I may be unclear. Indeed, both Pool C and D can be upgraded to ETP. Its just doesnot seem many extra features will be added, while there is cost to implement because pool C and D is bit more complicated than A
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We have done some minor text revise and corrected some typos. We also suggest that the “Specification Paper” is a good doc to read for anyone want to know how BearBTC/BullBTC work under the hood. NuShareholders please tell us any concern you may have.
We hope we can hash this propsal and kick off the project on next Monday.
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Nubits should be NuBits. You seem to consistently capitalise everything else properly, so I’m confused by why that’s consistently not.
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I’m challenged fully understanding this product. It appears a hedging product to me. It is also a considerable amount you are asking for. Total of 38,500 NBT.
Except this may appeal to hedgers what is the value for the Shareholders? I assume that are the transaction fees?
Can you give an example of how much transaction fees can possibly be collected by someone hedging a certain amount? Or maybe I should ask, how do you see the ROI for the NuShareholders eventuate? And what are your competitors? Poloniex?
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2 points i see:
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New pool. All deposits (bull and bear btc) represent liquidity in nulagoon. This is used to support the peg.
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Nbt transactions required to exchange bull and bear on nulagoon. While we don’t have volume based txn fees, increasing our txn/day via legitimate means like this is a very very good sign. Marketing and all that, but also harnessable txn volume when we do institute an efficient means of txn fees. Basically, network growth.
The idea is to have hedgers use trade instruments to bet on nulagoon instead of directly interacting with the market. T4 interactions take effort. Derivative markets are much easier to maintain.
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It’s an exchange that instead of using usd to settle bets on btc prices, uses nubits. One significance is that the users can transfer “fiat” as quickly as a crypto into/outof the exchannge, and the exchange won;t need to deal with fiats. @henry will the exchange allow lending among users for leveraged trading?
As for the price, it feels a bit steep considering that I am not clearly understanding the profit and risks. Does this expose NuLagoon to extra risks? If it turns out not to be profitable, can Nu have (some of) the source code after some time? If this is highly profitable, can Nu have a cut in trading profit? until Nu recoups its investment?
Regarding the value for the Shareholders
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Getting (much) more fund and much more steady fund (because of the longer close period) in NuBits liquidity operation while without pay more than 5000 per month according current motion or 150 per day according ongoing voting motion.
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Creating (much) more NuBits demand which comes from different type of people: A. speculators, who want to bet on the moving direction of Bitcoin with a relatively small cost. B. hedgers. who want to hedge the volatility risk of their Bitcoin assert. C. anyone who 's risk profile is between A and B. The demands aslo come from double sources. NuBits is not only the Cash or Fiat they trade, NuBits is also the back of the asset they trade.
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Increasing NuShare price. Because #2, more NuBits will be sold to meet the new demand, the money we get by selling NuBits will be put in the NuShare buyback and cause NuShare price to rise.
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Creating more NuBits transaction and consumption. All the activity to participate in ETP A, including purchase, transfer, redeem, buy, sell, cancel and so forth, will need to make NuBits transaction. The more NuBits is consumed, the less NuShare will be diluted when NuBits demand is drop at some time point in future.
Regarding ROI
Despite we think every promise of a exact ROI to NuShareholders is dishonest, but we share our visions on this project. Currently, there are 800k NBT in circulation. Most of them is used to trade with ordinary **"+1"**Bitcoin. After **"-2"**Bitcoin and **"+2.5"**Bitcoin (BearBTC and BullBTC) are introduced, we think it is a prudent expect to see them can attract a quater to a half of that. That means 200k - 400k new demand of NuBits, which definitely will contribute to NuShare price.
We don’t really have competitors. We built exchange mainly for the promotion BearBTC and BullBTC. we welcome Poloniex or BCE in future to list our product in their exchanges.
Regarding profit distribution
At the starting stage of ETP, the exchange fee is set to zero, NuLagoon will not make profit on it. However, it definitely will be profitable if BearBTC and BullBTC is succeed. If we charge exchange fee in future, half of the profit made by exchange fee will be shared by NuShareholders untill the 38,500 NBT of investment is recouped. We will add that term to the motion. Thank you @mhps for your advice.
Becase BearBTC and BullBTC are already leveraged products, the exchange do not offer lending features at the current plan.
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That is excellent.
Lending creates a lot of demand on the base currency as there is no risk for the lender except for exchange default, and it makes trader finance their trade much easier hence increasing trading volume.
Thank you for your advice. We will think more about lending and consider it in the future plan.
@henry, could indicate the timelines for the NBT grant for a), b) and c). Given that the Nu reserves are still shrinking some pro-active cashflow management would be more than appreciated.
A. First payment due: after the motion is passed.
B. Second payment due: after ETP A, BearBTC and BullBTC start operation.
C. Last payment due: after the exchange start operation
The exact timeline will depend on how fast the motion is passed and how well our develop and test work will go on. But the goal is to deliver our product as soon as possible. Considering the fact that some work already have been done in the past weeks, we expect 1-3 weeks between A and B, 2-4 weeks between B and C. If there is a clear sign that the motion will pass, we will be working at full speed.
In the time period between B and C, buyers and sellers can trade their asset directly with or without escrow. We also will open a forum thread as a marketplace to let traders publish their orders.
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We just hashed the proposal by using Daology. NuShareholders please vote:
###Motion Hash:
f24470e836ed480b3b5a39c4a7c1fe7df111cf3d
Proposal created with Daology.org by nulagoon for Nu
@cryptog, @cryptocoiner Interested in your position as data feed provider. I’m not feeling confident in my assessment to vote for this and on the fence whether this major investment is justified. This is mainly due to my lack of understanding of complex financial products like derivatives and their business models.
I will add this to my datafeed when either of you and MoD’s datafeed will add this as I would trust your combined assessment more as mine alone with this one. Hope I’m not putting too much weight on your shoulders 
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I haven’t made up my mind about that and don’t want to get that assement influenced by the doubts I have regarding the efficiency (value Nu gets for the money) of NuLagoon.
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I appreciate the proposal.
2 questions:
- How much NBT demand would this ETP create exactly?
- What would be the role of the nulagoon tube once ETP establishes?
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Can’t know. There’s 2 effects. Firstly we get more NuLagoon liquidity because a new service draws new people. Secondly we get an nbt use case. While the network fees are still very low, having a reason for someone to buy and hold nbt gets them into the system (often downloading a wallet and all that).
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The tube would still work the same way. ETFs are about taking bets on btc price over the next month or so. The tube is about making a trade right now at the current price.
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Thank you for asking. Nagalim said exactly. Just a few points to add.
The Tube will just work in the same way and will still be important by acting the role of spot product (+1x Bitcoin) trading and settlement. On the other hand, the establish of ETP A will enlarge the NLG Pools, and thus stengthen the liquidity support on the NBT/BTC pair on the Tube, and let us have more room to support more trading pairs on the Tube in future, such as NBT/ETH.
Regarding the newly created NuBits demand, we had a very rough estimation here:
Generally speaking, in an economy, the size of financial assets people holding and trading is much more than the size of cash in circulation. The volume of derivatives trades is much more than the volume of basic securities trades. Although the exact number of NBT demand can not be determined at the moment, we believe that ETP is the right direction, which NuShareholders should support, and will be rewarding. Moreover, ETP creates a secondary asset market of NuBits, and establishes a new business framework, Its potential should not underestimated, for example, it can evolve in the future by expanding the products to link to other assets such as NSR, or even crude oil and SP500, and by upgrading the technical features with latest techs such as PeerAsset.
P.S.
As poeple can tell from the name, ETP is designed on the idea of ETF(exchange-traded fund). we made some fine tuning to fit NuBits better. the following are good references for ETF.
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I made a comment regarding ETP here. We understand the mechanism of ETP is a bit complicated. But most of the idea just comes from the most popular financial products in our real world such as ETF, close-ended funds and structured fund. They are very mature, powerful and have been proved working effeciently for decades.
Please vote on this motion, let NuLagoon start working on its next product. If you have questions or concerns, just let us know. Not voting means voting against.
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I am still studying the value of this proposal for shareholders.
Maybe we need to stimulate drastically the demand for nubits via the only market we currently have, which is the trading and hedging market.
It seems that this exchange will create demand for NuBits.
So in this sense, it is good.
However what is the drawback?
The cost is around 40k NBT.
But if what @henry said is true, it could create 300k new NBT sales, and we would be way in the black here.
What is the likelihood for such sales?
What are the risks for Nu?