CNGN Trading Operations: Problem Statement

Overview

CNGN manages market-making positions across multiple venues to provide liquidity for the Nigerian Naira stablecoin. The goal is delta-neutral operation (~50/50 USD/NGN exposure) across the portfolio while capturing 10-30 bps per transaction through cross-venue arbitrage.

Positions & Venues

Future pairs: CNGN/ZARP, CNGN/IDRX (via USD intermediary)

Venue-Specific Operations

DEXs — Biggest Operational Headache

Current Process:

• Provide two-sided liquidity in concentrated LP positions
• Set min/max price range (~150 NGN wide, e.g., 1400-1550)
• Range set based on historical 5-6 month price bounds, not mathematical model
• Use separate wallet for market-making trades to adjust pool price
• When price exits range or pool imbalances: collapse position, reset range, rebalance

Pain Points:

1. Constant manual intervention — 2-5 adjustments daily during volatility
2. Rebalancing coordination — Must move funds between wallets when one side depletes
3. Multi-sig friction — 2-of-3 Safe wallets require coordinating multiple signers
4. No price reference — Manually checking external rates before adjusting
5. Range management — Wide ranges for convenience expose them to arbitrage/drain risk; tight ranges require constant updates
6. Operational hours — Volatility events require 2-3am interventions

CEXes (Quidax for now, VALR later)

Current Process:

• Set ~40 limit orders across buy and sell sides
• Price ladder: current rate ±1, ±2, ±3... up to ±20 NGN
• 5% of allocated liquidity per price point
• Adjust 4-5 times daily during volatile periods

Pain Points:

1. Manual order placement — All orders set by hand via UI
2. Frequent repricing — Must cancel and replace orders as market moves
3. Strategy iteration — Still A/B testing optimal spread/depth configuration
4. API unused — Quidax has API but no programmatic integration yet

Wallets (Blockradar, maybe other B2C providers later)

Current Process:

• Set fixed swap rate for each direction (CNGN→USDT, USDT→CNGN, etc.)
• CNGN is sole liquidity provider for swaps
• Earns ~15 bps each direction (~30 bps round-trip)

Pain Points:

1. Rate isolation — Rates set independently rather than referencing other venues
2. Manual updates — Price changes require manual intervention
3. No arbitrage integration — Should be part of cross-venue strategy

CNGN ↔ NGN (On/Off Ramp)

Status: Well-optimized. API integration exists. Not a priority for automation.

Global Challenges

1. No Clean USDT/NGN Price Feed

The Problem: There is no reliable, clean source for the USDT/NGN rate.

• Bybit P2P: Primary reference, but first 5-10 orders are typically fraud
• Filtering required: Must check transaction count, reviews, completion rate
• Azza dashboard: Previously provided filtered rates but stopped working
• CBN rate: Not representative of actual market

Impact: Every pricing decision across all venues starts with an unreliable input.

2. No Global Position Dashboard

The Problem: Portfolio state tracked in Google Sheets. No real-time view of:

• Total exposure by currency (CNGN, USDT, USDC, NGN)
• Position sizes per venue
• Delta neutrality status
• P&L by venue

Impact: Cannot quickly assess if rebalancing is needed or measure strategy performance.

3. Cross-Venue Arbitrage is Manual

The Problem: Price discrepancies between venues (DEX vs CEX vs Blockradar) create arbitrage opportunities that require:

• Manually spotting the discrepancy
• Coordinating multi-sig transactions
• Executing across multiple interfaces

Impact: Arbitrage profits left on table; response time measured in minutes/hours, not seconds.

4. Rebalancing Friction

The Problem: When liquidity depletes on one venue (e.g., all CNGN sold on Aerodrome):

1. Identify the imbalance
2. Determine source wallet with excess
3. Coordinate 2-of-3 multisig signatures
4. Execute transfer
5. Redeploy liquidity

Impact: Slow rebalancing during volatility = positions go stale, arbitraged against.

Security Considerations

Current State:

• 2-of-3 Safe multisig wallets
• Keys in paper wallets (desk operations separate from reserve HSM)
• No automated execution (all manual)

Desired State:

• Hot wallets with limited funds (~10 trades worth)
• Automated execution for routine operations
• Monitoring shifts from "watch prices" to "watch funding levels"
• Reserve multisig only touched for periodic hot wallet refills

Key Constraints:

• Cannot expose large amounts to hot wallet risk
• Must maintain audit trail for compliance
• Multi-sig approval still required for significant fund movements

Priority Summary

Success Criteria

A solution should:

1. Reduce manual intervention from 5+ times/day to 1-2 monitoring checks
2. Provide unified price reference that all venue operations use
3. Show global position state in real-time across all venues
4. Automate routine rebalancing within pre-approved risk limits
5. Maintain security through limited hot wallet exposure and audit trails
6. Be extensible to new venues (Valr, Busha, future ZARP pairs) and new pairs