This position is untenable. We had about 40,000 USD in BTC plus 120 million NSR, valued at around 330,000 USD just before the peg was abandoned. That is 370,000 USD in assets at the time the peg was abandoned to support a money supply worth less than 700,000 USD. Besides the fact that these funds were almost certainly ample, more NSR could have been had within 2 weeks.
I understand many believe there wasn’t any liquidity in NuShares, so the 330,000 USD valuation of the NuShares was illusory in their view. It is true that liquidity would have been an issue for that large sum of NuShares, but not to anywhere near the degree some on this forum believe. There is a lot of empirical evidence on the question of NuShare liquidity, however. Let’s review it just a bit.
In 2015, there was an extensive NuShare sale program. There was ample liquidity. The program barely dented the NuShare price. We were keeping the peg, committed to keeping it, and there was confidence in our commitment to those things. So it worked.
In May, there were a lot of suicidal tendencies (self-defeating tendencies) and extremely anti-social inclinations being expressed by a lot of forum participants, which had been duly noted and condemned by Jordan Lee in advance of the senseless and anti-social default. As soon as the large sale occurred on May 27, these self-defeating and anti-social proponents captured the collective mentality of the herd against the loud objections of Jordan Lee, who maintained that there was only a need to execute carefully crafted plans endorsed by shareholders. The only thing dire about the situation was the anti-social and self-defeating behavior of gateway operators and FLOT members. There were no significant economic problems present in the network in the few hours between when the large US-NBT sales were made on May 27th and gateways operators decided to abandon the peg, without using any of our very considerable reserves and without selling so much as a single NuShare to support our currency.
Decision makers didn’t seem to understand the importance of confidence in the whole affair. They were saying things like the whole peg thing is over and in the past and NuBits would never be supported in the future. Nothing could be worse for the value of NuShares. It was this chorus of voices that destroyed the value of both NuBits and NuShares. Who wants to buy NuShares in such a scenario? I wouldn’t buy them in that context. Only a fool would.
Now let us imagine that FLOT and gateway operators had maintained fidelity to NuBits and had stated with unity and conviction they would defend the peg at any cost immediately. They immediately bring a large number of NuShares to market. The price of NuShares drop 20% immediately due to the rapid sales. However, BTC is quickly flowing into the network from the NSR sales. It is clear the sale on NuShares won’t last long, because soon the needed liquidity will be obtained and the expansion in NuBit use will continue afterward. In that context, NuShares are quite valuable. But FLOT and gateway operators didn’t maintain and create this positive, win-win environment. They chose the dystopian and anti-social world of unnecessary credit defaults. So we had something like an 80% deflation in the micro economy that spans Nu and B&C due to the defaults. Everyone lost instead of everyone winning. Everyone got angry and mad over their losses, became suspicious and stopped cooperating. FLOT and the gateway destroyed the community by initiating the credit defaults. That is very sad because there was no financial reason for the defaults. There were ample funds available at all times.
When I became Chief of Liquidity Operations, I changed the unauthorized policy of FLOT and the gateway operators and began to declare what we should have been saying all along: the support of NuBits is our highest priority. We will even perform a massive dilution of NuShares if we have to to support NuBits. What happened was we saw a resurgence of demand for NuShares and liquidity in that market. I have been able to bring the NuBit money supply down from about 700,000 to around 350,000 in just 60 days. Imagine what we could have done if we had never initiated the default. We could have sold NuShares for 300 or 400 satoshis instead of an average of around 60 or 70 satoshis. That implies we probably had funding to purchase well over 1 million NuBits in 60 days. That is more NuBits than there are circulation. My guess is we probably could have obtained 200,000 USD in the first week after May 27th if we had maintained our plans and stayed with our commitments. That is way more than would have been needed. The sale on May 27th should have been a one week event that involved a modest dilution of NuShares, zero peg loss, followed by a return to normalcy. Unfortunately, that path was not chosen. I don’t think it was malice. I think it was ignorance. It is an ignorance we can’t afford to indulge. That is why I am needed to handle funds.
If I had been at the helm of liquidity operations for all of 2016, I suspect we would have seen NuBit adoption grow steadily. I would give a 1% chance there would have been a peg break for even one day. The market cap of NuShares would likely be far above 2 million. I am worth a great deal to the network. That is why it should pay me a very large bonus after I demonstrate a little more success.
The difference in the success I have had versus the massive failure of FLOT is a very strong argument for me controlling funds. We just don’t have reason to be confident in the decisions of multisig groups due to the incredibly expensive ignorance signers have demonstrated. Using multisig groups isn’t worth the risk of destroying more value at this point.
