Southexchange liquidity support thoughts

Liquidity Pools
#1

As Bitcoin.co.id (Indonesian exchange) is no longer supporting NuBits, I thought it would be a good idea to focus on the South American market and support Southexchange.com. I understand a wrapper for this exchange is underway.

Given that I’m running the risk of being marginalised now we are in the process of adding HitBTC, I like to test the waters first before proposing a grant and discuss whether the Shareholders think it is worth supporting this exchange on the NBT/BTC pair.

My opinion is that it would be good to support some niche markets and sow some seeds in what potentially could be a large market. I would suggest to start small with just $1,000 on each side (total 2,000 liquidity). Assuming the current rate of 0.3%/day on average that would cost about 6 NBT/day = 180 NBT/month. I would still value the bid side higher (0.35%) than the sell side (0.25%) similar to the NBT/BTC pair on CCEDK to encourage LPs to balance the pair e.g. through fiat pairs on other exchanges.

Having LiquidBits running this pair beside the other pairs wouldn’t result in additional costs. The server can support 4 or more currency pairs without further upgrades. There might be a ceiling in the number of users/bots supported but I haven’t seen any indication of that with 15 bots. I might also consider reducing the NBT/BTC support on CCEDK to offset some of the additional liquidity provision costs.

Interested in your thoughts or competitive proposals.

8 Likes
New Argentina-based exchange SouthXchange adds NuBits base-pair trading!
#2

I would love to try to transition to the competitive alp model where we propose individual motions for each pair well in advance of when we need the funds so that shareholders do not feel pressured to pass grants or have operations shut down.

Also, I’m hoping we can get liquidity rates below 0.3%/day. However, new pairs are not necessarily the place to try that. With $1,000 targets, I’m fine with whatever cause it’s a low cost proposal.

3 Likes
#3

I think it is a very nice proposal.

#4

What about trying the fixed payout model?

Instead of paying different compensation rates for targets of the same amount, you could consider offering
105 NBT (0.0035 * 1000 NBT/30 days * 30 days) total payout per 30 days on buy side and
75 NBT (0.0025 * 1000 NBT/30 days * 30 days) total payout per 30 days on sell side
distributed between all LPs on the pool.
Especially the low amounts make it attractive to try the fixed payout there.

This will make it easier for Nu to figure out which exchanges and pairs require which rates for LPs to contribute there.
And it will make it even easier for Nu to compare different pools.

In the end the only two values that will be important for Nu when considering grants are the payout volume that is granted for buy side and sell side!

#5

It’s too early. I’m sure @cybnate would rather wait until the software has been tested by at least nupond if not nupool as well before she really starts thinking about using it. I have no qualms about that, I think it’s important we keep institutional integrity by having some resistance to changes in something critical like the server code and reward system.

#6

For new exchanges such as hitBTC and Southexchange there is a significant exchange risk which can only be lowered usually by test of time. Recall how exco.in, a new exchange proud of and praised by peers for its technical innovation and enthusiasm, lost most of its coins because of rather low-tech operational mistakes.

I’d put ~7% premium on exchange risk per month for these new exchanges. The OP has 1000NBT on each side which is good. I suggest eventually any new exchange doesn’t have more than 10% total peg liquidity. I also suggest @willy put exchange age information to the pool page to infor LPs.

[Passed] Grant to provide liquidity using NuBot on hitBTC - the begin of modPuddle
[Passed] Grant to provide liquidity using NuBot on hitBTC - the begin of modPuddle
#7

I feel like this is the responsibility of the pool operators.
Users have to visit their website or announcement thread anyhow, in order to get the server details. I think this is the right place for a warning.

#8

Probably right, although the pool op may not have an incentive to warn people.

#9

Mmmh. I’ll think about this.

#10

Fine to run an individual grant, but given the cost of this proposal I’m not sure about that.

I think I have to start with that given the risks with a new exchange. Happy to adjust downwards when Nu-pool moves in the same direction.

Thanks :smile:

You’re right, we should probably experiment with this beside the current payout method supported by the ALP.

That is right, but good to be advised on perceived risks which I can publish or refer to. After all I’m also a Shareholder and like to ensure we keep happy and informed customers.