Liquidity Parameters Discussion | Overview
Overview
Now that the Pre-Discussion Phase: RAMM Education Guide, Call for Questions has come to a close, we are kicking off Part 1 of the Liquidity Parameter Discussion.
The Liquidity Parameter Discussion will be split into two parts, and each part will take place over a two (2) week period. The timeline for these discussions is presented below.
Liquidity Parameters Discussion | Part 1
During Part 1, the R&D team will ask the following three (3) questions—which all revolve around determining how much ETH should be provided as liquidity.
- What is the amount of NXM/ETH that should be able to be redeemed and exit in the short-term at a price close to book value (BV)?
- Over what timeframe (the initial exit period) should this NXM be redeemed?
- In the long term, how long should it take to get down to the Minimum Capital Requirement (MCR) based on the current cover amount, assuming everyone exits at maximum speed?
This discussion will take place from Monday (14 August) until Saturday (26 August).
- During the first week (14–20 August), members can discuss, share analysis, and come to a consensus on the potential answers to these questions.
- Once members have shared their views, the R&D team will use the community’s responses to create non-binding Snapshot signaling votes to gauge sentiment around how much initial and ongoing liquidity should be provided.
You can participate in the Liquidity Parameters Discussion | Part 1 in that discussion thread.
Liquidity Parameters Discussion | Part 2
During Part 2, the R&D team will initiate a discussion where members will determine what the parameters should be set at to achieve the desired outcomes that members have signaled support for in the Part 1 discussion. This discussion will also determine the slippage on swaps within the RAMM, and discuss capital capture in the Above Pool.
We expect that the R&D team will provide some suggested parameters to meet the Part 1 decisions, with the members debating those and proposing alternatives if needed.
The parameters that will be discussed will be:
| Parameter | Description |
|---|---|
target_liq |
Target ETH liquidity across both pools |
liq_speed_out |
Max amount of ETH that is removed from the pools daily |
liq_speed_in |
Max amount of ETH that is added to the pools daily. There is likely to be an initial and long-term value for this parameter. |
initial_reserve |
ETH amount to be redeemed before switching from short-term to long-term liq_speed_in |
ratchet_speed_a |
Daily decrease in spot_price_a price when above target value |
ratchet_speed_b |
Daily increase in spot_price_b price when below target value |
This discussion will take place from Tuesday (29 August) until Monday (11 September).
- During the third and forth week (29 August to 11 September), members can discuss, share analysis on the potential parameter settings, and come to a consensus on the potential parameter settings.
- Once members have shared their views, the R&D team will use the community’s responses to create a non-binding Snapshot signaling vote to gauge sentiment around the potential parameter settings for the RAMM.
You can participate in the Liquidity Parameters Discussion | Part 2 in that discussion thread.
Timeframe and Participation
We encourage ALL members to participate in the Liquidity Parameters Discussion. Every member has a voice and is encouraged to share their view. The R&D and Community team will facilitate the discussion and share the initial posts, as well as providing some guidance, but members will be the ones ultimately answering the questions and making the decisions.
We ask that everyone stays on topic during the discussions in Part 1 and Part 2. The full timeline for the remaining parameter discussion is noted in the next section, as well.
We are looking forward to hearing from members like you, sharing various analysis and data, and reaching consensus on the parameters for the RAMM.
Timeline for parameter discussions
- Pre-Discussion Phase: RAMM Education Guide, Call for Questions | COMPLETED
- Liquidity Parameters Discussion: Part 1 | COMPLETED
- Part 1 Discussion: 14–20 August | Discussion can continue until Saturday (26 August), but the signaling vote will begin on Monday (21 August)
- Part 1 Snapshot signaling vote: 21–26 August
- Liquidity Parameters Discussion: Part 2 | COMPLETED
- Part 2 Discussion: 29 August to 11 September | Discussion can continue until 17 September, but the signaling vote will begin on Tuesday (12 September)
- Part 2 Snapshot signaling vote: 12–17 September
- Oracle Buffer and Initial Price Parameters | COMPLETED
- Timeframe for discussion: 1 week | 18 September to 25 September
Next Steps: as per @Rei’s latest update in the Tokenomics Update - October ‘23, the Engineering and R&D teams are progressing through the audit stage, with Chaos Labs conducting the economic audit and iosiro, who will be conducting the Solidity audit, will begin their audit on 23 October.
- Once the audits are finalized and all mitigations are in place, this will proceed to an on-chain governance vote. A Nexus Mutual Protocol Improvement Proposal will be posted two weeks before the proposal can be put on chain.
- The DAO Community team will issue an announcement and share resources with all members well before the on-chain vote takes place, so members are aware and can participate in the vote.
Questions about the RAMM
In the Pre-Discussion Phase: RAMM Education Guide, Call for Questions discussion, the R&D and Community teams provided a simplified explanation of how the RAMM works, how liquidity is managed within the RAMM system, how the ratchet mechanism works, how the internal NXM price is determined within the RAMM, and the full list of parameters.
If you want to ask questions about the RAMM or how the system works, please do so in the Pre-Discussion Phase: RAMM Education Guide, Call for Questions thread. All of the resources you will need to understand the system are included in this guide.