There’s been a flurry of talk about winding down Nu. I don’t think that needs to happen. Here’s what could work.
- The first order of business is to establish a peg. @Phoenix is right about this. Nu is useless without one.
- We’ve seen that Nu needs better reserves to cover the peg. I suggest 50%.
- Therefore, Nu should establish a peg at whatever level yields equals 50% reserves with the remaining BTC in FLOT.
A quick calculation from this thread. Count the parked NBT! (It will be unparked soon enough.) 664536 NBT + 154680 parked NBT = 799216, or about 800k NBT. With buy side funds of about $19k, rounded up to $20k, that means the peg is:
$20000 / 800000 NBT, times 2 (for 50% reserve) = 5 cents. Ouch.
Now here’s where my suggestion differs from the ideas so far:
- Keep the peg there permanently, with buy and sell walls. NBT never returns to $1. After things stabilize, you might want to hard-fork the client so that NBT balances are reduced by 95%, and then $1 = 1 NBT again. It’s a permanent debt haircut. With the loss of NSR value, everyone involved has felt the pain of this default.
Now, for revenue:
- Use double the exchange fee as a wall offset. This means that, for every NBT that’s bought and then sold again, Nu earns money on the spread. That’s the revenue. Keep the reserve in BTC with NuSafe:
- When BTC is going up in value, the reserves go up in value, which counteracts traders’ desire to sell NBT.
- When BTC is falling in value, traders prefer NBT for its stability, which counteracts the falling reserve ratio.
- Each week, inflate or deflate NSR to keep the reserve at 50%. That could generate buybacks or dividends again, which gives value to NSR holders. Demand can be revived!
- Also, though it’s not critical, I’d suggest to keep park rates at 5% for 3-month, 6-month, and 1-year terms. It’s a small annual cost in exchange for a good advertising draw, paid for indirectly by NSR dilution (via the weekly rebalancing).
Now, here’s something else to consider: if a plan like this were followed, and shareholders were open to it, I’d be willing to double the Tier 4 funds of 25.742961 BTC, letting this plan run on a well-capitalized 10-cent peg. In exchange, I would ask for the 100M NSR that was recently created. I would be willing to leave that NSR in control of FLOT for the next one-month period, before taking possession of it. That would give shareholders a chance to see that this system is working. If it fails, the NSR would be nearly worthless anyway.
EDIT: This offer has been retracted due to low shareholder support for the above plan.
Disclaimer: I do not currently own any NSR, NBT, or BKS. I have not owned any of these tokens in 2016.