In the last month, there was $469 million USD in USNBT trading volume, ranking #47 by volume. In contrast, NuShares only have $304,000 USD in trading volume over the last month, ranking #836 by volume. The ratio of USNBT liquidity to NSR liquidity is 1543, meaning there has been 1543 times as much liquidity in USNBT as NSR. This is an unexpected ratio.
The main cause of the huge difference in NuBit and NuShare liquidity is that Bittrex and Upbit, where the vast majority of USNBT trading takes place, do not list NuShares. Fundamentally then, the weakness in USNBT support is coming from a failure to market NuShares, particularly in the form of exchange listings. That is a responsibility outside the scope of the responsibilities of Liquidity Operations. Anyone who has been watching knows I have always confessed incompetence in matters of marketing and my desire to not get directly involved in those efforts, even as I strongly support providing funds so others can engage in the important work of marketing. It is the responsibility of Liquidity Operations to optimally manage the liquidity that does exist. We have done a good job of that, even though we recognize further development in Liquidity Operations could reduce inefficiencies in our approach to peg support.
While it is a speculative claim, I suspect the ratio of volume of all types of NuBits to NSR might be somewhere in the neighborhood of 10 with equal exchange listings. A NuBit to NSR volume ratio of 10 would provide 154.3 times as much peg support from tier 6 liquidity as a ratio of 1543 provides. The current model has great potential if we could only add NSR exchange listings.
What the low liquidity in NSR means is that NSR is exceptionally volatile. We have switched from cycles of NSR sales to NSR buybacks several times in Nu’s history. Additional cycles are certainly expected. Nu has two classes of participants: investors and users of stable currency. The goal of investors in Nu is two fold: the first is to buy NSR low, such as when there are intense NSR sales like right now, and sell NSR high when there are NSR buybacks, as there were just a couple of months ago. Investors can also purchase NuBits (either CNNBT or USNBT) and collect an annualized premium of 43% for up to six months. When USNBT is below $1, they can also make a speculative profit of buying NuBits below $1 and selling them for $1 after the peg is recovered. Of course, for the Nu investor to make money, Nu must build success into the future. That isn’t certain, but we have been growing for three and a half years, and we are determined to continue.
In the immediate future, I expect shareholders will continue to offer high incentives to purchase and park NuBits, which removes them from circulation for the parking period chosen by the user. We will also sell NSR according to a formula that requires about 15 million NSR be sold each day under the present circumstances. The proceeds of these NSR sales will mostly go to purchasing USNBT in the open market, constantly providing price support to USNBT until the $1 price is restored.
Some Nu participants are fearful right now. Nu is designed to reward investors who step in and counterbalance that fear with brave greed. NuShares were commanding 160 BTC satoshis just two months ago, but today are going for 5 BTC satoshis. Smart investors with a risk tolerance can buy them at 5 BTC satoshis, in the hope they can sell them for much more later. Given NuShare history of rapid, wide and repetitive price swings, I do think the risk to reward ratio is excellent. Not because the risks are low, but because the rewards could easily be a ten bagger within months. It has happened before with NuShares.
We are currently in negotiations with a number of exchanges to list NuShares. We hope to be able to announce multiple new NSR exchange listings soon.