[Withdrawn] Motion to lower compensation for NuLagoon sell side

NuShares Motions
#61

I doubt the power is that great and it shouldn’t be the case. I don’t think it is a good idea to support this motion. I agree with MoD here. The route to fixed costs is a better one and therefore I will support Nagalims motion to experiment with fixed price instead.

However I still have an uneasy feeling about our current liquidity costs. That is clearly not sustainable given the current network utilisation. Will certainly revisit this motion when other attempts to reduce liquidity cost are delayed or fail in the next 2 months.

1 Like
#62

Which is a good idea.
Nu continuously needs to track costs and strive for more efficiency.
Accounting is still one of the rather blind spots of Nu.

I hope that the liquidity costs are reduced by that time. This hope is based on fixed cost compensation being tested, ALP integration in NuBot is being prepared, the parametric order book is almost here - just to name a few major improvements that help reducing liquidity costs.

Nu will soon pay less money for the liquidity that has a small offset and some more money for liquidity with some more offset. The peg will be safe, arbitrage risk for LPs is reduced, the liquidity costs will decline.
Add competition for the fixed cost compensation to the equation and you have Nu’s liquidity situation in a way better shape than it is now.

After that has been accomplished it’ time to get seeded auctions running to tie tier 6 down to tier 1 to 3.

There’s a lot of work to do, but all is moving in the right direction.

NuLagoon will be one of the competitors for liquidity compensation soon, which I consider more fair than just cutting down costs by reducing compensation for sell side liquidity at NuLagoon…
If NuLagoon works efficient enough - in relation to the market - everything is fine.
If not, it will have a hard time, but by more efficient market participants and not by a business partner which dictates new conditions.

1 Like
#63

Since Nulagoon’s operators can control exactly how much fund is exposed to BTC volatility, it is in a better position to improve its service by implementing an insurance for its customer liquidity providers. MLPs can have many advantage over ALPs.

#64

@assistant motion vote 5a37c1d4abadffbded0ebbdfedb40cbfa68a49ef

#65

Hi @cryptog

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

##5a37c1d4abadffbded0ebbdfedb40cbfa68a49ef
Blocks: 2461 (24.610000%)
Share Days: 921481426 (26.678310%)

#66
#67

Because this is not close to passing and is no longer receiving additional support, it is reasonable to unpin it, especially since there are so many other pinned topics.

I still think this motion is a good idea. In light of the powerful affect our first share buyback in the amount of $2500 had on share price, we can understand the importance of holding down costs.

It has been criticised because it would make the peg somewhat asymmetrical. There are other factors already at play that make the peg asymmetrical. A preference to avoid the volatility and additional risk of BTC appears to be causing the sell side (where NuBits are used) to be favoured at the current time. Therefore, a counter measure would increase liquidity wall symmetry. While fixed cost liquidity is an exciting innovation that is likely to reduce liquidity costs soon, we have every reason to pursue as many cost cutting measures as practical.

1 Like
#68

How about flat reduction of NuLagoon to $4000/month or $3000/month.

2 Likes
#69

This motion was just ahead of time and in addition I doubt that treating buy and sell side differently is the right way.
Nu needs to lower the liquidity costs. That much is sure.
But before this can be done reasonably, Nu needs to know how much liquidity it can get at an exchange it wants to support with X liquidity.
It would be a bad move to lower compensation before it’s clear that the minimum liquidity Nu wants to have there can be purchased with that compensation.

1 Like
#70

I agree our current liquidity provision is too much compared to the actual use of NuBits. That is why we need to decrease it. I would be in favor of decreasing the sell side liquidity across all ALPs and MLPs and not only NuLagoon.

#71

Maybe we need a motion for all ALPs and MLPs to lower the liquidity cost with 20%. Just to make it an even playing field and still achieving the liquidity and cost reduction. The ALPs can lower the caps on all their pairs accordingly and NuLagoon can lower the monthly cost.

#72

I think we do need such a motion and 20% seems not too much not too low.
I would favor such a motion.

#73

Can you please elaborate on your reasoning for your favour of having different compensation for buy and sell side?
What benefit do you see in this?
What condition would you base the ratio between buy and sell side compensation on?
In particular I’d be interested in the advantage over an equal compensation of buy and sell side.

#74

Tks for asking. I have no reason to favor an asymmetrical balancing in liquidity provision reduction after reading your explanation here.

So I would be in favor in decreasing not only the sell side but also the buy side at the same rate.

#75

With this 20% thing, how would you phrase something like that? If you say NuPond has to reduce costs by 20%, well I would just say that NuPond expands by 20%, then go ahead and reduce that by 20% and I’m right back where I started. Would you say something like “the next term must be 20% less than the last term”? Then do rollover funds count for or against us? How about operator fees? It seems to me that such a blanket motion would kill competition and expansion like moving to hitbtc or expanding nuriver on cryptsy.

1 Like
#76

I think the reduction of liquidity costs is necessary, but it’s just a little bit too early, because Nu has no reliable information about all exchanges and trading pairs Nu wants to support.

Ideally Nu would sustain an ALP (fixed cost version) at each exchange and trading pair Nu wants to have liquidity.
The ALP is used to determine the minimum required compensation rate.

If Nu has a budget of “n” NBT for liquidity operations per month, it can then

  • offer x1 NBT for liquidity at exchange y1 and pair z1
  • offer x2 NBT for liquidity at exchange y2 and pair z2
  • offer x3 NBT for liquidity at exchange y3 and pair z3
  • offer xi NBT for liquidity at exchange yi and pair zi
  • etc.

until the sum of x1 … xi equals n.
At the moment Nu can only guess how much liquidity can be bought at an exchange and pair for the offered compensation.

#77

Agree, it has to be a bit smarter than just a blanket. Here are some thoughts;

E.g. reducing the liquidity caps equally on either side in a way that results in a decrease of 20% of the liquidity costs for each ALP excluding the operator fees. These new caps will be put in place within 10 days of the passing of this motion. Excess funds will be either burnt or used as roll-over for the next term.

After that everyone is free to increase the caps, however that requires the passing of a motion or grant. The Shareholders might think twice to vote for increments again except maybe for new exchanges.
A more firm motion is a motion with a reduction of 20% and then a freeze of the caps and rates for 60 days, but maybe that is only required when the situation with the excess of liquidity escalates further.

#78

Yah, so that would indeed be either ineffectual (for a lot of complication, restarting all servers, changing all parameters and changing terms of all current pool contracts) or squelch competition (prevent any and all growth or new provision on new exchanges or pairs for some arbitrary period of time).

#79

I’m surprised by your response. Changing parameters and restarting servers is what all ALPs do every month, nothing difficult. Regarding competition, you have put up a motion to reduce the liquidity costs only for the MLP. Isn’t that squelch competition in your eyes?

Still with phrasing the motion smartly, we can just have the existing ALPs and MLP cutting costs and allow a small growth for new exchanges which doesn’t need to be named. It provides new exchanges with the leeway to request more funds within the caps of the motion.

#80

When we passed a spread regulation motion it took 90 days before pools started following it (and some still aren’t in compliance). If I take 90 days to comply with a fund regulation motion, what happens? Do shareholders shut down my pool? Isn’t that played out every time I ask for a new grant anyway?

Putting pressure on individual pools is exactly how competition is generated, so no I don’t think asking an individual pool to be held accountable squelches competition, I think it generates it. I think treating all pools the same despite obvious differences is what destroys the local flora.