- Your post has nothing to do with Park Rates.
- The point of NuBits is for them to stay worth the same.
I created a connection from the perspective of the economic feasibility for investors.
NBT park rates suck for the whole year 2017 compared to most random picks.
Please explain why anyone in his or her right state of mind should buy and park NBT if the profit to be had at e.g. XSPEC dwarfs it?
Oh, you already explained that, albeit with the wrong focus.
Because other investments are more viable.
Plus other stable coins are more stable AND sustainable (e.g. bitUSD).
As long as you can continue the greater fools game. Nu has no revenue. If that doesn’t change, Nu can’t survive. NuBits will be near worthless once that happens.
You haven’t started to learn some economics 101, Vice Chief of Liquidity Operations, did you?
Offtopic: it is hard to compete in a strong growing market. Still some people prefer a savings account with low interest over something else. Some prefer it to have it under their bed. It is not always about profit only (although nice bonus), it is about options and diversity. Please open a new thread if you like to continue this discussion.
I would like to find the time to articulate a comprehensive vision of what role park rates should play now and as Nu matures and grows. I will just mention a few quick points here.
Park rates are not very important right now, but I expect their importance to increase. Before they can become really important, there must be a large lending market in NuBits. Today, there is no discernible lending market. We need an active market in parked NuBits in order for them to be effective in peg support when we need it. Therefore, I believe park rates should be offered constantly, even if the rate is very low.
Our current task is to develop a market in parked NuBits. We need to balance the costs of paying the park rate and the benefit of developing this peg supporting mechanism. There has recently been a surge in parked NuBits, to $427,000 total. The total cost of premiums is less than $10,000. This means a little less than 4% of the currency supply is parked. It is a significant but still modest proportion.
As a reaction to the increased demand, I recommend minting shareholders reduce the park rate to 17% from its current 20% rate, for a period of a year or less.
Without the lending market I don’t see any value in short term (<3 months) parking rates. Short term parking rates don’t contribute not even to a future event when peg support is required and the market needs to be reduced. I believe it is just a waste, maybe less than 10k, but even so a waste. Why would you want to do that, shareholders?
I can see some value in long-term rates as that would stabilise the peg during future events. That can be justified as an insurance premium shareholders pay to NuBits holders willing to long-term park against the right rate. A bit like a bond. I don’t believe in bonds expiring within 3 months though. There is no value for shareholders.
I agree that parking should be developed as a mechanism to support the peg because issuance of new shares NuShares should only be used as the last resort. Nu does not want to dilute shareholders wealth.
In order to do so, parking rates market should be offering attractive rates, all the time, I agree, positive values even if very low.
I do not have particular insights about the exact number so I would following phoenix’s recommendations here.
I believe 17% would be too high within the current circumstance but since we would like to develop rapidly that peg mechanism, it should be regarded as a campaign period to attract customers.
So I would vote for 17% until further recommendations.
I strongly recommend minting NuShare holders and data feed providers vote for park rates of 28% annually, for a period up to 6 months.
Today park rates dropped slightly to 17%. I was expecting it to continue to rise, but there was shift in the vote pattern, at least by share days.
Our liquidity model very clearly indicates that elevated park rates are needed in the present circumstances. My confidence that they are necessary and far better than rates at 17% or below is extremely high. Not raising park rates now would be a significant deviation from the model that has flawlessly prevented our peg from falling below $1 for three years.
NSR pricing pressure from NSR sales is currently very high, with NSR sales last occurring at 10 BTC satoshis. From a shareholder viewpoint, this is a bad price to sell NSR at, relative to the option to offer park rates in the high 20’s. Low park rates mean shareholders will get diluted with NSR sales around $10 per voting NSR.
A park rate of 28% for up to 6 months, which is my recommendation at this time, will allow the reserve equilibrium to be approached with less pressure on the NSR price and without diluting NSR as much. Park rates don’t dilute NSR, but of course NSR sales do.
There is a problem with the protocol that shareholders have mandated be fixed, but development has not yet implemented it. Park rates use share days destroyed to calculate rates. This means NuShares that haven’t been transferred or minted with in an extended can have a very heavy vote rate. Most likely, someone started voting for no park rates with old NuShares in the last two days. To counteract this, if you have NuShares available for minting that haven’t been transferred or minted with in a long time, you can have a very large impact.
Will modify my park rates too.
I even think 28% is not enough though.
You forgot to mention that the peg was lost in june 2016 because we did not sell enough NSRs.
We do not want to make the same mistake here too.
So we must be prepared to sell plenty of NSRs if necessary but i agree let use park rates first.
28% for 6 months means in fact an actual interest rate of 14% over 6 months since the number you input into the client=28 is an annualized figure.
Please correct me if I am wrong.
Park rates for 1.5 months and less are currently dropping. That is a very expensive direction for rates to move at this time. I am certain it will cost shareholders a lot more money than if they raised these rates. Our other option is to sell NSR, but that is very expensive at the moment, given the low NSR price. Overwhelmingly, getting support at this time with park rates is the cheaper option.
Please set park rates for 5.7 days to 6 months at 28% annually. It is quite possible we will want to go higher soon.
With very little buy support for NSR (only a few BTC on orders), increasing park rates seems necessary in the short term to boost demand for NBT, which will hopefully reduce NSR sell pressure required to keep the peg.
It’ll be interesting to see if Nu can avoid dropping the peg this time.
Keeping reserves so low in the good times late last year has put Nu in a difficult position now… I just hope NBT holders hold, and NSR buy support picks up soon.
I am 100% willing to help the struggling peg. However, first I must have a general idea of the parking rates so that I can make a proper risk assessment. I am sure I am not the only one wondering, so can somebody please provide me with the current parking rates? Thanks in advance.
I am surprised to see park rates declining from the high 50’s on an annual basis to just above 50%. This is unquestionably a very expensive decision by minting shareholders.
There are two ways to support NuBits under the present circumstances: park rates and NSR sales. Because support is currently insufficient, we need to use both right now. However, it is abundantly clear that park rates are far, far cheaper for shareholders than NSR sales. Consider that just a few months ago we were buying lots of NSR for 150 BTC satoshis when BTC was worth a lot more than now. We are currently selling NSR at 4 BTC satoshis. We can’t say what we will have to buy that NSR back for, but chances are very high it will much, much higher.
The maximum liability for a 58% park rate up to 6 months is 29%. So, for park rates we have a maximum pay off expense of 29%, but for NSR sales, there is a very good chance it will exceed 1000%. The differences in cost to shareholders are staggering.
Many USNBT have been parked in recent weeks. Prior to the problems with USNBT value, there were about 325,000 USNBT parked. Now there are 1.3 million. While it is clear parking is much more powerful for supporting the peg in the current circumstances, it is also dramatically less expensive.
Dropping park rates will remove most of our ability to support NuBit pricing, as well as dramatically raise the average cost of support. It is a losing move for NSR holders, USNBT holders, Nu contractors, indeed everyone remotely involved in the project. There are no winners at all with this change. So far as I can see, there is absolutely no chance of anyone gaining from this change! So let’s not do it.
There are two protocol problems related to park rates that may be contributing to the problem of low park rates. One is that it calculates based on share days destroyed, instead of simply using 1 vote per block. Shareholders long ago passed a motion to make this needed change, but no one involved in development has ever implemented it.
It is also clear park rates rise too slowly. I recommend a protocol change to make rates rise twice as fast.
Given how much cheaper park rates are for Nu than NSR sales, essentially rates to should be raised consistently as fast as they can be (3% per day), until the peg is restored.
The current behavior of minting shareholders is seriously suboptimal.
Any minting shareholders care to share why they are doing this? It may be that old shares have just starting minting without setting park rates, thereby exposing the protocol flaw shareholders have already agreed to change.
Shareholders, please start minting, and configure your park rates for 70% annual rate for up to 6 months.
Surprisingly the only way I found the park rate is to download and synchronize (can last several days) the Nu wallet.
Then you go in the park section.
currently sitting at 51% in the wallet.
Park rates are also available here.
Park rates are on their way up to 58% annually at this point. I am happy to see it. Let’s go even higher, to 70% annually, then we can evaluate.
Why would nushares be bought back at 1000% of what they are being sold for?
I’m a relative outsider to NuBits, though as you can check I’ve actually had an account on this forum for almost as long as the forum has existed.
So, as an outsider, I just want to say that it does not inspire confidence when I see Chief of liquidity operations suggesting higher park rates. Let me summarize from an outsider’s perspective: you don’t have enough cash on hand to support the peg at the current Nubit supply, so your solution is to grow the nubit supply by at least double-digit percentages over the next several months. The problem is that there are too many Nubits and you can’t afford to buy them back, so to solve the oversupply problem, you suggest increasing the supply. Correct?
Think of me as someone who would love to profit from Nubits’ current under-valuation, but isn’t willing to throw a ton of cash at it because I’m afraid it’s a house of cards. How do you plan to convince people that it’s not a house of cards?
Your analysis is correct, and I’ve said the same on other threads. The park rate should currently be zero. Other changes also need to be made to make this system work in the future (which include replacing the leadership which either does not understand what both you and I have said, or understands perfectly but prefers the status quo for their own benefit), but the appetite doesn’t seem to be there.
I suppose the strategic situation essentially goes like this (in caricature): The shareholders have to choose between diluting NSR and diluting NBT. If the peg is not restored, the shareholders lose regardless of which token they diluted. If the peg is restored, the existing shareholders still lose if the peg was restored by NSR dilution.
The only way the existing shareholders win is if the peg is restored by NBT dilution. They have a weakly dominant strategy to vote for NBT dilution.
This sketch would make a real game theorist cry, but it’s a basic explanation for why it might not be totally irrational for the shareholders to vote for NBT dilution.