I want to give a brief update. This week I accidentally bought too much NBT (spent more BTC than I should) due to a technical problem. My plan is to burn it anyway, and reduce the amount of BTC used next week to make up the difference.
Who has noticed that there is basically zero selling pressure on the exchange between here and 50c? Now more selling could come from holdings that aren’t sitting on the book, but there also isn’t really a good reason to expect that.
In the last year, investors in USNBT have had about a 200% return, even without parking to receive interest. Since the coronavirus slide in March, a stunning 1000% return has already been produced. We have maintained and restored USNBT to $1.00 for many years in the past. We have been supporting it consistently. It is in NuShare holders’ interest to continue to support it, so they can issue NuBits in the future. There is an easy 300% profit available for USNBT buyers at the current price point of $0.23.
Nu may have experienced a low level of funding, especially the last two years. Even so, the incentive structure in the protocol is sound and functioning. It is an extreme stress test that Nu is passing.
We have run the experiment to see what this stablecoin can deliver at extremely low levels of funding: probably less that 2 million USD over the last 6 years. The only project I know of that has delivered more innovation for less money is Bitcoin itself. We established the very first stablecoin with a tiny team. We maintained for years with at most two full contractors. We are planning a marketing program to help bring our funding to the next level. The potential for the appreciation of NuShares is absolutely stellar. As recently as 2018, it was worth more than 15 times its current value. We call it the most volatile crypto, because we divert the volatility the market wants to impose on NuBits to NuShares, giving it a double share of volatility. This means tremendous profits can be made quickly. Once the peg is restored, we will begin to sell NuBits again. We will hold it all in reserves at first, strengthening our ability to secure the peg. We will develop other peg support mechanisms over time such as NuShare liquidity, reserves, revenues from trading and transactions, and debt issued in NuBits. After these are developed, we will stop holding 100% of NuBit sale proceeds. We will begin to use NuBit proceeds to buy back and burn NuShares, causing an impressive appreciation for NuShares, such as we saw two years ago.
When NuBits need price support, we create and sell NuShares to fund that support. NuBit supply decreases while NuShare supply increases. When NuBits require price suppression due to increasing demand, we create and sell NuBits while buy and burning NuShares. NuBit supply increases while NuShare supply decreases. The best way to make money in the network is to buy the asset that is decreasing in supply. Right now that is USNBT. Once the peg is restored and demand grows it will be NuShares.
That is exactly how it should work.
What I’m more worried about is the Nubit wallet - No new update for ages.
Also the parked Nubit dividends pay algorithm looks that it is at random going up and down.
This doesn’t make to much sense for me.
There are third party NuBit and NuShare wallets such as Coinomi that have been more active.
The park rate changes are suboptimal but the reasons for it and the solution are well understood by those paying the most attention. Everything else in the network, such as grants and motions, use a 10000 block (one week) vote counting period. They require passage by block count and share days (aka coin days) destroyed. The interest rate vote system does not employ block counts and it only counts the votes in the last 2000 blocks, weighted by share days destroyed. The solution has already been approved for implementation by a blockchain vote of shareholders: switch to a one block - one vote approach and count the vote in the trailing 10000 block period. The change is planned for our next protocol release. It is worth noting the present protocol would perform reliably at higher stake levels: they would stabilize from the market cap of NuShares rising. I would guess the current protocol requires a market cap of between 10 and 50 million USD to create enough interest to keep park rates stable. My guess is the new protocol can stabilize rates with a market cap of a few million.
How confident are you in this half of the system, because we’ve tried this before the first peg break, using a large portion of our BTC reserve to buy NSR and burn them. It did spike the price, however it didn’t last, and when it came time to print NSR to support the peg, NSR was no longer at a price level where it could reliably be used to support the price of NBT.
NSR was then deemed by a number of shareholders to not be a reliable last line of defense specifically because the price of NSR craters right when you need it most, as a way of drawing value to prop up NBT. What is to stop this same scenario from playing out again?
Do you believe the main reason it didn’t work last time is because NSR was illiquid? That would explain why you want to focus on increasing exchanges and liquidity for NSR.
Additionally, what percentage of the BTC reserve are you comfortable with selling to buy and burn NSR. A certain percentage will need to be kept. It’s been too long since the first peg break, so I can’t remember the numbers we used before.
In the other part of his reply he says that reserves will be boosted, at least initially. That’s a way of relying less on the liquidity of NSR until that liquidity can be developed over time.
Yes, I understand he plans to hold off on selling part of the reserve until after NSR liquidity can be boosted. I’m asking if he believes NSR illiquidity is the main reason it did not work the first time as a last line of peg defense, and if he believes it would work properly if we were able to obtain sufficient liquidity to support NSR selling in times where buying support is needed for NBT. Sufficient liquidity means selling batches of NSR would not negatively impact the price too much.
My own view is that you can’t count too much on NSR liquidity, because during times of stress it is likely to go away, even if it is more typically healthy.
So reserves are critical and weren’t high enough previously.
Longer term, possibly a slice of reserves could be invested in some sort of tail hedging vehicle that would naturally boost them during distress.
But overall I don’t see reserves as a particularly bad thing. Depending on what is done with them, they’re a source of stakeholder income and growth in addition to adding stability. I believe from reading past discussion here, that reserves were seen as a cost, but I mostly don’t agree. I do agree that there are risks associated with the reserves being mishandled or stolen, but that can be mitigated with things like multisig and having more independent custodians (when they are larger).
That’s right. The peg was lost because NSR trade volume was not well distributed among exchanges. Over 90% came from one exchange. When that exchange delisted NSR, it caused the ratio of NuBit trade volume to NuShare trade volume to skyrocket to 1400. At that ratio, NSR has very little ability to support USNBT pricing.
The solution is to get diversified and liquid exchange listings. This is not hard, nor a pie in the sky objective. After all, hundreds of crypto assets have already successfully accomplished this. In regard to establishing diversified NSR trading volume, all we need to do is copy these hundreds of successful examples. To do this, I propose we hire a marketing resource that focuses on relationships with exchanges. My team will offer liquidity to the exchanges to increase what the marketing team member can offer exchanges.
If anyone is interested in this role, please contact me.
Ultimately, I believe the best peg support mechanism is NuBit denominated debt. Debtors must purchase NuBits to make regularly scheduled payments. This requires a lot of development. Consider the US dollar and the role of USD denominated debt in supporting the value of the dollar.
Revenues and trading profits from market making are other great ways to bring support to our currencies. Combined with reserves, the approach is to use as many methods simultaneously as possible: interest rates, transaction fees, reserves, revenues, trading profits, NSR liquidity and NuBit denominated debt are all methods of currency price support that can and should be combined.
the burn seems to be quite small while Usnbt price is high, I think Circulating Supply is still increasing every month , it seems to have not been able to control the inflation rate? Because nearly 2 million usnbt is being parked and more usnbt will reappears.
I’ve been wondering about this as well. What exactly is the point of the park rates right now? The peg was already lost. It seems to be creating more inflation while we’re trying to decrease it. Doesn’t increasing park rates make more sense as a preventative measure before the peg actually breaks?
