That premise is true for every 10,000 NBT potential buyer. Is not related to the method itself.
You owe USD value, you can also buy and burn NSR, pay in BTC, NSR, LTC, PPC, ETH, etc. Basically whatever FLOT is willing to take. Burned is preferred to a payment to FLOT, but we can do both.
They already have the incentive when they have their hands full of buy side liquidity
I think you didn’t understood what this method proposes, and the risk of paying “one” person with this method (ideally they would be a few).
That person/s already paid his debt, and then some as a collateral. Nu have all the money.
You will have a hell of a time explaining to the tax authority that buying NBT to burn and cashing USD out is connected.
Anyway it’s an interesting idea to do two things together 1) get rid of volatility risk of BTCs in T4 and 2) have a decentrralised mechanism to buy NBT to burn.
You don’t need to go into details, how is this different than putting in money in the exchange and taking out BTC, then putting in BTC and taking out money? That is basically what you are doing, but in a complex way.
You also don’t explain ShapeShift transfers, I bet they are equally complex under the hood.
That way I not only 10 kUSD value for Nu, but lend Nu 1 kUSD.
It would be very convenient to do that on a NBT/USD pair to reduce the complex buying and burning NBT, receiving BTC, trading them, etc. solution to:
create a smart contract with Nu
buy 1 kNBT at an exchange, send it to FLOT T4 sell side address
receive 1 kNBT + interest back later
Not so different from parking after all, but more complex…
I agree that bitUSD is much less adopted than NBT. I don’t know whether I’d call it a broken product. One could say that BTC is a broken product as well and that’s the reason why we need to search for alternatives.
BTC has a huge market depth, but no stability.
bitUSD has little volume, but a better stability than BTC (hopefully! without volume hard to assess that).
I fear that one can’t be argued with - at least I don’t know how.
I think lending and leveraged trading will be very important once B&C Exchange is operational.
Isn’t this proposal paving the ground for it?
Just a reminder to @JordanLee and @NSRBuyback that the T4 threshold motion passed. That means the buyback velocity will most likely decrease this weekend. I’m guessing due to a number of factors next week’s buyback will be ~$15k instead of this week’s 20.
Except the btc price went up last night, so all bets are off. We could easily have more next week than we had this week.
But we don’t want NBT in the pockets of FLOT, we can grant them if needed, what we need is USD reserves for buy side, something we don’t have right now. I mean USD = NBT, right, but as a reserve they are not the same thing.
Also that simplified version you proposed does not have collateral, and the T4 reserve is still in BTC, not in the burned NBT.
Edit: I see USD as an asset, and NBT as a liability
I tried to say something to this effect when I asked for a T4 buy side that matched the T4 sell side. However, I think it’s important to realize that holding USD is a big liability compared to burning NSR or distributing PPC, possibly even compared to holding BTC. Fiat can get seized.
It’s only a liability if we are obligated to refill it.
Are we still going to get this side discussion moved to its own thread? It would be great to have some brand new eyes on it. I’d move it myself, but unfortunately I don’t have any mod powers in the Nu forum like at Peercointalk.
I am going to continue @Dhume discussion at the NuSafe post here, because we went off topic there.
This is not pointless, the point is to prove you own the money and secure a collateral at the same time. It is weird, yes, but it does what is supposed to do.
We only have reserves so we can buy when there is a lot of selling (demand peaks). Right now we could put up all reserves and T4 money in USD buy walls, do a buyback and burn of all the NBT we can. Then we run out of funds, we relay there will be then a lot of demand, and we don’t have to buy, because we have cut a slice of the necessary NBT quantity for current usage and demand force us to print new NBT. If that is not the case, and demand is not there, there are more NBT than needed and the whole systems collapses, even if T4 reserves prevent that happening soon, they will eventually go to 0 if the demand is not there.
We kept reserves so we can use them to smooth demand peaks, and cover temporal demand decreases without breaking the peg for a second.
No, the point is that users buy it for 1 USD and sell them for 1 USD. Nu leaves offer and demand cancel each other, and only acts on demand peaks.
If it is Nu who always sells them for 1 USD and buys for 1 USD we are basically Theter without being backed by a full reserve.
[quote=“ttutdxh, post:29, topic:3163, full:true”]
This is not pointless, the point is to prove you own the money and secure a collateral at the same time. It is weird, yes, but it does what is supposed to do.[/quote]
We already have a way to prove someone owns the money by using our ALP software. Your proposal is essentially nothing more than a less refined inefficient form of liquidity provision. I’m sorry but it doesn’t make any sense at all.
[quote=“ttutdxh, post:29, topic:3163, full:true”]
We only have reserves so we can buy when there is a lot of selling (demand peaks). Right now we could put up all reserves and T4 money in USD buy walls, do a buyback and burn of all the NBT we can. Then we run out of funds, we relay there will be then a lot of demand, and we don’t have to buy, because we have cut a slice of the necessary NBT quantity for current usage and demand force us to print new NBT. If that is not the case, and demand is not there, there are more NBT than needed and the whole systems collapses, even if T4 reserves prevent that happening soon, they will eventually go to 0 if the demand is not there.
We kept reserves so we can use them to smooth demand peaks, and cover temporal demand decreases without breaking the peg for a second.[/quote]
I just feel your reasoning is based on a misunderstanding of our tier system and the way Nu works. We have tier 1-3 to actively engaging in buying and selling Nubit at 1 dollar each (albeit with a tiny spread). In general the money used to do this is privately owned by individuals who are willing to use their funds to protect our peg and earn an interest rate over the amount of funds they provide (depending on pool etcetc).
The ALP software allows them to do deliver this service without your plan to buy and burn Nubit to prove they own the money since the software checks if they actually put up buy/sell orders and grants them interest over verified orders. This is how we work essentially our peg is run without using Nu funds other than the interest we pay to our liquidity providers, giving them incentive to use their funds in Nu benefit.
Now T4 funds (aka reserve) as meant to balance the underlying tier 1-3 in case it gets out of balance. Essentially when there is an increased demand for Nubits tiers 1-3 will start running out of Nubits (and thus have excess of BTC) to sell and request to buy some Nubits from T4 with BTC to restock. On the other hand when the demand for Nubits decreases and there is more sell pressure tier 1-3 start running out of BTC (and thus have excess of NBT) and request to sell some Nubits to T4 for BTC from our T4 reserves to restock on BTC.
Essentially there is a balance between buy and sell side in tier 1-3 and T4 is there to rebalance incase the scales are being tipped to either sell or buy side. This is the reason we have a T4 reserve of BTC, in order to balance tier 1-3 when they get out of balance.
Yes that is why we have trustless liquidity provision aka users of Nu. So we don’t actively buy up and sell NBT for 1 dollar each but pay others, the liquidity providers, to do so for us. For this service they receive interest, a fee over the amount of liquidity they provide. I don’t know exactly how Theter works but yes we are not backed by a full reserve available in T4, we are backed by NSR. In case a huge decline of demand for Nubits occurred and we ran out of T4 reserves we would have to resort to auctioning NSR to raise additional funds to protect our peg. That is how Nu works.
Now I honestly have a hard time explaining why your proposal doesn’t work since I feel I’ve already done so, but essentially your trying to buy up Nubits (to burn them) that are not being sold. What you are proposing is essentially what happens when demand for Nu decreases thus leading us to have to rebalance T1-3 with our T4 buy side funds. This cannot be done unless we cancel our ALP’s and remove the pools and start using T4 funds to buy up Nubit on the exchanges ourselves.
I would like to hear why is it inefficient, a example with numbers about expenses or whatever you consider inefficient, and why it does not solve the problem, with numbers. We are going too deep in terminology, and too light on practice.
Feel free to make a copy of my version an correct the mistakes/inefficiencies/negative results.
I’m afraid I can’t explain it any better than I already did. Maybe someone else can shed a light on this cause I really don’t know how to be more eloquent about this.
