A couple days ago I stated:
So, let’s discuss this. When I am elected Chief of Liquidity Operations, I will issue a similar Statement of Policy, which may be amended from what the Statement of Policy Intent for Discussion currently states if better ideas are presented.
Statement of Policy
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NuBits shall be purchased in the open market each day with 10% of our total buy side funds available. Buy side funds available include BTC held by FLOT, BTC held by gateway operators, shareholder BTC held by @jooize on or off exchange, and other assets which belongs to shareholders, excluding NuShares and NuBits.
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NSR auctions will be held weekly using established practices except for the following changes: Each auction will start with an estimated reserve price, which is the reserve price that meets shareholder interests the best at the time the auction begins. The final, actual reserve price will be chosen just after each auction closes, and will be adjusted for changes in the NSR market between when the estimated reserve price was issued and when the auction closed. If there is a shortage of valid bids so that some NSR goes unsold, this NSR should be placed for sale on Poloniex at the actual reserve price.
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NSR will be sold on Poloniex. The exact terms of sale will be adjusted regularly to adapt to market changes.
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Offers to purchase blocks of NSR in excess of the amount available in the current auction should be brought to @jooize for consideration. We will entertain offers to purchase 10, 20, or 30 million NSR (for instance) this way. Orders will be filled if it is in shareholders’ interest to do so and there are sufficient NSR immediately available.
Commentary:
Essentially, the plan is to purchase large amounts of NBT immediately. While it is not our normal practice to withhold liquidity, where a peg break is well entrenched, it makes sense to spread NuBit purchases over many days to get best pricing. Using all reserves to buy NuBits immediately would simply result in a spike to $1.00 followed by an immediate drop again. Using 10% of reserves each day is designed to create a sustained rally.
The rally will only be sustainable with additional sales of NSR. There is considerable evidence from the last 2 years that the NuShare price follows the value and liquidity of NuBits. A strong causal relationship likely occurred in the last week. Therefore, the strategy is to raise the NuBit price, which will bring demand and liquidity to NuShares, just as it has in the last week. We then sell NSR into this strength.
Currently, my custodial grant to become Chief of Liquidity Operations has 45% support over 10,000 blocks, but is trending at 53.6% support in the last 500 blocks. It is likely to pass on July 4th. I plan to ask the liquidity operations team to begin daily NuBit purchases on July 5th. To facilitate this, FLOT BTC will need to transfer some BTC to @jooize. Please prepare for that.