[Withdrawn] Make Firing and Replacing Incompetent Liquidity Providers Our Top Priority


#162

The offset as I understand it is the price below or above the dollar mark. So if one buys at $0.95 that’s a 5% buy offset. If one sells at $1.01, that’s a 1% sell offset.


#163

I had been warning about suicidal tendencies swirling around the forum for some time. We need to identify exactly what behaviors these are and reject anyone who defends those behaviors.

Voluntarily breaking peg with a fully functional tier 4, tier 5, and tier 6 is suicidal. There is no reason to do it. It destroys confidence. It destroys tier 5 and tier 6.

The solution at this point is to return to the model that was so carefully laid out. We can restore the peg. It is already too late to keep the peg. @masterOfDisaster destroyed it. We need to rebuild it. Doing so will restore tier 5 and 6. If people want our network to succeed, it will. We will have this period of failure in our history. But if we can articulate why it happened and why it won’t happen again, we have a future.

So, first of all understand that the peg is broken. There is no such thing as maintaining a weak peg. Its broken or not. We failed at this point in time. We need to accept that. Part of explaining that it won’t happen again is to remove the actors that chose the irresponsible actions that undermined our entire model.

So, I have made an assertion that the peg can be restored, and that it must be in order to get tier 5 working and to restore the full capabilities of tier 6. Let me explain a little more about that. Understanding that the peg is broken now, we need to restore it by putting up buy side liquidity at 0.995 or more. That is the only way to restore it. Let’s say we restore the peg and tier 4 is completely cleaned out. That is a real possibility. Improvement in the functioning of tier 5 (park rates) will take days or weeks of restoring the peg. So, if we end up with an empty tier 4 right away, we can’t use tier 5 right away. So we use tier 6. We say we are going to sell x number of NuShares each day to get funds to buy NuBits at 0.995. So, in this hypothetical narrative, we have zero tier 4 at a moment in time, but everyone knows it will be refilled from tier 6 each day. Some NuBit holders may choose to sell when there is no wall. Speculators will set a price according to the probability they think they can sell NuBits for more later. Let’s say a speculator says, “Hey, I will buy NuBits for 0.90 because I think I can sell them the next day for 0.995 with new funds from NSR sales are placed on the order books.” That may work, or he may need to try in subsequent days if other sellers beat him to the limited liquidity on a particular day. Meanwhile, as this pattern repeats, tier 5 begins working, because potential parkers begin to have confidence that can sell their NBT for 0.995 when it unparks. This means we can keep the peg a greater percentage of the time.

We do this until the NuShare price is zero and stays there or until we have fully restored deep and consistent liquidity at 0.995. It’s the only way back from the irresponsible choice of abandoning the peg that I can see.

Bottom line is the peg is completely broken right now. The only way to restore it is to buy NBT for 0.995, or at least 0.99 (I do recommend 0.995). An intermittent peg is better than a consistently broken peg. Hopefully the percentage of time that we can keep the peg will increase as we address the problems that brought us here and get tier 5 and 6 working properly again.

However, there is a very good chance that if we put orders for 0.995 that the liquidity won’t be consumed and that we can keep the peg 100% of the time from the moment our liquidity providers decide to do this. Even if we are unlucky and all liquidity is consumed, putting buy orders at 0.99 or 0.995 is the only way back.


#164

Or we maintain the 0.95 cents peg (which you don’t see as a peg at all) and wait out the storm until the halving has passed and which will most likely see an increase for Nubit demand. In the meanwhile we make sure we’re set up (motion wise) to maintain higher reserves in the future to prevent the current situation we’re in.

Your plan while I love how it sounds in theory most likely will lead to an empty T4 and a major dilution of NSR for little to no BTC. There is currently 11 BTC in total in polo NSR buy side. NSR buy side has been weak for as long as I can remember and the only buying pressure was when we conducted buybacks. There is not enough interest in NSR for your plan to work I feel it instead would be disastrous and destroy our already weakened product. Theory and practice don’t always match unfortunately.

We were already offering parking rates.
There hasn’t been buy side pressure for NSR in months if not years.
We only started weakening the peg (with a 5% buy offset) until we had next to no funds left.

I don’t see how offering those last few funds (a mere 20k USD or so) would have reversed the situation and suddenly make parking more attractive then it was in the weeks before or suddenly create enough demand for NSR for a T6 dilution to be successful.


#165

What took you so long to go fully on me?
Do you think you have sufficiently distracted the readers from the real reason: the BTC reserve was that low?
Do you believe that repeatedly accusing others of mistakes that purportedly played a crucial role for the situation distracts from the real reason?
Jordan, the buyback was a disaster.
With the wisdom of hindsight it was clear that a BTC bull run poses a double danger to the peg

  • BTC get sold, while they would increase their value, if they could be kept
  • you need to sell NSR once the BTC run dry in a time when nobody wants to give away BTC

That damage is done and can’t be undone.
The current situation is a direct result of the low reserve.
You want to blame me for errors I didn’t make?
Jordan, you failed with the concept of high liquidity in the NBT/BTC pair at a tight spread without sufficient reserve and a decent part of it USD stable.
Don’t try to make me the reason for that.

FLOT still has BTC.
Where’s your NuBot?
Show us!
…or was I right when I supposed you wouldn’t do it, complaining it would make no sense because of me?

I’m a pain in the ass, aren’t I?
Why not advocating your “1% spread motion”?
It would have liquidity wise the same effect.
Is is really because you need to sacrifice somebody to cover your mistakes?

One more thing regarding your lack of understanding of liquidity in practice:
you say a peg of $0.95 is no peg.
Well, then it would have been broken even at 1% spread, because the price feeds were for a lot of time around May 27th far off from Poloniex or NuLagoon Tube - depending on what feed you used, more or less.
Did you recognize that?
I guess no, because you aren’t in the front line of liquidity provision and stick to your unrealistic view no matter what facts.
NBT is pegged to USD.
The peg to BTC is a synthetic one.
It can never be as tight as a NBT/USD peg.
Focussing support on NBT/BTC was a another decision that was possibly a mistake…


#166

That is what i suspected.
Now, if the 2 spreads are equal say at 5%
does that make nbt pegged and tethering 1usd?


#167

Not at $1.00, but $1, yes.

There is one spread (e.g. 1%), and two offsets (in that case 0.5%).


#168

With your plan we have no tier 5 and tier 6 is impaired. Who will want to buy NBT for 1.005 when we only buy them for 0.95? So NuBit adoption will never pick back up. Buying for 0.995 or 0.99 is the only way out, I believe, of the mess created by abandoning the peg.

Dilution of NSR isn’t what matters. The price matters. The market has rejected what we have been doing recently by pushing the price down. We will have liquidity for buy side so long as the NSR price is not zero. We just have to find out whether people will let it stay at zero or not. As long as we present a credible plan to recover, I don’t think it will stay at zero. If shareholders are upset about dilution, perhaps they should ensure the peg is not abandoned again, because that is the source of the dilution. If a number of people buy 100 million NSR for 100 satoshis and they save the network and peg by so doing, they are our heroes. They deserve their windfall profits when things improve. If we don’t dilute, the NSR price goes to zero or near zero anyway.

The only way out is a credible plan to restore the peg. The sooner we do it, the easier it will be.


#169

The fact is, NSR was not a reliable source to maintain the peg. is there a motion to suggest when the selling of NSR would occur with relation to the available buy side? Clearly it would be imprudent to wait until the last minute, a buffer zone would be needed. I am not confident that the selling of NSR at this moment would be sufficient to providing liquidity to the peg.


#170

It’s not that I haven’t propsed an extraordinary NSR sale recently (in addition to the sale based on “Core and Standard”).
Unfortunately I’m busy with fighting your strange accusations, otherwise I’d have already organized making a new FLOT NSR address.
But I will do that soon and draft an NSR grant.
Unless you beat me by bringing the FLOT NSR pubkeys in a different order so that our privkeys still work, while the multisig address will be different (the current NSR FLOT address can’t be used for grants again).
Will you finally start supporting it, or are you busy with slinging mud?

Or why don’t you just make a grant with a singlesig address you control?
…like in the good old times…
I mean, shuffling the NSR FLOT privkeys is not more effort, but…
…I leave it to the readers to come to their own conclusion.


#171

Its clear reserves should be higher than they were. Steps are being taken to raise reserve goals through motions. I didn’t author the current regulations on reserve levels but I admit I didn’t steer them higher.

However, I am absolutely certain low reserves did not break the peg. Setting asymmetrical offsets did. We had plenty of capacity waiting in tier 5 and tier 6, but your asymmetrical offsets broke those tiers. That is the problem here. Remember, this is a liquidity engine, not a reserve based model. Our goal should be zero reserves, after the liquidity engine is robust enough. The health of the liquidity engine is what is of paramount importance, not the size of our reserves. Our liquidity engine was broken by those that set asymmetrical offsets. Fixing the liquidity engine must be our first priority.


(2nd Version - Expanded) My Interpretation of Jordan Lee's Liquidity Engine Model & Why its First Attempt at Pegging Failed
NuBits (NBT) will be delisted from Poloniex on Jan 4th
#172

I’m convinced. I don’t see how it can work any other way.

I want work done on advertisement of Park Rates. A simple to understand message presented well.

NuBits can work. I think many believe that. We need customers and new shareholders.

I don’t know how much time we need and which Park Rates are appropriate. Please focus on figuring that out. I believe we don’t have a choice.


#173

We have been discussing plans to restore the peg to 1% spread from 5% spread. The idea is gradually tightening it with current T4 fund and NSR dilution fund as BTC buy pressure receeds. It is also


#174

Others steered them higher e.g. @Nagalim

Thank you for your continued propaganda and false beliefs.
Low reserves were the reason the buyside offset had to be increased.

Will you eventually answer the question I asked so often, but am not aware or an answer:
what would have happened to the peg once the last BTC had been gone?
Tell us!
Better or worse than $0.95?

I provided data about how fast BTC were traded in the tight spread operations (ALP, NuLagoon Tube, @Cybnate’s PyBot, @zoro’s NuBot before he increased the buyside offset following a FLOT request) and that this couldn’t have been sustained for long.
You say you are certain. No more data. Strong argument!

You are not acting credibly. You are wasting our time. Once I find time I’m going to care for what you could as well, but you are busy with making pawn sacrifices.
Just in case you want to help; one more time:

  • alternate the order of FLOT NSR pubkeys and make an NSR grant. The remaining NSR won’t lasr long
  • make a proposal for a NuBot operation at Poloniex, that runs at a tight spread (each side <0.5% offset) and doesn’t use parametric order book

Otherwise I will create the NSR grant and make a proposal for a NuBot with these parameters.

I don’t give up Nu easily, no matter how hard you fight to plummet the NSR rate.


#175

Some here are asking why I didn’t raise a stink like this before, while others are condemning me for being this direct at all. I have been carefully pointing out how tier 4, 5 and 6 were being under utilised all along. In others words, don’t drop the peg, use tier 4, 5 and 6. I did so quite politely. So I have been trying to right the ship all along, but I have been critised for not doing it forcefully enough.

The polite approach didn’t work so I am trying something more direct.

What people need to realise here is that a reserve based model won’t scale and is subject to counterparty risk. It just won’t work. Our model is a liquidity engine. We have reserves at this point in our history, and we should have more at this point. But if you try to solve this problem from the perspective of keeping reserves or building them up, I don’t think it will work. You have to focus on the functioning of the liquidity engine, which has recently been broken.


(2nd Version - Expanded) My Interpretation of Jordan Lee's Liquidity Engine Model & Why its First Attempt at Pegging Failed
NuBits (NBT) will be delisted from Poloniex on Jan 4th
#176

How do you imagine Nu can recover? I feel as I’ve understood @JordanLee’s idea, and don’t see what the long-term plan can otherwise be.

Can you spell out suggested steps, or point me to where it’s been described?


#177

I’d like to know this as well.


#178

The friction of T5 and T6 is too high to serve T4-T1 fast enough.
You really have only a clue about liquidity provision in theory, but not in practice, do you?

But I appreciate the tone of your last post. So much less of an agressor. Will that be the next attempt: make me the reason for the rough tone as welk as the reason for the weakened peg.

Oh yes, I say weakened.
The peg in NBT/USD was fine all the time.
It was the synthetic peg in the NBT/BTC that followed economic principles by some degree - supply and demand, you know? - to support what was left of the peg.

@JordanLee, might we please have a report of the BCE development funds - addresses, balances, stuff like that.
I just want to make sure I make a grievous mistake considering some of them might have been dumped into NuLagoon.
As you already made a call for slaughtering me, you can very well put that on the list if accusations: asking for a report in an inappropriate way.
I could have held back with the reasoning, but I wouldn’t know why.


#179

Doing the obvious:

  • increasing the park rates
  • granting way more NSR and selling them for BTC or NBT
  • keeping the buyside from running completely dry

The last point is important.
If we consider the peg failed, we can as well buy cheap NBT (increased buyside offset), reducing the liabilities of Nu.


#181

I have been quite inactive but i’d like to offer my two cents.

If T5 and T6 friction is too high, the problem that needs to be fixed is that friction.

The idea of “reserves” don’t matter. The answer to “what would happen if we ran out of reserves” is sell NSR at whatever price. The price of NSR does not matter either. The whole idea hinges on the network as a whole will rise up to liquidity challenges and those that rise up will be rewarded for their efforts.

It makes it very hard to rise up and defend the peg when there is no peg to defend. No 0.95 is not “the peg”. If i feel this way as a very early member, i can only imagine what newcomers must think that haven’t observed this whole time and have no ties whatsoever to Nu. This is a huge huge huge hit. One that may never be recovered…


#182

I have explained this multiple times in this thread. Please read above.