If Nu provides liquidity on B&C, it will be essentially paying the BKC fee to provide a service for B&C. Are we in a unique position to nullify that fee solely for liquidity providers?
I will start with a number of assumptions that I hope to relax later:
- BTC/NBT is the only pair on B&C
- Everyone knows and agrees on the BTC/USD price
- BTC has 0 volatility
- Nu and B&C agree 100% on what liquidity provision is
- ‘Liquidity provision’ is defined by having up to 1000 nbt total orders up at all times on both sell and buy side at 0.2% offset from the price.
With these assumptions, we can begin going through what a liquidity Tx would look like. First, an LP gets money together and tells Nu and B&C that they want to provide, exactly how much, and when. This could be done nicely by submitting the unsigned BKC order to Nu and B&C for approval. Once it is approved, the LP signs and places the order. Then, Nu pays the LP’s reward and B&C pays the fee.
What would the BKC order look like? It would of course be btc or nbt at 0.2% offset from the price, but would there be an OP_return on it? Nu could pay a certain reward for a certain return length, despite whether the order gets bought or not. Or, Nu could pay a small reward at the start, then the full reward based on time of provision once the order is filled or the return time is hit.
Am I on the right track so far? I haven’t even begun to lift assumptions yet.