Several Peg mechanism discussion

[masterOfDisaster]

You are right.
The counterparty risk is there, but outside the Nu network.
Nu pays a compensation for those who bear that risk.
And you are right that providing NBT/BTC liquidity is more risky than providing NBT/USD liquidity due to the BTC volatility.

I expect 3 main categories of compensation to form:

• NBT/BTC with highest compensation (exchange default risk, high BTC volatility)
• NBT/(EUR|CNY) moderate compensation (exchange default, low volatility)
• NBT/USD (exchange default risk, no volatility)

Aside from the category the exchange that is used for liquidity providing will for sure have an influence on the compensation.

I hope that NBT/BTC will rather sooner than later not be supported by Nu any longer.
Until that happens, liquidity providers like NuLagoon might provide cheap NBT/BTC liquidity by proxying the NBT/BTC pair to a NBT/USD pair.

[cryptog]

I hope that NBT/BTC will rather sooner than later not be supported by Nu any longer.

If we suppose that B&C will get most of the liquidity, NBT/BTC will become the main pair for a while.//

[Sabreiib]

B&C exchange is an excellent chance for us to try a new pegging method, since we have no guarantee on BKC pegging, let’s wait and see if a second BKC market can come into being or not.

[crypto_coiner]

NBT/USD (exchange default risk, no volatility)

I hope that NBT/BTC will rather sooner than later not be supported by Nu any longer.

Anyone has an idea on how to peg NBT to USD on BCEX without using any crypto pair?

cc @cryptog @Sabreiib

[Nagalim]

peg NBT to USD on BCEX

BKC/NBT. I know that’s not the answer you wanted to hear, but you might be underestimating the relevance.

[crypto_coiner]

What about BKC?

[Nagalim]

Sry, you’re very right, I meant BKC. Edited.

[crypto_coiner]

That seems like a very good idea.

[JordanLee]

a) the zero reserve cannot give enough confidence to customers, if something bad happens, LPC may refuse to help. We all knowt that when you are rich banks are keen to lend you money but if you become poor, banks shut door to you.

Nu cannot guarantee that liquidity providers will keep a strong support of the peg in case the network is in trouble

Today it is true that for tiers 1 to 3 there is no guarantee liquidity providers will continue providing liquidity at the same price, but this is not the case for tier 4. In the future, I expect we can use the escrow feature of B&C Exchange to ensure designated liquidity can’t be withdrawn and orders will be placed automatically by reputed signers as a matter of protocol. Once this is done, we could guarantee a certain sum of liquidity for a certain period of time into the future. Even if the risk to funds rose and the liquidity provider preferred to remove funds due to some emerging condition, they would have no choice but to keep their contract and provide liquidity because the funds would be in the distributed hands of reputed signers.

[Sabreiib]

Jordan, How could B&C and Nubits help each other?

1. Nu community provide NBT/BKC (1:1)pair to help BKC pegged with USD
2. B&C will help nubtis if it’s in trouble, eg, use BKC to buy NBT and destroy those NBT.

[Nagalim]

2. B&C will help nubtis if it’s in trouble, eg, use BKC to buy NBT and destroy those NBT.

This will not happen. The synergy for Nu and B&C is limitless, but Nu’s debt is not B&C’s debt.

The main method by which B&C will help Nu is by providing alt/NBT pairs with actual volume. At least, that’s what I think will happen.

they would have no choice but to keep their contract

This is pretty cool, by the way. I still think it leaves open the need for tllp that can be withdrawn at will, but I really like that we will have mechanisms for these types of insured liquidity available. I am seeing it as a kind of trustless NuLagoon, is that the idea?

[Sabreiib]

Although B&C and Nu are two different DACs, B&C is designed to provide safe exchange for Nubits LPC. And 40% BKS held in NSR holders’ hands.

A win-win deal can be make by B&C / Nu

Nu provides BKC pegged with USD, B&C provides NBT based pairs on B&C exchange, also a friend in need for Nu.

We may even avoid BKC/BTC pair, customers can only buy BKC with NBT, thus NBT trading volume encouraged.

Perhaps in future, B&C breaks up with NBT, but before that happens, they are close firends.

[Sabreiib]

I have an idea, the B&C signers not only confirm customers trade, but also trade BKC/NBT by themselves via multisig for one public BKC address.

The original design is to sell BKC for BTC and distribute those BTC as dividend, now BKS holders may vote to sell BKC for 1 NBT, and buy back at 1NBT, the BKC selling is also the pegging process. BKS holders can vote to take a portion of NBT(BKC sale proceed) into dividend and keep the remaining NBT as liquidity for BKC.

[mhps]

they would have no choice but to keep their contract

This is pretty cool, by the way. I still think it leaves open the need for tllp that can be withdrawn at will, but I really like that we will have mechanisms for these types of insured liquidity available.

It will come with a cost. These liquid providers see that they would have no way to withdraw, they would demand premium or compensation or insurance from Nu.

[Nagalim]

no way to withdraw

Oh true, this is fundamentally different from NuLagoon.

sell BKC for 1 NBT

Yah, this is what I doubt will happen, but I hope I am pleasantly surprised. It is true that not only are a large number of BKS holders also NSR holders, but also that intersection is the voting body that has experience with the consensus process.

[Sabreiib]

@Nagalim

It depends on B&C exchange business, if trade volume is big, we can use “scalper scheme” to directly peg BKC to USD via BKC/BTC pair.

And Nubits can be pegged by BKC/NBT pair, when NBT liquid providers oeprate on BKC/NBT pair, there is no couterparty risk or exchange default at all.

In fact, the B&C signers can act as NBT LPC easily.

[Nagalim]

Yes, all that is very true. I do like the concept of controlling what BKC pairs are on the exchange to control what it means to scalp a BKC.

Still, I don’t see BKS holders ever voting to use their profits to burn NBT. I mean, I can’t really think of a situation where I myself would think it’s a good idea for B&C to bail out Nu. Maybe if I was really up the creek with how much I invested into NSR and sold most of my BKS, but then my opinion wouldn’t really matter as much as someone who had invested and held BKS.

[Sabreiib]

It’s easier for BKC to maintain peg than NBT because B&C destroy BKC every hour even minute, there are three ways for BKC sale proceed.

1. dividend to BKS holders

2. software development for B&C
   3)help Nu by burning NBT

3. option is possible, if NBT is important for B&C exchange, there are may be BTC based pairs and NBT based pairs on B&C. NBT plays USD role because impossible to use FIAT in decentralized exchange.

The B&C blockchain data is expensive, it’s designed for store transaction infomation not daily general transaction which NBT does well. (@Jordan correct me)

So the NBT pegging for B&C may be as important as bitUSD for bitshare.

Only short sighted BKS holders vote for 100% dividend, my opinion.

[crypto_coiner]

Sry, you’re very right, I meant BKC. Edited.

The BCExchange whitepaper says:

Use case: BlockCredit custodian
BlockCredits are used solely to pay transaction fees on B&C. Community members with
excellent reputations may propose to become BlockCredit custodians subject to shareholder
approval. While the protocol permits shareholders to elect anyone to become a BlockCredit
custodian for any purpose, it is expected that shareholders will elect BKC custodians that will
make the BKC they receive available for sale at a variety of exchanges and venues. A BKC
custodian may be a single entity or a group of entities using a multisig address to jointly control
BKC they receive.

That suggests to me we can use BKC in pairs NBT/BKC - If BKC is stable in value (or if we can track its value or if it is very stable), we can use in place of NBT/cryptos?

[Sabreiib]

I believe this is the most important thread of mine.

A year ago, I’ve predicted that

" the zero reserve cannot give enough confidence to customers,if something bad happens, LPC may refuse to help. We all knowt that when you are rich banks are keen to lend you money but if you become poor, banks shut door to you."

Now, NSR price is plumbing, it seems seldom will help a company in trouble.

Profitability, Anti-infaltion, and loose pegging even BKC/NBT pair also mentioned.

We can even add anti infaltion to BKC if we lift sell price with USD infaltion rate voted by shareholders. In 2020, BKC price is [1.25, 1.3]…