[Passed] NuSafe - An 30k hedge of Tier 4 funds in USD

After much discussion in my earlier draft topic, here is the final motion:

Original draft + tons of disussion

Original discussion topic introducing the idea

If there is a strong desire to make small amendments I suggest to discuss them below and when a consensus is reached we can do another motion to vote in the amendments.

Motion RIPEMD160 hash: e3966c4205ebb2966110218435ad21d9c5c8f2c0

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To overcome the risk of our complete reserve (designated to protect the peg) being in BTC and therefore being exposed to BTC volatility. Shareholder @Dhume proposes to hold 30.000 USD worth of funds currently in BTC to be held as USD on an exchange of his choosing, this operation is to be known as Nusafe. The purpose of this is to create part of our T4 reserve to be value stable and exempt from BTC volatility. In order to do this, part of the T4 BTC funds worth 30.000 USD at the moment of exchange are transferred to @Dhume which he in turn will sell within 24 hours (as fast as possible but sending BTC to an exchange takes time) for USD and hold on his exchange account for Nu.

In order to protect Nu from malicious intent or mismanagement/misuse of these funds at @Dhume puts up collateral worth 100>% of the hedged funds. @Dhume will report an update about the perceived value of his collateral every week. This to alert Nu in a timely matter incase underlying collateral assets see a devaluation that endangers the 100%> collateral requisite. This collateral is to be untouched unless @Dhume fails to returns part or all of the 30.000 USD in BTC (at the moment of exchange) in which case Nu has the liberty to use the collateral to reimburse Nu shareholders for any lost value. This also holds true in case an exchange default occurs causing @Dhume to lose all or part of the USD he is holding. In short @Dhume takes upon him the exchange default risk.

As a member of FLOT @Dhume has already committed to a 36 hour response time and he shall adhere to the same time frame for Nusafe as well. This motion is to remain valid indefinitely and can only be cancelled by @Dhume after 3 months of operation. This means at @Dhume promises to continue this service for at least 3 months and extend his commitment for more 3 month timeframes unless he notifies Nu at the end of every 3 months operation period. Contrary Nu can cancel this commitment at any time they see fit by shareholder motion. Besides shareholder motion @Dhume will use the funds incase all other T4 funds are depleted and the peg is in danger to refill FLOT T4 reserves. He will coordinate such action with FLOT and publicly announce and account if this action is ever to be taken.

Therefore @Dhume is not to take any other action with the funds besides keep them safe and return them to Nu as decreed by shareholder motion or an emergency depletion of T4 funds.

For collateral @Dhume is required to put up 100>% of the hedged amount in USD. For this @Dhume proposes to put up 7500 BKS (valued at the open market between 6-7+ USD a piece at the time of this proposal) which current value is estimated to be 45.000-52.500 USD as collateral. This collateral is to be held in a FLOT multisig address which @Dhume will not be a part of.

For this service @Dhume will charge a 300 NBT fee per month, totaling 900 Nubits per 3 month service period. @Dhume will take payment after every 3 month operation period by requesting a grant to be passed at the end of the operation period. He will also use this grant topic to report anything he deems relevant to know for Nushareholders regarding Nusafe and to state whether he will commit to another 3 month period. The fee is to compensate @Dhume for the loss of access to his funds + the exchange risk which he takes upon himself. Thus shielding Nu shareholders of the exchange default risk that having USD reserves on an exchange would normally hold.

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Verify. Use everything between and including the <motionhash></motionhash> tags.

@assistant verify

Hi @Dhume

Here are the verification results of all the motion and custodian hashes I could find in this thread:

I found the following hashes:
1 Motion | 0 Custodial

motion hash
Original Hash : e3966c4205ebb2966110218435ad21d9c5c8f2c0
Calculated Hash : e3966c4205ebb2966110218435ad21d9c5c8f2c0
The hash is good.

This took a while to digest and I’m not sure whether I got this entirely clear. Do I understand that this takes 30k in BTC out of T4 and replaces it with 30K USD? So it won’t add any funds to T4 over the 15%, something I would like to prefer see?

I’m ok with the collateral. Still having a hard time of justifying 300 NBT a month just for BTC volatility. Would be a lot easier and more valuable in my opinion if it was just adding an additional layer of security to the tier 4 funds instead of replacing.


If BTC swings down by 1%, the 300 NBT is at break even with the saved losses (based on 30k USD value being shifted from BTC to USD) :wink:

If it swings up Nu has a double loss. Just to show the whole® picture.

I think BTC has more room on the down side. Maybe. I could be biased.

To be fair it is not a double loss, it is a loss of the 1% as fee and a loss of opportunity that could as well have been another monetary loss.

I mean by the previous post’s logic a swing upward of 1% will let Nu not only spend the fee but also miss the benefit of increased valuation as a result of btc/usd appreciation.

The risk of a peg break is greater than the reward of some buybacks. That discrepancy creates a need for stable reserves that have some small demurrage.

1 Like

The thought behind transferring part of Nu held funds to USD stable alternatives is that upswings in BTC price do not really affect us. An upswing in BTC price doesn’t effect Nubit price or USD price. However a significant downswing combined with a decline in demand cut put us in a awkward position. A strong decline in demand would require us to use T4 to support the peg but at the same time due to BTC decline the reserve would be strongly diminished as well. This is sort of a perfect storm scenario but definitely possible and in my opinion the greatest threat possible to breaking the peg.

Now effectively we’re 100% long on BTC at the moment including our “back-up” reserve. I would like to see a situation where the “back-up” reserves are shifted to value stable USD alternatives. So we can guarantee to always have XXXXX amount of USD available to support a decline in Nubit demand.

In practice we will still have a ton of funds (everything in surplus of our 15% reserve) in BTC so an BTC upswing will still be profitable however a BTC downswing will not affect our “back-up” reserve.

[quote=“Cybnate, post:4, topic:3215, full:true”]
This took a while to digest and I’m not sure whether I got this entirely clear. Do I understand that this takes 30k in BTC out of T4 and replaces it with 30K USD? So it won’t add any funds to T4 over the 15%, something I would like to prefer see?[/quote]

Yes it is meant as a replacement of volatile BTC currently regarded as our T4 15% reserve and replace them with value stable USD.

Personally I would like an additional layer on top of the 15% we currently reserve in accordance with this motion: [Passed] T4 Circulating NBT Threshold

I think @ttutdxh’s proposal DR (Distributed Reserves) would be extremely well suited for this, I would love it if we could have the current 15% reserve and an additional 10% reserve in DR, totaling 25% reserve compared to outstanding Nubits.

Thanks for the clarification. Adding to my datafeed. Will need to look into the DR proposal this weekend amongst a few other discussions.

Your welcome, thanks for your support.

@Nagalim could you add this motion to the hot list?

Anybody can do that. It’s a wiki post.
I’d do it, but don’t want to mess up the post on my mobile phone…

Oh I didn’t know that, I’ll try adding it myself :smile:

Using only bks as collateral is not satisfactory to me.
It is an illiquid asset at this stage.
I would have wanted something like half of the whole collateral in bitcoins.
Besides, 30k is a bit too much.
I would have preferred something like 15 or 20k.
However the overall idea of NuSafe is good.
I am hesitating to vote right now.

1 Like

Liquidity of BKS on the open market is indeed very low, although @tomjoad’s post in the other thread seems to indicate a decent amount of volume is happening in private trades. A collateral in bitcoin would be interesting as well but of course bitcoin is very volatile (which is the reason for doing an hedge in the first place) I’d argue more so than BKS.
I would welcome a similar proposal to Nusafe from a shareholder proposing to put up BTC as collateral. Unfortunately I do not have large amounts of bitcoins for long term holding so this is not an option for me. I went with 30k based on my poll in the other thread and the suggestion from @nagalim.


This is going to need more support if it is to pass, I urge shareholders who are in favor to not forget to vote for this proposal.

1 Like

I would vote for it if the amount was under or equal to 20k. The reason is that I would like to prioritize NSR buy backs.

This doesn’t affect buybacks, it replaces some of the btc covering 15% nbt we keep in T4 with a contract for USD.

I see. If this motion passes, 30k among T4 will be kept in USD, the rest in BTC?