Thanks for joining the discussion. It is great that developers of NuBot are here to keep us informed. My apologies if my comment on the timeliness of the parametric order book was of any offense.
A 1% spread will not protect us from BTC swings that are generally in the order of 5-10% , daily1.
This is true. On the other hand, speculators as a whole cannot outperform the market significantly and consistently. Under non-adversarial conditions this risk can be compensated for by higher spreads in the long term.
For adversarial conditions (e.g. manipulation) nothing is completely robust. Overall a currency peg is worth protecting if it supports an economy that keeps afloat whatever institution is maintaining the peg, so ultimately this still boils down to a revenue model. To avoid further digression I’ll stop here.
I find it a bit flawed when you make a comparison with the orderbook of LTC at a random instant of time taking only the top bid/ask. One of the points of NuBits is providing liquidity in a way other coins cannot provide, resulting in outstanding market velocity.
I agree it doesn’t conclusively prove anything, and for that reason it may have been somewhat misleading. A larger sample (than 1 snapshot) would have helped, but I think it holds that the observation is alarming. We don’t have nearly the same market cap or adoption yet we try to provide expensive liquidity that is only used by speculators, which calls for attention on this matter.
So @masterOfDisaster is also proposing a maximum spread for compensation. Is this clear in your motion?
I did not include it as I have taken @nagalim’s estimate on a reasonable lower bound, which exceeds @masterOfDisaster’s upper bound. At this moment I am inclined to state that the upper bound is 1.4% plus exchange fee, i.e. a bit over 3% overall spread. I will put it in the motion and see whether people like it.
I agree that ultimately we need to agree upon and implement market-aware tactics on maintain the peg, but this min-max limit as you call it is just a first step.