[Withdrawn] Proposal for NBT/USD dual-side liquidity on CCEDK


#1

This is a proposal to provide dual-side liquidity for the USD/NBT pair on CCEDK.

I am a known and active member of the community, having worked with both the NuBits team and the Peercoin community. I have successfully fulfilled a recent liquidity provider contract, proving my competence and abilities in this role. I have been encouraged by several members of the Nu team to put forward a new proposal.

If elected, I will deposit a USD equivalent of 10,000 NBT to CCEDK and operate a bot supplied by Nu to provide dual side liquidity. Under this proposal, I will let the funds trade between the buy and sell side of the USD/NBT currency pair for a period of 30 days. In exchange for this service, I request a fee of 5000 NBT.

A few thoughts:

  • Jordan has expressed that he does not plan to continue the custodian-for-NSR bounty from last month. Instead, he hopes to see a market of individual proposals, such as this one, each in exchange for NBT compensation.
  • Compensation for the prior 30-day contract was 3M NSR, which, at current market rates, was about 50% of the total funds put at risk. This proposal maintains that ratio of compensation.
  • The currency pair in question, NBT/USD on CCEDK, currently has no buy-side support. This proposal would backstop that currency pair with new USD, increasing the utility of NuBits for those wishing to convert directly to fiat.

EDIT: This proposal has expired. See this replacement proposal.


[Passed] Proposal to provide NBT/USD dual-side liquidity
[Withdrawn] Proposal for low-fee USD dual-side liquidity
#2

Done :slight_smile:


#3

I view 5,000 NBT to be an unreasonably high rate. The rate you are proposing seems to imply a high risk of the peg failing, which I believe is not true. This fee is especially high given that you would face no crypto-to-crypto exchange risk on a NBT/USD trading pair, and would have a safety net of @KTm’s buy walls to sell all your purchased NBT at the end of 30 days.

At the time of your last proposal, NSR were sold for 0.0018 USD per NSR from Jordan. This would give 3M NSR a market value of $5,400.00 US. NSR were not publicly traded until after you had begun your liquidity operations. For this fee you provided liquidity of 20,000 NBT, implying an effective fee of just over 25%.

If I understand your proposal correctly, you are providing half the liquidity to shareholders that you previously did for almost the exact same fee.

I would much rather see a custodian like @KTm or @jmiller transition to providing services on the NBT/USD pair once they feel it is appropriate, as they are charging approximately 2% compared to your 50%.

I will not be voting for it in its current form.


#4

Actually, @KTm is already operating on this currency pair. The difference is that this proposal brings new money, from outside the Nu ecosystem, to the support walls. KTm and Jmiller are charging low fees because they are not risking any of their own money – their buy support comes from the sale of NBT that was created on their behalf.


#5

I should have been clearer - providing services solely on the USD/NBT trading pair once it is appropriate.


#6

Here’s how I understand the proposal…

  • Personal stake of $10,000 equivalent fiat is placed on CCEDK. This is used to operate a NuBot for 30 days.

  • At the end of 30 days, the personal stake will be in the form of either: i) $10,000 equivalent fiat, ii) 10,000 NBT, or iii) a combination of fiat and NuBit equaling the original capital. The personal stake is then removed from the exchange. Compensation is 5,000 NBT, which is a 50% profit (not accounting for transfer fees).

  • Risks: i) CCEDK default and ii) loss of the NBT-USD peg.

Did I summarize it correctly?


#7

@sportscliche That’s a good summary, but I would highlight that risks include (but are not limited to):

  • Exchange risks:
  • CCEDK default
  • CCEDK hacking event
  • Personal hacking event (API keys must be kept online in order to operate NuBot, and funds are not insured by the government)
  • NuBits-specific:
  • Loss of NBT peg, leaving the operator “bagholding” NBT that are no longer worth $1
  • NuBot malfunction: self-trading or trading loss (when this happens to @KTm, shareholder funds are lost, not personal funds)
  • Regulatory:
  • Reporting requirements to local governments (example: FBAR filing)
  • Tax implication

If you feel that these risks are minimal, then I would invite you to submit a proposal to provide liquidity. @JordanLee’s objective in offering the NSR bounty last month was to jumpstart a stream of proposals such as this, to create an open market for this activity.


#8

Thank you, everyone, for your feedback. I have brought forward a new proposal for your consideration.

This proposal has now expired. If it passes, I will send the granted NBT to an unspendable address to annul it.