I need to ask further questions regarding this. Nu can get a better price than exchanging big amounts at the open market, but the price will still be worse than the best price (market boundary price, if it can be called like this) Nu could get for comparably small amounts, right?
At least that’s my take why this auction is so important and why it offers an incentive to participate:
both Nu and other participants get better prices than they’d get if they wanted to trade a similar amount at exchanges
Nu will have a slightly worse price than market boundary price
other participants will have a slightly better price than market boundary price
In the end both Nu and the rest of the participants are better off participating in the auction than using exchanges.
Even with Nu’s exchange rate being slightly worse than the boundary price it’s better than the exchange rate would have been after Nu had dropped the NBT or NSR at the (thin) market.
As Nu is better off using the auction than exchanges, it has an incentive to participate.
The participants except from Nu have an even better incentive than Nu, because they will not only have a better price than when using exchanges, they will also profit from Nu participating and moving the auction price point.
Each participant can win something and lose only the transaction fee (allow me to ignore the already mentioned risks for now); as long as the participants stay close to the price point no big difference between sent and received NBT, NSR will occur.
Participants far from the price point will exchange NBT and NSR and be happy about the deal - at least they should be
Not necessarily. First off, the strong argument that most NuCrypt holders would rather trust Nu elected officials to handle NuCrypt coins rather than third party exchanges. Secondly, the medium strength argument that there are much smaller fees in this process. Thirdly, the weak argument that a the trade is direct from NSR to NBT the leverage is much tighter than going NSR>BTC>USD>NBT like must be done to make the conversion on open exchanges now.
However, the trump argument is that in this kind of an auction liquidity is almost guaranteed. Because of that, we could easily see whales that are more comfortable trading on this venue than an open exchange. By pushing a bigger seed, we may see more competition arise than we ever would by trying to sell a small amount on an open exchange.
Try putting up a small nsr market order on bter in the middle of the spread and you’ll find it takes a long time to get eaten. Put a big market order and it will get snapped right up. A similar concept applies here, but it is intensified by grouping orders in time and following a different market procedure.
I agree, not only is very volatile, the spread is also wider than usual, so that also bid/asks value are not very helpful. (I’ll open a new thread on this soon).
this would be a price computed by Nu that it suggests auction participants use if they want the ‘going price’
So is a sort of suggestion that will be displayed somewhere during auctions? mmm ok. What if we display more than just one value, with a short explanation? Example :
Maybe someone can get custodian fee to sell certain amount of NSR and NBT in every auction period at e.g. averaged market prices weighted by volume. It’s basically pegging operation to provide liquidity. The fee is paid for the work and exchange rate / attacker risks.
@desrever Yah, using more stats is kind of where I was headed. This is more than just a display, this is something of a suggestion for the automated bots. Currently, I am intending on releasing an update tonight (I’m going away for a week starting early tomorrow) in which a participant can choose their price from 3 options:
Nu Suggested NSR/USD price
Previous Auction Close NSR/NBT price
Any Static Number (float)
So the Nu suggested price will be somewhat realized by certain bots at certain times, so it is necessary to have a single source. However, I personally think each user should make their own trading bots, so it might be a good idea to supply a basic set of tools and let each person assemble their own concept of what the ‘going rate’ is.
@mhps You’re basically talking about Nu seeding both sides. We can do this if people really want to, but I think it is wasteful and unncessary.
The ‘Dominant Auction’ risk is only a risk if the seed is small or nonexistant, as is currently the case. If there is a seed, market participation should be a given and stablizers are less important. If you want to seed both sides a small amount to start with, then slowly back off on one side and grow the other till we’re up to speed, I would be down with that.
I am taking the auctions offline indefinitely, please do not send additional funds. When I come back online, I hope to have upgraded auction software, website, upgraded wallet to Nu 2.0 and possibly an upgraded server (I’m having memory issues, the usage seems on par with running a tllp). Possibly upgraded participant software as well, who knows.
If you had announced to take auctions offline, because of lacking interest I would have been really desperate.
But I’m glad you only took it offline to make some upgrades
I think this type of auction - especially once it has more participation and can be held as seeded auction can do Nu a big favour.
It would be a good way to bring NBT to market once the market needs to be provided with additional liquidity.
If @JordanLee’s projection stays true there will be need for NBT grants:
Having the custodian participate with the granted NBT in a seeded auction would be a direct way to do a NSR buyback with the issued NBT.
It can be assumed that some of the NBT that are distributed by this auction will be used for TLLP operations or NuLagoon and are made available for liquidity this way!
All it requires is some more participation!
…the alternative is to sell the NBT at an exchange at a risk we already know from February this year…
Doing this auction instead is almost free of counterparty risk!
Theoretically, if we used provable burns and performed the auction with wallet software (like how grants are performed) then it truly would be 0 counterparty risk. With this implementation, I am the counterparty risk, as I could walk away with the auction funds at any time (though all participants would of course know when they failed to receive their funds).
As for a custodian participating with granted funds, that is exactly what is meant by “seeded”. The auctions are not meant to be a way for the individual custodian to balance their checkbook (though that is a very useful side effect). The main purpose behind seeded auctions is to balance the entire Nu economy (sell vrs buy side) on a global scale using a pseudo-continuous burn method.
The auctions were taken offline for purely technical reasons and I hope to make many improvements such that forum readers will feel more comfortable participating once it comes back up.
Right. I adjusted the sentence. But in difference to centralized exchanges the auction software runs on a server nobody knows the IP address.
So you are still the counterparty - in case you’d walk away with the funds - but this auction is providing so much less attack vectors than exchanges do that it’s worth developing it further.
The custodian that receives the grant poses a counterparty risk as well. Completely without counterparty risk this is simply not possible. It can be mitigated by spreading the control over funds, but can’t be completely eliminated.
Once BCE is complete, I hope (NBT and NSR) grants can be issued at multi signature addresses.
That would be a big improvement, although I’m not able to say whether that’s possible.
@JordanLee, can grant addresses be NBT or NSR multi signature addresses?
It should be possible to tie the auction to NBT and NSR multi signature addresses though.
Only I’m not sure how to handle the payouts.
A kind of distribution list would have to be created for each auction - pretty much the job your auction software already does.
As the participating transactions are visible in the blockchain it can be verified how the distribution needs to be done.
The reputed signers of the auction addresses would then execute withdrawals to the participants’ addresses.
You’re like a train coming in to station. 90% of the auction software is simply analyzing the block chain and finding that distribution list. 5% is the participant software (including price feeds), 1% is updating the website automatically, and 4% is registration (not yet implemented).
Multisig is totally viable, though it would be beyond my skill range. The auction transaction (I.e. derivation of the distribution list) is 100% verifiable using the block chain if we have people register their nsr-nbt link by signing some kind of ledger with their private keys (this does not need to happen on the block chain as there is no concept of order or time).
What I’m getting at is that we could take this beyond multisig and write it into the core protocol. Instead of sending funds to an auction address a participant would do a special burn event. At auction close, all funds on the ‘distribution list’ are created fresh on the block chain at the linked address. At that point the seeding is native (the entire auction becomes a custodial grant event) and must be controlled via voting on the blockchain (which is only 1 additional bit per block).
Nope. I’m working on logging, but haven’t done anything in a while. My work on the ALP software is really really helping me understand how to code this better.
I’m glad that I could promote this idea, because I consider it the missing link between NBT and NSR.
At the moment there are only workarounds available to bring NBT to the market or remove them, typically manually held auctions that lack continuity and transparency and without rules that enforce such an auction - they are done, when Nu feels like it should…
Seeded auctions could pave the ground for a tier 6 liquidity management that is embedded in a framework with defined guidelines.
Guidelines like:
tier 4 multi signature custodians seed granted NBT in auctions if defined conditions are met (like network wide sell side at below x% of buy side (at average) in the last y days) and distribute the z% of the proceeds as dividends (after the obtained NSR have been traded for PPC)
tier 4 multi signature custodians seed granted NSR in auctions if defined conditions are met (like network wide buy side at below x% of sell side (at average) in the last y days) and burn the received NBT
The interval of seeded auctions can be adjusted to enable Nu to react more quickly to changed market conditions at the cost of additional administrative overhead.
Tier 6 can then used to refill tier 4 - same story: framework, conditions, rules, etc.
You might notice that I omitted tier 5 - shame on me
Working on a recycle function to return unregistered funds between auction closes. That way participants can know for sure what the current auction balance is. It’s important for the gaming aspects of it.
I just wish I wasn’t so busy all the time. The list goes: recycle, set up bigger nuauction server, alpha testing. I’ll skip the website upgrade for now.
The recycle function checks txns with 10-90 confirmations in between auction blocks for any txns that have inputs that are not registered. If there is an unregistered send address the auction server will send the full output back to the first unregistered address it finds in that txn. I’m doing my best to make sure this cannot be exploited (ddos is always a concern).
The end result should be that any output at an auction address with more than 20 confirmations or so should be reliable as a submission to the auction. That means anyone can verify at any point in time what the auction price was about 30 minutes ago. This of course creates an unavoidable haze about the very end of the auction that can only be verified in hindsight, but therein lies the gameablility of the auction.
To help others grasp the gravity of this mechanic, let me give an example:
Participant A, Participant B, and Participant C all have registered address pairs. Participant A submits 10 NSR and 1 NBT at the beginning of the auction, which coincides with the market price of $0.1/NSR. Participant B goes fishing and submits 10 NSR, skewing the auction price. Participant C submits 1 NBT to balance the price again. At the end of the auction, during the last few blocks during which no transaction can be fully confirmed as being registered or not, Participant B submits another 1 NBT. Now the auction results are:
Auction price = 0.15 NBT/NSR
Participant A sells NSR for above market price
Participant B sells NSR for above market price
Participant C buys NSR for above market price
As you can see, Participant C gets the shaft for having been fooled by Participant B. However, if Participant B hadn’t’ve submitted at the last minute, Participant C would have been more than happy. The gaming done by Participant B and C here come from a very fundamental maneuver that C was making: Participant C submitted at a price not aligned with the market price and hoped the participation would be enough to make up for it. If Participant C had instead ignored the price and simply looked at the current auction volume, he would see 20 NSR and 1 NBT. By submitting 1 NBT, Participant C was drastically changing the amount of NBT in the auction. Had he instead submitted 0.1 NBT or 0.01 NBT, the price would barely have moved and he would be just fine. Participant A here is extremely vital and will be played by stabilizers in unseeded auctions and Nu/custodians in seeded auctions.
To Reiterate:
The benefit of the recycle function is not to know what the auction price is at any given moment, but instead to know what the auction volume is for either currency (NBT or NSR). The price can be changed at the last moment but the volume cannot be decreased if the submission was from a registered address (i.e. was not recycled).
Recycling also helps avoid participant error, something @masterOfDisaster experienced during one of the last auction tests.
Can anyone tell me if “listunspent” could ever return an output that I just spent via a “sendmany” that may still be in the mempool? I want to say the answer is no, because if I just spent it it shouldn’t return in the unspent list, but I’m not sure. I was hoping maybe someone might just know the answer.
Edit: lol, I totally have to do the recycling by forging a raw transaction, otherwise it won’t recycle the correct outputs. W/e, not that big of a difference between a manysend and forging a raw transaction anyway.
