Ideal Liquidity Operations practices and policies

[Phoenix]

I am asking shareholders to vote for me as Chief of Liquidity Operations. As part of my campaign, I will be letting shareholders know what I would do if I were the Chief of Liquidity Operations in our rapidly evolving situation. Obviously, specific practices will vary according to the situation, but in all situations I will show a deep commitment to maintaining the value and liquidity of NuBits. This will also benefit NuShare holders, because it will build trust in our product and spur demand.

I will be posting my recommendations regularly in this thread. Others are welcome to discuss and debate it here.

[Phoenix]

Right now our liquidity operations should consist of selling NSR at a weekly auction. I will provide an analysis of what the NSR auction quantity should be based on passed motions shortly. Payment should be accepted in BTC and NBT. However, all BTC proceeds should be used to purchase NBT immediately. All proceeds end up as burned NuBits within days.

No buy walls are needed right now. We let NuBits float for now with the understanding we are aggressively buying them and destroying them. This will push the NuBit price up toward $1.00 over time. For now, NuBits are not a stable cryptocurrency. They are an asset Nu is determined to increase in value 400% from $0.20 by buying them on the open market and destroying them. As our plan is credible, people will buy NuBits for the 400% gain we are sacrificing our NuShare price to create. If that happens, the NuShare price will recover.

[ksmith]

Assuming people find this plan credible, they will buy NuBits at a low price, thus helping to push up the price. But then, if the peg is achieved, they will turn around and sell their NuBits, to make their intended profit. As soon as that happens, the peg will collapse again.

To maintain the peg, you need one of two things.

EITHER there must be a general motivation for the public to keep buying NuBits (so the peg only needs to be maintained from the top, by simply creating more NuBits), OR we must have an unlimited source of funds to keep buying NuBits and thus keep the price up even if the general public prefers to sell NuBits rather than buying.

I don’t see either of these two conditions existing right now.

[Sentinelrv]

Right now our liquidity operations should consist of selling NSR at a weekly auction.

The previous auction didn’t sell the entire lot of NuShares. What would you have done differently to encourage them all to be sold, lower the minimum price or something else?

If that happens, the NuShare price will recover.

Do you believe as a result of this plan being implemented, that NuShares may recover slightly as the auctions are taking place? Or do you believe the price will remain where it is right now or even go lower during the auctions until later on as buying and burning of NuBits starts to effect the price of NuBits?

[mhps]

OR we must have an unlimited source of funds to keep buying NuBits and thus keep the price up even if the general public prefers to sell NuBits rather than buying.

You don’t need unlimited fund. You just need enough fund to buy all outstanding nbt back. that is called 100% reserve. Both @Phoenix’s and @Cybnate’s plan to have it. The former trys to achive it buy mainly selling nsr; the later by mainly charging fee to those who refuse to park (reducing outstanding nbt)

[Phoenix]

Assuming people find this plan credible, they will buy NuBits at a low price, thus helping to push up the price. But then, if the peg is achieved, they will turn around and sell their NuBits, to make their intended profit. As soon as that happens, the peg will collapse again.

This concern is valid. As we get closer to the peg price of $1.00, there is less potential gain to be had, because the price won’t go over $1.00. This will flush the speculators out. But there isn’t a single price point at which speculators will leave. Each will have a different price point based on their own assessment of the risks and potential rewards.

So, if NSR sales continue, I would expect the most likely scenario would be a relatively steep ascent in the NBT price at first. This ascent will slow as it approaches $1.00. Along the way, there will be some noise and apparently random fluctuation in the NBT price. However, as long as we keep purchasing and destroying NuBits, the price is certain to rise over time.

I have come to believe the fastest way back to $1.00 is this method where we let it float up to $1.00 while aggressively buying and burning NuBits. The transition from floating to pegged will be gradual. We should use this method because we prioritize a fast return to $1.00 above all else. We need to do this in the presence of a 100% reserve requirement, which shareholders are voting on right now.

[mhps]

I have come to believe the fastest way back to $1.00 is this method where we let it float up to $1.00 while aggressively buying and burning NuBits. … We need to do this in the presence of a 100% reserve requirement, which shareholders are voting on right now.

To achieve this Nu needs to sell ~1000 btc worth of NSR to do the nbt-buying and/or 100% reserve replenishing for a $1 peg. You’d better come up with a convincing argument that ~1000 btc worth of NSR is possible (circular logic not allowed)

[ksmith]

You don’t need unlimited fund. You just need enough fund to buy all outstanding nbt back. that is called 100% reserve.

I don’t mean literally unlimited (as in infinite), but rather, an indefinite quantity, with no foreseeable limit. Even after buying back all NuBits, and restoring the peg, what happens then? Suppose the public then buys a large quantity of NuBits, and the peg is then maintained by generating more NuBits. Now the market changes and the public wants to sell all its NuBits. The peg is lost again, and you will need yet more funds to buy these NuBits. Every time this cycle repeats you will need more funds.

[Phoenix]

The previous auction didn’t sell the entire lot of NuShares. What would you have done differently to encourage them all to be sold, lower the minimum price or something else?

Some people were confused about the minimum price, thinking it was in US dollars. I think it is clear now that pricing is in NBT. If the minimum bid price is 0.001 USD, then it is far above the market price. If it is 0.001 NBT, then it is far below the market price.

Do you believe as a result of this plan being implemented, that NuShares may recover slightly as the auctions are taking place?

I don’t know. What I do understand is the NuShare price is a speculation on Nu’s capacity to sell NuBits in the future. To make the NuShare price go up, you have to increase confidence that there will be increased demand for NuBits in the future.

The good news is increasing confidence shouldn’t be very hard at this point, because the current NuShare price tells us confidence is very low right now.

[mhps]

Suppose the public then buys a large quantity of NuBits, and the peg is then maintained by generating more NuBits. Now the market changes and the public wants to sell all its NuBits. The peg is lost again, and you will need yet more funds to buy these NuBits. Every time this cycle repeats you will need more funds.

Suppose the public then buys 1million NuBits, Nu will save the sales proceeds in the reserve, preferrably in 1m USD denominated tokens, so that the saved reserve doesn’t fluctuate in $ value. Now the market changes and the public wants to sell 1m of its NuBits. Nu just takes the nbt back and pay $1m with the reserve. The peg is not lost again.

[cryptog]

1000 btc worth of NSR to do the nbt-buying and

I do not think we need to buy all nubits in circulation.
There must be a good chunk of holders that do not want to sell.

[cryptog]

@Cybnate’s plan to have it

here she talks about 50% reserves only.

[mhps]

I do not think we need to buy all nubits in circulation.There must be a good chunk of holders that do not want to sell.

That is true. but let’s say they are 50%. 500 btc is still a lot.

[ksmith]

Suppose the public then buys 1million NuBits, Nu will save the sales proceeds in the reserve, preferrably in 1m USD denominated tokens, so that the saved reserve doesn’t fluctuate in $ value. Now the market changes and the public wants to sell 1m of its NuBits. Nu just takes the nbt back and pay $1m with the reserve. The peg is not lost again.

Right now, the public will be buying at a price much lower than $1. In the future, if the market changes, the public will want to sell at $1. You will need more funds than you started with, and these funds can never be recovered.

[ConfusedObserver]

We let NuBits float for now with the understanding we are aggressively buying them and destroying them. This will push the NuBit price up toward $1.00 over time.

You do that by selling NSR to remove NBT directly from the market or receive BTC, that are used to buy NBT from the market.

As our plan is credible

This plan is not credible.
It lacks the revenue to continue once the peg was recovered.
You can continue with 100% reserve from then on and still go bankrupt, because you can’t cover your operational expenses.

No buy walls are needed right now.

I can agree with that - at least in parts.
Buy walls at a quite low price can help buying NBT from the market and removing debt.
It will be more efficient than buying NBT from the order book for two reasons:

• the maker fee (0.15%) is lower at Poloniex than the taker fee (0.25%)
• you get NBT at a cheaper rate

You try to position yourself as “Chief of Liquidity Operations”, but seem to have lack of knowledge in very basic parts of that role.
And you have a flawed understanding of how to run a business.
You are in my opinion not the ideal person to fill that role.

If you want to provide a credible plan, it needs to include how to run the business without continuously selling NSR or NBT to cover the costs, as that can be identified by the least capable economist as ponzi scheme.

@Cybnate with the help of @creon showed how Nu can be transformed to a profitable lending business by introducing a coinage dependent transaction fee.
This will not only provide a means to recover the peg and to get rid of the debt, but create ongoing revenue as well.

Each of them are obviously a better choice, because they understand economics and are able to use that knowledge.

[mhps]

In the future, if the market changes, the public will want to sell at $1. You will need more funds than you started with, and these funds can never be recovered.

That is understood and that is the hardest part.

[Passed] Temporarily cap NBT supply with full reserve

To raise a100% reserved peg, the reserve has to increase at the same rate.

[crypto_coiner]

@Cybnate with the help of @creon showed how Nu can be transformed to a profitable lending business by introducing a coinage dependent transaction fee.This will not only provide a means to recover the peg and to get rid of the debt, but create ongoing revenue as well.

Again, that sounds attractive –
What is this lending business about?

1. Business model
2. Revenue projections
3. long term Vision

[ConfusedObserver]

Some people were confused about the minimum price, thinking it was in US dollars.

How do you know?
I haven’t found such an information in the forum.

What I do understand is the NuShare price is a speculation on Nu’s capacity to sell NuBits in the future.

This is what makes it clear that you intend to continue with your Ponzi Engine.
NSR price should be a speculation on Nu’s capacity to make revenue in the future.

[cryptog]

@Cybnate with the help of @creon showed how Nu can be transformed to a profitable lending business by introducing a coinage dependent transaction fee.This will not only provide a means to recover the peg and to get rid of the debt, but create ongoing revenue as well.

So if we adopt such a model, Nu would radically pivot from providing NuBits for free to providing NuBits for a fee.
In that case, what should be a reasonable daily fee of such a service?
And isn’t a big problem with holders?
I mean when I hold 100 USD today, it is still 100 USD in one year.
(I am discarding the inflation part because NuBits being pegged to USD does not have any advantage over USD).
It is very legitimate to ask what would be the reaction of the holders?
Would they be like: “no way!” or rather": the fee is reasonable and after all paying for the privilege of using a stable crypto is not so unnatural"?

[Phoenix]

It lacks the revenue to continue once the peg was recovered.You can continue with 100% reserve from then on and still go bankrupt, because you can’t cover your operational expenses.

There are so many sources of revenue available they are nearly innumerable. The talk about no revenues being available is really stupid, considering so many sources of revenue have been identified and discussed on this forum. I can’t think of a line of business with better prospects for revenue. Even Facebook found revenues. That was difficult. There were plenty of naysayers like you in their early days who didn’t know what they were talking about. We won’t have even 5% as much trouble finding revenue as Facebook. What we need is credibility in our product, and we will be flooded with revenue. We are a startup, however, and that requires investment. We have to demonstrate ourselves worthy of investment. Abandoning our main business operations in a disorderly and unplanned manner as we did is the worst way to court that investment. It is that unpredictable behavior that is our biggest problem at this point.

NuBits themselves are a depreciating liability. That is really important. We get transaction fees, which shareholders can and should raise. Volume dependent transaction fees are coming. There are trade spreads. There are lost NuBits. So many promising avenues that have already been discussed at length.

Sorry, saying we should destroy NuBits holders for lack of revenue is just incredibly stupid. I stand amazed.

All the idiots saying we should break our promises to customers because we don’t have the kind of revenue they want right now should leave the forum as far as I am concerned. You are no friend of NuShare holders. Like we are going to have more revenue by acting in the way we have the last month. Building trust and credibility are paramount, not making tons of revenue right now. But these people aren’t identifying ways to get tons of revenue. They are suggesting that we shut down operations until we get more revenue. The stupidity of this is truly amazing and I am weary of indulging it.

To those who insist on bringing suicidal values to our network, just please stop. You look like idiots.