Decentralized long term USNBT purchase and burn program

US NuBits were the first functioning stable coin, implemented in September 2014. We have a proud and long history of remarkable innovation. Nu’s approach to pegging is remarkably flexible and economically efficient. The design of the system allows for adaptation to emerging circumstances. Along those lines, I would like to introduce a new program to support the USNBT price.

Essentially, the program permits NuShare investors to purchase NSR on favorable terms by purchasing USNBT on the open market and then burning or destroying it as the actual payment for their NSR over an extended period, such as 13 weeks or 52 weeks. Here are some highlights of what the program allows investors to do:

⦁ Acquire NuShares at a discount to market price
⦁ lock in today’s NuShare price
⦁ increase value of the network with long term weekly USNBT purchases and burns as payment for your NuShares

The program was inspired by negotiations with its first participant: @smooth. As we set up rules around a plan to purchase NSR and burn USNBT, it became clear the network could benefit by allowing other NuShare investors to invest in and support the network in similar fashion. We would like to invite other investors to approach the liquidity operations team at team@nubits.com and agree on a similarly structured program of NSR purchases and USNBT burns.

The basic outline of the process is as follows:

  1. Someone wishing to invest in the network chooses how much they would like to invest in NSR and how long they want to spread that investment out. The longer they are willing to spread out the USNBT burns, the deeper the NSR discount.
  2. They transfer their BTC payment to a 2 of 2 multisig address, where the investor holds one key and the liquidity operations team holds the other key.
  3. The liquidity operations team transfers their purchased NSR to a 2 of 2 multisig address, where the investor holds one key and the liquidity operations team hold the other key.
  4. Each agreed upon interval of time, which might be a week or a month, BTC (or other payment currency) is transferred.
  5. BTC is used to purchase USNBT on the open market.
  6. The USNBT is then burned and the burn transaction ID will be published, proving the USNBT money supply has been reduced.
  7. NSR is transferred from the 2 of 2 NSR address to an address under the control of the investor.
  8. Steps 4 to 7 are repeated weekly or at another specified interval until all funds are used and the term of the agreement is complete.

Each participant in the program can choose their own investment amount and the time period over which that investment is made by reaching out to us at team@nubits.com. Below are the specific terms the liquidity operations team has negotiated with @smooth. They are presented as a draft for shareholder comment, and may be modified due to suggestions made:

Terms of the USNBT buyback and burn program for @smooth

The duration of the buyback agreement is one year from when the first NSR for USNBT exchange occurs. After each 13 week period, smooth will be permitted to reevaluate whether to continue exchanging burned, unusable USNBT for NSR or whether to simply purchase and park USNBT. The NSR price for the first 13 weeks is 15 BTC satoshis. The first step in the program will be for smooth to transfer $50,000 USD of Bitcoin to a 2 of 2 multisig address, with smooth and myself each holding a private key. After the Bitcoin is transferred, the liquidity operations team will transfer NuShares held in the team 2 of 4 multisig address to a single sig address specified by smooth. The quantity of NSR transferred will be determined by the quantity of BTC sent to the 2 of 2 address using a price of 15 BTC satoshis per NSR.

Each week, 7.69% of the BTC 2 of 2 funds transferred will be sent to a BTC single sig address of smooth’s choosing. He will use these funds to purchase USNBT in the open market, and then burn them (a transaction that publicly proves the USNBT can never be transferred or spent). smooth or an agent will post a link to a block explorer documenting the burn each week on this forum. When the last of the 13 weekly USNBT burns operations is complete, he may choose whether to receive additional NSR or to instead purchase USNBT and park it for a period of one year. For each of three subsequent 13 week periods, the price of NSR will be determined by the average price each day for 14 days prior to the final transfer of BTC funds. It is at smooth’s discretion at that time to deem the NSR price acceptable, or unacceptable. If acceptable, the same steps will be followed as in the first 13 week period: a BTC payment is made to a 2 of 2 address, then NSR is transferred to a single sig address chosen by smooth. If smooth deems the NSR price unacceptable, he can opt to purchase and park USNBT for the duration of a year. Instead of receiving NSR as compensation for his BTC payment, he receives parked USNBT that cannot be spent for a year, but yields a premium at the conclusion of the park term.

@smooth is acting solely as an independent investor, have no affiliation with the Nu team, and make no representations nor commitments to anyone, other than to carry out the transaction as negotiated and agreed.

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The proposal above is detailed and somewhat technical in nature. Its relevance may not be immediately apparent to many readers.

The immediate practical impact of the proposed deal with @smooth will be an increase in total weekly USNBT buy support from $1311 to $5156. At current USNBT pricing, this raises the weekly reduction in the USNBT supply from USNBT burns from 17,958 to over 71,000. Due to low volume in USNBT trading currently, this has a high likelihood of increasing the USNBT price.

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Confirming that I did particpate in these negotiations (via forum DM) and I’m prepared to proceed with the program as described.

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Bitcoin price is 10k8 and i bought Usnbt when bitcoin price is 19k . And now , Price Usnbt (you call is stable coin) is 0.08 …a question : WHERE IS MY BITCOIN ?

@TonyChen69

As near I can tell most of the Bitcoin was spent trying to support the peg in early 2018 when the whole crypto market was crashing, including the value of the BTC that was supposed to back up the peg, which in turn put further selling pressure on the peg, requiring even more of the rapidly-depreciating BTC be used to try to support it.

Beyond that, who knows, some of it probably “leaked” in various ways. The transparency and judgment of the team has not always appeared to be the best. Even if we assume no malice (which is just an assumption), it appears they may have simply gotten in over their heads during that wild period.

The decentralized program I negotiated with them minimizes the involvement of the team. Once under way, the amount of USNBT being bought and burned regularly will increase dramatically (as further enumerated above) and I would be frankly shocked if the price does not quickly increase well above $0.08 (but this is just my opinion, no one can be sure of future market prices and I make no guarantees).

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When bitcoin 8k the peg lost … but with case them can buy 3-5 milion USNBT with bitcoin that they have . Where is 3-5 milion ? Hahaa… ok i don talk more maybe im wrong . But new investor will be careful.

My concern is more around what @Phoenix and others intend to do once USNBT/USD reaches upwards of $.80 when everyone who holds NBT starts trying to get out. That would require an immense buying support by them.

@Ghaleon In 2016, USNBT value was restored to $1.00. I don’t think we experienced any special level, such as $0.80, as being inherently associated excess selling pressure. US NuBits may change hands to different types of users as it rises to $1.00, but that doesn’t necessarily equate to a lot of selling pressure. Users have plenty of reasons to hold on to US NuBits, and new users have use cases to buy them.

In 2016 the dip was very small in time compared to the current one. The current one is allowing people to buy massive amounts of NBT at very discounted prices and park at upwards of 70%. It also appears (though I’m unsure) that team Nu has significantly less funds this time around to support the pegbot.

I think they are waiting for the market to recover or the investors give up (those who bought nubit at $ 1 and hope it is stable at $ 1), when they sell all the nubits then the team can buy back with cheap prices (although they sell them at $ 1) and start a new cycle, and no one knows how many times this will happen when the market is volatile and there’s always a reason for them to fall excess or profit from other investors.

We have quite a few more funds (at $256,000) than at certain times in 2016, when we had nearly zero funds. We are on the cusp on closing a $200,000 USNBT purchase program with @smooth and a purchase and promotional program with BarterTrade worth more.

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The price of NBT has been going down again and why does it take so much time with the Bartertrade deal.You guys should at least complete the deal with @smooth ASAP.

Things take time and we are not quite ready yet. But we are getting there. It is better that it is done properly and takes months, than to rush into a less than optimal solution, causing things to ultimately fail.

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@smooth and I have spoken in the last day to coordinate the next steps in creating and testing multisig wallets. Once those wallets are in place, @smooth will make a $50,000 payment to the BTC multisig address.

@Phoenix, I appreciate your continuous effort about Nu project, but I still believe that “liquidity engine” is of very low efficiency because the big gap between buy & sell price, too much money will leak out of this system by officially buy high and sell low for NSR. Furthermore you have to maintain relative high liquidity for NSR which is unnecessary.

Good luck to your leaking engine.

K i hope this will have an effect on USNBT price.

I can’t speak for the Bartertrade deal as I know nothing about it whatsoever other than what was posted, but I can say that any delay in my deal is entirely my fault. Nevertheless things are moving forward.

No one can predict or promise market prices but I have a hard time believing that around 50k NBT/week being bought and burned won’t have an effect. I guess we will see.

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I agree with @smooth: I also strongly suspect buying and burning around 50,000 USNBT each week will have a major impact.

@smooth and I have created multisig wallets. The multisig BTC address we will be using to fund the weekly buybacks is 3Lv9C4JtFQmVMhFtyYK43GncwweMi341NT. A test signing is underway. Next comes a $50,000 transfer into the address from @smooth.

@Phoenix I have a question for you. If you manage to get NuBits back off the ground a second time and keep it that way, do you have any plans on utilizing Peercoin as Nu originally intended to in the beginning, as a dividend coin? Or are buybacks the norm now?

I’m not sure how closely you’ve been following us, if at all, but we have not been idle. Over the past year we started the Peercoin Foundation and hired a number of full-time contractors. We’re on the verge of upgrading to SegWit and will work on integration with Lightning next. This will be the first time Peercoin is current with Bitcoin in terms of development since before 2015. You can see this in Peerchemist’s recent interview here…

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The network is still set up to distribute dividends in Peercoin. While some shareholders have expressed interest in receiving dividends, the majority appear to favor other use of funds at the present time.