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.
When you mint or provide liquidity, you get more NSR not extra NBT, so the reward has nothing to do with NBT’s inflation.
A single entity holding a large minting stake probably wont suicide since it is the most victim of the attack. This is the PoS common knowledge.
Bitshare is 300% fixed pledge which cannot control the bitUSD supply effectively.
when underlying asset(NSR, BTS) loses value, the ability of issue stable money(bitUSD, NBT) also decreases.
Let’s look back and compare the Market Cap of NBT and NSR since Sep 2014, is NSR insufficent to back NBT? Usually NSR value is enough.
But there must be some abnomal senarios that NBT demands very high and exceeds NSR market, when this happens. We produce extra NBT from thin air just like Kiara did few months agao, it is emergency measure and I don’t belive it last long because the free market not fool:
- they either stop buying NBT afraid of NSR lack backing and turn to our competitors. Sometims we need them to help us, healthy competition, as Hayek said.
- Or they feel that NBT business so good that NSR price need to be higher, this is our perfect result.
It’s not an abnormal emergency scenario. It’s hopefully a normal scenario which we very much want.
It’s not an issue of suicide, it’s a question of someone having full control and printing infinite NBT for themselves. If they can fork, they can do whatever they want. I do not trust centralized PoS.
This is currently true, we don’t need to change protocol at all to have this. Burning in any form makes this effect more direct.
When my loan comes due, I’m going to look at the NSR/NBT conversion ratio the loan was taken out at and compare it to the market price for NSR. If it is higher, I’ll take the NSR back. If it is lower, I’ll default on the loan and go buy the NSR on the open market. In either case, the shareholders that are voting and participating in the system lose.
Hopefully normal, actually abnomal.
BTW I believe 2millions USD value NSR in people’s hands, but I doubt nearly one million NBT also in people’s pockets. The Nu wallet says only 100,000 NBT @sell/buy wall, perhaps some NBT on 2nd, 3rd lines are invisible. Anyone could clearify it?
Please read the link I gave and what Jordan said quoted by Sentinelrv above to understand how it works.
[quote]1. When NuBit demand is low, NuShares will be created and sold while NuBits will be purchased with the proceeds and burned. NuShare supply increases as NuBit supply decreases. This depresses the NuShare price as it supports the NuBit price to the pegged level.
- When NuBit demand is high, NuBits will be created and sold while NuShares will be purchased with the proceeds and burned. NuBit supply increases as NuShare supply decreases. This inflates the NuShare price as it suppresses the NuBit price to the pegged level.[/quote]
What Jordan said here is similairty of pledge scheme, when you burn NBT for NSR, actually you lower the pledge ratio so that NSR holders can borrow less NBT from protocol. When you pledge NSR to protocol, you actually burn it, when you return NBT to protocal, in fact you burn NBT.
One point I disagree with jordan is the NSR buying order cannot maintain NSR price high for a long time, when Nu launched, you said the PPC dividend bought from market will lift PPC price, yes, it lifted, but only briefly and then fell again.
The free market is watching Nu, the operation status is critical for NSR price, you cannot play trick with NBT/NSR dual direction burning to manipulate NSR price. Grab the hair pulling themselves, does not work because they(hands vs hair, NSR vs NBT) are internal effect. If nu wanna becomes successful, it must absorb more FIAT from OUT OF Nu system as my picture shows above.
For me and perhaps many potetial investors, Nu DAC/DAO is a money-losing company,and if we couldn’t find a proper renenue way, the endless expenditure on liquidity providing/Parking will kill Nu sooner or later, is this campany’s share very valuable? I am not sure.
Transaction fees, NBT loans, burn spread, adoption, other possible business deals; we’ve mentioned all these ways. It is simply not true that there is an ‘endless expenditure’, Nu operates as a business and like all other business it spends money to make money. Ultimately, it will only be successful if the shareholders are successful business owners.
NSR should be worth little to you if you are not willing to take it as a responsibility rather than an ordinary investment.
NBT should be worth $1 to you, regardless of who you are.
Check this out. By charging a quarter everytime someone moves $100, we could easily start making back our inflation rates, as long as there’s some adoption going on. There are lots and lots of possibilities here, you gotta be creative.
What I see in Nu’s “annual report” is that Nu collected only 3500USD as revenue since its birth, and expenditure exceeds it a lot. Investors are all practical, as a money losing company how many dividend you paid to shareholders are of unimportance. People won’t buy and hold NSR untill you make the annual report brilliant.
My suggestion is to cut down the expenditure, it’s up to NSR holders/developers anyway.
We haven’t even existed for a year yet. How many startups turn a profit in their first year? It takes time to grow. If you aren’t comfortable believing in Nu now then don’t, come back later when the business is on strong footing and NSR prices are much higher. It is always risky to invest in something so experimental at such an early stage.
Many money-losing company have good profit model so they can convince people to believe they can make profit in future although losing money now.
Any profit model shown by Nu yet? Treat NBT sale proceed as profit? Come on, this disobeys the basic accounting rule. Dual direction burning to directly lift NSR price? Doesn’t make sense although its a good method to peg USD.
Lower liquidity expenditure by decentralized exchange is a good direction.
Plz convince me by a better profit plan. I’ve given out my own suggestion in order to make Nu profitable DAO.
I think too that it should be the main purpose of NuBit but this is different from the main point of focus of Jordan Lee which is to provide liquidity for traders.
Since providing liquidity for traders is done essentially for free it is a losing business and Nu loses money.
If the article describes the reality, I think paying for such an article is just part of a legitimate advertising budget.
This is an interesting idea but this is somewhat in contradiction with the “no reserve-no counter-party risk” principle advocated by JL.
I think currently Nu is a losing business because Nu pays LPCs an expensive price to provide liquidity (because Liquidity provision profitability is difficult to predict as I tried to explain here; so you need to incentivize them more) but there are only a few traders that use NuBits currently and they use NuBits essentially for free.
I think we should make traders pay for the privilege to use a stable currency and then Nu could become profitable from there.
The pledging will not work as promise for Nu users that all their NBT are backed. Pledging is only applied to make a deal between one shareholder and Nu, and this particular deal has to be backed with NSR from this shareholder. It really doesn’t change the system in any way, it just provides a feature to lend money from Nu if you are a shareholder who afterwards will burn more NBT than originally received and therefore creates revenue for Nu.
You never responded to volume-based transaction fees ($.25 for 100 NBT transaction, for example, while still retaining $.01 for microtransactions) or NBT loans (this can even be done via legal contract). These are both legitimate and useful income sources. In addition, competition will drive down liquidity compensation rates over time (reducing costs) and adoption will increase NBT in circulation, also a profit source.
I’ve given out my suggestion to make Nu a profitable DAO via burn rate spreads, but clearly there is resistance to that.
Have you done the mathmatics?
Could tx fee of $0.25 for 100NBT bring more profit?
Bitcoin/NBT pair is highly risky, the liquid providers natually demands high revenue, before you draw the conclusion plz do the math. If you dare to lift tx fee, why people choose you and not ripple even traditional visa system?
NBT Loan, a sweat dream, assume thousands of people will borrow one million NBT and return 2 million, fantastic, I won’t wake you up.
%.25 thx fee is way better than fiat services. It is cheaper than credit card, so visa’s out of the picture. It is also decentralized: if you trust ripple labs then use ripple, it’s a different project with its own pitfalls. I have not got through all of Nu’s history to find out how much my 1%/[log(vol)+1] would earn, but it would clearly earn more than the .01 nbt fee. This has little to do with nbt/btc pairs as those almost always operate off block chain on the exchange and the tx fee wouldn’t affect trade fees at all.
No one would borrow at 100% interest. I, however, have been thinking of putting up a proposal for a 100 nbt loan for a month at the end of which I would burn 101 nbt. Yes, collateral is an issue if we don’t use legal contracts.
I can totally support micro-loans of this nature.