NuBit peg strength has improved between 87% and 275% since 2015

The NuBit peg can be thought of as having three dependencies that determine its strength:

  1. Tier 1 to 4 reserves. Right now these are BTC that we hold which we can use to support NuBits at a moment’s notice. The more we have the stronger the peg, even as it increases counterparty risk.

  2. NuShare sales. Our ability to use NSR sales to support the peg depends on the liquidity of NSR. Deep liquidity means deep peg support.

  3. Transfer capacity. The capacity to transfer funds from the lower tiers (2 to 6) to tier 1 where they are accessible to NuBit customers. This is the dependency that failed nearly a year ago, so its importance shouldn’t be overlooked.

So, let’s consider the long term trajectory of peg strength, in terms of these three factors.

  1. Tier 1 to 4 reserves. These reserves used to be regulated at 15% in 2015. We currently hold a 28% reserve in tier 1 to 4 alone. This is an 87% improvement in peg strength from this one factor.

  2. NuShare sales. NSR liquidity has experienced phenomenal improvement since 2015. Two measures are important: the percent of NuShares that are exchanged each day and the USD value of all trades. While I haven’t crunched raw data figures to derive exact historical values, I recall that in 2015 we typically had less than 0.1% of all NuShares being exchanged each day. It is now nearly 2% of the NSR circulating supply each day, for a 20 fold, or 2000% increase. That is a phenomenal improvement. Even though the NuShare price is much lower today than in 2015, the USD value of liquidity has also dramatically improved. It was under $2000 per day in 2015, and is now around $7500 per day. That is a 275% improvement. Imagine how much NSR liquidity would improve with an NSR price increase.

  3. Transfer capacity. In 2016, we experienced a major human failure in our transfer capacity. Some unprincipled multisig custodians failed to keep their contracts to provide liquidity. They were afraid of some market events, which seemed to cause them to hunker down and freeze in fear, as people with authoritarian tendencies are apt to do. They used their fear as a justification to claim that everything had changed, and that the rules that had been so meticulously developed and agreed to were irrelevant. They were lawless and impulsive, which is characteristic of authoritarians. Today, transfer capacity depends on three individuals: myself, @jooize and @woolly_sammoth. I don’t permit pseudonymous custodians in my department. I require everyone to provide multiple verifications of their birth identities. In the time I have been Chief of Liquidity Operations, I have created a culture where efficient and rule based movement of reserves is of paramount importance. @jooize was a custodian at the time of the 2016 transfer capacity failures. He consistently resisted the misconduct of our authoritarian custodians, consistently arguing for devoted and quick peg support. We know how he will react to a crisis, because he has proven himself in one. Similarly, @woolly_sammoth was cooperative in the crisis and demonstrated a fidelity to NuBit holders. We can have confidence he will do his part to reliably support the peg. Our transfer capacity is much more secure than before.

In summary, our reserve is 87% higher, liquidity is greater by 2000% or 275%, depending on how it is measured, while our transfer mechanisms have been improved a great deal as well.

The peg is far more secure today than it has ever been. Nu is gaining strength over the long term.

You can discuss or upvote this on Reddit, if you like.

@tomjoad please post this to the NuShare holder Twitter and Facebook accounts. Alternatively, you could transfer those accounts to me, as mandated by passed shareholder motion.

Another indicator of peg strength not yet mentioned is the ratio of all NuBits to NuShare market cap. Right now there is $2.83 in NuShare market cap for every $1 in NuBit liabilities. That is somewhere near our historical average. It is healthy.

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Tomjoad hasn’t logged into the forum for more than 6 months, so it is unlikely he responds. I suggest we set up new accounts and ensure at least 3 people have the credentials available to them. Possibly we can ask Twitter and Facebook whether they are good to handover the account as we have lost access due to administrators abandoning us. After all they haven’t been used at all.

It is great, but we should aim for better than we did to show strength.

Interesting, you are still pseudonymous. So the Shareholders depend on only two people to run the whole operation?

I don’t agree with that. It is only a different risk we are now exposed to. It is now highly centralised.
More work is required in this area. I have raised the solution for that in earlier emails.

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@phoenix, I’m very happy about this fact and happier on you knowing it, this is the base of Hayek short-term loan model.

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It might be useful to open up a discussion of what Hayek money means to you in 2017, in our context. I would like to hear more, probably in the thread you started yesterday.