If the auction succeeds, no NBT burning will be necessary. If it does not, it will probably be time to discuss burning NBT from NSR sale proceeds.
Why? Do you mean because you are buying NBT with the BTC bids? These NBT will be future sell side pressure because they are used as salary for people who have to pay bills from this income.
I am also already excited to see how many bids were done in NBT, because looking at the current liquidity I think it is more than apparent that no single NBT was bought to make an auction bid and therefore every NBT that was used in a bid was an NBT which was held before and will now be sell pressure.
I hope you are right. If we, as usual, wait for the very last second to take any action, and the buy side liquidity will drop so much that you cannot pay your contractors for B&C anymore, then we will have to pay a pretty good premium to someone for burning NBT. If we do it before our house is burning, then we might get a much better deal.
I thought the high cost of liquidity is mainly due to exchange default risk and BTC/USD price volatility risks. No amount of liquidity in NBT/BTC will change liquidity price. Please explain if I am wrong.
Don’t want to answer on behalf of Jordan, but I do think given enough competition the liquidity price would come down. I don’t believe the exchange default risk and BTC volatility are priced right at the moment. Especially if you take hedging opportunities into account. The market is still immature I believe due to complexities preventing some players to enter.
What I do struggle with though is increasing the rates even further. If there are still NBT floating around at these rates, I think there is a serious oversupply and we should look at other means e.g. burning. The auction would only provide temporarily relief and only if successful, but won’t solve the problem as all those NBT will enter the market again sooner or later. Let’s see what happens with the auction but I would advocate to burn NBT very soon anyway.
Nu needs to provide sufficient NBT liquidity to keep the promise of a pegged crypto currency.
That much is clear.
All circles around the question: how high do parking rates have to be?
How I understand some things that related to parking rates:
- Paying parking rates is expensive for the NSR holders, but required to temporarily increase demand
- Selling NSR to burn NBT would be expensive as well - currently mainly due to the low volume at NSR markets.
Auctioning off NSR to fund B&C creates sell-side pressure, because the BTC, LTC and PPC that are paid by the auction winners will be converted to NBT (“All Bitcoin, Litecoin and Peercoin proceeds will be converted to NuBits.”, p.4 chapter “Funding”) - but this is only temporarily
- Paying for B&C development (converting the NBT funds to whatever) is creating buy-side pressure once more
A combination of sufficiently liquid pools and parking rates will ever be necessary to face NBT (over)supply.
Paying the parking rates and pool fees that are required by the 200,000 NBT of the B&C funds is a kind of insurance against BTC, LTC and PPC volatility.
Do I like this?
Do I see an alternative at the moment?
Do I see improvement?
The question is: would it be more expansive to face the volatility?
What I really miss are (reliable or any at all!) calculations for that.
What is the expectancy value of the volatility? I mean there’s not only the chance for decreasing value, there’s a chance for increasing value as well.
So the “insurance” is only well invested if the value of BTC, LTC or PPC declines.
In case their value increases the insurance is paid for a loss of B&C fund value.
I think that such a bold project requires a sound base - financially as well as technologically.
I think what bothers some (and I understand that very well) is that the current course of actions lacks the required transparency.
We need an authoritative forecast of network costs if we want to be able to determine proper parking rates.
This helps us evaluating proposals for liquidity providing as well as evaluating proposals for funding projects with NSR auctions.
It’s way too late for the current situation, but for the next motion we might have more information and I can imagine seeing different proposals in the next motion to fund something:
- auction x NSR at a price of (in total) y and exchange non-NBT crypto to NBT, creating an estimated cost of z NBT for NuNet (which Nu pays for the required increased liquidity)
- auction x NSR at a price of (in total) y+z and exchange non-NBT crypto to NBT (let the successful bidders pay the cost for the required liquidity providing)
- auction x NSR at a price of (in total) y+v (estimated volatility cost of non-NBT crypto) and don’t exchange non-NBT crypto to NBT (successful bidders pay an uplift for the volatility risk)
In the end it might be even more complex than my attempt to line it out.
I hope to spark a discussion, though…
We need models to calculate parking rates. At the moment it’s only guessing - or did I miss something?
The model for choosing park rates really doesn’t need to be complex. While there may be other factors at times, it is really this simple:
Are the two liquidity walls balanced? If yes, keep rates the same. If the buy wall is low, raise rates. If the sell wall is low, lower rates.
Right now, 21,000 in buy side liquidity is on the CCEDK USD and EUR pairs. The vast majority of NuBit sellers don’t want a bank wire transfer of US dollars or Euros, so this liquidity is not very relevant. The BTC pair walls have 13,000 on the buy side and 59,000 on the sell wall. This means only 18% of liquidity is on the buy side.
I’m quite concerned to see rates drop over the last day. It is quite clear to me they need to be raised until the BTC liquidity walls are even. Failing to do so exposes the network to serious and completely unnecessary risk. If park rates remain elevated for an extended period, that just means NSR creation and sale needs to be combined with an NBT purchase and burn. High rates have a clear remedy.
Shareholders have not fully utilized the supportive capacity of park rates. This is particularly true during the last couple weeks. I urge shareholders to reconsider their approach to park rate voting.
The buy wall at Bittrex disappeared and hasn’t come back. I guess BTC liquidity is consumed by the anticipation that BTC will rise for some time, due to the recent Nasdaq news.
USD EUR are not totally irrelevant - they can be considered a low-priority choice for those who wish to sell NBT for something else. Roughly speaking, even if they aren’t at the bottom of tier-1, they’re still some `visible’ form of lower tier liquidity. After all at a massive NBT sell-off people will buy them.
That is a good question. Right now when btc goes down, btc is sold for nbt. When btc gosd up, btc is bought. In both cases, lpc loos money with currently acceptable spread and pool rates. That is one of the biggest issues of Nu right now, in my opinion.
The buy side liquidity is indeed thin. I will increase my parking rates.
I continue to be surprised and concerned that rates are not being raised. There is no doubt in my mind that shareholders are mismanaging park rates and have been for at least a couple weeks. The peg can only take so much of this type of mismanagement. If it is pushed too far we will lose the peg for a period. That will cause the NuShare price to be lower for an extended period, if not permanently. It can remove many hundreds of thousands of dollars from the market cap. The cost of the parking that is needed is likely around 1,000 NBT. Shareholders are risking losing perhaps 500,000 NBT in market cap by refusing to spend 1,000 NBT on parking. That is an extremely poor decision that is highly unlikely to be in the interest of shareholders.
I have brought liquidity from tier 4 to tier 1 several times in recent days and that is simply unsustainable.
It is imperative that shareholders use higher parks rates to balance liquidity until NSR or BKS is sold.
My rates have been increased to significantly above the current rates offered, I hope others will join me in doing the same.
I will not stop to say that the selling of BKS will not reduce our liability in any way. We must sell NSR to burn NBT. Did you ever ask why there is nobody who wants to be an LPC? Its not the hedging risk, its the fact than you might just sit on your NBT in the end, just like those people on bittrex right now. In such an environment, there is no park rate that will attract enough buy side. This here is not a temporary liquidity problem.
We have now 100M NSR which actually was future sell pressure but which we now can transform into buy side liquidity. We need to set a sign and show the world that we are not just willing to ponzi, but also to increase our share supply to safe the peg. Burning at least 10,000 NBT will show this. Afterwards I would be willing to set higher park rates and I expect much lower rates to be required than without the burn.
You keep ignoring this and all the other options we discussed here in the forum. Maybe take a look at all the ideas the community developed and respond to them instead of trying to enforce a method many shareholder don’t seem to see as the right tool for our current situation.
Let us say that the current annualized monthly rate is 12%, which is more or less what we have currently.
It translates to 1% monthly return.
Let us say that the currently parked nubits quantity is 100k nbts, roughly.
That would mean that shareholders would have to pay 1k nbts this month as interests.
That is certainly rather a low cost relatively.
What you are suggesting is to double the rate, to a 24% annualized monthly rate, which translates to a 2% monthly rate, adding 1000k to the current monthly cost?
That is still certainly affordable compared to loosing the peg and incurring a huge loss on nsr price, as you have shown.
In that case, i will certainly double my monthly rate.
I think that psychollogically, having rates displayed as annualized rates in the client does not help at all.
I second that approach as it seems to be more sustainable than parking rates.
I’m aware of the tiered liquidity model, but I think the price that Nu has to pay for first paying the parking interest and then burning an even bigger amount of NBT is higher than burning NBT right away.
In the last two days Jordan has publicly expressed support for NSR-for-NBT burning multiple times, including the post immediately preceding yours. I don’t see how he is ignoring the issue at all.
I agree that the issue hasn’t been ignored but, in light of the initial B&C funding failing to hit the 200k target, is now the time to have this discussion?
Park rates do need to be adjusted upwards to maintain the peg in the short term but I’m in agreement with @creon that a burn needs to happen sooner rather than later.
Jordan should sell nsr on the open market to burn nbt in my opinion. I’ll grudgingly raise my rates some (I’m currently @ ~10% and will go to 15%) but park rates are NOT our method for short term peg maintenance, burns are. Park and distributions are midterm peg maintanence.
Whether it is temporary depends on a couple variables. One is the question of whether BKS are sold or not. The other is change in the level of NBT demand over the next six months. If BKS are sold that will certainly support the buy side because NBT will be purchased with BKS sale proceeds. All other things being equal, this is indeed temporary as you say and will reverse as contributors are paid NuBits and they sell them. However, it is unlikely that that all other things will remain equal over a six month period. NuBit demand is only a fraction of what it was before the exchange defaults in February. It is likely that demand will increase as NuBits become more popular on our new exchanges, just as they increased in popularity on BTER, CCEDK and Excoin when they were functioning normally. If this scenario plays out, the lack of buy support is indeed temporary and NBT burning is unnecessary. Alternatively, NBT could be burned now and if demand does indeed increase in the coming months, NSR buybacks and burns could be performed. Both are reasonable approaches to the situation. If you prefer the later, you should propose a motion to do it.
Create a motion to do it. Refusing to raise park rates while doing nothing is irresponsible. I had planned to resolve the situation with the auction that concluded yesterday, but that didn’t work out. I plan to remedy the situation with a BKS sale and park rates in the interim. Remedying it with a separate NSR auction is certainly a reasonable option. Everyone is empowered to propose such an action. However, even in that case, park rates must be raised until the NSR sale and NBT burn can take place. I still don’t see any plan that would not require rates to be raised right now.
I doubt others feel I am ignoring other options proposed (I haven’t seen any), but it seems like you have an expectation that I raise a motion on behalf of others. That is unnecessary because others are just as empowered to raise a motion as I am. You seem to be attributing some special authority to me that just isn’t there. I’m not enforcing anything in regard to park rates. I am trying to make shareholders aware of the risks as I see them.
We can’t accurately predict at what rates people will park. However, I had in mind that 25,000 NBT could be parked for three months at 16% annually. That would cost 1000 NBT.