[Passed] Motion to regulate rules of fund management in NuLagoon

I suppose you are not talking about OP’s motion. Please clarify.

Obviously @henry is talking about the linked motion and recommends not to vote for it.
It’s a little bit confusing that he linked one of his contributions, but nevertheless the thread only deals with one motion:

thanks MoD!
obviously i was confused :smiley:
thus i am still voting for Henry’s motion :wink:

This motion aims at balancing the liquidity provided by NuLagoon and at uniforming it compared to the overall network liquidity. If it works as intended, it will solve the issue of “too much sell liquidity” on NuLagoon provided that ALPs have a balanced liquidity and produce more liquidity that NuLagoon, which is the normal state and matches the current conditions since we are in a normal state.
Therefore I am in favor of such a motion.

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It’s a good first step towards a future in which the ratio of the sum of bid and ask sides will indicate whether Nu needs to print more money or needs to remove money from the market.

As soon as seeded auctions are established (an evolution of the unseeded auctions) there will be a burn gateway to either inflate or deflate the NBT supply gradually.

Separate share buybacks (like the one that might happen soon) will only be needed under rare circumstances - the seeded auctions will be an ongoing “share buyback” or “share distribution” - depending on the demand for NBT.
In seeded auctions “share buybacks” will create NBT, “share distributions” will burn NBT.
The demand for NBT can be read from the balance of the bid/ask sides, the side to be seeded (NBT or NSR) can be derived from it.
Everything comes full circle.

This motion is one of the first steps on Nu’s way to evolve liquidity even further.

The tiered liquidity model has despite of the name of the thread not been finalized November last year. The layers are important, but it still lacks the feedback loop between NBT in circulation and the market.
This is being changed for the better.

This motion here is not to be underestimated!

It appears that Nu is a never ending source of innovation thanks to the developers and the community.
Hats off to Nu!

…sorry if this sounds confusing. If it confuses you, I recommend thorough investigation of the matter (especially if you are a share holder!).
This post aims to draw a big picture of Nu’s liquidity future.


I’m very interested to see how NuLagoon’s method of balancing based on the current network liquidity compares to MoD’s proposal to always balance 50/50. I’m inclined to prefer NuLagoon’s method for tier 3 liquidity, but for tier 1 I think a 50/50 balance might be the best choice.

I don’t think this is a necessary condition for proper operation. Let’s pretend NuLagoon consists of 90% of the liquidity and is 75%/25% sell side. The rest of the network is ALP with 50%/50%. That means that the total network is 72.5% and NuLagoon does not have to rebalance. In fact, if NuLagoon constitutes 90% of the network, NuLagoon would have to be 100% sell and the rest of the network 100% buy in order for a rebalancing to occur. Basically, my argument is that if NuLagoon complies with the stated motion and is not able to rebalance effectively (from the shareholders’ perspective) it is because the network itself is unbalanced and it is not NuLagoon that has ‘too much sell liquidity’ but in fact the network as a whole.

I understand your point. Tks for the math.
But my point is to say that if NuLagoon represents the vast majority of the network liquidity, the rebalancing formula would not help much even if the rebalancing is triggered.
I see one problematic situation: NuLagoon represents the vast majority of the overall liquidity, and the overall liquidity is skewed towards the sell side. (as in your second case scenario)
In that case, the formula will not help in getting much more liquidity on the buy side which we would want, in my understanding, ideally.

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@assistant motion vote 1f7223971e026dd124dc1a31ebf548836b73af71

Why is it so?

This is only my perception. It might be off, so take it with a grain of salt.

The tiered liquidity model provides Nu with a sophisticated “waterfall model” with the several tiers being able to buffer liquidity.
Higher tiers buffer lower tiers in two different ways.
Higher tiers can absorb NBT or BTC of lower tiers if needed.
And they can provide lower tiers with NBT and BTC if needed.

The tiered liquidity ends at tier 6.
Tier 6 provides a connection between liquidity and the Nu network in the way that NSR or NBT grants can provide the market with additional NBT or absorb NBT in excess.

But how to handle tier 6 liquidity? How to connect it to the market? How to determine whether NBT need to be distributed or absorbed?

Remember how difficult it was (and still is) to find out when to pay park premium and how much?
There’s no metric available to assess the liquidity situation in a way that you know whether all is ok, or you need to do something and what.

This is why I perceive this motion here an evolutional step of the liquidity model.
Balancing the funds like proposed in this motion provides Nu with information about the liquidity situation:

Nu can read from the liquidity situation whether it’s necessary to distribute NBT or absorb NBT (or do nothing).
A very sophisticated way to distribute/absorb NBT would be the seeded auctions.

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the Liquidity section in the wallet is not shown accurate situation?
from where it gets the numbers? also i see an unknown tier!

Very much appreciated elaboration.

@assistant motion vote 1f7223971e026dd124dc1a31ebf548836b73af71

Hi @cryptog

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1f7223971e026dd124dc1a31ebf548836b73af71 voted.

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This is contrary to the interests of the network. Allowing NuLagoon to be unbalanced if needed to balance total liquidity is positive.

Dude what? Why did you not participate in the week long discussion of this a week ago?

In what situation would NuLagoon being unbalanced balance the network? Of course, only when the rest of the network is unbalanced the other way, which is exactly when an interpool balancing is useful. For example, LP1 has 25 nbt buy and 75 nbt sell. NuLagoon has 75 nbt buy and 25 nbt sell. It is perfectly consistent and good for the network if NuLagoon buys 25 nbt from LP1.

NuLagoon is a liquidity provider like the multiple other ALPs and maybe soon one or another NuBot.
There’s no reason to expect or to want NuLagoon to buffer liquidity from other pools.
It’s in the best interest of the Nu network to have the liquidity balanced across pools.

In fact what NuLagoon starts does not go far enough.
This whole idea of balancing needs to spread across all liquidity tiers up to 6.

If NuLagoon balances funds with other pools the result might be that NuLagoon’s (as well as the other LPs) buy and sell side end up unbalanced, having either too much or to few NBT.
There must be a way to connect from tier 3 to tier 4 and from there to tier 6 to balance again.

How else should NuLagoon or all other LPs get NBT if they need them or get rid of NBT if they have too many of them?

The Nu network needs this inter pool balancing to know which side to seed in seeded auctions. Once again I’m speaking of seeded auctions, I know… But seeded auctions (or something even better that I can’t think of) are needed to absorb or distribute NBT by the Nu network.
And the balancing NuLagoon proposes can be used to determine when (threshold) and what side to seed in the seeded auctions that yet need to be developed.