This comment is a general reminder for the governance forum:
This applies to everyone in this thread 
Thanks Brave for your measured response. Let me try and answer and elucidate a few things, keeping in mind this is just the humble opinion of an individual holder.
Firstly, we should really start thinking about wNXM and NXM as a single token. I’ve noticed two arbitrage bots that arb between the 1inch limit book and Uniswap against the RAMM. This means that in absence of bid liquidity from long term holders, any wNXM wanting to exit can only exit via the RAMM. Not unwrapping doesn’t mean that RAMM liquidity won’t be used.
Now that has been clarified, I don’t think I have a specific figure in mind for additional ETH liquidity injection, but I think what the community of holders want to see is reassurance from the team that parameters are flexible and can be changed/adjusted and that the 43k ETH previously voted on can be flexed upwards if need be. I was quite shocked when I saw this 200k+ redeemer begin to sell down his holdings as I assumed he was aligned in my prior spreadsheet I posted. He alone, as you mention, has taken over 60% of the RAMM liquidity thus far. So just that reassurance from the team would be great. If other members have an actual incremental figure, I implore them to post.
On speed, it is indeed excruciatingly slow, maybe it starts getting better once this person divests his holdings completely. My view is that it needs to be 2x faster.
Thank you.
All members agreed something had to be done about the capital lock. So they voted.
Therefore : 1) mostly sticky capital left 2) no intention to modify anything from sticky capital since there is now a long term solution implemented.
There is indeed no value-add here. You should have understood that when voting.
Also the game is fair for everyone, there is no reason the whales you complain about should take the 7% haircut and you shouldn’t.
The sooner you accept it, the better off you will be.
Most of the discomfort experienced by mutual members willing to exit comes from the fact that the mechanism is akin to trying to empty a lake with a tiny pipe. We all experienced the pain of standing in a slow-moving queue for hours, and how it can make one nervous.
We should be able to collect more data on the amount of NXM willing to exit when the total ETH redeemed reaches 50-75% of the allocated ETH for the initial exit period. fastRatchetSpeedb could have been higher at the start of the initial exit period to facilitate early exit and create a smoother experience, but I think it is too late to change it unless we agree to increase the initialBudget.
I would advocate for leveraging the assessment of appetite for redemptions within the next 24 days to consider an intermediary period for RAMM, which could use 50% (or less, depending on data) of the parameters set for the initial exit period, for example:
This would offer optionality and avoid the abrupt difference between the current early exit period and the much slower normal RAMM parameters.
Thanks for the detailed answer.
Regarding the wNXM/NXM, I think they are equivalent, and any sell on the wNXM Uni market will be arbitraged by a bot, making the RAMM the liquidity sink at the end.
Currently, there is no strong case for holding wNXM aside from redeeming when the price is acceptable. Long-term holders will unwrap and participate in governance.
Some holders would also rather not unwrap because there’s a KYC element. Hence, I think it’s fair to believe that a large part of this supply will redeem. It’s also the consensus among holders.
As @NXMBull said, I think it’s fair to see some reassurance from the team about the willingness to support an orderly process, and not a PvP match between holders. 50% could be a good quantity in my opinion, but I’m sure others can have a say.
In any case, most of the ETH in the treasury is unused currently, so adding more liquidity is akin to a Pareto-optimal play where we make the NXM holders whole without any added costs.
There are many things to unfold here, and I don’t think this goes the right way, either in the short or in the long run.
The long term solution, in the case we have a significant amount of NXM holders still left but wanting to redeem, will end up in a worse situation than now.
This would probably create a governance crisis as those holders will be very vocal and unhappy about the process, preventing Nexus Mutual’s restructuring.
No sane investor would enter ever again, if the insiders openly states that taking a 7% haircut on the exit is your responsibility, while they could improve the conditions at no cost.
The voted amount was an estimation. DAOs are fluid and this is not a constitutional vote. If the solution found is suboptimal, nothing prevents a corrective vote to improve it. It’s the daily life of democracies. Saying that it won’t change is a fallacy to prevent action.
hello why don’t we just double the size of initialBudget, and then once the 7D Trailing Average of Daily ETH Redeemed drops below 100 (or whatever number we consider to mean short-term exitors have all exited), reploy the contract again with an initialBudget of 0 (thus ending the fast ratchet period).
Would be really simple to do, guarantee everyone who wants to exit can so we all have peace of mind.
need more data ricky? was bcap included in your estimates?
This is the most elegant and simple answer really. We’re not going to write enough covers in the next few months for the doubling of the initial budget to be an issue, and the ratchet doesn’t keep ratcheting past BV, so there’s no risk of overpaying for NXM. Once pent up initial exit demand has subsided and initialbudget is set to 0, the mutual reclaims the leftover budget for writing covers, and by definition everyone has had a chance to exit.
Some good discussion here - I don’t proclaim to know what the exact numbers should be - I don’t think anyone does. There are suggestions to double the budget. I think the suggestion by Ana above is a fair one - double it, and then when RAMM activity slows down, the liquidity can be reined in.
Blockchain Capital’s sales today escalate the need to engage in productive discussion sooner rather than later - even if it takes some time to determine whether and the extent to which to change parameters – so that there is a plan as we move toward the end of the initial period. It is worrisome to see one of the mutual’s oldest partners selling tokens at a 30% discount to book, in a fund that is not even in liquidation mode (BCAP III DLF).
Yeah, the lack of engagement from Blockchain Capital in the initial process only to start exiting extremely aggressively is deeply frustrating. We have to assume that Bcap wants to fully divest their position and that the initial stage of Ramm is underfunded by at least 10k Eth.
I wanted to provide an update from the Nexus Mutual team. To start, I wanted to emphasize that the community played an integral role in determining the launch parameters for RAMM in the months leading up to the on-chain proposal, where members unanimously voted to launch the RAMM with the current parameters.
As members, you can create a formal NMPIP with the suggested changes to the RAMM’s parameters and I will ensure it is whitelisted on-chain for a vote. The RAMM’s parameters can be updated through an on-chain governance vote, and I would encourage everyone here to form a consensus on the final parameters you would like to propose, so it can move from a request for comment (RFC) to an NMPIP.
Any one who wants to put together the NMPIP can use the resources in the Nexus Mutual documentation and the guidelines on the governance forum. Members can go through the governance process and raise an NMPIP on chain through a no action vote, which the Advisory Board would then whitelist on chain.
I’m happy to serve as a resource for community members who want to raise an NMPIP.
A point of clarification: there isn’t a limited number of days for people to exit. The initial exit period will last as long as the initialBudget amount does, so until members redeem the remaining 32,790 ETH, the initial exit period will still be in effect.
During Part 1 of the liquidity parameters discussion, the community talked about redemptions after the RAMM was implemented. So far, we’ve seen 98 members redeem NXM for ETH in varying amounts, with a total of 561,381 NXM redeemed for 11,026.9 ETH.
Some large holders have redeemed NXM for ETH, but this was anticipated and previously discussed in Part 1 of the liquidity parameters discussion. That discussion resulted in a signalling vote, where members signalled their support for 30% of the Capital Pool as the initialBudget for the initial exit period. A total of 1,352,548 NXM (20% of total supply at the time of vote) participated in this signalling vote.
We even had other community members note on the high rate of community participation in this discussion and vote:
As I shared above, I’m happy to serve as a resource for community members who want to raise an NMPIP to update any RAMM parameters folks here would like to propose changing.
As far as I understand, no one from the Foundation plans to comment on any member’s decision to redeem NXM. Everyone is free to review on-chain activity and speculate on their own, but unless individuals who redeem NXM decide to issue a statement, the Foundation will not issue any comment.
Every member has the right to redeem their NXM for ETH. The tokenomics revamp initiative was started for the benefit of all Nexus Mutual members (i.e., Mutual members overall and NXM holders).
The DAO R&D and Community teams both provided regular updates on the tokenomics project, and the draft whitepaper was shared four (4) months ahead of the on-chain vote.
During the RFC phase, no community members commented on the governance forum in response to the post. The only comment I found during that time frame on Discord was the one below, which is positive:
In both the draft whitepaper and the finalised whitepaper, the RAMM’s operation is summarised and the following is outlined in both the draft and the final whitepaper:
To enable price discovery, there is a ‘ratchet’ mechanism that moves the spot NXM prices up towards Book Value over time from below for the Below Pool and down from above for the Above Pool.
This was illustrated in the Pre-Discussion Phase: RAMM Education Guide, Call for Questions post on the governance forum, where Rei’s simulations were highlighted in August. Rei also shared a variety of simulations for the initial exit period in Part 2 of the liquidity parameters discussion, with only one person commenting on the forum post.
Since launch, the RAMM has been working as designed and as outlined in the Ratcheting AMM whitepaper.
While I understand the call to poll NXM holders to see if they plan on redeeming, I personally still feel this won’t be effective. I’m happy for someone in this discussion to conduct a poll, but if the people here aren’t willing to publicly share the amount of NXM they plan to redeem, it’s highly unlikely that the broader community of holders will either.
Hard agree. No sense polling here.
There were assumptions made about the demand for redemptions when finalising the RAMM parameters, and most of those assumptions put forward by the team included VCs being long term aligned.
One of, if not the, biggest VC NXM holder is now redeeming. At least in part, and we’d have to assume in whole. The foundation needn’t comment on individual redemptions, that’s fair enough.
But can we get some comment on how this changes the underlying assumptions about redemption demand, and how the RAMM parameters as they’re currently set will handle that?
Thanks
Hi all,
Some thoughts from me:
First of all, totally appreciate the frustration of seeing someone jump in front and having to wait for the price you want. Especially the case if you’ve been an active member of the mutual and locked for a long time, as some in this thread and on Discord have been. I don’t think anyone in the mutual, including the team, wants people to feel like they’re trapped. One of the goals of this whole exercise is to allow those who want to exit to do so and allow the community to return its focus to growing through covers, new capital provisions and sharing risk.
The parameters of the RAMM, especially around liquidity sizes and timings were subject to a pretty involved governance process very recently, with multiple viewpoints and balancing the above objectives between people keen to exit and long-term aligned, and a high turnout. Also worth noting that significant security work has been done on the smart contracts and associated parameters as they are now, a lot of which would need to be re-done for any changes. To change the parameters or structure straight away after a week and not waiting to see how the whole initial budget pans out would, to me, feel like a knee-jerk response.
The goals of the revamp are:
So far, in my opinion, it’s doing (a) and (d) pretty well, with (b) subjective and (c) to be seen.
Also wanted to note that because all of this has happened in the open, there has been significant capital buying up huge chunks of the wNXM market and waiting for the RAMM launch to redeem and make a profit. Right now, there are still actors and arbitrageurs buying wNXM, unwrapping and redeeming from the protocol at a profitable price because people are willing to sell to them.
The mechanism overall seems to be doing what it was designed to do and enabling the first exits to those willing to accept the lowest prices. I know reasonable price is subjective. It’s worth noting we were hovering around 1/3 of Book Value in terms of the available exit route for members at the time that the work began. The RAMM overall was always clearly designed to find the market price, not set it. Even though the initial parameters were modified to significantly pull towards book value, reasonable price remains decided by the market.
Reiterating the technical point that Brave made - the parameters move to Long-term state when the initial budget of 43,850 ETH is injected as liquidity, not strictly after 1 month.
No matter how robust the gov process was, there is now more information. Once the initial liquidity is used up - which it will be - it will need to be increased, and it shouldn’t take six months to do so.
With all due respect, even blockchain capital feels trapped. They’ve demonstrated it and I understand are planning to keep selling.
I completely agree with Rei here.
More broadly, members are free to propose changes via governance as they wish, Brave has offered to assist in the process if you desire it.
Personally I will be voting against any parameter changes at the moment. I’m always open to new information and, as always, reserve my right to potentially change my view. I just don’t see any data that warrants a change right now.
I’d suggest that members who are unhappy with how things are going either:
#DAOLife
This may be true.
An alternative explanation is the inevitable shift from the mutual towards stablecoins. Nexus Mutual won’t just be a beta ETH play like it has been for the past few years. This forces long term members to rebalance from NXM to ETH.
let’s get this trending on twitter
What sort of data would you be looking to see?
The biggest concern from what I gather at the moment is simply that folks want to ensure the initial liquidity phase is enough to accommodate all short-term exitors.
What is going to end up happening is:
A) It is enough.
B) In around ~30 days the initial liquidity runs dry and a lot of folks are vocal about still wanting to sell, and we initiate param changes then, which may take another month.
C) In around ~30 days the initial liquidity runs dry and a lot of folks are vocal about still wanting to sell, but you still are not open to param changes.
Think it is fair to say that no one knows for sure which of the above will happen. But we can avoid all three if we just:
As mentioned by others this wouldn’t affect the Mutual’s ability to write covers, would guarantee the Initial Liquidity phase ends when everyone who wants to exit has, and would be easy to implement (just one param change that operates independently of other params). This would take the guesswork out of the three options above, easing the stress of many I’m sure, and as far as I can tell would not adversely impact the Mutual in any way. What are your thoughts?
Hi all. Wanted to address the questions around BCAP:
In the course of managing the digital assets held in our funds, from time to time we readjust our positions, which may involve increasing or decreasing our holdings in one or more digital assets. We practice rebalancing periodically for a number of organizationally prudential reasons that are not necessarily market or project driven. In the case of our recent sales of NXM, this activity was limited to holdings in one fund and was done predominantly for operational and administrative purposes. We continue to be very supportive of the Nexus Mutual ecosystem and community. We have no near term plans to adjust our NXM positions in other funds.
Hopefully this helps inform the discussion.
Separately, to chime in on the parameter discussion, I agree with comments from Rei and Hugh and don’t think a parameter change is necessary.
