DR - Distributed reserves

[mhps]

[Passed] Motion to begin NSR buyback immediately

but in a complex way.

The onus is on you to explain that complex thing to tax offcial who may well be totally ignorant about cryptocurrencies.

[Passed] Motion to begin NSR buyback immediately

You also don’t explain ShapeShift transfers

Because the exchanges and shapeshift with their interfaces shield the complexity for you as a user. You don’t have the benefit if you roll your own.

[masterOfDisaster]

[Passed] Motion to begin NSR buyback immediately

I have 11k USD sitting somewhere that are not growing or doing anything. I buy 11k NBT, burn them. FLOT send me 10k USD in BTC, so 10000/320 = 31.25 BTC total. I can convert back those 31.25 BTC to USD and now I owe Nu 10k USD.

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…

[Passed] Motion to begin NSR buyback immediately

BitUSD is a broken product that is unlikely to ever gain widespread usage.

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).

[Passed] Motion to begin NSR buyback immediately

Integrating a weaker product into our network would give that competing network legitimacy, which is counter to NuShareholder interests.

I fear that one can’t be argued with - at least I don’t know how.

[Passed] Motion to begin NSR buyback immediately

So lending Nubits is out of the question for Nu network?

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?

[Nagalim]

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.

[ttutdxh]

[Passed] Motion to begin NSR buyback immediately

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 late

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

[Nagalim]

[Passed] Motion to begin NSR buyback immediately

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.

[masterOfDisaster]

[Passed] Motion to begin NSR buyback immediately

Also that simplified version you proposed does not have collateral, and the T4 reserve is still in BTC, not in the burned NBT.

Looks like I removed the marrow of you proposal by my (overly) simplifying it

[Sentinelrv]

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.

[Sentinelrv]

@ttutdxh, you have your own thread now for your idea.

[huafei]

i think this way can avoid the move price of BTC very well

[ttutdxh]

Thanks @CoinGame for splitting the topic.

---

I have added a title, lets hope it clears things up a bit.

Let’s continue with the discussion, any new comments on this?
I find that the model is difficult to explain, what would you change about it?

A lot of discussion have taken place in @Dhume NuSafe proposal about what I think are two very similar methods, what do you guys think?

[ttutdxh]

I am going to continue @Dhume discussion at the NuSafe post here, because we went off topic there.

[Discussion] Nusafe - Hedging 50k tier 4 funds in USD

I buy 50.000 Nubits from Nu so I can Burn them, since Nu can’t accept USD (our whole problem) I can only pay with BTC (buying Nubit on a NBT/USD trading pair eventually would still end up with Nu getting BTC). Since I can only pay with BTC these BTC end up in our T4 funds. Nu then repaying me 90% of that lost Nubit value (which I burned) from T4 funds is essentially nothing more than a very weird way of me getting back my own BTC minus the 10% collateral you propose to hold. This is pointless we already have a way of liquidity provision without using centralized custodians using automated liquidity pools.

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.

[Discussion] Nusafe - Hedging 50k tier 4 funds in USD

That means your proposal actually comes down to an argument for using our T4 funds to reduce the outstanding monetary supply (Nubits in the wild). The problem with this is that we’re already buying back all unwanted Nubits (if we didn’t the PEG would break). There are no unwanted Nubits in the wild since if people didn’t want them they can just sell them into our buy walls. To manage these buy walls we have a Tier system. You want to do the impossible, buy back Nubits that people want to hold, how do you imagine doing this? We cannot force people to sell their Nubits back to us.

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.

[Discussion] Nusafe - Hedging 50k tier 4 funds in USD

We are already buying up all NBT to protect the peg, essentially we are in a permanent state of buyback. Just like we are essentially permanently selling, this is the whole point of maintaining a stable crypto, sell for 1 USD buy for 1 USD.

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.

[Dhume]

[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.

[Discussion] Nusafe - Hedging 50k tier 4 funds in USD

We are already buying up all NBT to protect the peg, essentially we are in a permanent state of buyback. Just like we are essentially permanently selling, this is the whole point of maintaining a stable crypto, sell for 1 USD buy for 1 USD.

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.

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.

[ttutdxh]

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.

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.

[Dhume]

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.

[huafei]

the main point is that: we want to avoid the move price of BTC? am i right?

[ttutdxh]

Yes, eventually having a way to store USD might lead to other usages.

[huafei]

NU hold BTC , and others short BTC at USD market. maybe a good idea.

[ttutdxh]

Continuing the discussion from here

@Dhume do you think that allowing buy side liquidity go way bigger (like 150k, vs 70k sell), and not enforcing the 40% on the sell side like this, would solve DR collateral risk completely? That modification should not create any problem.

[Dhume]

@Dhume do you think that allowing buy side liquidity go way bigger (like 150k, vs 70k sell), and not enforcing the 40% on the sell side like this, would solve DR collateral risk completely? That modification should not create any problem.

Are you referring to the scenario where DR is funded by “new” money entering Nu (so external USD flowing in) or the scenario where we are talking about stray Nubits are already out in the wild (so a decline in outstanding Nubits) being burned to accommodate DR?

[ttutdxh]

Both, because T4 will ultimately kick in in the event of a liquidity unbalance further than 40%, thus risking collateral not being able to be converted back to USD into the buy wall.