Can NuBits withstand a hyperinflation?

[GreatScott]

How does dual side custodians selling NuBits for NuShares or vice versa provide buy support for the NuBit peg? If the peg is in trouble, the answer is clear that more buy support is needed. Today it would be BTC. I do not see how this provides anything besides large walls for NSR traders to react to. You can’t prop up the NuShare price with NuBits because you are going to need to buy the NuBits back with BTC or USD when we get an exchange.

[cryptog]

You basically peg NSR/NBT to NSR/USD and it acts as an economic lever for NBT/USD.

I feel it is similar to the approach of bitshares and bitusd.

[Nagalim]

It’s not propping up the price, it’s simply finding an equilibrium. If the true price is $.0001, then we will drop to there before we find stability. We don’t need to keep buy and sell walls on the floating peg, just on the static peg, so there aren’t big walls or anything. It’s the burning (preferably reserved for custodians based on how much liquidity they have contributed recently) that makes the floating peg have an effect, so it is outside the market.

This is very similar to bitshares, they have a good product and they are doing well. We have many many protocol benefits over them, but I don’t see why we can’t take a page from their book.

[mhps]

The NSR market is even thinner than that of PPC. So I feel a system setup like that might suffer the same fate, and benefit some skilled traders as opposed to shareholders or the peg.

These skilled traders face great risks exactly because the volume of NSR trading is so thin. I think there is less than 0.5% NSR up for sale in the order books and maybe 2% total are in the hand of speculators. Maybe the shareholders can set aside price stability fund to buy up all NSR for sale at dumping prices. Assuming most shareholders won’t sell until dumping is over, NSR prices can only go up because there is nothing left to sell, and those who have sold are thinking about cover.
The not-sell assumption means that this could be used in a crisis. It’s not very good to stop a long down trend.

[GreatScott]

It’s not propping up the price, it’s simply finding an equilibrium.

If you are placing orders in the order book, you are contributing to the price one way or another. I do not think we should be contributing at all to the NSR price. In my opinion we are already too reliant on the NSR market, but with few other options.

[Nagalim]

Right, so the best thing to do would be to have a way to sense that the downtrend is happening and react, setting up liquidity opportunities automatically at prices that are relevant and opportune for Nu with hopefully big payouts for liquidity providers.

@GreatScott Nu doesn’t place the orders, it pays custodians a rate to place the orders to offset the risk they have to take. This stimulates a rally and a return to a more stable, albeit lower, state.

The other thing to be concerned with is those shareholders who want to sell but are waiting for the dump to be over will only propagate the dump. If we buy more NSR then, we become those would-be dumpers. If we burn the NSR for NBT, we can sell the NBT on the NBT/USD peg or park them. This also helps turn the crisis but is not good in the long term because it basically requires us to hedge better than everyone else.

Long term NSR profitability is intrinsically linked to NBT adoption.

Currently, If all the NBT is in circulation, we can use motions to create more NBT and buy PPC for distributions or NSR to burn to decrease supply. Other than the NBT/USD spread which we give to custodians, NBT deflation is our only route to profit, as it allows us to print money.
This statement is true whether y’all decide you like the floating peg system or not. However, I’d like to point out that if people know the shareholders will automatically leverage their own share price for the sake of the peg they might use it more.

[GreatScott]

If we burn the NSR for NBT, we can sell the NBT on the NBT/USD peg or park them.

The only time we should ever be burning NSR for NBT is when we have substantial profits. There is no other excuse for such an action as it inflates the NBT supply. Selling NBT on NBT/USD takes away buy support liquidity from the NuBits peg.

Our problem is not enough buy support. We’ve got the sell side resistance pretty well figured out already and I do not see how this NSR liquidity operation will help with this problem on the buy side.

[nikolaso]

There is no reason for speculators to buy NuShares while it is likely shareholders will be selling it for under market rates in the near future.

I am very disappointed!

I think this is very wrong… if this is true i will never buy it again and let the price becomes zero…

sry but we have no interest for “longterm” investing if price wont rise soon, there are far better cryptocurrencies for investment. with sooner profits…

and that is crypto currencies about, profit, not community and friendship.

i guess this could be the end of NSR/NBT, so please stop it asap

[Nagalim]

If our problem is not enough buy support then the price of NSR should be lower. We should be burning NBT for NSR. Burning should be used to keep the peg even, basically, and the profits will realize themselves. We should be burning continuously to keep the peg even. Any time a buy or sell occurs on a custodian, that custodian should be assessing whether or not it is worth it to burn their way back to the other side of the peg.

The case you quoted was when there is vastly more NBT liquidity than NSR liquidity, in which case we should definitely use the peg to our advantage to help stabilize NSR.

I can keep a peg pretty easily if I never distribute the currency. NSR price should reflect this.

[nikolaso]

Also, fact that someone bought NSR for aprox 0.0000055 destabilised NSR price - he can profit double if sell for 0.00001…

This auction was biggest mistake which helped few to get rich and now entire community suffers

[MaVo]

Well, you are a little bit wrong I feel. Especially open source projects that happen on a larger scale like this one benefit a lot from the community backing it Though, I understand what you mean. I also put a lot of money into NSR and am wondering what kind of fundamental development has to happen in order to lead to a price increase.

[Nagalim]

For a price increase in NSR, we should not be looking to tricks like burning or a floating peg, those are only useful for turning NBT hyperinflation into NSR hyperinflation. To turn the tide of NSR hyperinflation, nothing will work long term but NBT adoption. That and that alone will sustainably increase NSR price.

[nikolaso]

In my opinion new NSR shouldnt be auctioned like last time, as Nu could get far more money for NBT burning if NSR was sold on markets instead of auction.

To turn the tide of NSR hyperinflation, nothing will work long term but NBT adoption.

Only thing what matters here is fresh real money, which can help wider NBT adoption. Only way to keep community expanding and giving continuous support is to make rules equal for small investors and big fish. Otherwise, if NSR fall too much, whole system could easily fail

[Nagalim]

I totally agree with everything you said. To ‘make rules equal’ we need to be clear what the rules are. That’s why I argue for full automation and decentralization of the desired NSR/NBT price. Motions tend to deal with much bigger dollar values than the average joe wants to put in crypto, we need more motions like the NuPool that allow any investment value you want to participate. If we trend toward decentralized liquidity, we need to provide the ruleset whereby they operate to instill confidence in the system. In my opinion, this means automatically tracking a NSR/USD price and allowing burning around it (there is some spread here that goes directly back into Nu) as though it were the NSR/NBT price point to enforce that NBT=USD. This one number would provide a basis for a ruleset that the community of custodians can rally around.

[mhps]

Nagalim
To turn the tide of NSR hyperinflation, nothing will work long term but NBT adoption.

Only thing what matters here is fresh real money

Especially if the money is USD. If BTC goes to very low, say $20, we have to burn a lot of NBT to maintain the peg because NBT is pegged to USD. By then the peg walls will be so thin, because there will be very few NBT left, anyone selling a thousand NBT can break the wall.

BTC is addictive but toxic. Support selling NBT directly with USD. I propose some measure here.

[cryptog]

selling NBT directly with USD.

The first intended link has not content.

[mhps]

Thanks. Fixed.

[GreatScott]

I think this is very wrong… if this is true i will never buy it again and let the price becomes zero…

I am not trying to FUD in the slightest if this is your impression. I am still fine taking the risk, myself, as it is still really early for Nu. To me, this is just simple economics. You cannot expect buyers to ignore the fact that others receive NSR for a lower price than the going rate. Just as you can also not expect shareholders who do purchase NSR in exchange for NBT burns to hold their shares instead of taking the quick profit by selling on the market right away.

[nikolaso]

Just as you can also not expect shareholders who do purchase NSR in exchange for NBT burns to hold their shares instead of taking the quick profit by selling on the market right away.

As small investor (500$) i realized that my buy orders (below real price 900-1000sat) make profit for big fish who got their NSR underprice. that is definitely disencouraging.

Also i can hardly believe that impact of NSR auction is far bigger (negatively) than impact of opening the source code. I guess if other exchanges which already have NBT (for example bitcoin.id) or even big exchanges like bittrex adopt NSR i doubt that will make the price go higher.

Im not trying to be rude nor just smart, but i feel this is big mistake made by our highest managment. With lot of understanding for them cause this is still brand fresh “one in the world” project. However, this could be avoided if mechanism other than last auction is adopted. If newly issued NSR cost more, there would be less sellers.

In my opinion there should be two main rules for issuing new NSR (for NBT burning or not):

1. issue in small quantities
2. issue at price right below market price

If NSR is placed on market, sold for BTC then NBT can be bought and burned, resulting same as auction, but with big community (not private personal) gains,

[GreatScott]

If NSR is placed on market, sold for BTC then NBT can be bought and burned, resulting same as auction, but with big community (not private personal) gains

I think this is something worth examining further. It has been insinuated that NSR buy backs will take place on the open market. Which leaves me wondering what is the rationale for selling NSR inflation off of exchanges via bid motion? I think the answer will have to do with the effect it will have on the market price, but I think it may have that same effect no matter where the NSR are sold.