Tier 4 itself is somewhat easy at this moment because, in a sense, the tricky part would be tier 3. Tier 3 liquidity is still pretty much centrally managed off-exchange liquidity, so you can definitely know addresses beforehand.
Thus in terms of liquidity, this multisig management of tier 4 funds is something like this: we watch tier 3 funds (off-exchange liquidity) and decide whether to add . Tier 4
This liquidity can be provided by custodians not dedicated to liquidity operations. A present example are the proceeds of NuShare sales. They are intended for operational and development expenses, but can be used to support the critical function of liquidity provision as needed. When these funds are used for liquidity, they are exchanged from one type of asset to another, but are still available for their original purpose, such as development. These funds can be promoted to tier 3 in hours and the cost is exchange rate risk.
So Jordan intends that tier 4 funds are some form of operating budget for running the network. For liquidity all we need to do is (1) watch liquidity across tiers 1-3 (2) inject tier 4 funds to tier 3 as needed. Tier 3 is already some kind of buffer, so we don’t need very swift action - 12 hours might already be feasible to rotate through multiple timezones. There are many issues in coordination here, so I expect it to be a lot of work - especially if we want to move further into decentralized management of tier 3 funds, but all that can be more thoroughly discussed and implemented by the selected team.
I think it’s more.
What about the handling of the NBT that are received for the BTC that buy side custodians promote to tier 3?
Do they just end up at the sell side custodians?
Up to what threshold?
Will the NBT be burned and will NSR be granted to sell them for BTC and fill tier 4?
How will they be sold for BTC?
From a process point of view, it would be the most sophisticated approach to effectively use the tiered liquidity model like a waterfall model (except I’d like to ignore tier 5 for the time being):
If tier 1 funds are below a certain threshold
fill tier 1 with funds from tier 2
If tier 2 funds are below a certain threshold
fill tier 2 with funds from tier 3
If tier 3 funds are below a certain threshold
fill tier 3 with funds from tier 4
If tier 4 funds are below a certain threshold
fill tier 4 with funds from tier 6
If tier 6 funds are below a certain threshold
fill tier 6 with grants
This works for both sides (buy/sell; NBT/NSR).
One of the most sophisticated ways to use tier 6 for filling tier 4 might be seeded auctions, which I never get tired to advertise until somebody comes up with a better idea.
The exact management of liquidity funds are not the direct responsibility of the signers. That said I didn’t think this through - basically the only tier 3 we have is given by NuLagoon (and perhaps also Jordan?).
So currently it’s just a matter of depositing to NuLagoon, and there’s no way around it yet; we still need people dedicated to moving funds around the top 3 tiers. If we want to decentralize tier 3 and above, we probably need to wait for BCE. I think that’s why Jordan can only give up tier 4 to us - it’s more ripe for decentralization.
In my opinion, the top priority is to be able to actually form a group, make some multisig addresses for the funds, and making sure nobody can steal money. All the remaining terms shall be discussed by the group under higher engagement that we’re seeing now, and the group should aim to expand their operations beyond just depositing to NuLagoon.
I’m not sure of @tomjoad’s approach of posting one motion to select the entire team. In my experience lumping several things in a motion is not very good for consensus. However, very few people seem interested in my own motion either. That’s fine, but I hope somebody (like you) would try the same as I did.
Why wait for that? What does BCE offer which Nu can’t resemble?
Funds at BCE are always held in multi signature addresses of foreign blockchains. With BCE there might come a future in which the difference between tier 2 (on exchange, but off order book) and tier 3 (off exchange, off order book) ceases to be. OP_CHECKLOCKTIMEVERIFY might make it attractive to keep funds in BCE multi signature addresses if the funds are a certain time automatically transferred to a deposit address.
No need for tier 3 any more!
Over tiers 1-3 Nu only has indirect control.
Tier 5 and tier 6 are obviously already fully controlled by NSR holders (not true for FSRT, though).
Tier 4 is the only tier that is directly controlled by Nu which isn’t under direct control of NSR holders.
I agree that from a democratic perspective a slate of candidates is less desirable than voting for each candidate individually, and I’m glad you submitted your name individually to see shareholder reaction.
The difficulty in this context though comes from the requirement to establish signing parameters and governance without a centralized authority. We are not electing politicians to Congress where established rules and procedures are in place. For instance, how would shareholders know how many signers to vote for? What proportion of signers will be required to confirm a transaction (4-of-7, 5-of-7, 6-of-9, etc.)? What happens if one signer is elected for 1 NBT/month compensation, but then threatens to abandon his duties if another signer is elected for 100 NBT/month?
In my mind it seems simpler to initially elect a group of qualified shareholders who can then discuss the many different operational issues that will need to be decided, rather than requiring each signer to answer questions in advance about how they intend on acting in the position. We may risk decision paralysis if we require shareholders to decide those variables on the fly. Once those rules and procedures are established though, I think it will be easier to elect individual signers.
Not 100% true. For example I have some funds held in my wallet and I’m willing to put them in an ALP when liquidity is low on Nu walls. That fund is tier 3 although no one knows about it and the amount could change. My point is that it exist. And with fixed cost pools, the reward is high when liquidity is low, more of such fund will be incentivised to jump in when needed.
I appreciate your taking the initiative. It’s just that I think it’s without basis to evaluate and vote without knowing the signers’ duty.
I’d rather think Tier 3 is something shareholders believe they can somewhat formally rely on. I can’t say I vouch for NuLagoon (no offense - just by the principle of decentralization) being a formal outlet but it’s so far the most reputable destination for Tier 3.
Nonetheless I guess a lot of people would be willing to jump into NuLagoon when buy-side or sell-side is low (and interests are set high enough), so my consideration sending funds to NuLagoon is probably somewhat redundant. There might be better ways managing the flow from tier 4 to tier 3 instead of directly injecting funds.
It’s just that I think it’s without basis to evaluate and vote without knowing the signers’ duty.
I’m not mainly complaining about support, but a lack of discussion about the general theme, over there or over here. How much work do we want from maintainers of tier 4 (not just signers) to justify any sort of payment? You are right that the exact duties are not clear; but I say it’s even worse, even the most essential components aren’t established (no GUI for multisig, need some scripting to make it work with RPC, need to make the script work for dummies), there’s a demand of effort even before day 0. How much work is needed to establish the most basic workflow, and how much do shareholders think it’s worth?
Most people in the community are too hesitant to even talk about a price - what they are willing to pay, in what circumstances, or even whether they are indeed willing to pay. And I don’t like a motion for free signers to start hashing without a good attempt to answer this 0 as given the current situation, it might just pass.
In my mind it seems simpler to initially elect a group of qualified shareholders who can then discuss the many different operational issues that will need to be decided, rather than requiring each signer to answer questions in advance about how they intend on acting in the position.
With some thought this sounds fair, but I think in practice you would be putting up a motion draft that needs to be changed all the time, or stalls while people don’t want to point out on the forums which candidates they don’t like.
This issue has starved for some time. While many raise concerns about defining the duties of a signer, it’s probably a chicken-and-egg problem that the role is shaped so slowly because we don’t have enough dedicated minds on the issue (and Jordan didn’t explain what exactly he has done with Tier 4 so we can copy).
There are two things that should exist before any tier 4 group can start functioning beyond forum discussions.
A workflow to enable the action of initiating and signing multisig transactions. @masterofdisaster outlined some practical issues on coordination that we should pay attention to. A basic forum-post-based workflow can be hacked together with a few scripts and the multisig documentation, but in the long term some more dedicated effort and infrastructure are needed.
A single, stable example of using Tier 4 funds to supplement liquidity. Like injecting funds to NuLagoon. Or putting money into some kind of community-owned exchange account, if such thing can be maintained securely. Or supplying urgent grants to ALPs that can’t be covered by custodian grants in a timely manner. Or seeding automated NSR/NBT auctions.
I think this can define a baseline on how an early multisig group can be formed.
This doesn’t have to be defined before the group is formed. Actually it will take a very long time and iterations before the strategy can be worked out. I think the urgency is in getting a group of interested and committed community members together in case things happen and we don’t even have the mechanism ready.
Reasonable. I guess for the time being tier 4 is going to be a piggy bank that’s just used when called upon, and has a somewhat lower threshold of approval than custodian grants.
My feeling is that tier 4 hasn’t been used in the last year (right?) so Nu will likely have many months before it is used. We need to setup the nuts and bolts of the tier 4 fund movng mechanism (specify the group’s action manual, select the group, get them trained …) and dscuss the fund use strategy llike any of the topics.
That’s easy to say, but proper implementation will take a long time. We need to be on our feet without it, not put all our eggs in one economic basket. We have nsr grants, yet all we’ve passed has been nbt grants since Nu 2.0. That tells me that with seeded auctions Nu still would not pass nsr seeds, so we would effectively end up performing share buybacks.
I agree.
Because of that it’s better start sooner than later
It depends - if seeding NSR (to counter NBT oversupply created by the NBT grants) depletes tier 4 NSR funds, there’s only one way to refill them: NSR grants.
If continuous use of NBT grants brings more NBT on the market than is considered healthy (not everybody might want to receive NSR and prefer NBT instead - that’s a challenge Nu needs to deal with!), a way to remove them is seed NSR in seeded auctions and burn the retrieved NBT. Or just buffer them on tier 4 sell side, if there’s some space left - it depends on the agreed thresholds of tier 4 funds…
Those NSR for the seeded auctions need to be purchased before on the market for the BTC that is held in tier 4 buy side or granted on tier 6 (current situation).
Either way it won’t matter whether grants are NBT or NSR type - at least not if seeded auctions run with sufficient participation, because seeded auctions using tier 4 liquidity can even it out. If tier 4 gets depleted below a threshold, tier 6 needs to be used to refill it.
I think it might be good to have some NSR (in addition to BTC) in tier 4, because it would make dealing with seeded auctions easier and not dependent on tier 6 grants and NSR liquidity in NSR/BTC trading pairs (possible future situation).
