I don’t think I find the time soon (I want to keep an eye on operational tasks and revive liquidity), but wanted to create at least a placeholder - feel free to continue it! - for a motion to increase the reserve.
Customers need to know that we learn our lesson and that such a shortage on buyside won’t happen again, just because somebody trades $100,000 in a short period of time.
The reserves need to be increased by far, have a floor level etc., if Nu wants to recover confidence.
The last motions that regulated thresholds above which buybacks begin need to be replaced or amended.
Go!
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As far as I understand it, the reason we’re in this current mess is because we were relying on a mistaken assumption which came from @JordanLee. Check the bolded part in his quote below…
This assumption of a high NuShare price due to buybacks turned out to be false. We based our NuShare buybacks on this and sold most of our BTC reserve to buy and burn NuShares. However, now that it comes down to it, NuShares have been a horrible store of value and have collapsed in price at the moment we need it most. The high price was only temporary and didn’t carry over into the opposite end of our demand cycle. If we had not followed this assumption, we would still hold most of our reserves and we wouldn’t be in the situation we’re currently in. So the answer sounds like we need to rid ourselves of this mistaken assumption and increase the percentage of reserves.
However, we still have older comments from Jordan that say Nu was designed with a zero reserve model in mind…
These comments argued against instating a reserve at all. Is the zero reserve model not reliable when Bitcoin becomes volatile or is it too expensive to maintain while final revenue from NuBits transaction fees is still too low? Is Jordan incorrect here in these posts? Or do we need a mixture of both, higher reserve and decentralized liquidity together? I think these are fundamental questions to answer. A lot has happened since Jordan said these things and we’ve gained a lot of experience. How does that experience compare with Jordan’s statements in these threads about reserves and decentralized liquidity and which is the best direction to move in?
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By the way, I’m not blaming Jordan for the above. Nobody is infallible and because of voting, a majority of shareholders take responsibility in going along with the path we set ourselves on when committing to NuShare buybacks.
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The main purpose of having zero reserves is to have zero counterparty risk. It might be more useful to focus on counterparty risk specifically. Reserves held by FLOT have very low counterparty risk. Reserves held on Poloniex have relatively high counterparty risk. Not all reserves are equal. There are also a variety of ways that liquidity can be ensured over a period of time without being a reserve. The funds NuLagoon has in its custody are an example of funds that act like reserves in many ways but do not pose a direct counterparty risk to the network. B&C Exchange will provide rich new opportunities to allow individuals to provide liquidity in a way that can be ensured over a period of time. We should continue trying to push counterparty risk out of the network over the long term, but it isn’t the priority right now.
Whether we use reserves or ensure liquidity by other means, we obviously need to make sure we have enough of it. Recent events indicate we didn’t have enough of it. We need to determine how we can acquire more reserves or liquidity.
The lack of buy orders in recent days for NuShares has surprised nearly everyone, so far as I can tell. We have sold NuShares in the past as a part of liquidity operations, and it worked much better. This inconsistency in the viability of NuShares sales suggests they should not be relied on as much.
The situation is not as bad as some think. We had a single, very large NuBit user sell around 14% of our money supply. If we can just get a little more scale, these kinds of things won’t happen. If we double our money supply to a mere 1.4 million, that 14% becomes 7%. While we are small we need to prepare for sudden and large redemptions like this.
Can anyone name a currency that can maintain its value as well as NuBits when 14% of the money supply is sold in a single day? Our performance was actually remarkable. National currencies would crumble in the face of such a large sale.
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Some people including me already said years ago that when Nu in danger, its share is not a relaible asset to help.
Tether can maintain its value even 80% tether was sold within one day.
This community founded a company 1.5 years ago and till now developer&LP&share seller have earned 650,000$ and share holders suffer low share price below IPO because of 650,000 equity loss.
Some should dislike me because I’ve been kept saying Nu is a losing money company, a ponzi, as early as 2014. When would you wake up to realise Nu’ s debts will be much bigger than asset and even NSR cap?
As long as a system has flaw, no matter how big the business scale is, vulnearable to attack, even UK pound was attacked by George Soros.
Why this forum is incredible active? Partially because of enthusiasts, partially because Nu is a cow for LPs!
@JordanLee, one way to acquire more reserves is to begin selling a product which isn’t so expensive to maintain. We were previously talking about beginning the sale of a non-pegged fixed supply currency which mimics Bitcoin’s inflation rate. We wouldn’t need to provide any liquidity since the value would be free floating, meaning it would be relatively cheap to support, meanwhile buyers of the new currency would be giving Nu a much needed injection of funds that can be used to help fill our reserve back up. Regular sales would also occur to keep up with Bitcoin’s inflation rate. I think this would be better than introducing another pegged currency which needs funds to be maintained. The draft is here…
The discussion on this fixed supply currency started here…
Text wall alert.
I tried to write the parts I consider important bold - a kind of tld;dr by formatting
It was a totally possible outcome, but it was the preferred way to lean on NSR as the asset that keeps the proceeds from selling NBT.
You need to keep those assets in one way or another to have an opposite side to your liabilities in the balance sheet.
Keeping BTC would have made Nu dependent on the well-being of Bitcoin beyond the fact that BTC is the main trading pair of NBT.
It was necessary to store the assets in a reliable way.
Alas, NSR aren’t as reliable as we hoped they would be. But it could have worked though to improve the demand for NSR with the buyacks.
Isn’t possible in the unforeseeable future. It requires high NSR trading volume and the NSR rate would need to be decoupled from the reserve ratio by and large.
Low reserves are one of the main reasons for shareholders to sell NSR!
Without that decoupling NBT and NSR we’ll always see plummeting NSR rates once the reserves start to get low, because an NSR sale becomes likely and shareholders try to frontrun others in selling the NSR, hoping they can buy them cheap during the sale - or not at all.
Didn’t we want to have the opposite - NBT being backed by NSR, being tightly coupled to it?
It seems that worked: a weak NBT leads to a weak NSR.
Zero reserve is impossible, unless the Nu network is a lot stronger than it is today.
It’s not really a matter of Bitcoin volatility that tero reserve isn’t working at the moment.
It’s a matter of NSR volatility.
My solution would be:
- a drastically increased ratio of reserve (in relation to NBT in circulation)
- a diversified pool of assets that builds the reserve (BTC, PPC, LTC, USD, USDT, etc.)
If we had known it before, or had seen it more realistically, we could have steered Nu in another direction.
We didn’t.
It’s easy to be wise after the event.
We could have known parts of what happens before.
But we were to damn confident that Nu couldn’t fail anytime soon.
Now we need to admit that we’ve entered very rough waters, with a low reserve and being horribly dependent on BTC making a nosedive, if we want to have a good chance to increase the reserve in the near future.
But it’s not over yet.
There’s still a lot of confidence left, that Nu can recover.
I’m speaking not of confidence with this community, but of confidence within the market.
Otherwise NBT holders had abandoned the sinking ship, getting over the 5% or 7.5% buyside offset.
They haven’t!
If we can recover confidence by adjusting and improving our liquidity provision, increasing the reserve and showing them that we haven’t given up, Nu can recover.
At the moment we see that NBT holders don’t turn away completely. We might get in the position again to make people turn towards NBT.
It will be hard to find a good mix of agility, stability and security of reserves.
Nu should continue NuOwned operations, even if ALP continue.
Those NuOwned operations should convert a part of the BTC T2 to USD, USDT, etc., maybe even PPC or LTC.
The exchange risk for Nu by having funds there is real. We faced it in February 2016.
Diversifying across 2 or 3 exchanges would be useful to spread this risk.
But whether you have BTC or USD (or USDT, LTC, PPC, etc.) at the exchange, doesn’t alter the exchange default risk.
You introduce a risk of USDT failing if you hold USDT. But as we need to find a replacement for having most of our reserve in NSR, we can as well pick one that mitigates BTC volatility issues!
You can’t withdraw USD or USDT to a group like FLOT without issues or at all.
That’s why converting a part of BTC overflow to other assets, which can be withdrawn to FLOT is intriguing.
And don’t forget we’re talking about T1-T2 here!
There can - and in my opinion - should be funds from Nu at T1 and T2, if only to have a buffer when ALP or MLP fail.
Unfortunately not. We learn from it. We adjust.
This will be the harder part. Recovering confidence in Nu requires showing present and future NBT holders that they can rely on Nu and on the stability of NBT.
This stability is guaranteed for NBT/USD trading pairs. It should only be guaranteed with a less tight peg for other trading pairs, e.g. NBT/BTC.
With a increased reserve we should be able to keep it quite tight compared to now, though. Maybe it’s possible to keep it below 1%.
I suppose the lack of revenue plays a role.
Together with sorting out liquidity issues and increasing, diversifying stabilizing the reserve we need to create revenue streams.
Supporting trades at centralized exchanges is not really making revenue, but creates an immense cost.
Until NBT are really used as means of payment (that might take some longer…), people need to know they can trade the NBT they receive.
Trading at exchanges can be a prerequisite for bringing NBT towards being accepted for payments.
We can’t sustain liquidity at exchanges forever. We need to build revenue on top of that.
As strange as it might seem: I concur. But I’ve already explained it above:
Nu suffers from a damage of the brand image, but isn’t bankrupt yet.
We need to try to scale and we need to introduce a floor level.
If we had had a reserve of $100,000 + 15% of NBT in circulation, last Friday wouldn’t have made as much as a dent.
These are just random numbers to get at a reserve that is big enough to have.
…it’s easy to be wise after the event.
The thing is:
we need to find a new balance between the risks of having a reserve and the risks of having no reserve.
You’ve been right with that assessment.
I’d be happy to find more contributions from you in the future!
While this is strictly true, the IPO share value adjusted by the dividends that were paid, is around $0.0015.
The recent NSR sale was remarkably close to that value!
It’s below IPO value, but not below net value of shares including dividends.
Tether is done from one day to the next, if the reserve gets seized by the government.
For reference: https://en.wikipedia.org/wiki/Liberty_dollar_(private_currency)
If this were really an attack, why did the attacker stop right before Nu had 0 reserves left?
Do you imagine somebody attacked the exchange rate of NBT to get a chance of buying cheap NSR?
That kind of attack would speak volumes about the long-term outlook this attacker sees at Nu!
An attacker that tried to ruin Nu would only need to sell some tens of thousands NBT more, but I promise, I’ll make it as expensive for him/her as possible! 
You are right with both statements.
We should try to keep the enthusiasts while dealing with the costs of LP.
I’ve made a proposal here: [Discussion] Liquidity operations - a paradigm shift some months ago.
Take the initiative! This approach is good!
Even if Nu fails as the organization that issued the world’s best stable digital currencies, it still provides a reliable PoS network, that is very sustainable, if you get rid of the costs that liquidity provision and all its dependencies cause.
What I’m trying to say is: Nu might fail with NBT. That doesn’t mean Nu fails as network or community.
There aren’t any developer checkpoints like in Peercoin, are there?
PeerAssets is a scheme developed for Peercoin at the moment that is by design suitable for other blockchains as well.
Our Nubox devloper @peerchemist is working on it and seeks funding.
Here’s the road map: https://www.peercointalk.org/index.php?topic=4566.msg43393#msg43393
The related peer4commit procject: https://peer4commit.com/projects/178
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You must be dreaming when you say that Nu will be anything without NuBits. It is the product this company is selling. As a network it has no other utility.
[quote=“masterOfDisaster, post:7, topic:4006”]
There aren’t any developer checkpoints like in Peercoin, are there?[/quote]
I am not sure what do you mean by saying that. I hope you are not implying that Nu might step into the crypto currency game and try to act like successor as Peercoin.
Just check the list of all crypto currencies and see how many have tried exactly that and see where are they now. Peercoin is the only economically sane “coin” design there is, and there is always first mover advantage about other stuff like PoS.
You all just need to calm down with all of this stuff. I do see you are struggling to keep the head over water, but it may just be a phase. Nu should have though of this a year ago, predict this events (Bitcoin halvening and all). Nu has gotten so far only because JL decided to sell all B&C IPO BTC’s for NBTs. Also, you have fully disregarded Ethereum. Everyone looking at scene saw that something like Nu will inevitably coded on Ethereum platform. This is your greatest concern now, as they will get a splendid marketing and will have almost infinite funding. Find a way to cope with that.
After all, now that ship is sinking you will see who is real and who is not. As always I place my money where my mouth is. I have been out of Nu since the B&C motion has passed.
And please note, I really did want to help for Nu to succeed as investor and crypto currency enthusiast. Nu did set some standards and paved a road in decentralized governance, however due to lack of transparency and outright egocentrism of @JordanLee I had to quit.
Sorry for short rant, I have seen this post only because you have tagged me. I do not see how is PeerAssets project relative to this discussion.
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Then I’m dreaming.
Lol, how can Nu step anywhere just because it decides to?
Testing things that might eventually be used elsewhere is no bad idea, is it?
Of course it’s economically sane and sustainable; haven’t doubted that.
Maybe yes, maybe no.
Just sitting, hoping and doing nothing is not after my fancy.
It’s relative to what @Sentinelrv quoted regarding assets, that are different from the pegged digital currencies.
As far as I understand PeerAssets they could be based on both NBT and NSR.
But my understanding of these matters is limited.
–begin–
The core btc reserve threshold will be increased each week, starting the week after this motion passes. It will increase by 0.5% of circulating nubits per week, taking the target threshold from 15% to 30%. The increases will cease once the threshold is 30% (approximately 7.5 months).
The peercoin reserve target will be increased to 10% upon passage, and the peercoin flow will be fixed to 2/3 until the increases in the core reserve are completed (at which point it will still be 2/3 by standard calculation).
–end–
Thank you bringing this thread back to topic!
Do we want to stay at a reserve of 30% without a floor?
Using such a floor could easily be translated in funds that can be put in NuSafe and alike.
Is 30% the next step and we look where we go to once we’re there?
Why is that? How B&C can harm NU? Can you please elaborate?
I don’t believe people are floating the idea of a fixed supply PoS currency in order to compete with Peercoin. The only reason this is being talked about at all is because putting much of our reserves into NuShares turned out to be a serious mistake, which we are paying for now. Selling a new volatile asset which is inexpensive to maintain would help us partially refill our reserves, giving us some breathing room.
NuShareholders themselves don’t necessarily need to believe that a fixed supply PoS coin would be successful in the long-term in order to provide it as a product on the network. I have no delusions that Nu would succeed without stable value coins. We would simply be providing an additional product which may or may not have some demand from the market. If not, then we wasted our time. If there is some demand though and people do buy it, it will help refill our reserves to a certain degree and get us back on track.
Our main product will most likely always be NuBits though. Nu will not survive without it. A fixed supply PoS currency as the sole product offering will not save Nu, and I wouldn’t expect it to. But, if there is some demand for it from the market, it could possibly offer Nu a life raft. Offering a product like this though means we would have to commit to it and follow through with regular distributions.
Good question. Is 30% just a target for us to aim for? What happens when we hit it? Will we need to pass a motion to discontinue NuShare buybacks?
Proof is in the pudding. The question is how many shares does it take to right the ship and if it is more or less than the burned shares.
This isnt really a question. The Standard and Core motion is very clear about such matters.
The effect of stable liquidity is spelled out in the outstanding nbt motion.
–begin–
The core btc reserve threshold will be increased each week, starting the week after this motion passes. It will increase by 0.5% of circulating nubits per week, taking the target threshold from 15% to 30%. The increases will cease once the threshold is 30% (approximately 7.5 months).
The peercoin reserve target will be increased to 10% upon passage, and the peercoin flow will be fixed to 2/3 until the increases in the core reserve are completed (at which point it will still be 2/3 by standard calculation).
@mhps will be paid 10,000 nsr/month for updating the buyback calculation (until the core reserve has reached 30% threshold). This will be paid by FLOT at request from @mhps and only if FLOT is satisfied with the work provided.
–end–
It made so far successful investment in B&C.
As long as pegging ops go on, the peg will recover when BTC price falls. Traders will come back to use Nubits.
Updating the calculator takes more than one hour -ish per month even when relevant motions are clearly written.
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Who tells you 30% is enough, why not 25%? Why not 50%?
Sometimes I believe this community is insane.
-
When Nu began to work on NBT/BTC pair rather than NBT/USD pair demonstrated by white paper in 2014, I was astonished. BTC pair brings higher risk, while higher risk means higher cost if you wanna eleminate it. This risk is even higher than the exchange fault and government intervene, you need to be succesful at first and then attract government otherwise you die silently!
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When Nu believe they can spend BTC proceed as wish, I was really surprised. That’s typical ponzi.
3)When Nu said they can get help from NSR when NBT pegging in danger, I was puzzled. When iphone sales drops, the shareprice of AAPL plumbs, so is the relation of NBT/NSR. If NBT pegging fail, NSR is rubbish, and you plan to rely on it. This NBT/NSR shift should be done when NBT pegging very well, and do it stealthily. But what did you do when NBT pegging good? The opposite direction! the share buy back, you could not be more wrong!
- When Jordan said DAO is not a company, I completely understand that seldom of this community has proper common sense of financial management.
You declare you are inventing a newest machine but not comply old newton laws/ thermaldynamics rules.
So the machine is perpetual motion machine?
What happens if bitcoin jumps a couple hundred in the next several weeks?
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