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.
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.
Roughly starting from here there were discussion about increased spread for 3-4 days. You actually started the discussion from a post somewhere before the one in the link. I would like to hear what you think.
Related to spread, there is a question directly to you regarding potential PEGs that would want to buy Nubits from the reserve fund. Could you please answer it (in that thread) ?
At risk of pulling the thread off topic, I think experimentation with spreads is healthy to see how the market reacts. Wider spreads lower the quality of our product, but it also lowers or eliminates the cost of liquidity. I hope to see people offer NuBits at payment processors without shareholder compensation at spreads that are profitable without additional compensation.
Various spread systems which encourage buy support, volume dependent transaction fees, trustless NSR burning without grants, or a different dividend system that encourages holding the share continuously are just some examples. We need your expertise when discussing those topics, since you are by far the person with the most knowledge about these systems. There are many interesting discussions about revenue models and buy incentives and everyone would love to hear your opinion on the technichal feasibility and economical aspects.
And I am saying for weeks that I am not convinced by the sustainability of the peg with our current strategy and I even wanted an NSR sale if the B&C auction would have been successful. This is the reason why I don’t want to be an LPC right now, and other LPCs might get to the same result in their calculations. With my wish to dilute NSR to destroy NBT I am certainly not speaking for all other shareholders here, and to my surprise this is the first time here in this thread that I see others who also want to reduce the liability first before providing people with an offer to lock up NBT.
And we don’t need a motion for this. We need someone who applies for a NSR grant and simply burns NBT in exchange. There is no need to make a blind auction here. If NSR grants are still not avilable (I guess they will be soon when looking at the tracker), you could simulate it by sending the NSR to the grant recipient who then applies for an 1 NBT grant.
I am happy (maybe together with @Ben) to create a template NSR grant proposal with an explanation how to burn NBT and how to proof it afterwards. We also should make a price recommendation, I guess something around the 0.2 cents you proposed in your auction would be a good starting point.
EDIT: And maybe just to calm people down: My park rate configuration won’t have much effect on the overall park rates. I bought all my NSR from the open market and I am not a rich person. My posts here in this forum surely have a much larger staking weight than my coins.