That is a statement with a lot of facets to be considered. And to some extent your statement is correct. We are not a bank, but a customer in a broad sense and the market is the bank. To act as a bank, we would lend the money for better rates than we borrow, but we do not have that mechanism. We ask for money in return for interest rates and as with any other customer, we have to undergo a credit rating, too.
Now you and some others here might exactly know the situation of Nu, but I can tell you that I have no clue what our situation looks like. It is incredibly hard to tell what it needs for Nu as a network to either thrive or die. It is hard for me to grasp how many factors there are that are far beyond our control and how these factors are accounted for given the current architecture of Nu.
Putting things into perspective sometimes helps very much, but sometimes only represents part of the story. I do believe that the 6k NBT in interest compared to 700k NBT outstanding is only part of the story
.
I feel I have to invest an incredible amount of time and effort to map the relevant factors in order to draw a proper conclusion whether Nu might be able to pay me BTC for my parked NBT in 6 months, for example.
I have a hard time to judge the short and mid term downside risk of Nu. Let’s say I am looking for those 45 days at 2.77% interest rate investment option given the current situation of Nu and its dependency on Bitcoin volatility. If BTC goes up, other customers might start dumping their NBT and empty Nu’s BTC reserves, leaving me hoping that there is enough left to pay me back. If BTC goes down, I must hope that new customers will consider buying NBT to fill the reserves sufficiently to pay me back the proper USD value amount in BTC. So, in our situation a potential customer has to sort out quite a sophisticated lump of risk vectors compared to other investment alternatives, especially in the alt coin market.
I don’t have a put option for 45 days when I park my NBT, even if bad news about the Nu network pop up. Why, given the current situation, shouldn’t I put my money just in a liquid alt currency if I really only aim for a 2.77% gain? It gives me full control and it is highly unlikely that I lose my whole investment if I pick the right alt coin.
I am not saying that park rates are completely false. But in the end it is a mechanism that we put a lot of work and thought into without getting a return from it as a network. Let’s say we are soon perceived as a 100% parking network only for getting interest, every single NBT we sell being dumped back right after the parking period is over. Can we do anything with the parked NBT? Actually nothing but speculation, right? We can’t really spend them because we might face bankruptcy when the spending activity does not create any (quick) return.
Can we somehow map the relevant factors and create transparency for potential investors considering our park rate offer in a quickly comprehensible way?
In the end, if I don’t get this wrong, the positive correlation of park rates and financial distress of the Nu network leaves us with negative expectancy values for potential customers extremely quickly.
Assume you invest 100k dollars at 2% interest with a 1% (which is probably optimistic) chance of complete failure of the network.
Then the expected return calculates as
102,000 * 0.99 = 100,980 minus 100,000 * 0.01 = 1000 --> 99,980 --> leaving the customers with a negative expected value of 20 dollars assuming just 1% chance of network failure.
Why, as an average investor who puts at least a little thought into his investment decisions, would I invest into NBT to receive the parking rates, given our very young age and low experience resulting in high risk. It is not that we can tell anyone that our parking rates have worked for 10 years. We have to somehow break the loop that we are into.
The biggest mistake thus far was the NSR buyback and I don’t want to withhold at this point that I feel this mistake has not happened out of negligence, but possibly with intent. Though, this is another story I guess that is up to everyone’s philosophy without any chance to ever reveal the truth behind it. Therefore, I leave it like it is.
