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.
Any ideas for collateral, or do you think it would pass based on pseudonym trust alone? Credit card companies give out a good bit of unearned trust and still make a profit.
No grants, this can only have a bad ending. I’d really suggest that shareholder vote on a pledging rate and that you simply have to burn a specific amount of NSR (which should be much more valuable than your loan) in order to get NBT and you have to burn the NBT + some extra NBT in order to get your NSR back.
If you don’t pay the NBT back, then your NSR will remain burned. Since we pledged much more NSR than the NBT are worth, we can simply grant a part of the NSR back to someone who is interested in order to burn the NBT.
This all can happen on the blockchain without shareholder interaction (except for the voting on the pledging rate).
Except if the nsr price is declining I’d do better to just sell the nsr and buy back later. I do not want to stop staking my NSR, I’d like to just be given the loan. If I start with small amounts at high interest, Nu is basically extending credit. It might get burned here and there, but that should be made up for by the rest of the network. Build trust and credit in increments.
Nu is not yet that far. Nu has not succeeded becoming what it has been designed to be, but nor has it failed!
It’s a young business that has lots of expenses until some products generate revenue.
This can be the way to go, if you want to create a loan business that is embedded in the protocol:
There’s no need for custodians in this approach. I was thinking of loaning business some time ago, but @creon’s approach is so much more elegant, because it removes the custodian from the equation, moving anything but the loaner into the protocol
With that approach the loaner has an intrinsic motivation to perform, because otherwise the way to get the NSR back is blocked.
And just like in real world you need securities if you want to have someone lend you money.
If you’re the one with no money (no NSR or other securities) but with a brilliant idea, go to a NSR holder and convince him/her of burning some NSR to NBT, lend you the NBT and make money.
You pay back the loan (with a horribly high interest rate, or offering the former NSR holder a share of the business you created with the NBT), the former NSR holder pays it back (by burning it) and receives the NSR back.
This makes loaning simple and efficient.
Nu is not yet that far I wrote at the start of my post.
But if you consider what it has already achieved in the last months, I think it’s rather impressive and Nu is on a good way.
At the beginning there was no burning at all!
Now we are discussing how to make use of two way burning, allowing for loans on a protocol level.
Liquidity providing is possible by different approaches of which I especially like @creon’s master piece of TLLP (because the control of the funds stays in the hands of its owner), but don’t want to bad-mouth’s @henry’s pool in any way! NuLagoon is great and has its benefits, I just like TLLP better.
So Nu is able to get rid of NBT by burning and able to incentivize liquidity providing without NBT that are granted by Nu.
Both are important improvements.
They won’t be the last.
NSR burning is an important next step towards loaning with mechanics that may be close to what @creon already outlined.
I don’t know what you expected, but Nu has exceeded my expectations by far! It’s still here and it’s even better than when it has been started.
I’m aware that the discussion has drifted far from the topic of this thread. I wanted to answer here anyway.