The market prices of NuBits and NuShares are the result of many interactions of unpredictable and unknown actors, so they cannot be forecast with certainty. However, I believe we will see the NuShare price rise as we reduce the rate of NuShare sales, which is a process that began yesterday. Let me explain why.
NuShares are no ordinary crypto asset. Aside from the pioneering model of governance they facilitate, they are designed to be the most volatile crypto asset. This is because NuBits were designed to be the most stable crypto asset. We take the price volatility the market wants to impose on NuBits and we divert it to NuShares. That’s our model. It has proven to work every time it has been tried. The default orchestrated by incompetent decentralized liquidity providers dramatically reduced demand for NuBits. When NuBit demand falls for any reason, the market is trying to lower the price of NuBits. Our model says we counteract that by reducing the NuBits in circulation and increasing the NuShares in circulation. When a very sharp reduction in NuBit demand occurs, a very sharp increase in the issuance of NuShares is necessary. So I created a sharp increase the issuance of NuShares. That’s the model protecting the value of NuShares. It isn’t a fun process for NuShare holders right now, but it is certainly the right way to preserve the long term value of this most volatile asset. We must at this difficult moment in time be careful to bear in mind how our model plays out through the entire cycle of decreased and increased demand. It is a test to see if we have the maturity and discipline to keep our attention on the big picture instead of being swayed by emotional impulses. Decentralized liquidity providers utterly failed this test. I am demonstrating the maturity and foresight that is needed at this moment.
A NuShare is a speculation on the potential to issue NuBits in the future. If we increase demand for NuBits by offering a quality product that is predictable and people have confidence in, everything else will fall into place. NuShare issuance will slow. The NuShare price should rise as a result. Then additional NuBits are issued to meet increased demand, and NuShare buybacks will eventually follow. Then the price of this most volatile asset moves upward for as long as NuBit demand increases.
Some say promoting NuBits is hopeless because of the poor choices of decentralized liquidity providers at the end of May and in June. However, all this is already priced in to the NuShare price (and the NuBit price). All we need to see improvement is to increase NuBit demand from its currently low level. Ironically, destroying so much NuBit demand as has been done in June makes it easier to create additional demand, because it is easy to make major improvements over the terrible way things were run in June.
If we follow the model carefully, the NuShare price will be true to its volatile character and swing back powerfully, because we have already firmly established a dramatic improvement in the NuBit price. Our biggest threat is lack of confidence that we will follow the model. We need to make it clear we will not let anyone who rejects our successful model to have any control in our system.
I wish to emphasize that I intend to gradually reduce the number of NuShares sold per week, which have exceeded a rate of 35 million NuShares per week the last couple weeks. I reserve the right to increase it, but I don’t intend to in dealing with the crisis that was under way when I became Chief of Liquidity Operations.
We are very tentatively stable at $0.85. We need to build a buy wall below that to increase the stability. We can create NuBit demand by stabilizing at $0.85 and increasing the soft peg price slowly… At this point, NuBits are a semi-stable asset that offers the promise of modest appreciation of a little more than 15%. That is something we can sell. Our goal should be to make the restoration of the peg be seen as nearly inevitable, so that the ride from $0.85 to $1.00 seems like an easy gain and as close to a sure thing as we can make it.