Overview of Nu's current situation

There are a number of acute pressures on the NuShare price either presently or recently. Here are the main ones I am aware of:

  1. In the past 6 months, the NSR supply has more than tripled to support the peg in the wake of the governance crisis aka rogue Augeas default in June. The pace of NSR sales have been dramatically reduced in the last couple of weeks. This is because most NSR sales in recent months have occurred when our mandated minimum reserve was repeatedly breached, requiring immediate NSR sales, often in considerable quantity. However, it has been approximately two weeks since the minimum reserve has been breached. We have more cushion between our actual tier 1 to tier 4 reserve level and the mandated minimum than we have since the governance crisis of June. This means the chances of the minimum reserve being breached and requiring an immediate NSR sale are lower, though a single large sale of NuBits can cause the minimum reserve to be breached at any time. When the minimum reserve isn’t breached and the NSR price is below 70 satoshis, it our policy to only sell 1% of the offset from equilibrium. This is currently $530 per day. So, while NSR has been sold by my department at a dizzying pace in recent months, this has slowed down to under 20% of what it was in the last two weeks. This dramatically slowed pace will continue so long as the minimum reserve is not breached and the NSR price is below 70 satoshis.

  2. The steady rise in Bitcoin over the last three months means that as we keep the NuBit peg, the satoshi price of NuBits has seen a steady decline. This makes any financial asset unappealing. It is a well demonstrated characteristic of our network that NuBit demand tends to decline when Bitcoin goes up, and NuBit demand tends to increase as Bitcoin drops in price. Historically, Bitcoin bull markets have not lasted longer than several months since 2012. This Bitcoin bull market is about three months old. No one can say what the future of the Bitcoin price is, but we can say the present Bitcoin market has placed unusual downward pressure on NuBit demand.

  3. We have been surprised in the last 48 with a notice that NuBits are to be delisted on Poloniex soon. This is bad news for NuShare holders and constitutes an additional extraordinary downward pressure on the NuShare price. We are working hard to reverse the decision, but in the end, the decision belongs to Poloniex.

Despite these three extraordinary pressures on the NuShare price, the peg is working. Over the last two weeks, the total number of NuBits is circulation has seen a modest rise of about 5%. The number of NuBits in circulation is now so low (just a little over $150,000 worth), that even terrible news like the Poloniex delisting have not caused it to drop further, at least not yet. While no one can predict what the future level of NuBits will be, we can observe that it isn’t going down now, even in the face continued and new extraordinary pressures.

While NuShare performance has been quite frankly abysmal in recent months, the modest increase in NuBit demand even in the face of the Poloniex delisting announcement combined with our continued movement toward reserve equilibrium indicates the situation is quite ripe for a turnaround. Even so, no one knows what will happen and additional negative surprises can occur, such as the Poloniex delisting announcement.

By way of comparison, I looked at a number of coins that were included in the recent Poloniex delisting announcement. Every one of them dropped more than 50% in the 24 hours after the announcement. US NuBits, in contrast, stayed perfectly flat while our buy walls have thickened since the announcement. Our design is working. We have taken some tough hits recently. No one knows if there are more to come, but we can say that the downward pressures on the NuShare price have been truly extraordinary recently and therefore appear likely to ease going forward.