[Withdrawn] 0.6% Maximum Spread for ALP/MLP, 1.2% for Nu Funded Liquidity Operations

[Cybnate]

They are Nu-funded bots and the contract needs to be adjusted accordingly, I agree. The average total liquidity in the network doesn’t vary that much. The percentage of Nu-funded liquidity can be adjusted say each week or each fortnight and with some accepted deviation or minimum amount to prevent unnecessary transactions.
The funds the Nu-funded bots are holding can be increased by FLOT by adding funds and decreased by the custodian transferring funds back to FLOT.

[Nagalim]

I don’t think this is possible.

[Cybnate]

I don’t think this is possible.

And why do you think that? End 2014 and early 2015 we had 0.4% spreads.

[zoro]

At first, i was against at any motion of this kind (as i have written in JL’s thread)
but then i was convinced that a motion like this, is a good publicity for NU customers (a.k.a. traders)
in order to convince them to turn their bots at NU.
Thus we have to keep a clear and simple (as possible) motion. If we start the “if then” we will loose them again!
I like the title as it is, i cannot follow the rest of “ifs”

[Nagalim]

Single LPs make the math much simpler. If you’re talking a collective like ALPs you have to talk in min and max. If the price moves around, what is the minimum spread and maximum spread of the collective given a set of deviation and offset parameters?

Ex: Ignore Exchange Fees, deviation=0.25%
So if the offset = 0.25%/2 = 0.125% then there will be collisions between orders (minimum spread = 0%). The thing is, if we consider the maximum spread = 2*offset + deviation = 0.5%, we see that at 0.5% ‘maximum spread’ or lower the network is literally burning money by accident.

0.6% is cutting it real close.

[Cybnate]

After ample considerations this motion is up for voting now (and the daology link published). I believe the combination of low spreads for the lower 60% amount of the liquidity provisioning tot attract trading and the higher spreads for the 40% to protect the peg is a good balance to start with. When the overall liquidity amounts go up significantly (>100%) the percentages may meed to be reviewed.

When you are supportive of this please add the following motion has to your wallet:

6d76ce3ff163a3bd8cd8f43b7126a7670ec9d28a

I will also add it to my datafeed.

Thanks for your consideration.

[Cybnate]

Bump, here is a personal plead to consider this motion over JordanLee’s motion.

A lower quality peg for non ALP/MLP operations where Nu takes risk should be possible as it is now. Even yesterday and today that saved the peg for those who paid attention to ALP/MLP unable to provide buy side funds. It all came from Zoro’s NuBot with high spread after my medium spread (1.4%) Pybot was also depleted. Loosing those lines of defence in order to always provide a high quality peg is suicide in my opinion. A best places are sold out option must always be there imo, hence a lower quality peg for Nu funds as I propose.

Only option Jordan’s motion could work is having almost immediate access to T5 and T6 funds. I haven’t seen solutions to withdraw from T5 and T6 quickly or anyone working on this in the near future. Without being able to top-up within hours I believe Jordan’s motion will lead eventually to peg suicide indeed.

Please consider the consequences unless you want to buy NSR really, really cheaply in the near future.
Not making a plea lightly

[masterOfDisaster]

Utterly shameless plug. I beg your forgiveness.

Your motion goes in the right direction, but not far enough.
Your PyBot at 1.4% spread is no sufficient line of defence. How long did the BTC you received yesterday last?
Deposit/trade logs help you answer that.

@zoro’s at an even bigger spread is that line of defence.
This operation traded $3,000 of $9,000 BTC since yesterday, while your funds got drained quite soon.

This is why shareholders should vote for this motion:

[Passed] 1% Maximum Spread for ALP/MLP, Above 1% Allowed for Nu Funded Liquidity Operations (e.g. Gateways)

Motion hash: bd4d153bb5c2d8cd6013b77ad8780eabc7bae79e To provide an alternative for https://discuss.nubits.com/t/draft-1-maximum-spread-in-shareholder-funded-liquidity-operations/3926/ I created this motion. Please continue the discussion in the thread, @JordanLee started to have all arguments in one place. https://daology.org/proposals/107a2e83eb2b5cf7d54e9af4c4b6f5f8d7d4522a Quoted for convenience:

This is a very sophisticated and much more detailed version than what I have put up for voting:

[Draft] Spread and Nu Ownership

Work in Progress [image] [image] --Begin-- Spread Band Model In a single instance of a custodian, there are normally 3 prices that matter: the price feed, the bid price, and the ask price. Usually, the offset of the bid and ask from the price feed is symmetric and so the individual spread can simply be defined as (the ask price minus the price feed) divided by the price feed. When several custodians provide on a single pair, there are potentially many bid, ask, and price feeds. The e…

My motion to regulate the spread is the only one compliant with what I call superior motion to regulate spread.

[Cybnate]

Utterly shameless plug. I beg your forgiveness.

Just this time

Your PyBot at 1.4% spread is no sufficient line of defence.

It is first line of defence after the high quality peg sells out. 30% of liquidity should be in it according to my motion.
In other words no more seats at the sunny terrace but still inside at the window. [quote=“masterOfDisaster, post:10, topic:3931”]
@zoro’s at an even bigger spread is that line of defence.
[/quote]
That is the seat with no windows in de back next to the toilet
Just following the analogy of a restaurant offering seats for people to dine.
My proposal still offers 10% of liquidity at that level. It is also the canary in the coalmine when order are sold at this peg. Urgent action and top up of the higher quality peg levels is required.

My motion to regulate the spread is the only one compliant with what I call superior motion to regulate spread.

Second best I would say Better than Jordan’s for sure.

[cryptog]

Only option Jordan’s motion could work is having almost immediate access to T5 and T6 funds. I haven’t seen solutions to withdraw from T5 and T6 quickly or anyone working on this in the near future

This is indeed the main challenge.
Jordan Lee s motion assumes this is the case or assumes that we have enough time to unlock funds from T5 and T6, which assumes that we have enough reserves to replenish the buy side while the unlocking is being processed.
This is what he is advocating by proposing a nsr sales, which i agree on in principle.

The problem with low quality peg is that there does not seem to be any limit in the spread degradation.
What about providing liquidity at 30% spread? This does seem to protect the peg you would argue, but in fact it does the opposite, because either traders buy at 30% spread which destroys the peg, or they do not buy, which is better but does not help nubits usage…

[masterOfDisaster]

Second best I would say Better than Jordan’s for sure.

Look how @zoro’s BTC got eaten at 2.8% spread. Only 6 BTC left.
2.8% is nit enough at the moment.

If that’s the seats next to the toilets, traders at Poloniex will soon have to take a seat ON the toilets…

[cryptog]

Look how @zoro’s BTC got eaten at 2.8% spread. Only 6 BTC left.2.8% is ni

Hum.
It seems that for the time being we need to increase the spread even further.

[Cybnate]

If that’s the seats next to the toilets, traders at Poloniex will soon have to take a seat ON the toilets…

LOL, but you are right. Without short term access to T5 and T6 we are in a dire state.
I thought FLOT had a transaction underway to top up both Pybot and Zoro.

[masterOfDisaster]

I’ve spent some time trying to wrap my head around the percentage values you have in your proposal.
I share @Nagalim’s assessment that it doesn’t work this way
And that’s not because we have no clue about a wise choice of numbers.
It’s because the percentage values are related to the total liquidity.
If ALP drops off, you have to reduce the gateway funds, because total liquidity gets reduced.
That’s the opposite of what’s necessary.

It might work, if you relate it to NBT in circulation.
Like

• x% of NBT in circulation on ALPs/MLPs
• y% of NBT in circulation for NuOwned operations at a medium spread
• z% of NBT in circulation for NuOwned operations at a high spread

My numbers for x, y, z would differ from yours

[Cybnate]

I’ve spent some time trying to wrap my head around the percentage values you have in your proposal.

Thanks for trying to improve my proposal
but I believe my proposal achieves what you are describing…

It’s because the percentage values are related to the total liquidity.If ALP drops off, you have to reduce the gateway funds, because total liquidity gets reduced.That’s the opposite of what’s necessary.

The contracts we would have with the gateway providers would still relate to the average liquidity percentages. Therefore during a crises the absolute amount would be stable and the percentage would likely increase sharply. Exactly what is needed imo. It only changes after weeks or months depending on the contracts when new gateway contracts needs to be negotiated.

So there is no reason to relate it to NBT in circulation, but it is certainly an option to explore.
The advantage of total liquidity instead of NBT in circulation is that it actually reflects usage of NBT better.

[masterOfDisaster]

relate to the average liquidity

That’s not what your motion states.
But with the average liquidy itvs effectively close to what I proposed

[Cybnate]

That’s not what your motion states.

That is correct, but effectively it will work like that given the 1-3 months term contracts with the gateway operators.[quote=“masterOfDisaster, post:18, topic:3931”]
But with the average liquidy itvs effectively close to what I proposed
[/quote]
I’m sure we can work on an improved proposal, there was not much time for discussion and improvements when the originals came up. Not sure if that is useful.

[masterOfDisaster]

it will work like that given the 1-3 months term contracts with the gateway operators.

Those contracts will be bound to the limits of your very motion:

High spread (1.4%-2.5%) for Nu funded liquidity but limited to a maximum of 10% of total liquidity as a last line of defence

2.5% spread is not enough. We are at 5% offset (!) and still get dents in our buy walls!

If you motion were already in place, the peg wouldn’t have been kept above $0.95, except for sheer luck.
I fear, there’s not much room for arguing here.

But we can make a test and lower the spread of the NuBot gateways to 2.5% (offset 1.25%), if you want to see it, before you believe it.

[crypto_coiner]

Look how @zoro’s BTC got eaten at 2.8% spread. Only 6 BTC left.

Tightest spread indeed should cater to the fiat pairs, our target.
Crypto pairs are intermediary, secondary and should not get our best care imho probably.

[Cybnate]

For the record: withdrawn for obvious reasons.