About how Nu can make revenues - June 11th, 2016

[cryptog]

It seems that on the long term, we cannot sustain Nu and NuBits without finding ways to make profits.

Our primary and sole market has been the BTC traders/hedgers market since inception but the conclusion with the failing peg is that we cannot rely only on it right now, given our small scale.

The reason is that we are providing our hedging instrument = NuBits for free.
and the sporadic NuBits sales does bring us revenues but in a very unpredictable way.

This thread is intended to keep track of all the different ideas/proposals/suggestions of tools/business models/services that any individual can come up with to generate revenues and profits for Nu.

This thread is a wiki so anybody can edit it.

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• NuBits cost API
  https://daology.org/u/coingame/articles/8fe7550299d217e17fcb0a8f84c01f0edb64d4ce

[Sabreiib]

Feasible profit model discuss

[image] This was Hayek’s suggestion. we have two ways to control the quantity in circulation… 1) by selling/buying We sell a little higher and buy a little lower, this can be adjusted to sell@1.02/buy@0.95 or even lower. (transaction fee) In this way, we complish two missions in one step: make profit and buy back NBT. So that we can control the NBT quantity in circulation. 2) by lending Nu system lends NBT to custodians by using their Nushare as a guarantee because nushares is o…

This topic should be discussed as early as 2014, sadly we return to the origin point with lots of debts.

Feasible profit model discuss

The dividend and parking interest should be backed by our revenue, if not, our system is in danger, maybe OK, maybe a bank run.

You know from beginning our credit/reputation is zero, we need to convince our customers that we can buy back all the issue NBT.

There are lots of speculators and hostile attackers on internet and anomynous, if we pay out dividend more than our renenue, they may find a chance to attack by suddenly sell all of NBT in their hands and spread rumors we are near bankrupt.

The public always easily get panic. Wealth investors may save our system once but can’t withstand continuously leaking. If we can’t maintain 1$ and build up a buy wall @0.9$, our reputation is damaged.

If all the shareholders sell their dividend(PPC) and build buy wall @0.99$, which means the dividend return back to system, that’s fine. If there are only several shareholders, maybe all of them are helpful. But if there are 1000 custodians, I guess quite some holders will NOT return money to system. That’s tragedy of commons: more and more selfish people ruin the whole thing.

[Sabreiib]

I suggest after B&C launched and arrange some profit to Nu for NBT’s FIAT token function.

EDIT: online content consumption is also a potential profit, when websites receive customers’ payment, 1% of NBT destroyed.

[Confucius]

I have a couple of ideas for Nu to make a little bit of money here and there. And some ideas for stabilizing NBTs vs BTC while avoiding, to a certain extent, counter party risk. Like getting off oil, I don’t think one silver bullet is the answer, but several silver bullets.

Stabilizing:

Premise: Nu avoids holding assets in USD on exchanges b/c of exchange default/theft risks, so we put them in BTC which has it’s own risk of large swings.
Suggestion: There are several other currencies designed to peg USD, Nu buys into those currencies for stability because, in theory, they should not fluctuate vs. our peg nearly as much as BTC does. I think some of Nu’s assets should be held in these and they can be held away from exchanges.

Premise: NBTs moves inversely with BTC.
Suggestion: Nu buys short positions to hedge BTC’s volatility.

Revenue:

Premise: Nu provided/ was providing/ will provide a hedging service. That service shouldn’t be free
Suggestion 1: Nu only provides liquidity at a fixed rate (pegged at some % dollar) at a % of it’s assets over time. By this I mean, something like only 1-2% of Nu’s assets are available to buy NBTs at $.99 per day. After that, it’s dynamically spread traded by Nu. Another way to put it, make the buy/sell walls much smaller, but slowly replenishing, and if anyone has to trade more than a certain amount of NBTs for BTC, they receive a little less than the peg, the more they need to trade, the less they receive/NBT.

Suggestion 2: Until Nu gets the peg back, Nu spread trades NBTs and NSR.

Premise: Nu wants to be in as many markets/ exchanges/ venues as possible to provide it’s services.
Suggestion: Why not, since Nu is there already practice some inter-site arbitraging? It would make the peg as accurate as possible by evening out BTC and whatever currencies Nu is concerned with.

Conclusion

I think, ultimately, for Nu’s experiment to work (at least until the liquidity engine is running at full steam) it needs to behave less like a 3rd world country, asking for loans and financing to support it’s bleeding to death, and more like an organism, reaching out and gathering nutrients from wherever it can while being as efficient as possible in the use of those nutrients.

[nmei]

Premise: Nu provided/ was providing/ will provide a hedging service. That service shouldn’t be freeSuggestion 1: Nu only provides liquidity at a fixed rate (pegged at some % dollar) at a % of it’s assets over time. By this I mean, something like only 1-2% of Nu’s assets are available to buy NBTs at $.99 per day. After that, it’s dynamically spread traded by Nu. Another way to put it, make the buy/sell walls much smaller, but slowly replenishing, and if anyone has to trade more than a certain amount of NBTs for BTC, they receive a little less than the peg, the more they need to trade, the less they receive/NBT.

This is good an partially enabled with the order books we have…But the Nu operator would have to limit the funds they have. Once they’re gone they’d have to re-adjust parameters.

I think selling Nu should always be closer to peg than buying Nu.
So like 1%/2% initial
Then 2%/5% after

Or something…just thoughts.

I mean this is what spread traders do now right? Could Nu do this in the current Nu market? Its been mentioned before - take a stand at whatever the price is and spread trade until the price is back to $1. Good slow pump…without the dump.

[Confucius]

I mean this is what spread traders do now right? Could Nu do this in the current Nu market? Its been mentioned before - take a stand at whatever the price is and spread trade until the price is back to $1. Good slow pump…without the dump.

This seems to be the obvious solution.

[Cybnate]

Providing liquidity only on fiat pairs or with other stable coins. Only provide liquidity to NBT/BTC pairs and other volatile pairs when at least 33% of the transaction costs charged by the exchanging platform can flow back to Nu as compensation or that the transaction takes place on the Nu blockchain (e.g. with B&C). In the latter case at least 10% of the fees would be required.

Although early days, I believe eventually there is money and risk in liquidity provision. Nu shouldn’t give this away when dealing with volatile trading pairs. The cost of keeping fiat pairs for exchanges is relatively high due to all the legal stuff. There should be a business case for a stable coin mimicking fiat, like NuBits, but maybe it is too early.