See title. Someone (or group) with a lot of shares is trying to game the system, I assume…
It’s possible shareholders set park rates to promote NuBits, or of course own USNBT themselves. I believe it is counterproductive for the credibility of our liquidity to offer excessively high or any park rates especially while distributing revenue to shareholders.
Shareholders voting for non-zero rates should provide an argument for offering park rates at this time.
Park rates are one of the main mechanisms we use to support the peg. Therefore, having a market for parked NuBits is very important. If none are parked, and people are not in the habit of parking them, then when we really need to use park rates to support the peg, it is unlikely to be effective due to a lack support and liquidity in the parking market. I say market, because hopefully with time the parking market will become mature, with parked NuBits being made available by third parties. In some ways, this is akin to the US treasury market, where US dollars are to US treasuries what US NuBits are to parked US NuBits.
I expect park rates to be much lower as our brand matures. But even now, the costs of developing a market for parked NuBits is quite small. Right now, there are about 36,000 parked. At an annual rate of 24%, the monthly cost to Nu is only $720. That is the cost of developing a market for parked NuBits that will enable Nu to provide stronger peg support when we need it.
Circulating supply: 960,923.0153 USNBT
Parked US NuBits: 46,322.3546 USNBT
Affected by Park Rates: 1,007,245.3699 USNBT
Most impactful Park Rates available: 22.992% annually for parking half a year.
If all purchased NuBits were parked today for the longest period we’d be looking at an increase of 12% in US NuBit liabilities. That’s 120,869 USNBT.
I believe that’s the primary concern people have. It doesn’t seem likely that everyone will park their NuBits, and if they do, it can show that Park Rates are observed by customers and ready to be utilized.
This should be it and only that. It concerns me that we still have park rates and doing buybacks. It doesn’t make sense to have them for marketing purposes imo. It confuses NBT holders and traders. It signals that network is not healthy. Can’t see the value of developing a market for parking.
Just my opinion.
I’ve always found it uncomfortable that a mechanism designed to support the price of NuBits (to support the peg) involves increasing the supply of NuBits in the medium term.
In addition to this, if NuBits are parked from being held rather than bought from an exchange, they will do little to nothing to support the peg, only inflate the supply in the medium term, which is counter productive.
One way to potentially make NBT parking more potent in its support for the peg would be to enforce that any NBT to be parked must be bought on the open market. If a method could be found to do this, it would ensure that anyone parking would need to add buy support to the peg, rather than possibly parking already held NBT.
Alternatively / in addition, what if parking incentives were applied to NSR instead of NuBits?
This way any upward pressure on NSR price from parking offers would help support the peg by providing liquidity via NSR sales, and NSR being diluted in the future sits more comfortably with the more speculative nature of the asset compared to NuBits.
If parking were moved to NSR, it might also be easier to ensure that any new parking provided liquidity, as parking could only be available on NSR bought in fresh NSR sales. For better or worse, this would make it impossible to run parking alongside NSR buy-backs. NSR buybacks could also be used to pay the interest on parked NSR when buybacks resume.
I haven’t thought a lot about this, but thought I’d throw it out there in case there’s some substance to it.
The tier 5 mechanism can be used to control a decline in NuBit demand. Its utilization can increase understanding and ensure some predictability of the intended movements in the circulating supply. Shareholders raise Park Rates to incentivize customers to take their NuBits out of circulation by protocol.
Taking NuBits out of circulation for a specified amount of time can help investors in risk assessment when deciding whether to provide backing and invest in the future of NuBits via tier 6 NuShare sales.
Tier 5 may by itself incentivize new NuBit sales to customers which would back NuBits leaving circulation, but is not a true deep backing source as tier 6.
Which other strategies can be employed with tier 5 Park Rates?
You may not be suggesting what this answers, but I have to state that shareholder NuBits are never parked. Doing so would make little sense that I can see. Shareholders create new NuBits when necessary to meet demand.
Are you talking about sell-side peg support? I imagine Park Rates will usually only be used in negative NuBit demand when shareholders have NuBits to sell but limited reserve assets to back NuBits leaving circulation.
I appreciate the discussion.
I’m suggesting that parking only has a positive impact on providing buy side support for NBT if the NBT being parked are bought on the open market for the purpose of parking.
If someone parks NBT they already own, it does nothing to support the peg in the short term, and acts against the peg in the medium term once NBT + interest is returned to the parker.
I’m not talking about sell-side peg support; as you say, Shareholders can create NuBits to meet demand.
I can see how parking should, and can help in controlling a decline in NuBit demand, especially if the requirement is only short term.
In terms of ensuring predictability of movements in the circulating supply, if the situation that led to park rates being offered doesn’t improve within a few months, knowing that NBT supply is going to increase when a parking term ends isn’t necessarily a positive thing for shareholders (as it may well put more sell pressure on to NBT if the returning supply + interest is sold).
Overall, the concept of trying to boost supply of NBT by increasing supply doesn’t seem ideal, though of course can work out well as long as demand picks up before the end of the parking period when interest is paid.
I’d be interested to hear your, and other people’s thoughts on the idea of switching parking to NSR instead of NBT in terms of whether it could work, and how it would be different. It could certainly remove the problem of increasing NBT supply in the process of trying to support its price.
I like the high park rates It’s one of the things that has kept me in Nubits so far.
You can’t find any good yields on “safe” investments anymore
What if @jooize gets a heart attack? Do you actually know how “safe” your investment is? Do you have the tiniest clue that one single actor is sitting on literally 100% of Nu’s assets? This business isn’t decentralized. Better inform yourself before risking large sums. And it is an absolute shame that Nu does not publish a comprehensible and all time visible disclaimer about this. This is a huge threat to anyone putting money into Nubits and Nushares. And yet @Phoenix and @jooize refrain from warning their poor customers (victims).
Yeeeeeah, there are some strange bits about the history of this community but it’s still a compelling idea overall It certainly seems like there could be more… redundancies But I’m pretty much a casual observer and wish the project well without a lot of stake
@woolly_sammoth I don’t know whether you ever accepted NSR as payment for your service. But I would like to know when you - if ever - accepted NSR as a payment for the last time. Would you be willing to disclose?
I hope your risk assessment gives you no reason to complain in the future.
no park rates for now?
No Park Rates for any NuBits are currently offered by shareholders. I agree with that.
What are current park rates, anyone?
The shareholder vote is currently 20% annually for durations between 11 days and 6 months, although due to a protocol limit in the rate of increase, the current rate being offered is 16.7%. If the shareholder vote remains the same, rates will be at 20% annually in a little over a day.