patrickdugan
commented
2 years ago This is obsoleted by recent tickets about a more sophisticated weighting system that responds to volatility and filters WT turn-over (and by proxy perhaps legitimate rapid turn-over).
This theory was more optimistic about arb but it's really about cost and rate limiting.
A key experimental part of Native is how the VWAP is based. For instance, ALL for LTC VWAP is simple. But what about LTC/USD, that could eat its own tail and use LTC for USDL trading, but the value of USDL depends on this contract. sLTC for LTC can tell you how stressed the ALL/LTC contract is. ALL for USDL * ALL for LTC VWAPs could weigh in to what the LTC/USD settlement price is. We could get fancy with weighing these by volume, but LTC volumes can be printed at some fee cost and miner fee cost. Maybe we should model that, but more importantly, people need to see the settlement pricing as not-arcane, as something they can easily calculate and predict, so perhaps fixed weightings and running triangular arb bots on day 1 is the best move.
The idea is that there are multiple things to arbitrage that are related, it costs money to manipulate them, and in tandem they act like a structure that is resilient to outside stressors.
It's like https://en.wikipedia.org/wiki/Le_Chatelier%27s_principle; let's have a system where the new energy can get diffused through the different parts of the structure, bending it by not breaking it.