Reduced as well, here. (inspired from @cryptog rate)
I’m 2% from 11 days to 6 months.
1 Like
buy side: 31k
sell side: 44k
I am raising my rates - 2% 5% 10%
I am raising the rates from 0% to 15% over up to 3 months since the the gap between sell and buy side is more than 20k NBT now (buy side is almost only 50% of sell side) but parking rates do not seem to be regarded as a reliable tool by shareholders in general for adjusting the supply on the short term, any more. Am I correct?
I am raising my rates as well due to the imbalance between buy- and sell-side.
Any suggestion as what to do right now?
1 Like
Essentially, nothing. Now let me say a bunch of should be able tos but can’t.
We should be able to raise park rates to create nsr buy pressure. However, we can’t because we don’t have liquid burn gateways.
We should be able to keep a constant, small park rate to spread debt out over time. However, we can’t because of the burn motion currently in place.
We should be able to distribute dividends if the park rates are zero, however we can’t because the low park rates aren’t actually representing health in our network.
All that said, buy and sell side liquidity is pretty well balanced, so if we just shut our eyes to the low nsr price we’re doing just dandy and we should keep on keeping on.
1 Like
At risk of derailing this thread, I will respond. If needed, we can move comments out to a separate thread.
More structure in our plans for burning (both NSR and NBT) would be helpful as an iterative improvement. I know you have done some work on that and it is appreciated. I have some ideas I’d like to present but doing hasn’t quite bubbled to the top of my priority list yet. However, I don’t believe it is prudent to create NSR buy pressure by offering park rates. Doing so would increase demand for NuBits, which might allow us to use sale proceeds to purchase and burn NSR, but the approach isn’t sustainable.
The relatively even liquidity walls are telling us the market is absorbing the additional NuBits entering circulation as NuBits unpark. Parked NuBits reached a peak of approximately 105,000 NBT about two and half months ago. Now there are only ~34,000 NBT parked. This means NuBit demand is growing at a healthy pace. I hope to see all NuBits unparked in a month, which would demonstrate there is no need to spread parking out over time.
NuBits experienced a drop in demand in February and shortly thereafter as a result of the losses on exchanges and the loss of venues to trade NuBits at. As currency demand dropped, we saw park rates which ultimately reached 19%, followed by NSR sales paired with NBT burns. That is what the bottom of our economic cycle looks like. Demand began to increase from that bottom, which manifested as an end of park rates being offered, no more NSR sales and drop in the number of parked NuBits. If NuBit demand continues to rise as it has in the last couple of months (I’m not claiming it will as much as I’m just illustrating what the course of our economic cycle is), then we see demand for the 34,000 parked NuBits as they unpark over the next month. If new demand continues, we will see tier 4 buy side liquidity grow to a level where will want to use some of those funds for dividends or NSR buyback and burn.
So, park rates being zero is a sign of network health. Having funds available for dividends or share buyback would demonstrate even greater network health, but it is to be expected that as our economic cycle turns that we would first need to absorb NuBits that are unparking.
If NuBit demand continues to grow at the pace it has in the last couple of months, we will begin to have funds for dividends or share buyback in a couple of months. We can expect the NSR price will respond favourably to that scenario. We just need to continue to focus on ways to increase currency demand while limiting expenses. It is working.
5 Likes
I think shareholders are confused about the use of park rates and comments like yours are vital for general understanding of park rates.
Thank you
Of course using park rates to increase buy pressure is not sustainable if abused. However, a small amount of continuous inflation is very healthy for any economy and I really admire the foresight of Nu (and JL in particular of course) to integrate a feature like parking from the get go. We should be using it.
No doubt. I would not be here if I thought otherwise. I am just trying to talk about how it could work even better.
Our biggest economic issue right now is a low NSR price. JL made a post last month about how we have distributed a huge amount of dividends this year. That’s freakin fabulous. However, our NSR price is clearly suffering and has been since literally the day after the B&C blockchain snapshot (i.e. the actual moment of distribution). That our liquidity is balanced is, in my opinion, something like a white lie about our economic health. The NSR price is the betrayer of the truth.
By having 0% park rates we are saying Nu effectively has 0 debt. We should not raise park rates only when we reach the bottom of the economic cycle; we should have continuous park rates nearly all the time until we are actually at a state where we believe we have paid off all our debts. I realize the concept of ‘debt’ for Nu is hyper abstract, but one perspective is that Nu is in a rather rare position to pick and choose the interest rates on its loans from the community (this is the same perspective that sees all NBT in existence as liability).
By picking 0%, we are turning away people that are willing to loan us money at a reasonable rate. However, we do not currently have the infrastructure to conglomerate ‘loans’ that we get via park rates into our greater economic system. Therefore, I am currently voting 0%, despite my ideology.
2 Likes
Small point of consideration - NBT already have 1-3% inflation built in through the monetary policy decisions of the US Fed. Like you, I consider a small amount of inflation to be healthy, but I think we already have it included in our design with our USD peg.
1 Like
With respect to park rates, I agree. So that is a scale that we use as an upper limit and take something like an order of magnitude less. With that in mind, maybe we should vote for %0.25 on most of the normal time frames?
Is there a way to calculate a realistic number for how much Nu inflates as a %/year with just this first year of data? Would it be consistent to use that number to find a good park rate to offer loans at?
I’m not an economist, so I’m having a really hard time expressing what I want to say here. We should pay some % that is a fraction of the amount we inflate to take out loans from the community to avoid our inflation. Like if NBT inflates by 10%/year, we should be able to safely offer 1% interest on loans.
1 Like
Perhaps I should set my parking rate to zero then
Does anyone have a clear explanation once for all of what liquidity tiers are?
JL explained tiers a while ago:
-
Money on buy and sell walls, reported in nu client.
-
Money on exchange but not in an order
-
Money off exchange, held in reserve.
-
Developer funds, also a reserve, but the reserve tagged for paying developers
-
Parking and distributions
-
Burns and buybacks
1 Like
That’s some seriously circular logic. If we don’t offer rates, that will cause no one to park, so eventually they will all unpark. That doesn’t indicate network health, that just indicates that we haven’t been offering park rates. We could offer 0 park rates while completely bankrupt and we would have no parked nubits, but that doesn’t mean we’re magically not bankrupt anymore. It just means we’re stupid for not letting parkers bail us out.
Surely there is some rate we would be willing to accept a loan at? 0 parked nubits is not a measure of health to me, it is a measure of sickness that we could not offer reasonable interest rates.
I just feel like we’re saying we have no use for money, and it seems very strange since that’s our whole business model.
@Nagalim’s summary of the tiered liquidity model is appropriate.
Here’s the detailed version:
1 Like
With our way of dealing with things, I don’t think there will ever be a stable state of 0 parked NBT.
We have always raised rates to crazy levels every time there’s low liquidity; the worst part isn’t exactly the cost, but the fact that we only deal with park rates during emergencies of sorts, where there’s little space to experiment. There’s simply no way to get enough data and decide upon something milder than maximal crisis-handling measures.
I would agree to have a constant lower bound park rate and see how it goes. I suspect a low constant park rate has the following benefits:
- Reduce sell pressure spikes
- Which gives us a chance to review and reduce long term liquidity pool spending
- More data and predictability on NBT movement within the chain
- More predictability and consistency for users
- All these increase the solvency of Nu so is win-win for us and users
The average park rate certainly has to be lower than USD inflation. I don’t have the expertise to give a concrete number, but perhaps we can look to the federal reserve interest rate which is 0.25% at the moment.
I was thinking that 0% would be desirable for Nu (looking healthy), but I came to the conclusion that a moderate parking rate all the time might even be better.
It could create some persistent degree of demand.
At a low rate it would cost less money annually than the liquidity providing monthly.
But I think this is too low to really provide an incentive to park:
I’m no financial expert, but offering parking interest in the range of 2 to 4 percent might be a better experiment than having parking rates spike in cases of “emergency” in which people are less willing to park than in times where Nu and the peg are not considered being in trouble.
1 Like