[Passed] A Report on Peg Abandonment and How to Proceed From Here

[Phoenix]

Motion Hash: faafd2dea7c11fc27155118469140c0b0dd66eb3

I have created a detailed report on Daology describing what happened in our network the last month or two. I have also explained where we ought to go from here. It is presented as a draft motion, so please comment on it.

My hope is that we can demonstrate that shareholders have a consensus about the nature of the problem and solution by passing the motion. I normally quote a motion here in the OP, but that requires editing of white space, and there is just so much content that I am going to ask that you view it using the link here.

With the passage of this motion, we will be prepared to unite with a common understanding of problems and solutions.

Please join me as we restore the peg!

[Sabreiib]

As a 40 years old engineer, this is what I see and believe in recently days.

1. Nu has serious flaw, for its ponzi like architecture.

2. “Jordan Lee” has gone, in the time when community needs him/her most.

3. A new account of Jordan(possible) continues to accuse @masterOfDisaster and other members of FLOT for the failure of peg because they failed in seling enough NSR in time to support peg, however, How could a illiquidity market(NSR) provides timely help to a very liquidity asset in real time when crisis occurs?

How old are you @Phoenix? Although you will never leak your privacy, but I can feel that you are young, not learned how to take responsibility yet.

[MaVo]

“What is needed is a return to Jordan Lee’s system, which served us well for the entire 20 months that it was applied. That is what I will do as Chief of Liquidity Operations: restore the excellent and successful system designed by founder and architect Jordan Lee.”

You are a fucking pain in the ass. Go take your anti Schizophrenia pills you bloody idiot.

[Phoenix]

2. “Jordan Lee” has gone, in the time when community needs him/her most.

By formally promising to back NuBits with NuShares in multiple passed motions and then failing to sell a single NuShare before abandoning the peg, NuBits became a scam regardless of the intent of its creator, who was not in control.

The system was well designed to punish shareholders for this type of failure, and it has. They didn’t really get away with anything with their share price down 85%. But the sad thing is that not backing NuBits was not the will of shareholders, who passed many motions mandating that NuShares be used to back NuBits. It was just the failure of decentralized liquidity providers. They made the mistakes, but it was NuBit holders and NuShare holders that paid for the mistakes.

How could a illiquidity market(NSR) provides timely help to a very liquidity asset in real time when crisis occurs?

There was enough liquidity in the NuShare market just before the peg was abandoned. Typically, there were about 15 BTC in buy orders within 10% of the market price. When the price gets volatile as in a rush NSR sale, the liquidity increases in most cases. If this liquidity is taken, it will usually regenerate in a few days or even in a matter of hours in volatile times. For supporting a $650,000 unparked money supply, that is enough when combined with parking and reserves. It is more than enough. But it wasn’t used. You say I criticize FLOT “because they failed in selling enough NSR in time to support the peg”, but that is misleading because FLOT sold exactly zero NSR before the peg was abandoned. In their defense, the abandonment of the peg was not in their control and likely came as a surprise to them. However, they violated NuLaw by not selling NSR in the week prior to May 27th, when the big sale occurred. That means they let us come to May 27th with reserves that were lower than allowed by NuLaw. Also, in the month since the peg abandonment, they have only sold around 5 million NuShares, or 0.5% of the NuShare supply. That is really pathetic and a serious violation of multiple key NuLaws as has been detailed by @IAmJordanLee. To call this a human failure is very accurate. That is difficult and awkward, because if it was a human failure, then the solution is to identify individuals who failed and replace them. That is contentious. Sorry.

[Sabreiib]

By formally promising to back NuBits with NuShares in multiple passed motions and then failing to sell a single NuShare before abandoning the peg, NuBits became a scam regardless of the intent of its creator, who was not in control.

We are inventing something brand new in this fast changing world, initially, in Nu’s white paper , the NBT/USD pair is standard, isn’t it? Then just before Nu began to opearate in late 2014, Jordan choose NBT/BTC pair, get NBT exposed to BTC volatility.

And the NBT<->NSR dual direction burn was not in in Nu’s white paper in 2014, it was someone on this forum suggested, and get motion passed. Jordan has changed his mind many times according to new situation, why couldn’t Nu shareholders change their mind? Nu is a fast evolving organization, any old law can be abolished if needed.

It seems that Nu shareholders are going to original white paper, NBT/FIAT pair and no NSR burning. Does 2016 version Jordan betrays old 2014 version Jordan or Nushareholders become scammers just because of sticking to original white paper?

There was enough liquidity in the NuShare market just before the peg was abandoned. Typically, there were about 15 BTC in buy orders within 10% of the market price. When the price gets volatile as in a rush NSR sale, the liquidity increases in most cases. If this liquidity is taken, it will usually regenerate in a few days or even in a matter of hours in volatile times. For supporting a $650,000 unparked money supply, that is enough when combined with parking and reserves. It is more than enough.

15BTC is far from enough, in front of the big NBT dump.

However, they violated NuLaw by not selling NSR in the week prior to May 27th, when the big sale occurred. That means they let us come to May 27th with reserves that were lower than allowed by NuLaw. Also, in the month since the peg abandonment, they have only sold around 5 million NuShares, or 0.5% of the NuShare supply. That is really pathetic and a serious violation of multiple key NuLaws as has been detailed by @IAmJordanLee.

Big NBT dumping is impossible to predict, your demand too much to FLOT members.Selling NSR is a freemarket activity, sellling 50 million NSR is just your wishful thinking, how could FLOT sell NSR when customers won’t buy? e.g. I will not buy NSR even at price of 1 satoshi.

To call this a human failure is very accurate. That is difficult and awkward, because if it was a human failure, then the solution is to identify individuals who failed and replace them. That is contentious. Sorry.

If you design a system which demands high level proffesional skill of participants, you are going to the wrong way, a centralized way. On the contrary, a successful decentralized system must be a system that demands very high level of architect and very low level of ordinary participants.

When your grandma can also provide liquidity, Nu will succeed.

[backpacker]

It is time for immediate use of tier 6 liquidity (NSR sales)

A single actor has sold between 64,000 and 72,000 NBT in the last 12 hours. That is about 10% of all NuBits in circulation. Where we were already using tier 5 a day ago, it is clear it is prudent use tier 6 liquidity immediately. This doesn't mean we stop using tier 5 (parking rates). We need to step that up as quickly as possible at this point. I had stated a couple hours ago that we were borderline for immediate NSR sales by FLOT. Since I said that I noticed another 12,000 NBT sale on Tube,…

I remember that day and there was nothing close to 5btc within 10% of the price, as the matter of fact there was one order at 400sats which was around 2btc and that’s it.

[Sabreiib]

I want to repeat that invention of a brand new system demands extremely high level.

Satoshi, the creator of BTC, is crypto expert(s), financial expert(s), psychologist(s), etc, and the copy cats of bitcoin are of much lower level in these fields.

We want to invent something very different from Bitcoin, so that Nu’s architect must be a group of experts on various fields while ordinary panticipants can be any one above 12 years old . I won’t blame you @JordanLee or @Phoenix. I know the task is very difficult to achieve in the decentralized way. It’s unfair to demand you as good as Satoshi, but we can learn from the facts, we should listen to the guys with many years experience on business, just like @BusinessGuy.

Don’ t blame FLOT, if the soldiers disappoint you, it is because you have not invented a AK47 for them, simple and reliable to use. You know what I mean: Mikhail Kalashnikov, Creator of AK-47, never blame ordinary soldiers.

The whole story is: Jordan invented a AK47 prototype(Nu), some good soldiers (FLOT) are required to test the gun, oops, they missed the target and they believe there are some flaw with Ak47’s protoype, then Jordan became angry and blame those testers, now Jordan want to show us how to use this gun. If Jordan succeed, so what? Is the gun only suitable for himself? How could Jordan confirm every ordinary person above 12 years old can use this gun? FLOT(testers) are far better than ordinary Nu’s paticipants, even they cannot handle the tricky NBT LP, how could Nu become popular? Governments can easily nail down a dozen of LP if they want to fail Nu.

[crypto_coiner]

However, they violated NuLaw by not selling NSR in the week prior to May 27th, when the big sale occurred. That means they let us come to May 27th with reserves that were lower than allowed by NuLaw.

. But the sad thing is that not backing NuBits was not the will of shareholders, who passed many motions mandating that NuShares be used to back NuBits. It was just the failure of decentralized liquidity providers. They made the mistakes, but it was NuBit holders and NuShare holders that paid for the mistakes.

So be it
Now, I for one want to be constructive and construct on that failure – replacing FLOT by another FLOT#2 on which you dont have a centralized “KYC” type of control will repeat the failure for certain.
This crisis, supposing that FLOT violated the law, shows us that our law enforcement is weak and unreliable,
We must ask ourselves: how can we enforce motions and verify the actions provisioned by it?
Answer: by creating a software driven police? by executing the actions by software bots over the blockchain?

If you design a system which demands high level proffesional skill of participants, you are going to the wrong way, a centralized way. On the contrary, a successful decentralized system must be a system that demands very high level of architect and very low level of ordinary participant

The centralized hierarchical pyramidal way is a good way. Cant say that google or the fed is not successful but yes, the blockchain is hierarchy-free and will not tolerate a pyramidal structure.

[GLnp]

A question occured to me: if the PPC reserve was full two month ago, would it have been enough to save the peg?

[BusinessGuy]

@Phoenix there is no doubt in my mind that the liquidity engine and the tiered reserve structure was pure genius. Unfortunately though the business model upon which it is based is fundamentally flawed. The peg failure may or may not have been caused by human error but regardless its failure was only a matter of time. If Nubits is to be reborn then we need to take the good aspects already developed within the liquidity engine and underpin them with a stable base. Only once an agreement has been obtained as to the best way of doing this will it be worth rebooting Nubits. I have put some ideas in my latest post. Maybe they are crazy but if they lead to a result in any way then I will consider myself to be happy.

[cryptog]

pure genius

What do you think so?

[Phoenix]

This motion has been hashed is now being voted on.

Motion Hash: faafd2dea7c11fc27155118469140c0b0dd66eb3

Voting for it means you endorse it as an accurate account of what occurred, and like the plan on how to proceed.

[crypto_coiner]

The report is valuable.
The suggestion of the hierarchical structure for LP is interesting but wont probably work since Nu is a blk, not a real inc.
Inc are regulated by laws coming from central and pyramidal agencies.
Blk (business on blockchain) are regulated by laws generated by anyone permissionlessly .

What has more chance to succeed is create reputed LPCs

Ref: Let the Peg Fail

[Phoenix]

The suggestion of the hierarchical structure for LP is interesting but wont probably work since Nu is a blk, not a real inc.

Why do you think it won’t work more specifically? I will always need approval from the majority of minting shareholders, but I don’t see anything about the blockchain that would prevent me from leading a small team of liquidity providers in daily operations.

[crypto_coiner]

I don’t see anything about the blockchain that would prevent me from leading a small team of liquidity providers in daily operations.

• How can you have confidence they will do the job properly and as per their contract on NuLaw?
  In a real corporation, hierarchy works because corporations are legal entities and the boss can coerce subordinated people to do the job, because there are many counter-incentive not to achieve it, that are perfectly legit in the real legal and judicial system. In other terms, control is possible because the pyramidal structure is something we all recognize and believe as legit in our real world

• The blockchain entities such as Nu are not defined and referred to in our legal system.
  People will feel comfortable not respecting NuLaw, from their real life perspective.

• Your small team of liquidity providers will certainly not feel pressured to achieve their contract and do what you ve told them to do through motions, if they are not threatened and controlled.
  Being identified as having broken NuLaw does not constitute a threat.

The threat must be native to the blockchain and proper to Nu, and very probably an economical one.
I would suggest this one: downgrading the reputation of the individual such as it is much less likely to receive Liquidity Provision jobs next time.
An individual with very high LP reputation could be typically trusted for 24/7 Liquidity job.

[crypto_coiner]

@Phoenix
OK lets get our hands dirty into legality.

In your report,

“The liquidity engine was in pretty good shape on May 27th, although for weeks Standard and Core calculations indicated park rates were required (in actuality only low ones were instituted, and late) and NSR sales were needed according to the calculation on May 22nd. FLOT NSR did not conduct an NSR sale that week, in clear violation of NuLaw. It is important to make small, frequent and early corrections to any imbalance in the liquidity engine. The more unbalanced the system, the less confidence there is, which lowers NSR price and reduces NBT demand. Shareholders made a mistake by not offering park rates enough in May. FLOT NSR clearly broke NuLaw by not selling any NSR in the week beginning May 22nd.”

The issue I see:
Unfortunately standard and core is not law. There is no ruling within it.
At best, a recommendation or advisory statement.
This is not compelling as coercing or ordering.

I suppose the part that interests us is:

When the standard exceeds 2,500 US-NBT, the FLOT should seek to buy an amount of NSR within the next week equal to the standard. Similarly, when the standard is below -2,500 US-NBT, the FLOT should seek to sell an amount of NSR within the next week equal to the standard (using sources such as exchange markets to achieve a best-guess spot price or moving average for NSR in terms of US-NBT

Thought it has some legal intent, it is not formalized and enough formatted.

I believe and bet most shareholders and FLOT have neglected this “motion” because they thought it was just considered as recommended guideline

It is time to write in formated legalese, organize, formalize the motions and introduce much more than the notion of motion.

def : https://en.m.wikipedia.org/wiki/Motion_in_United_States_law