Brilliant. If properly structured, this is the solution to “the money supply can’t deflate” criticism.
What I like about this solution is that it puts the risk on the “speculators” from Day 1. Currently in the Price Stability section of the website it says in regards to NuBit demand decline: “As this outcome approaches, NuBits will shift from the hands of ordinary businesses and people into the hands of speculators tolerant of high risk in exchange for possible high rewards.”
Indigoman’s solution puts the risk of speculation into the proper camp from the onset.
One positive aspect of this solution is that it encourages minimal or zero-level interest rates from NSR holders, who presumably do not wish to dilute their holdings. This will help prevent over-inflation of NuBits supply. When the time comes that supply exceeds demand, I think it would be rational for NSR holders to offer interest rates that slightly dilute their holdings, rather than risking a complete market collapse if confidence is permanently eroded in the peg.
but I think the true solution isn’t so prescriptive. In periods when demand exceeds supply, NSR holders have no
incentive to dilute their holdings with interest rates that lead to NSR creation.
One final point, is that in the current system, if demand declines for a year or two I think it’s quite likely panic might set in and a mass sell-off of NuBits occurs. Many are not as confident in the ability of the system to handle “multi-year dips in demand” as Jordan Lee is. With Indigoman's proposed system, a multi-year demand dip might not affect NuShareholders as much, because they still derive utility from ownership of the stock (namely, the ability to vote for solutions to the business). A NuBit holder has no incentive to hold NuBits in a severe demand decline, but a NuShareholder does – for the promise of having the ability to vote for solutions to revitalize the system. EDIT: Also, NuShareholders gain access to the existing Nu infrastructure - websites, social media accounts, branding properties....all things with real value even if NuBits is collapsing.
Excellent idea Indigoman, I hope the community thinks through this issue in-depth.