It is clear to those who are most closely involved in Nu that the network has functioned as designed, despite its inability to peg at certain points in our history.
The key to understanding the reality of the situation is to turn our attention to the meaning of stake in Nu. To meet our objective of creating a decentralized stable blockchain currency, it was necessary to start with an open source protocol to spearhead the effort. Ours was and is a proof of stake network (we had it in 2014, while Ethereum is just getting around to upgrading to it). The irony of an open source proof of stake network is that when first designed, it necessarily has no stake, yet stake is its security model. Therefore, we can expect a well designed proof of stake network to have essentially zero security and zero functionality when, at its birth, the value of the network (market cap of NuShares) is zero.
It has been our hypothesis that our proof of stake network is a viable way to implement a robust decentralized stable currency network. The evidence supports this, though the evidence is, unfortunately, incomplete at this point. The reason for this is that the network has not been tested at a high enough stake level. We know that Nu, and all proof of stake networks, will utterly fail at a stake level of zero, or a NuShare market capitalization of zero.
The question that presents itself is what stake level is required for the network to be robust and reliable in its peg support. Here are my thoughts about the network’s capacity at various stake levels, which are best thought of as the market capitalizations of NuShares.
$0 NuShare market cap
Total failure at all levels.
$10,000 NuShare market cap
Worth reserving domains and having a few forum threads. Peers would not be expected to connect at this level, so there would be no functional network.
$100,000 NuShare market cap
At this level we would expect to see peers begin to connect, though the network would be unstable. At this stake level, there is almost no functional ability to peg currencies.
$1 million NuShare market cap
I would expect peers to create a small but continuously connected network at this stake level. The capacity to control stable currency pricing becomes quite noticeable, but it doesn’t fully function under a number of circumstances. The support for currencies is constant but weak at this stake level. Voting, especially for interest rates, may not be as stable as we would like.
$10 million NuShare market cap
Once this level is maintained, the pegs have a good chance of holding. The project becomes more professional and mature. It can support marketing and development programs. People begin to notice that NuShares are the crypto that is dramatically shrinking its supply, as opposed to Bitcoin and others that are still debasing their token.
$100 million NuShare market cap
At this level we can expect the network to be fully functional, with an extremely robust peg.
$1 billion NuShare market cap
The collapsing NuShare supply is getting a lot of attention. It attracts investors, which creates a virtuous loop: the more investment NuShares get, the more we market NuBits, causing more NuShare buybacks, raising the price even higher and strengthening the stake level.