[Passed] T3 Trusted Custodianship: @Nagalim - Second Attempt

[mhps]

I make sure not to trade during volatile 15 min intervals,

I wasn’t clear. I mean when you hold BTC, how do you avoid, assuming you want to, losing value when BTC prices drops.

[masterOfDisaster]

He doesn’t, Nu does.
Nagalim is handling the funds on behalf of Nu. It’s Nu property he’s dealing with.
They are just as prone to BTC volatility as T4 funds still are (we need NuSafe!)

If this were a collateralized custodianship, it could change that, if the contract were made regarding $x in BTC.
A collateralized custodianship about x BTC would be different and keep the volatility risk at Nu.

[mhps]

OK. I was confused for a moment. Somehow thought he bought his fund from NU.
That just made me think of another kind of custodian – borrow fund from Nu against collateral and use the fund to earn profit from LP subsidy. Nu get more liquidity out of it.

[masterOfDisaster]

borrow fund from Nu against collateral

That would be version 2 (“collateralized custodianship about x BTC”) of what I explained above, right?
If that’s after your fancy, make a proposal!

[mhps]

collateralized custodianship about x BTC

not quite but close. if one has btc he can be an LP using his btc, w/o going to Nu. the collateral should be other coins – ppc, bks, nsr…

[masterOfDisaster]

If somebody uses from BTC from the own pocket, the volatility risk remains at him(/her).
Receiving BTC from Nu in a collateralized way (to keep the volatility risk at Nu) of course requires something different from BTC - PPC, BKS, BKC! (as soon as they are available), NBT?

If you want to put the volatility risk on a T3 custodian (by making him use own BTC funds), the compensation will likely be far above the compensation Nagalim requests.

I see a purpose for both models.

[mhps]

I wasn;t thinking of reducing volatility risk about the other kind of custodian. I thought it’s just a way to use other funds to increase T1-2 liquidity

[Nagalim]

That version (collateralized loans) is very similar to distributed reserves, i think.

[masterOfDisaster]

It has a similar effect.
One of the reasons why I included USD stable tokens like BKC and NBT.

[Nagalim]

If we think about who pays the fee when I send a customer NBT, it should be obvious that I should pay the fee because it’s just Nu burning its own NBT, no big deal. However, when I send BTC it gets to be more complicated. How much of a premium fee do I send? Does Nu pay for it, or should the customer?

For now, I am having Nu pay the fee, and I’m using a 0.0002 BTC fee.

[zoro]

0.0001 is enough like Poloniex does

[Nagalim]

I thought 0.0001 was the minimum, don’t we want a little bit of priority given that we’re making thousand dollar transactions and not just spam?

[zoro]

I really don’t know how faster it would be with more fees. It depents on network congestion.
But i don’t have any complains when i withdraw from Polo.
The trick here is (for you, T3) to sent BTC directly to an exchange’s BTC address thus with 1 or 2 confirmations
the funds are ready to fight for the peg

[Nagalim]

Whoever is voting for this as a hash should stop that.

[Nagalim]

So I’ve been thinking pretty seriously about increasing the bar for withdrawal while keeping everything else the same. Alternatively, I could increase the withdraw wait time to 48 hours or something similar. I realize people probably don’t really know the intricacies of what I’ve been doing here because it’s behind closed doors by design. However, I think anyone can see that some of my interactions with FLOT haven’t been completely useful. It’s difficult to tell the future and predict whether I will need the funds tomorrow or not. I’m open to suggestions.

[masterOfDisaster]

So I’ve been thinking pretty seriously about increasing the bar for withdrawal while keeping everything else the same. Alternatively, I could increase the withdraw wait time to 48 hours or something similar.

I don’t see a problem increasing the withdraw wait time even far beyond the 48 hours.
While a more frequent withdrawal decreases the risk Nu needs to face, it increases your efforts and in turn the costs of your operation.
I see it similar to ALP vs. Nu funded NuBots: does Nu want to buy a kind of insurance or face a risk?
You know my answer already.
I dare say withdrawing once weekly would be fine as well.
You already have some efforts when making deals although you get a tiny compensation for that from the spread.

I realize people probably don’t really know the intricacies of what I’ve been doing here because it’s behind closed doors by design.

Do those activities need to be kept behind closed doors?
Would it help to make them publicly available or would that hinder business partners from dealing with you?

However, I think anyone can see that some of my interactions with FLOT haven’t been completely useful. It’s difficult to tell the future and predict whether I will need the funds tomorrow or not. I’m open to suggestions

Is it wrong to say that each time you made deals, you saved FLOT from efforts?
Based on that assumption I consider your interactions very useful!

[Nagalim]

you get a tiny compensation

I haven’t made any fees off this service yet. Every trade has been at 0.1%, which goes straight to Nu. With a 0.4% offset, for example, I would make 0.3%. I’m not there yet though, still doing proof of concept and every trade I’ve made has made the liquidity more balanced to I’m happy to do it.

Do those activities need to be kept behind closed doors?

Yes, protect customer identity.

saved FLOT from efforts

The biggest thing I’m doing is securing a relevant price feed for both Nu and the customer. The second biggest thing I’m doing is allowing FLOT to sign at leisure. Most of the time so far 1 trade = 1 FLOT request. However, in my opinion this is an indication that we need more T3 providers to absorb more trades per FLOT request.

[masterOfDisaster]

However, in my opinion this is an indication that we need more T3 providers to absorb more trades per FLOT request.

Or an indication that the total T3 provider funds need to be increased.
With you still being the only T3 provider that means: more funds under your control.

[Nagalim]

more funds under your control

But I don’t have a lot of motivation to do this unless my involvement in pools is of a similar size. That’s why I am hoping that some LPs step up as T3 custodians and start trading with themselves. I’m just not sure it’s a theoretically sound thing to give someone more credit than they ask for.

[Nagalim]

If @Nagalim holds >$4,000 on either side of the pool for longer than 24 hours, funds will be moved to a Tier 4 address to bring the pool back to $2,500.

I’m considering adjusting the 24 hours to read 7 days and the $4,000 to be $5,500. Note that this will regularly leave my operation in a state where there is >$5,000 total liquidity, sometimes as much as $10,000. However, I would urge shareholders to consider before requiring collateral for this increase of operation two points:

1. I have already performed 11 trades, most of which were at the max of my volume, and most of which required an individual T4 interaction. T3 is much more useful when it can do several trades per FLOT txn.

2. Gateways hold much more liquidity in a more dangerous way and have not yet required collateral. Before using this motion as an opportunity to change precedent, please realize that current operation is not terribly efficient and it wouldn’t be great to be stuck with this iteration of the T3 contract.