Burn is a similarity of pledge(you call it BTS style), when I pledge my NSR for NBT, to some extend I actually burn NSR for NBT, and when I wanna take back my NSR collateral by giving out NBT, I burn NBT for my NSR. The only difference is how can I get back my NSR on same ratio.
As far as I known, BTS has a fixed pledge ratio which is ridiculous. In my suggestion, the pledge ratio is flexible through which we control the NBT supply.
That’s what I call a feedback loop. Distributions will increase NSR cap in an intangible way not directly related to the NSR supply.
Why should we let you get it back at the same ratio? NSR/NBT is essentially just the price of NSR. Why should we give you the same pledge rate going in as coming out when the NSR price has fluctuated in the mean time?
Also, I advocate for the burn model such that anyone (shareholder or not) can take advantage of the burn rates. I do not advocate requiring liquidity providers to burn NSR to make funds for their own operation. I think we should print those NBT ‘out of thin air’ as a loan against future Nu operations.
Liquidity is a cost for Nu. There are many other concievable sources of profit, including Tx fees, Burn spread, NBT loans, Adoption, and others we haven’t thought of yet. Anywhere a bank makes profit Nu can stand to make profit.
Posts at the top of this thread expressed concern about publicity – whether paid for or free – that the competing crypto-technologies are getting. I think it’s important to ask whether this publicity is in any way effective in generating tangible market interest. It’s no secret that Bitshares is significantly influenced by demand in China. Examination of the recent price trend at its largest exchange suggests that the article in the OP has had little to no impact:
@Nagalim’s diagram highlights an important point of Nu’s design that most of the previous posts seem to be ignoring. For the benefit of anyone who wasn’t here in October, NuShareholders have already passed a motion allowing variable transaction fees to be set in the future. I mentioned in @Benjamin’s economic analysis of Nu’s original design that I agreed with his assessment that variable transaction fees should be an important method of generating profit.
Nagalim also correctly points out that any NuShareholder can start a lending business if they were inclined, which is another way of individually increasing demand for NuBits. Both this and variable transaction fees are methods of properly monetizing the network without increasing the risk of peg collapse.
I’ve argued previously that the current transaction fees (0.01 NBT) are far too low, and I will do so again once variable transaction fees are enabled in the protocol. A sustainable system will see income “earned” from transaction fees being destroyed, as well as secondary income streams like loans, eclipse the amount being paid to liquidity providers each month. The more precisely that transaction fees can be set to the actual value delivered by using NuBits, the lower the odds of ever needing to do another NBT-for-NSR burn. The term “necessary evil” that @Woolly_Sammoth used to describe the current high-liquidity costs is very accurate too - those costs will be lowered through competition in the long-run.
In regards to paid articles (OP): I’ll never authorize paying for them as long as I have an input in our marketing communications. They are ineffective and fail to generate any sort of customer loyalty. The way back to where we were in February is simple: we need to publicly promote our liquidity pools in places like Bitcointalk, we need to improve the quality of exchanges we’re on (which B&C Exchange will be a highlight), and we need to regain an optimistic outlook for Nu’s future. Many of the posts here since February seem to be fatalistic, which is not a view I share. The Nu design has performed admirably under heavy stress and is well-structured to continue its growth into the future.
I had completely forgotten about variable transaction fees.
Also, judging by the ineffectiveness of the Bitshares ads in the graph above posted by sportscliche, I’d say you’re correct.
Crypto competitive transaction fees are no suitable revenue model any time soon. In the total history of Nu there were 690581 transactions according to the block explorer, from which 339668 most likely are staking transactions (every block contains it). Also some of those transactions were NSR transactions. I can prepare the accurate data later if you want.
So in total there were less than 350,000 NBT transactions since the creation of Nu and in total less than 3,500 NBT were burned this way. For the last 24 hours the same calculation based on the estimate shown in the blockexplorer results in roughly 1200 transactions, so 12 NBT got burned.
We are currently paying around 0.25% per day for our liquidity and we are aiming to get around 100,000 NBT total liquidity. This will cost about 250 NBT per day. Parking adds some additional NBT to that.
So 12 NBT coming in, 250 NBT going out. In order to come up with that we would need to use 20x the current transaction fee, i.e. 0.2 NBT (20 cent). This would make NBT at least uninteresting for microtransactions, which however would be anyway critical in the long term due to Nu’s scarce block space.
So is this the strategy to go? Raising fees to > 10 cent and hope that the transaction volume won’t go down? Its very hard to guess what the effect would be and I personally would at least consider it as dangerous.
Well said creon, we’ve talked about the transaction fee(even crypto message service fee,eg, emeth@PPC message) about revenue, but I am afraid this scale of revenue is insufficient, just like creon calculated. Perhaps in future the transaction volume becomes huge and fee income get remarkable, but not in this early stage.
I don’t understand the philosophy of Nu system, there are already hundreds of NSR holders and crypto asset(NSR) in their hand are millions of USD value, this is a mighty army and why do we need to hire “mercenary” and bother ourselves how to pay them ? I suggest just disband them and do the work by ourselves(liquidity service, parking NBT etc).
Nagalim said[quote]
Why should we let you get it back at the same ratio? NSR/NBT is essentially just the price of NSR. Why should we give you the same pledge rate going in as coming out when the NSR price has fluctuated in the mean time?
Also, I advocate for the burn model such that anyone (shareholder or not) can take advantage of the burn rates. I do not advocate requiring liquidity providers to burn NSR to make funds for their own operation. I think we should print those NBT ‘out of thin air’ as a loan against future Nu operations.[/quote]
Let’s raise an example, now the NBT demand decrease, Jordan Lee calls to burn NBT for NSR, if you have 1000NBTs, do you agree? Maybe, maybe not, because you are disatisfied about the price, you may have an evil thought that let NBT pegging in danger and NSR may plumb and then you can burn NBT for much more NSR.
Obviously, you are not the only one who thinks so.
My pledge scheme is from FA Hayek’s idea, not mine actually, this method force people to tranfer NBT to NSR on the same ratio when they pledged because the pledge contract is short term, and they have no choice, if they refuse to give back NBT, the protocol then confiscate their NSR of more value.
In Hayek’s style, the Nu protocol is the central bank and every NSR holder is tiny commecial bank who borrows NBT from central bank(fully decentralized), and the protocol(central bank) is under the vote by NSR holders.
I do think this is interesting but I still cannot fathom how the protocol can keep track of exchange rates at a quick enough pace without resorting to external oracles or centralized data feeds. Perhaps it’s a moot point, but we’ve already had a glimpse of how difficult it is to appropriately scale parking rates in response to evolving market conditions.
Third-party services will help, but I’d be very, very wary of direct integration into the protocol layer.
How do we capitalize on this money? Jordan is already auctioning off NSR. We have no NBT reserve.
I don’t like the current burn system, I also think it’s not fully functioning, but it’s new. I argue for decentralized burns whereby the market could burn at will based on prices that voted on by shareholders like park rates are. In this system, if you have 10,000 NBT and you try to manipulate the price of NSR down, you will need to spend far more money in NSR to convince the shareholders the price is lower than it would earn you. If the peg were to fall, people would burn NBT for NSR and the NSR price would go down some, sure, but that’s not manipulation, that’s as it should be. Then when you burn your NBT for NSR, you will get more NSR, but NSR has been diluted and it’s not worth as much. We encourage this kind of gaming of the market, as we will often win if we keep our spreads big enough and it helps feed adoption and evolution.
Liquidity Pools take a NBT loan out and give it to trusted members to distribute amongst people who are providing money to support Nu. It sounds like we’re already doing this, we just don’t put our NSR up for collateral. How would this work with the staking system, vital to the protocol?
This is exactly the revenue model that we should build on. And this does not in any way substitute the current design. Its just that every shareholder has at any time the possibility to create X NBT by burning a security of Y NSR and will get the full Y NSR back if X * (1 + r) NBT will be burned within a specific duration.
This means every shareholder can lend money from Nu according to the base rate as specified by the shareholders. A shareholder therefore becomes a bank and can make a profitable use of the available amount of NBT, just as a bank gets its money from the central bank to make its business.
The whole (expensive) Nu infrastructure ensures you that your funds remain stable in value, while you have all advantages of a crypto currency. This is a product worth using today I think.
All NSR holders are members of the board of directors. They are live people and perceive in the first time how NBT/NSR fluctuates. Assume you’ve pledged 3$ NSR to borrow 1 NBT, during one week, NSR price may drops to 1/3 price, or the NBT demands may flautuate to a level that we need to change the supply.
The problem is voting costs one week to execute, why not add another voting mechanism by private key signature?
There are maybe two private key , one for transaction, the other for vote.You make a vote private key with transaction private key on an offline computer(cold staorage), and use vote key online to sign a vote, it says “My 10 million NSR vote for 1000NSR:1NBT”, your vote broadcast to the whole network within minutes on blockchain. In this way, NSR holders can change pledge ratio from 500NSR:1NBT to 1000NSR:1NBT within one or two days if holders are diligent. Remember that holders don’t need to do that daily, they just do it when needed, perhaps once per month, even per season if NSR price stable enough? BTW, I suggest we port emeth’s message app into Nu so that holders can get intime operation message from VIP.
Assume one day later, new ratio take effect. At this time, some old contracts are due and the new NBT supply halved, we don’t need to pay money to others for parking at all.
This sounds good, now that I think about it. I’m still concerned that it provides a disincentive to hold NSR, however, given random a stable NSR price and burn rate. Maybe it could be offset by a higher minting rate, such that the NSR supply tends to inflate more and burning your NSR at a fixed rate tends to be bad compared to minting it.
I.e. you don’t win unless you get lucky or you make some use of the NBT. We don’t want people burning their NSR, parking the NBT, and getting the NSR back when NSR is worth more, along with some extra NBT, do we? Did that person actually do anything for Nu?
I think its more more appropriate to vote on a pledging rate continuously, i.e. in every block / minute and to take the weighted median over the last 1440 blocks (1 day). This doesn’t have to be very accurate, as long as it is significantly larger (x3 or more) than the market price of NSR. They use just their regular private key to mint blocks and write their rate in it.
This sounds interesting. I already thought about an optional layer on top of the Nu peer2peer network that simply allows to query motion texts from hashes, which would fall back to a very simplified torrent protocol. Distributing motion proposal texts based on their hash would already be a great feature.
This probably should be avoided, although it really starts to get complicated at that point. While your scenario clearly leads to an NBT dilution, it also clearly provides a buy incentive for NSR, because people need them to take this offer. So maybe this could even make sense if NBT demand is high.
NSR are “gold” in holders hands, and they use the “gold” as backing asset to issue a paper money(NBT). When they pledge NSR and get NBT, in protocol’s eyes(central bank), some NBT issued. Then they may lend NBT to someone or provider liquidity with the reward of more “gold”(NSR). Why do you mint NSR? This is the incentive.
This kind of burn is similarity of pledge ratio voted by NSR holders.
We are currently paying around 0.25% per day for our liquidity and we are aiming to get around 100,000 NBT total liquidity. This will cost about 250 NBT per day. Parking adds some additional NBT to that.
We pay 250NBT per day for liquid providers and some NBT for NBT parking.
I suggest we pay nothing to them and do it by ourselves, if one as a NSR holder won’t do that work, get diluted.
Good idea, and this costs little modification to protocol, yes we can tune the period, one week, one day, one hour ,one month etc as needed.
In your system, who votes and provides the proof of stake security? I feel like you are telling me your system doesn’t work with current protocol at all. Who verifies transactions?
The incentive which drives NSR holders to mint, is the same as that drives NSR holders to provide liquidity---->more NSR.
But if I can get more profit by providing liquidity, I won’t mint. But if we increase minting rates to increase incentive, we get hyperinflation of NBT. It’s a risky game, and at no point do we want the network to be vulnerable to the plethora of attacks that come from a single entity holding a large minting stake.
It’s an interesting idea and it can work to some extent, as it is similar to how bitUSD is pegged – someone pledges some Bitshares (300%) and gets to create bitUSD. However BitAssets seems to be in a downward spiral (except for bitCNY) because, I think, the underlying asset (Bitshares) is losing value against the assets bitAssets are pegged to.
Nu is less complex and has marketmakers (LPCs) to provide Nubits user liquidity. It’s an user oriented coin. I think we should keep it always in mind that no type of shuffling between NBT and NSR will do much good if we don’t find ways to make users pay fiat (or real world assets in general) for Nubits/Nushares.