I think this should be analyzed in asset-liability point of view. @Benjamin discussed this here. Asset has been discussed before. Today NuShares is the main form of Nu asset. Development funds is also part of asset.
Nubits can be seen as the product Nu sells. When selling happens, the proceeds should go to raise the marketcap of Nushares or go to the development fund, both should increase Nu asset.
Nubits in circulation is also a liability. Of the 4589985.404 NBT money supply, 4040000 is the Strategic Reserve. 549985.404 NBT is in circulation. If we ignore the risk of Strategic Reserve unexpectedly entering into circulatioin, Nu liability is $0.55 M. NSR marketcap is about $2 M. So Nu is well above the water.
@cryptog’s calculation is the monthly change of asset and liability, which is very important. That Nu hasn’t been doing this all along is NOT GOOD. In the calculation any increase of NBT in circulation (including selling) is an increase of liability. Any decrease of NBT in circulation and appreciation of NSR marketcap is an increase of asset/liability ratio.
For accounting data, from my debug.log I find the last block in July was found on 2015-07-31 23:58:28
Block #463,681
hash 982f7c775f5a39ad3c60364856b145eeab08d9ba56d8ee1c3b6a0049cbf43bad
moneysupply(S)=1006831118.028 moneysupply(B)=4589987.1517
I don’t know how to pull money supply from the blockchain and I don’t have June debug.log. So can someone help to find moneysupply(S,B) at the end of June?
With price data of NSR we can calculate liability and asset changes.
The blockexplorer would be perfectly suited for a task like that.
It already provides current supply information.
Having access to historic supply information would be useful for NSR holders as well as (interested) customers.
* asset only includes NSR marketcap. Development fund, tangible assets belonging to Nu, liquidity reserves in BTC etc are not counted in.
I don’t understand why ~$86k of NBT marketcap was lost (mostly on June 4) while in the OP @cryptog only found ~$5k and auction only burned $1k.
Anyway Nu has a very high Asset-Liability Ratio (although it is decreasing). Inspired by @cryptog’s OP, I itemize changes of asset and liability
Asset change
proceeds from selling Nubits
(NSR creation + minted total - NSR burnt - NSR tx fee) * price at the end of accounting period
marketcap change of the NSR amount in the beginning of the accounting period (Marketcap of NSR is subject to mostly random price fluctuations, so I list it separately)
That 80k or whatever was a custodian I believe. We don’t really “owe” the full 500k, it’s complicated and the real amount we “owe” should be closer to 200k.
Seeded auctions can provide an official price to report this automatically while being resistant to manipulation (theoretically).
Doh. Forgot that. Will modify my message. Minting increases moneysupply of NSR and theoretically has no effect on marketcap, but negative effect on NSR price (dilution). Technically minting is asset creation until the minted amount is sold to push down the price.
You mean a custodian burned 80k ?
The reason of this thread is bringing transparency to that complicated beast.
The nbt debt needs to be understood in terms of what we know will be held in a given time period based on factors like development fund, sell side liquidity, and parked nbt. We can lump what we know will be sold (development and the like) in with the free floating nbt and subtract off the buy side liquidity. Then, compare that result to the total nsr marketcap defined by nsr in circulation * most recent auction price. You should find that we come out over an order of magnitude ahead.
Where does the buy side liquidity come from? In the beginning of Nu they were from fund paid by shareholders at IPO. The NSR marketcap already reflects this fund (why else the NSR price hovers at IPO price?) which is part of Nu asset. They are already counted in the asset part.
Then self-funded LPCs provide both sides with their own fund. Foundamentally Nu has no control of pegging liquidity fund. Only when Nu demonstrates very good financial health can we expect LPCs not to pull their NBT (to sell for other currencies).
It was right to count different sources of liquidity when analysing health of the peg. But these days I think it’s irrelevant in asset-liability analysis.
I do not think we can consider that as asset. To me it is just revenues (renaming P&L as Revenues/Expenses should be more accurate in reality) that need to be immediately distributed as dividends or used to buy back NSRs and burn them.
Oddly, you can see here by the way that revenues can reduce the NSR supply, reducing NSR market cap, reducing the assets of Nu but then if the supply is reduced, it should increase the unity price of NSR, so at the end, there is no contradiction.
Another thing is that normally, dividends should be created from the profits.
Profits = Revenues - Expenses.
So sensu stricto, shareholders should not distribute dividends directly from the NuBits proceeds, but wait to have the monthly profit statement, which assumes the calculation of the expenses.
We just happens to call it dividends when using peershares client to distribute fund to shareholders. Maybe we should give the fund distribution a different name.
NBT never get to be sold, as per the common meaning of the term, since they are re-bought back.
I think one should indeed talk about tiers and which one side (buy or sell) the funds were originally placed onto.
For now, Nu is not in the business of selling NBT because people still want to redeem them for dollars or other cryptos -
Nu is in the business of providing liquidity of selling AND buying NBT, according to the demand. One day perhaps the demand would be so great that it would be reasonable to say we SELL NBTs?
Please don’t confuse liquidity providing with issuing and selling NBT!
At the moment it isn’t but some months ago it was
How do you think the 562,036 NBT came into circulation if not by having been sold to people?
This was in a time when liquidity providing wasn’t decentralized but handled by @KTm and @jmiller.
A lot of the value that was retrieved for selling the NBT got lost during the February exchange hacks.
If Nu were to sell 100,000 NBT tomorrow, the revenue needs to be distributed to NSR holders, because they are the ones responsible for keeping the peg. Being responsible for the peg includes at worst case issuing NSR via grant to sell them, buy NBT and burn them.
As NSR holders are ultimately reliable for the NBT peg, they need to get the revenue from sold NBT.
Whether that is done by dividend distribution or by NSR buybacks is another topic.
Mmhh… in one case Nu sells NBT in the other case it doesn’t?
Liquidity providing has nothing to do with Nu selling NBT.
Nu sells not a single NBT in @henry’s NuLagoon or all the ALPs.
Nu just incentivizes people placing buy and sell orders.
As NBT are granted for paying the compensation for the liquidity providers and nothing is getting distributed to the NSR holders (there’s no revenue just like there is no spoon in the matrix), this appears as a position on the expenses and not the revenues side.
This is getting philosophical - I appreciate it
This allegory suggests you can transfer the LPC compensation on the revenue side if one changes one’s perspective and realizes some truth (trust in NuBits?)
