[Passed] Proposal to create a strategic reserve of NuBits

Chronos 2014-10-11 16:22:10 UTC #16

It’s fallacious to equate volume with demand. For example, if I buy a BTC for $240, sell it for $260, buy it again for $255, then sell for $245, all in 24 hours, I created $1000 of volume with my money, even though it’s impossible to buy $1000 of NBT with that money.

You can’t lose all by losing the peg to the upside. “Oh, no, my NBT are worth too much! I guess I’ll… sell them? I guess I won’t buy more?” And the problem fixes itself, because the buy walls at $1 remain. You can lose some reputation and volume in this way, but the system returns to $1 eventually, not to $0 as could happen in the case of losing the peg to the downside. Custodial buy walls are strongest when the peg breaks out upwards, so that’s the moment when the risk to “lose all” is least.

This could even bring more publicity to NuBits, if spun the right way. Imagine the headlines: “NuBits fails by being too successful!”

Again, I’d be interested in custodial data on this. Has anyone been collecting getliquidityinfo over time, so we can see a graph of custodial liquidity and what size of relative shock would be needed deplete our reserves?

Also, as several people have mentioned, would Jordan be willing to make public the total number of multi-sig key holders?

masterOfDisaster 2014-10-11 17:02:31 UTC #17

I agree that losing the peg in the other direction, being unable to sell (from customer perspective) a NBT for $1 but for less would be much worse.

But I tend to disagree with your conclusion that you can’t lose all by losing the peg.

NuBits claims to provide a stable peg to the USD of 1:1.
It might not play much of a role why the peg was lost and that it was lost into an unproblematic direction (being above 1 USD per NBT).
It might be recognized as NuBits failed to keep the peg by those who don’t spend much time trying to understand what went wrong and why it wasn’t that bad at all.
Plus it will be displayed by competitors that NuBits failed to keep the peg.

It might be fallacious to equate volume with demand. But it’s fallacious to assume that there can’t be that much demand as well. Not long ago 30,000 BTC were sold. Imagine they had been sold for NBT instead of USD…

Not keeping the peg may cost enough reputation to ruin the whole experiment; this is my conclusion.

mhps 2014-10-11 17:24:44 UTC #18

That is true in general. Are there data to show demand change after major bitcoin crash?

Chronos 2014-10-17 23:12:57 UTC #19

This custodial grant proposal has passed.

cryptog 2014-12-17 02:26:29 UTC #20

Isn’t 40,000 nbts a lot of money for just transferring some liquidity?

mhps 2015-01-04 12:22:37 UTC #21

I can’t find the address BhCnQrYrA5LZm871dtMQEXeU93gmqbhdrC in the proposal using any of the two explorers. Is this because the address is multisig ?

Ben 2015-01-04 14:43:08 UTC #22

http://blockexplorer.nu/address/BhCnQrYrA5LZm871dtMQEXeU93gmqbhdrC/1/newest

Ben 2015-01-04 14:44:57 UTC #23

Time is not free. Liquidity providing isn’t necessarily a one-time thing. If the shareholders didn’t agree with the requested fee, they should not have voted for the proposal.

mhps 2015-01-04 14:54:00 UTC #24

Thanks. Was it because of the glitch ealier today that I couldn’t find the address, or something was fixed?

Ben 2015-01-04 14:58:39 UTC #25

I didn’t make any changes to the explorer, so I’ll go with “glitch”

mhps 2015-01-04 15:00:09 UTC #26

oddly this also says unseen address https://svr1.nubitsexplorer.nu/address/BhCnQrYrA5LZm871dtMQEXeU93gmqbhdrC

Ben 2015-01-04 15:01:59 UTC #27

That explorer may not be configured to handle multi-sig addresses, yet. @Cybnate would have a better idea of the status. I know it’s pretty bare bones (no NSR tracking, etc.)

Cybnate 2015-01-05 00:13:07 UTC #28

It is barebones indeed but should see all NuBits transactions. Have raised an issue with Matthew about that. I suspect NuNet is using some special trick to handle multi-sig addresses.

cryptog 2015-01-06 10:51:04 UTC #29

I am not advocating ignoring the cast votes of course

mhps 2015-06-19 08:18:45 UTC #30

This proposal was passed long before burning NSR for NBT was approved by shareholders. The Strategic Reserve is 4M printed money with no backing. It is supposedly to be used when there is a high demand of NBT so that the sell side of the PEG is running very low.

I think either the Reserve should be burned or any use of it must be followed by a NSR burn or a dividend distribution so the new NBT in circulation is backed by increased marketcap of NSR.

To put it in simple speaking, it is not logical to auction undistributed NSR when the buy side is low but not to burn circulating NSR when sell side is low.

masterOfDisaster 2015-10-16 09:18:39 UTC #31

To revive this old thread and possibly continue it with a new direction:
As the tier 4 management discussion goes forward, I think NSR holders might be interested in adapting the control over the FSR to move it away from an anonymous FRST (or is the number and identity of the individuals controlling the funds known?) and put it into the hands of elected fund managers.

The tier 4 management discussion just has begun, but I think a discussion about the FSRT can be held in parallel, because both topics share a lot of the operational business.

Both need to answer questions like:

what are the (objective, measurable, verifiable) conditions under which funds (and how much vlaue) get released
how to eliminate single points of failure (in particular: how to bring the funds to market without putting them in the hands of one single person, the person that holds the exchange account?)

The last point obviously isn’t relevant for the tier 4 fund management, but I consider it important for the FSRT:

what happens with the proceeds (I think a clever combination of all that follow would be wise)
buy NSR and burn them?
fill tier 4 buy side with BTC to keep the relation between tier 4 buy side and NBT in the wild intact?
distribute PPC dividends?

desrever 2015-10-16 10:20:58 UTC #32

I think that if anything, part of the funds should be burned because given how things went, we don’t need that much liquidity, not even if we get on the first page of the wall street journal. Jordan recently wrote

As an aside, there is a consensus that most of the NuBits in their possession should be burned, as the amount is far more than would ever be needed over a couple weeks. Expect a motion on this soon.

As for the anonymous part of it, I am ok with it. Is enough for me knowing that participants have been in Nu for more than a year accomplishing their mission successfully .

mhps 2015-10-16 11:38:48 UTC #33

Yes knowing that 4m NBT exists has been worrying me. 100k seems more appropriate.

Cybnate 2015-10-17 04:19:56 UTC #34

I believe the funds are in good hands and in multi-sig NBT addresses. But it doesn’t suit our decentralised Nu business model. To much potential control in the hands of a few. And I agree with @mhps, the size of the fund can be reduced. We can create large amounts of NuBits in a week anyway. Voting apathy would be our only enemy, but I think when there are significant dividends in sight by creating large amounts of NBT you would not see any of that

What should to be done with revenue except for paying dividends?

masterOfDisaster 2015-10-17 13:08:40 UTC #35

I believe so too, but I second that it doesn’t suit the decentralized Nu business model.

This brings focus on another topic NSR holders need to discuss: what to do with the proceeds of sold NBT?
I think I will create a new topic, because what I’m going to say has to do with the FSRT, but reaches much further.