When an order is placed, canceled or packed (even partially), the liquidityinfo RPC method is called te the Nu client.

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Official automated trading bot for NuBits custodians

Disclaimer : this documentation is presently under-development and is therefore subject to unexpected switches

NuBot is a cross-platform automated trading bot written ter java. NuBot is a contraption that helps NuBits custodians to automate trades. Spil explained ter the white paper, a custodian’s core mission is to help maintain the peg while introducing fresh currency into the market.

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Disclaimer . Use NuBot at your own risk


By using NuBot you announce to have accepted the afore-mentioned risks. See the DISCLAIMER.md for detailed terms.

Custodians will use the trading bot and broadcast liquidity gegevens to other Nu clients. Within the Nu system there are mainly two types of custodians: sell side and dual side custodians. Dual side custodians are custodians whose specific function is to provide liquidity for compensation, and they will primarily only provide buy side price support. Merienda their buy order for NBT is partially packed, the bot then creates a sell order for that NBT. Te the case of sell side custodians, the liquidity they provide is secondary to another purpose such spil funding core development, marketing NBT or distributing Peercoin dividends. They want to spend the proceeds of their NBT, so under no circumstance will they provide buy side liquidity. NuBot permits a user to indicate they are either a sell side or dual side custodian. This effect the trading bots behavior is detailed ter the use cases below.

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Dual-side strategy

Very first, someone who wishes to fulfill this role voorwaarde seek shareholder approval via the custodial grant mechanism. Say a particular liquidity provider or LP custodian has Ten million USD he wishes to use to provide NuBit liquidity. He would expect compensation for lost chance cost (he could otherwise invest those funds ter rental property, stocks or bonds) and for the risk of loss via an exchange default, such spil wij have seen with Mt. Gox and others. While the market will continually reprice this, let’s say ter our case the prospective LP custodian determines a 5% terugwedstrijd every six months is fair compensation for lost chance cost and risk of exchange default. So, he promises shareholders to provide Ten million USD/NBT worth of liquidity for one year te exchange for 500,000 NBT. Shareholders approve this using the grant mechanism and he is granted 500,000 NBT. Now he vereiste provide Ten million te liquidity permanently overheen the next year. He may do this through a single exchange or numerous exchanges. Let’s say he does this with a single exchange. He opens an account with the exchange, then deposits $Ten million worth of BTC and exchanges the BTC for USD. Now he is ready to make use of the trading bot. An adequate exchange will expose a trading API and our trading bot implements the API for that specific exchange. Each implementation of a specific exchange API implements an interface to standardize the way the trading bot interacts with thesis diverse exchange APIs. Doing this will permit the LP custodian to come in authentication information into the trading bot for his exchange account. He will then use the user interface ter our trading bot to place an buy order for Ten,000,000 NBT on the exchange. The price will not be exactly one USD, it will be one USD minus the exchange transaction toverfee. If the exchange charges a 0.2% transaction toverfee, he will place a buy order for Ten,000,000 NBT at a price of 0.998 USD. Let us suppose his order is partially packed ter the amount of 1,000,000 NBT. Now his exchange account will contain 9,000,000 USD used to fund an order for 9,000,000 NBT. There will also be 1,000,000 NBT ter the account. The trading bot automatically and instantly place thesis 1,000,000 NBT for sale at a price of 1.002 USD (one USD + a 0.2% transaction toverfee). If this order fills, then the bot should use the USD proceeds to instantly place a buy order for NBT at 0.998 USD. All funds should be continually on order and the LP custodian’s funds should not be depleted by transaction fees. When an order is placed, canceled or packed (even partially), the liquidityinfo RPC method is called ter the Nu client.

See Affixed Diagrams for a visual flowchart.

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Sell-side strategy

Te some cases custodians will spend the NuBits directly and not use the trading bot at all. For example, if core developers accept NuBits spil compensation then Jordan Lee will simply distribute NuBits granted to him directly without the need for any exchange. Let’s examine the case where a Ten,000,000 NBT custodial grant is given for the purpose of distributing a shareholder dividend ter Peercoin. Such a custodian will deposit Ten,000,000 NBT ter a single or numerous exchanges. Te our use case wij will use a single exchange. Merienda the NBT deposit is credited, the custodian will begin the trading bot, indicate they are a sell side custodian and indicate that orders should be created, albeit nothing specific about the order should be entered by the user. The trading bot should opoffering the entire oscilación of NBT for sale using the formula of one USD + transaction toverfee + one pricing increment. Some exchanges permit the toverfee to be discovered through their API, while others do not. If the toverfee can be found through the API, it will. If not, the user should be asked to specify the transaction toverfee. Let’s say our exchange has a transaction toverfee of 0.2% and supports Four parte places te its order book on the NBT/USD pair. Using our formula above, the trading bot would place an sell order for Ten,000,000 NBT at a price of 1.0021. The reason it should be 1.0021 instead of 1.002 is that wij want dual side sell orders to be executed very first, so their funds can be returned to providing buy side liquidity. Each time an order is placed, cancelled or packed (even partially), the liquidityinfo Nu client RPC method is called. Details about this method can be found te the Liquidity Pool Tracking section. Calling liquidityinfo will have the effect of transmitting the size of the buy and sell liquidity pool the particular trading bot is managing to all known Nu peers.

See Fastened Diagrams for a visual flowchart.

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Other strategies

There might be adjusted versions of the two strategies explained above. To request a custom-made build of NuBot to fulfil a particular custodial grant, get te touch.

Alternative strategies : Secondary Peg Strategy : a strategy to let custodian trade of pairs different from NBT/USD . KTms Strategy : dual side Strategy with x% of proceeds from sales kept te vaivén. Verbinding to KTm’s custodial proposal .

Multi-tier liquidity provision

A mobility wasgoed waterput forward by Jordan Lee on Nov 12th 2014 to help guide the development of liquidity operations for the Nu Network. The vormgeving calls for recognizing six tiers to the liquidity operations that support the NuBits $1 peg. Liquidity breakdown is displayed directly into the Nu client, or accessible via RPC directives getliquiditydetails &lt,currency&gt, and getliquidityinfo &lt,currency&gt,.

Tier 1

This liquidity is instantaneously available, being on the order book at the best price (1$ +- fees and spread). It is used by NuBot to maintain the 1$ peg on exchanges, and it is also refered to spil “wall”. Tier1 liquidity will be replenished automatically after it stays at 10% of llamativo wallSize for more than N minutes, defined ter Settings.java .

Tier Two

This liquidity sits on exchanges but is not usually placed on order books, or is placed on the orderbook at premium prices. To understand the details on how Tier2 liquidity is managed by NuBot, please refer to parametric orderbook documentation. It can be promoted to the order book (Tier 1) te a duo seconds.

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Tier Three

This liquidity sits off exchange and is held by liquidity providers te wallets not exposed to counterparty risk or the risk of NuBot malfunction. It can be promoted to tier Two when needed te minutes.

Tier Four

This liquidity can be provided by custodians not dedicated to liquidity operations. A present example are the proceeds of NuShare sales. They are intended for operational and development expenses, but can be used to support the critical function of liquidity provision spil needed. When thesis funds are used for liquidity, they are exchanged from one type of asset to another, but are still available for their innovador purpose, such spil development. Thesis funds can be promoted to tier Three ter hours and the cost is exchange rate risk.

Tier Five

This liquidity presents itself te a decentralized manner from the manipulation of rente rates (park rates). This liquidity is generally buy side, albeit technically it can be sell side ter the case of lowering rente rates. This liquidity is available ter days and the cost takes the form of rente paid.

Tier 6

This liquidity takes the form of custodial grants for sell side and currency searing for buy side (presuming a currency searing movement is passed and implemented spil shows up likely). It takes a week or more to bring to market but has zero maintenance costs.

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