When campaigning to become Chief of Liquidity Operations, I pledged to return our peg to $1.00. I predicted the first moves upward in the NuBit price would be swift. They were. I said progress would slow as we approach $1 and that the peg would be gradually restored. With the NuBit price ranging from $0.85 to $0.90, it is time change the character of NuBits from the very speculative investment it was at $0.20 back the to stable currency it is supposed to be.
The important question is: What course of action will incentivize NuBit use the most? It isn’t my plan to buy all NuBits back. I want to create demand for NuBits. Right now we are supporting NuBits with daily purchases of several thousands of NuBits. This might be the fastest way back to $1.00, but it might not be the way that encourages the widest adoption of NuBits. As of today, NuBits are still subject to fluctuations in price as a result of changes in demand. Daily volatility (the difference between the low and the high) typically exceeds 5%.
We could restore stability nearly immediately by introducing an escalating soft peg. We would start at a price the market supports today (which would be somewhere between $0.85 and $0.90 at the moment). Instead of using all NSR sale proceeds to buy and burn NuBits, we begin to shift some resources to building a buy wall and reserve. Then we slowly increase our soft peg price. We might use a calendar to shift the soft peg upward according to a planned schedule, or we might not commit to specific dates. If a calendar were used, I am inclined to increase the soft peg price $0.005 NBT per day until $0.95 is reached, at which time the increase would slow to $0.0025 per day. That would take about a month to fully restore the peg. However, NuBits would become stable almost immediately, with a steady appreciation expected.
Let’s think about how this looks to NuBit holders. They become increasingly confident NuBits won’t go down in price from our soft peg price, which would likely start between $0.85 and $0.90. Instead, each day they hold, they get an extra $0.005 for each NuBit they hold. Those that have confidence in our ability to keep our escalating price target will have difficulty justifying selling today when they can wait just one day and get more than an additional half percent return. Who sells an asset that goes up a half percent a day? Not many people. This may be a way to provide the right incentives for people to hold on to their NuBits. As it approaches $1.00, the plan is to have thick walls and the price stable. The buyer had a use for stable currency before, so it is likely they will continue using NuBits for the same purpose they were before the crisis in liquidity operations.
I would like to open a discussion on what the best approach to NuBit support will be in the coming days and weeks.
