Even if Nu reduced compensation rate to 0 on the sell side those nubits will still be in some pools’ sell side, as they have no where else to go.
This has been discussed in the thread @masterOfDisaster started as a result of this thread. Discussion started from @henry here are very good. I hope @JordanLee can join in.
It’s amazing how compact you could outline the future of liquidity providing Nu should strive for!
Very true, the problem is that the Shareholder resist market driven dilutions. Ideally you would have a capped monetary incentive to burn NuBits when the sell side is too high across the network. When that is the case sell side liquidity should not be compensated and the funds freed up for that can be used to burn chunks of NBT. The challenge is to get this either captured in a motion and provide supporting tools for that.
In the mean time we might have to vote for this motion, although I’m still on the fence but motivated by Jordan’s recommendation to just try make small steps in the right direction even if not perfect. That is better than apathy indeed.
Well it is better to have a bigger buy wall than a smaller buy wall when someone sells onto it, I think.
Since Nu can always create NuBits if needed, I think we should always reward better buy side liquidity.
This is the current situation. We have too much buy side too, I feel. But since buy side liquidity is more crucial than sell side liquidity, we should first kill off some parts of the buy side.
Currently, we have 83k (buy) and 99k (sell) for 5k daily volume, so way too much sell liquidity.
I might too.
There is no apathy. Fixed cost ALP are in the test phase. They will help determine compensation rates for liquidity providing - you can just read it from the amount of liquidity provided for the fixed compensation.
Nu will soon have an indication about the compensation rates the market demands.
Cutting down compensation on one side of NuLagoon makes trouble for the rest of the liquidity pools, because NuLagoon has an incentive to keep the sell side low and the buy side high if the buy side is getting higher rewarded than the sell side. NuLagoon is incentivized to drain buy liquidity from other liquidity providers if this motion passes.
You are right. Nu needs to develop this:
Thanks to the concept of seeded auctions it’s within reach.
Please have a look here: [Passed] Motion to regulate rules of fund management in NuLagoon before you consider voting for this motion.
It’s called a small step in the right direction while all it does is cutting down costs at one MLP at the expense of making trouble for the liquidity situation of all other LPs, e.g. all ALPs.
My gut feeling agrees with you.
But my apprehension tells me that having an equal compensation for both sides is better because it will make the market situation more clear.
With equal compensation of buy and sell side Nu will know when to increase or decrease NBT supply:
If you compensate buy and sell side differently it will be harder to know when and how to react.
You need a coefficient instead of only a threshold.
Equal compensation of buy and sell side allow Nu to know which side to seed - once seeded auctions are available again.
Nu needs to connect the liquidity “in the wild” with an ongoing adjustment of the NBT supply.
Unequal compensation rates make that more complicated and are only good for short-term reduction of costs.
I’d say Nu shouldn’t afford saving these few costs now.
Be glad that fixed cost pools very easily can adjust the sizes of buy and sell sides by increasing or decreasing the payout (assuming that the compensation rates, which LPs demand, stay the same).
The same recommendation I already wrote in @Cybnate’s reply:
Please have a look here: [Passed] Motion to regulate rules of fund management in NuLagoon before you consider voting for this motion.
Both you and @Cybnate have great power: you offer data feeds.
With great power comes great responsibility 
A call to NSR holders.
In addition to (or instead of…) voting for this motion and dictating a business partner conditions, consider trying something different to reduce costs and improve liquidity service in a more fair and sophisticated way.
Make fixed cost pools a reality!
Vote for this motion:
If you missed the discussion, I urge you to have a look here:
Can the concept of Fixed Cost Liquidity Provision Compensation Scheme help us reduce the oversupply of sell liquidity of NuLagoon and all ALPs in general?
EDIT: I think I already got the answer below
But we could do the same (naively?) within the current ALP scheme (Fixed Reward) by decreasing the sell side daily rate reward, couldn’t we? Which would bring back to OP’s motion… 
Let me reformulate my question: To which extent it would be much easier and fairer and more transparent in case of Fixed Cost ALP (newly proposed scheme by nagalim) compared to Fixed Reward ALP (current scheme derived by creon) when it comes to adjust the liquidity provided on each side?
I doubt the power is that great and it shouldn’t be the case. I don’t think it is a good idea to support this motion. I agree with MoD here. The route to fixed costs is a better one and therefore I will support Nagalims motion to experiment with fixed price instead.
However I still have an uneasy feeling about our current liquidity costs. That is clearly not sustainable given the current network utilisation. Will certainly revisit this motion when other attempts to reduce liquidity cost are delayed or fail in the next 2 months.
Which is a good idea.
Nu continuously needs to track costs and strive for more efficiency.
Accounting is still one of the rather blind spots of Nu.
I hope that the liquidity costs are reduced by that time. This hope is based on fixed cost compensation being tested, ALP integration in NuBot is being prepared, the parametric order book is almost here - just to name a few major improvements that help reducing liquidity costs.
Nu will soon pay less money for the liquidity that has a small offset and some more money for liquidity with some more offset. The peg will be safe, arbitrage risk for LPs is reduced, the liquidity costs will decline.
Add competition for the fixed cost compensation to the equation and you have Nu’s liquidity situation in a way better shape than it is now.
After that has been accomplished it’ time to get seeded auctions running to tie tier 6 down to tier 1 to 3.
There’s a lot of work to do, but all is moving in the right direction.
NuLagoon will be one of the competitors for liquidity compensation soon, which I consider more fair than just cutting down costs by reducing compensation for sell side liquidity at NuLagoon…
If NuLagoon works efficient enough - in relation to the market - everything is fine.
If not, it will have a hard time, but by more efficient market participants and not by a business partner which dictates new conditions.
Since Nulagoon’s operators can control exactly how much fund is exposed to BTC volatility, it is in a better position to improve its service by implementing an insurance for its customer liquidity providers. MLPs can have many advantage over ALPs.
Hi @cryptog
Here are the details for the Motion Vote on 5a37c1d4abadffbded0ebbdfedb40cbfa68a49ef:
##5a37c1d4abadffbded0ebbdfedb40cbfa68a49ef
Blocks: 2461 (24.610000%)
Share Days: 921481426 (26.678310%)
Because this is not close to passing and is no longer receiving additional support, it is reasonable to unpin it, especially since there are so many other pinned topics.
I still think this motion is a good idea. In light of the powerful affect our first share buyback in the amount of $2500 had on share price, we can understand the importance of holding down costs.
It has been criticised because it would make the peg somewhat asymmetrical. There are other factors already at play that make the peg asymmetrical. A preference to avoid the volatility and additional risk of BTC appears to be causing the sell side (where NuBits are used) to be favoured at the current time. Therefore, a counter measure would increase liquidity wall symmetry. While fixed cost liquidity is an exciting innovation that is likely to reduce liquidity costs soon, we have every reason to pursue as many cost cutting measures as practical.
How about flat reduction of NuLagoon to $4000/month or $3000/month.
This motion was just ahead of time and in addition I doubt that treating buy and sell side differently is the right way.
Nu needs to lower the liquidity costs. That much is sure.
But before this can be done reasonably, Nu needs to know how much liquidity it can get at an exchange it wants to support with X liquidity.
It would be a bad move to lower compensation before it’s clear that the minimum liquidity Nu wants to have there can be purchased with that compensation.
I agree our current liquidity provision is too much compared to the actual use of NuBits. That is why we need to decrease it. I would be in favor of decreasing the sell side liquidity across all ALPs and MLPs and not only NuLagoon.
Maybe we need a motion for all ALPs and MLPs to lower the liquidity cost with 20%. Just to make it an even playing field and still achieving the liquidity and cost reduction. The ALPs can lower the caps on all their pairs accordingly and NuLagoon can lower the monthly cost.
I think we do need such a motion and 20% seems not too much not too low.
I would favor such a motion.