[Withdrawn] Motion to lower compensation for NuLagoon sell side

Thank you for your vote of confidence. I can’t foresee the outcome of the other motion, but from the ideas I gathered in this thread, I sincerely hope that the community finds an improved solution which serves both Nu and NuLagoon better than restricting the sell side compensation.

1 Like

Holding off on voting for this. Like to evaluate this further including the discussion started here

1 Like

Generally speaking, buy side liquidity is more important than sell side liquidity. Therefore buy side liquidity should be more rewarded that sell side liquidity whether it is ALP or MLP. I believe this is the case of all ALPs. Isn’t that the case of NuLagoon?

Is it chiefly caused by NuLagoon?

We would like to clarify that we are not accept this motion. We will be forced to stop NuLagoon operation at 1 Nov if this motion pass.

Because fund are shared by POOL A C D, all three pools are affected, we can not implement the calculation before 1 Nov, The only choice is to stop NuLagoon operation at 1 Nov.

Because there is a motion to regulate NuLagoon balancing operations, assuming that motion pass, this motion’s effect will be just as to lower the whole compensation. Later will be easier to implement at least.

Related info:

@assistant motion vote 5a37c1d4abadffbded0ebbdfedb40cbfa68a49ef

Hi @cryptog

Here are the details for the Motion Vote on 5a37c1d4abadffbded0ebbdfedb40cbfa68a49ef:

Blocks: 2393 (23.930000%)
Share Days: 896623257 (26.520183%)

@assistant motion vote 5a37c1d4abadffbded0ebbdfedb40cbfa68a49ef

Hi @cryptog

Here are the details for the Motion Vote on 5a37c1d4abadffbded0ebbdfedb40cbfa68a49ef:

Blocks: 2617 (26.170000%)
Share Days: 982228115 (28.335588%)

I was surprised to read this, and I am unable to understand why the only choice would be to cease operations. It is possible there has been a misunderstanding of the motion content. When it states compensation will be lowered for sell side liquidity, this refers to pool users that place NuBits in the pool. It does not refer to pool users who place BTC in the pool which gets converted to NuBits while in the pool in the course of providing liquidity. So, for the purpose of determining compensation levels, it doesn’t matter whether the funds are NuBits or BTC at a certain point in time. It only matters what side the funds entered the pool.

It appears to me that implementation of this motion will be very easy and straight forward. In terms of operating procedures, it will only change the number used to calculate a new NAV. @henry, have I misunderstood something? Why do you say you would have to cease operations?

This motion only has 26.5% support, although it appears it is rising to the low 40’s. It appears some shareholders haven’t voted for it with the expectation that an alternative would be offered by @masterOfDisaster. That hasn’t happened, and the thread opened to discuss alternatives is now inactive (for 7 days). I’m concerned shareholders are making the perfect the enemy of the good. This motion isn’t perfect, as additional improvements in how pools such as NuLagoon are run can be imagined. It is good, though. It is a simple method that will bring significant savings to shareholders. Let’s pass this, and then think about how to iteratively create additional improvements. We are at risk of accomplishing nothing by trying to accomplish too much at once. Successful projects are built iteratively, not all at once.

An alternative was offered. Henry came to consensus with the other shareholders and proposed a motion. I’m completely unclear about your concerns with that motion, as it seems to attain exactly what was desired without imposing an artificial buy/sell asymmetry.

I have to admit I was not clear about this by reading the original content of the motion. I believe most of the community members also missed this during the discussion.

In one of my response, I mentioned that It won’t work as expected neither to incentive pool participants to provide equal size of NBT/BTC when they initially provide fund.

@JordanLee, will you respond to the following questions?

  1. Do you agree that It won’t work to incentive pool participants to provide equal size of NBT/BTC when they initially provide fund.
  2. Why the fee rate should be lowered so sharply, (1/4 of the current rate)
  3. Why you said the cap will only impact Pool A operations.

Thank you.

The purpose of this motion is to reduce the cost of liquidity both in terms of the cost per dollar of liquidity and total network wide liquidity costs. Henry’s motion doesn’t lower liquidity costs at all. Therefore, I regard his motion as unrelated to this one.

I’m concerned that perhaps there is a lack of understanding among shareholders about the critical importance of reducing liquidity costs. Right now the costs are many times what is sustainable long term. There are many methods known to reduce these costs, the most important of which is B&C Exchange in the medium to short term. The viability of our network depends on the credibility of the claim that liquidity costs can be dramatically lowered from their current levels. It is OK if it takes a number of years to arrive at a cheap and truly sustainable cost, but we must make consistent progress on this. To date, costs have continued to climb.

At approximately $184,000 in tier 1, 2 and 3 liquidity, what we have now is excessive. It is time to cut this.

1 Like

I’m not sure I understand this question, because the motion proposes unequal incentives, which is expected to result in much more BTC being in the pool than NBT. This makes sense because off exchange NBT has little value. FSRT and I can always bring plenty of NuBits to tier 1 quickly as needed. Buy side support sitting off exchange does have considerable value as its supply is not nearly so endless.

See my above paragraph. Paying high premiums for off exchange sell side liquidity just doesn’t make sense, because there is plenty of it available for free or nearly free.

I’m going to turn this question back to you. How will this motion impact Pool A, C and D?


I agree on that.

That’s true. But where does those BTC come from?
Image what a NBT depositor will do with this unequal incentives. In order to get a higher expected return, he will sell NBT for BTC by using other LPs service in the market before the deposit. Nothing can stop he doing this as we promise 1 NBT always worth 1 USD.
The effect of this incentive is just to move lots of BTC from other LPs to NuLagoon. Is this situation what you expected?

All the three pool will be impacted according to your interpretation of the motion.

Based on this analysis, I agree on the fact that NuLagoon is offering too much sell side liquidity.
More generally, I think Nu is offering too much sell side liquidity right now, overall.
So I think all liquidity providers (NuLagoon and ALPs) should offer less sell side liquidity.
So this is not only about NuLagoon’s sell side.
But it is true that NuLagoon has Tier2 and Tier3 involved.
Those Tiers are less important than Tier1.
So after further thinking, I think this motion makes sense but we should also reduce the compensation rate of ALPs on the sell side too.

Any flows in my reasoning?

Yah, arbitrarily asymmetric reward rates will just cause the network to provide an asymmetric peg. For example, let’s say we always reward buy side at 20% and sell side at 10%. Then the network stabilizes with 50 buy nbt and 25 sell nbt. We think we’re super clever for having a big buy wall now, but what happens when someone sells onto it? Well, the network must seek to keep the 2:1 ratio, so exactly the same switching issue arises, just with some arbitrarily awkward ratio pegged around. The end result is that instead of having a peg that is resistant to price moves in either direction we have a peg that resists price movement well one way but poorly the other direction. For an example of what that looks like, check out bitUSD.

The most efficient answer is to reward both sides in some logically consistent and symmetric manner and balance the network using higher tiers. If the network has too much sell side, we need to perform dilutions or institute park rates. Providing asymmetric peg rates only aesthetically solves the issue and does so in a woefully short lived manner.


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.