The massive NuBits trading volume we are seeing right now is a great advertisement for the Nu project, but is almost certainly a result of a group of clever traders scalping our inefficiencies in maintaining NBT/Crypto trading pairs. While NuBits has performed as intended (maintaining a $1.00 US price), it’s clear that scalping threatens the cheap liquidity being provided by KTm and Jaime. Several interesting solutions are being discussed on the forum, but in my opinion they are all stop-gaps until we attain a liquid NBT/USD trading pair.
The most logical solution to this problem is to convince a large USD exchange to offer a NBT/USD pair, and then transfer LPC support solely to that trading pair. Our network really only needs a single popular NBT/USD trading pair for now; market arbitrage would balance out all NBT/Crypto trading pairs on other exchanges without requiring complex NuBot intervention. I think that many traders will continue enjoying attempting trades against NBT/Crypto pairs for a profit (as they likely currently are) - the difference is that LPCs won’t risk being on the losing end of the trade. An ideal exchange should satisfy the following criteria:
Easy to deposit/withdraw USD funds
High USD trading volumes per day
Reputable
Has existing non-BTC crypto trading pairs (ie. an openness to non-BTC currencies)
What do we need to do to incent one of these exchanges to add NBT/USD? Is it a matter of offering a large NSR bounty to give them a stake in our success, or are they looking for something different? In my mind this should be our biggest priority as shareholders right now, eclipsing any marketing or business development activities that we are planning. If a representative from one of these exchanges reads this thread, please send us an email at info@nubits.com to discuss. I’m confident that whatever exchange chooses to add a very liquid NBT/USD trading pair first will gain a lot of trading volume very quickly.
Traders always can take advantage of market-makers to some degree. In general MM’s don’t take directional positions, and are at an informational disadvantage. They have to earn profit by the privilege to make the spread. It’s the task of arbitrageurs, who take outright positions, to find the best price. These principles apply independent of Nu in any market. To be quick one has to cross the spread, which by definition MM’s never do.
I think exchanges will definitely not want to provide liquidity. They have to be impartial and not actively participate in the market. MM functions and exchanges are clearly separated in all proper operating markets. The reason is that otherwise there can be manipulation of all kinds, because exchanges have more information than participants. Sometimes exchanges provide incentives for MM via maker/taker fee distinction. AFAIK so far only BTC/fiat exchanges have done this, not the crypto only ones.
In the future (with our 0.6.0 release), shareholders would be able to fund an NSR bounty like this in a completely decentralized way. However, for now, if shareholders wish to provide a bounty for this or any other purpose, just pass a motion stating that undistributed NSR should be used and I will make sure it happens.
I’ve been meaning to bring this up and I think Tomjoad covered the main points. I was going to suggest offering a NuShares bounty to exchanges with liquid USD pairs so that they can share in the success of Nu. This would give them the needed incentive to join us.
I sit somewhere between @tomjoad and @benjyz on this.
It hurts to see our custodians suffering losses as it makes the position of custodian less attractive. However the network is still young and I feel happier if I view the losses as a cost of getting the exposure that NuBits have enjoyed since coming to market.
I was just arguing privately that it may be an idea to shift some of the risk to the exchanges themselves as they have the immediacy of trade available to mitigate some of the risks the custodians face. @benjyz post persuaded me otherwise and I do now think it better for the supporting exchanges to remain impartial.
The future road-map for NuBot does attempt to address quite a few of the issues which have come to light in the real world so I think this situation will improve. I’m therefore hesitant to shy away from NBT/Crypto pairs just yet as I think the visibility they afford NuNet is invaluable.
I do think that arbitrage could play a bigger and better role in maintaining the peg in the future. It shifts the risk to someone else, helps the peg and helps maintain a positive image of NuBits among traders. I think there may be more that we can do to assist positive arbitration that helps the peg on un-maintained pairs. I’m working on a secondary trade engine that could be put to use as a NuBit tool. It needs a lot of work yet though.
I also think that we should be actively investigating potential alternatives to the centralised exchange model we currently have. Although I think we will be supporting pair on exchanges for a long time, there are enough inovations and alternatives that we could be providing a large portion of our liquidity through other channels (OpenBazaar was mentioned in one post, I’m sure there are others either available or in production)
This was brought up and discussed at length in the cease PPC/NBT operation thread. Most people seems to agree that idealy NBT/USD should be the only pair Nu support but due to initial adoption rate and liquidity NBT/Crypto should be offered. As a redult a tiered bot order book has been proposed to reduce risk (ala “junkcoin”) and hedging is recommended to be used to mitigate exchange rate risk.
I think OP is still a timely discussion in light of increased adoption of Nubits and increased volatility of cryptocoin coin price lately.
Thanks @benjyz for pointing out the importance to separate market maker, arbitrageurs, and the exchanges, and that marketmakers should be allowed to set spreads.
Back to the OP, I suggest we also look into addting Nubits to direct purchase option of payment processors and gateways.
I have been emailing a few processors with no response yet. Our lack of open-source code may be of concern, although I’d only be speculating. It’s a good reminder I should send follow-up emails tomorrow.
Do you think we may convince large USD exchanges to accept NBT/USD pair by paying them with NSR?
I mean to give them a certain NSR amount by just support the pair not be a cusdodian themselves.
I can contact kraken and bitstamp
Could be. However I am not sure they all run crypto wallets locally. Some of them apparently use external exchanges for cryptos and only act as a fund funnel.
I personally don’t support the idea of giving nushares to exchanges in return for providing USD/NBT pairs. This is going the easy way and I would vote against it. The exchanges should want to adopt NBT trading pair for its volume.
I do support the idea of independent BTC <–> NBT converters though and I am willing to implement one if I get some reasonable support from the community. If such an online converter provides NBT at 1 USD cost then we don’t need to have custodians present at exchanges at all. The people doing arbitrage would represent NBT on the exchanges. If the peg is lost on some exchange then it becomes profitable to buy/sell from our converter and transfer the funds to the exchange where the peg is lost.
While I agree with this in general, we need a USD pair fairly soon. I’m willing to make an exception for the first exchange to do this for us. For the rest though, we shouldn’t be getting in the habit of paying for support.
Only if bitcoin keeps losing its value, right? I believe bitcoin might start rising soon. Also, I already suggested an alternative. Why would it be worse than paying to an exchange for a special favour?
@Hyena, I think you should go ahead and develop the converter you mentioned. I’m am positive that these sorts of services will play a big part in the future of Nu and to be the first service available will give you a lot of boost in terms of network effect.
Actually my idea for the service is not so much to gain personal profit but to do a favour for the community. I would develop the software and make it as easy as possible to set up for anyone. So, the code would be released under MIT license and perhaps at some point other developers would also contribute. The reason why the code should be made public is that it is compatible with the decentralized nature of NuBits. It would make even the custodians decentralized and independent. Also, I am not interested in running such a service myself in the long term because I don’t intend to become a custodian. I think that I should maybe develop a proof of concept (prototype) rather quickly and see how the community likes it.
Sent emails to kraken and bitstamp asking only to support the NBT/USD pair.
Of course i am just a shareholder, perhaps it needs someone from the DEV team?
bitfinex has other plans. btc-e is hard to penetrate , okcoin is mainly used by large speculators : BTC, LTC and Futures (no other alts ) .
I have never heard about bityes and justcoin .
Anyone has some contact?
I would consider also Kraken.
Not only, I would also consider exchanges with large volumes fiat (non-USD)/BTC pairs: EUR, CNY, PHP, HKD are easier to track and far less volatile than cryptos. THen we can open up a new array of possibilities : btc38, etc etc.
Awesome. I have most of the infrastructure already developed for such a service but integration with a trading site such as Bitstamp is yet to be implemented. If you want to know what I will be using as a basis for this project, take a look at this service: http://www.cryptograffiti.info/paystamper/
If you go to monitor tab you can enter a bitcoin address you wish to monitor and it will send you notifications whenever a payment is made to that address. I have solved the single-address-payment-receiving problem by differentiating payments by their amounts. Each customer will get a random number of satoshis added to their service fee in a range of 0 - 9999. That way the service can only have 1 receiving address which makes a lot of things simpler.
edit:
There’s currently a known bug when you subscribe to some bitcoin address to receive payment notifications: when you don’t check the FREE TRIAL checkbox then you will probably get a message Invalid field: amount (cannot exceed 1000 when trial is TRUE).
I’m trying to contact bityes, in fact, bityes is a subsidiary of huobi.com , CEO leon.lin want face to face communication with NU Chinese community, have any news, I will immediately feedback
