFC that is always at target (using something like a 0.5% reward). Note that this is identical to FC, but using the threat of lowered total compensation to keep the pool at least at target. It’s similar to the idea of using a very FR reward rate and relying on the dutch auction to reduce costs.

[masterOfDisaster]

Correct me if I’m wrong, but doesn’t that sound like round 2?
Round 1: Test the waters with fixed cost to determine the reward that LP require.
Round 2: Define a target and calculate how many NBT need to be offered to LP to reach that target (more or less).

CRFC is a neat idea to offer market aware compensation.

[Nagalim]

Meh, as long as the rates offered are high enough to cause liquidity that exceeds target, both CRFC and dutch auction will reduce the rates to the market level. FC on the other hand demands a certain liquidity by offering exorbitant rates and more asks shareholders to state how much they’re willing to spend and finds the correct target, rather than the other way around… I wish I could say it’s working, but the NBT/BTC pool on bter has been offering rates near 1% for several days now.

[zoro]

I wish I could say it’s working, but the NBT/BTC pool on bter has been offering rates near 1% for several days now.

it seems that each exchange has its own “attributes”

[masterOfDisaster]

I wish I could say it’s working, but the NBT/BTC pool on bter has been offering rates near 1% for several days now.

1% per day? Impressive!
Either it isn’t working, LP are unaware or Bter is regarded as unreliable and LP require a high fee to feel sufficiently compensated.
With 1% daily, it takes only a few months to compensate 100% exchange risk (depending on the BTC volatility). Sounds like Nu would be better off paying for a Nu funded dual side NuBot - unless Bter really is that risky
If the reward stays like this (and the liquidity provision has been improved in general), I might consider a proposal for a dual side NuBot with Nu funds for a quite low operator fee

I bet ALiX can very easily generate the present and average (15 min, 4h) percentage, if only ALiX can retrieve the compensation that is paid per exchange/side.

[nmei]

With the BTC swings recently…I pulled ALL of my BTC liquidity…but I’m slowly licking my wounds and returning.

[Nagalim]

The issue is that the ALP providers move quickly, so when BTC is being volatile they move to CNY and back to BTC when china does weird stuff. Ultimately, the pools are very rarely empty and Bter has seen some good volume recently. So while 1% sounds like a lot, we are still only paying $10/day/side for a peg that doesn’t fail. Bter doesn’t really seem to follow the ‘provide the liquidity and the trade volume will come’ philosphy anyway.

[masterOfDisaster]

Hang in there!

NuBot 0.4.1 is soon ready:

NuBot development roadmap - From 0.1 to 1.0

• : 0.4.1 :
• NuBot as ALP client
• Adapt authentication strategy
• Visualize stats from pool
• SoutXchange and Cryptsy integration
• Front-end restyle
• Preview orderbooks in web-browser (raspi compliant)

and that will pave the ground for a feature that will reduce the hedging risk:

NuBot development roadmap - From 0.1 to 1.0

• 0.5.1
• Market-aware liquidity distribution models ( adaptive )

Bter might not exactly be representative.

So while 1% sounds like a lot, we are still only paying $10/day/side for a peg that doesn’t fail.

That’s cheap, if you ask me.

Bter doesn’t really seem to follow the ‘provide the liquidity and the trade volume will come’ philosphy anyway.

I think it’s rather the ‘if the trade volume comes, provide the liquidity (if you want to keep the peg)’ philosophy.

[Nagalim]

Please vote for this!!!

[Cybnate]

This motion passed!

[masterOfDisaster]

Dear shareholders,

I want to thank you for subsequently granting a permit to what I did with the NuBots at Poloniex. I was hesitant to write this post, but came to the conclusion that I shouldn’t just accept it and be glad about it.

It would have made miserable knowing that what I did, in hope of doing it in the best interest of Nu, was not in the interest of the NSR holders.
You might want to ask what’s the difference between “Nu” and “the NSR holders”. For me Nu is more than just the sum of its parts (of which the NSR holders and the community are just an important part as the developers and the architect).
It’s the vision of a future in which people can regain control and power over more than just tokens to transfer value, which Bitcoin already brought them. It allows them to regain control over a currency and to limit the power of central banks whose primary goal seems to be the skinning of people.
That’s why Nu must not fail. That’s why I did what I did.

Thank you for your vote.