Supply, Reserves, and Equilibrium (superseded by automation)

Liquidity
#342

Equilibrium 2017–04–07

Circulating US-NBT: 157,751.2496
Reserve percentage: (50 - 157,751.2496 / (2,000,000 / 25)) / 100 = 0.4803
Equilibrium reserve: 0.4803 * 157,751.2496 = 75,768
Current Tier 1–4 reserve: 16,729.77 + 2,326.49 + 5,926.60 + 32,527.37 = 57,510
Minimum Tier 1–4 reserve: 0.20 * 75,768 = 15,154
Daily move to equilibrium: 0.01 * (75,768 - 57,510) = 183

Equilibrium is Nu having $75,768 in Tier 1–4 reserves. We have $57,510. When $18,258 is raised through NuShare, US NuBit, or Chinese NuBit sales on a combined basis, any additional funds raised can go to NuShare buybacks assuming no updated reserve requirements or funds spent.

Daily move to equilibrium is the amount in USD of how many NuShares will be sold or repurchased every day toward reserve equilibrium.

#343

Supply 2017–04–14

US NuBits (US-NBT)

Blockheight: 1,354,714

Existing: 838,054.8002
Parked: 16,539.6257

Liquidity Operations*: 575,324.8412
Liquidity Operations**: 34,162.5800
Bittrex: 23,916.3663
Cryptopia: 2,517.9332
NuLagoon Tube: 27,421.8698
Nu-owned: 663,343.5905

Circulating: 158,171.5840

* BJLmVRdGFi4q7Zidwzr4CPPsLT6pozR31a
** B71AkDjzm4S24KoXGoq6W3hynexAyNb9FV

Chinese NuBits (CN-NBT)

Existing: 2,000,000
Parked: 0

Liquidity Operations*: 2,000,000

Circulating: 0

* YhSEw9AGBJ3KtqLrxeQrcsTVk5u57pA88m

NuShares (NSR)

Blockheight: 1,354,714

Existing: 3,317,136,640

Liquidity Operations*: 399,999,940
Liquidity Operations**: 47,998,230
FLOT 1***: 64,344,685
FLOT 2****: 5,940,000
Cryptopia: 20,000,000
Poloniex: 11,774,255
Nu-owned: 550,057,110

Circulating: 2,767,079,530

* SiyWZ1WCedKRXLg7u8fmVkUtF3JRC9QATv
** SaaP8P3TH8HU27MBkhH6j8EhQ9AvAEY27J
*** SvtGbNjWE49pTM2TiUZrYKSNkxTJx75mmC
**** Snvrc5q82wfe2NjEjaQAyStpPKseWrsNqn

2 Likes
#344

Reserves 2017–04–14

Dollar amounts represent BTC in USD.

BTC = 1,171.79 USD

Tier 1–2

Bittrex: $16,007.66
Cryptopia: $7,855.94

Tier 3 (Not in effect)

Tier 4

Liquidity Operations*: $32,662.58

* 17owruzTRANDYwCq77bSABQLXBxx3QaCea

Tier 5

Refer to parked amounts for current utilisation.

Tier 6

Monthly liquidity of NuShares: $1,648,859

Total Tier 1–4

$56,526.18

2 Likes
#345

Equilibrium 2017–04–14

Circulating US-NBT: 158,171.5840
Reserve percentage: (50 - 158,171.5840 / (2,000,000 / 25)) / 100 = 0.4802
Equilibrium reserve: 0.4802 * 158,171.5840 = 75,954
Current Tier 1–4 reserve: 16,007.66 + 5,858.95 + 1,996.99 + 32,662.58 = 56,526
Minimum Tier 1–4 reserve: 0.20 * 75,954 = 15,191
Daily move to equilibrium: 0.01 * (75,954 - 56,526) = 194

Equilibrium is Nu having $75,954 in Tier 1–4 reserves. We have $56,526. When $19,428 is raised through NuShare, US NuBit, or Chinese NuBit sales on a combined basis, any additional funds raised can go to NuShare buybacks assuming no updated reserve requirements or funds spent.

Daily move to equilibrium is the amount in USD of how many NuShares will be sold or repurchased every day toward reserve equilibrium.

2 Likes
#346

Supply 2017–04–21

US NuBits (US-NBT)

Blockheight: 1,365,818

Existing: 838,073.5798
Parked: 18,804.4257

Liquidity Operations*: 575,324.8412
Liquidity Operations**: 31,974.4900
Bittrex: 16,971.7115
Cryptopia: 3,156.4143
NuLagoon Tube: 27,421.8698
Nu-owned: 654,849.3268

Circulating: 164,419.8273

* BJLmVRdGFi4q7Zidwzr4CPPsLT6pozR31a
** B71AkDjzm4S24KoXGoq6W3hynexAyNb9FV

Chinese NuBits (CN-NBT)

Existing: 2,000,000
Parked: 0

Liquidity Operations*: 2,000,000

Circulating: 0

* YhSEw9AGBJ3KtqLrxeQrcsTVk5u57pA88m

NuShares (NSR)

Blockheight: 1,365,818

Existing: 3,317,540,226

Liquidity Operations*: 399,999,940
Liquidity Operations**: 28,000,000
FLOT 1***: 64,344,685
FLOT 2****: 5,940,000
Cryptopia: 42,485,956
Poloniex: 22,902,415
Nu-owned: 563,672,996

Circulating: 2,753,867,230

* SiyWZ1WCedKRXLg7u8fmVkUtF3JRC9QATv
** SaaP8P3TH8HU27MBkhH6j8EhQ9AvAEY27J
*** SvtGbNjWE49pTM2TiUZrYKSNkxTJx75mmC
**** Snvrc5q82wfe2NjEjaQAyStpPKseWrsNqn

Nu just another noble experiment or more?
#347

Reserves 2017–04–21

Dollar amounts represent BTC in USD.

BTC = 1,217.94 USD

Tier 1–2

Bittrex: $23,702.75
Cryptopia: $7,718.75

Tier 3 (Not in effect)

Tier 4

Liquidity Operations*: $28,016.49

* 17owruzTRANDYwCq77bSABQLXBxx3QaCea

Tier 5

Refer to parked amounts for current utilisation.

Tier 6

Monthly liquidity of NuShares: $3,089,631

Total Tier 1–4

$59,437.99

#348

Equilibrium 2017–04–21

Circulating US-NBT: 164,419.8273
Reserve percentage: (50 - 164,419.8273 / (2,000,000 / 25)) / 100 = 0.4794
Equilibrium reserve: 0.4794 * 164,419.8273 = 78,823
Current Tier 1–4 reserve: 23,702.75 + 5,061.17 + 2,657.58 + 28,016.49 = 59,438
Minimum Tier 1–4 reserve: 0.20 * 78,823 = 15,765
Daily move to equilibrium: 0.01 * (78,823 - 59,438) = 194

Equilibrium is Nu having $78,823 in Tier 1–4 reserves. We have $59,438. When $19,385 is raised through NuShare, US NuBit, or Chinese NuBit sales on a combined basis, any additional funds raised can go to NuShare buybacks assuming no updated reserve requirements or funds spent.

Daily move to equilibrium is the amount in USD of how many NuShares will be sold or repurchased every day toward reserve equilibrium.

I will be Market Making NuShares NSR at OpenLedger (BitShares)
#349

The circulating US-NBT level has just reached its highest level in recent months. People don’t appear to be selling US-NBT as a result of the Poloniex delisting. That’s good for Nu. Looking at our financials just posted above by @jooize, there is no reason to be worried about the peg. Our tier 1 to tier 4 reserves are still near historically high levels as a percent of circulating currency.

The primary result of the Poloniex delisting is that Liquidity Operations has to sell quite a bit more NSR to raise $194 each day.

1 Like
#350

So if I’m reading this right, “Nu” has $60k in the bank?

Anything else in terms of assets?

#351

Sure. NSR. Billions of them if need be.
Some say NSR are the best way to store value.

#352

That is correct, but there are also liabilities for $164k in the form of circulating NuBits. It is the highest % reserve we ever had I believe.

We have some infrastructure e.g. website, wallet (Mac, Win, Linux), mobile wallet (NuDroid), a sophisticated bot (NuBot) and at least two blockexplorers. Not to forget some community members still working behind the screens.

1 Like
#353

Wasn’t it higher before the NSR buybacks?

That’s true. But these are assets that are hard to liquidate.

#354

It is indeed from memory as it has been a while ago. I can vaguely remember advocating for 30%+ so it is unlikely we ever reached that. In $ the reserves might have been higher just before the buybacks but we also had way more NBT in circulation. Might dive back into that in the next few weeks when no one else beats me to it. It would be a great marketing fact. Focussed on keeping some of the infra assets going at the moment and securing social media.

1 Like
#355

So, NU has $60k but $164k in “USD” NuBit liabilities? Doesn’t that mean it has a fractional reserve?

Is the idea that there can always be more NSR sold to cover the difference?

#356

You data is accurate as far as I can tell.

Sure, where else would you get money from?
Without 100% reserve you need to fill gaps.

Here’s how it works:
NSR are bought by Nu in buyback programs as soon as there’s to much BTC value in reserve.
NSR are sold by Nu when Nu is in (desperate) need of money.
The silly part is that Nu buys NSR when Nu is in good shape and tries to sell NSR when Nu is in bad shape.

And all because of BTC volatility. That’s the reason to transfer the value from BTC in NSR. A transformation with a lot of friction as I explained at the end of the past paragraph.
The original Nu design was utilizing custodians who were providing liquidity with own funds in the NBT/USD pair.
To receive the NBT they provide liquidity with, they could have bought NSR at the market and provided them as collateral (kept in multisig or in later iterations of Nu burned).
To the best of my inquiry this design was changed to providing liquidity in the NBT/BTC pair by discretion of JordanLee, the architect.
Focussing on massive trade volume in the NBT/BTC pair was paramount where organic growth in NBT/USD would have suited a startup better.
This was when the counterparty risk of BTC as asset in Nu’s reserve arose.

There have been attempts designed by @Nagalim to create seeded auctions for providing an off-exchange access to swapping NBT and NSR.
This was not followed, although it could have paved the way for focussing on the NBT/USD pair once again. I don’t know why.

Anyway. This is only my understanding.

1 Like
#357

What backs any currency is the rationale of a belief behind the agreement of value.

While relying on external factors is unavoidable, Nu has reduced them to the properties of its value transfer assets, reserve assets, backing asset, and a method of exchange. Today, our assets are Bitcoin and the NuShare. Those enable Nu to function independent of regulated entities, which NBT/USD never can and Tether recently may have found issues with.

Nu’s liquidity model involves incentives for investors to purchase NuShares when NuBit demand is in decline. They get to take part of future proceeds from NuBit demand, exchange trading, transaction fees, and any other ventures shareholders pursue.

Investors who expect benefits from a continued NuBit economy will support NuBits in times of declining demand. Assuming sustainable revenue (which is not a fairy tale), there will be incentive for investors to support NuBits via the NuShare at some price point unless an extreme loss of NuShare market cap with a heavy sustained decline in NuBit demand at a large NuBit market cap occurs.

Our value transfer and reserve assets can be switched out for another, and it doesn’t matter what the NuShare is traded for as long as it can be converted to one of the value transfer assets.

Parts of this are from previous posts.

3 Likes
#358

I believe your explanation is very clear and makes sense and is realistic.

2 Likes
#359

I’m not aware of any NAV calculation for exchange trading. Does this create proceeds or cost money? What’s the ROI?
Remember, you trade NBT/BTC, but the NBT are valued in USD. Saying there’s revenue from spread does not suffice.

254 NBT in the first 1.5 years from 20,000 transactions. Most activity happened and still happens on exchanges on not on blockchain.

Which are? Name just a few. You can include all past ventures if you like.

That sounds like

Did I misread it?
Or what’s the incentive? To take part of future proceeds from NuBit demand? How does NuBit demand create proceeds? To date revenue is a fairy tale. A fairy tale gone bad.
What if NSR holders just cut their losses and sell their NSR at a time when Nu needs to sell NSR too?

You got it. You are well prepared for the Q&A.

#360

I would just like to add to this.
I don’t think there was ever any malicious effort to avoid a NBT/USD pair. In the early days of Nu I remember concerted efforts being made to convince exchanges to host such pairs. I also remember a great reluctance of exchanges to do so. In fact it was a struggle to add the secondary peg mechanism to NuBot in time for the launch as an NBT/USD pair just wasn’t available to us and NuBot had to be altered to work on a NBT/BTC pair.
The secondary peg worked well enough for the first few months and the stability of NBT meant that we were having good discussions with Exchanges around hosting USD pairs and NBT based pairs. That’s when three of our supported exchanges got hacked within a week, loosing a large chunk of the funds used to support liquidity and even leading to the disappearance of one of the exchanges (unfortunately the most forward looking one that was already hosting an NBT based pair, so the BTC price was shown in NBT rather than the other way round).
That event meant we all had to scramble to recover and the effort that probably should have gone into USD gateways instead went into decentralising the liquidity provision to reduce the associated risks.
I don’t think the aim of hosting a USNBT/USD pair has gone away, we just need to be able to prove that we can supply a product to gain the trust needed to allow such a pair to exist.
Similar to your arguments about the need for revenue, I don’t think anyone disagrees when looking at the future of Nu, there’s just work to do to get there.

4 Likes
#361

Thank you for your insights as contemporary witness.
I don’t know whether there was any malicious effort to avoid a NBT/USD pair and focus on the NBT/BTC pair. I only see what happened after BTC were available, what was changed and what was the result. I come to my own conclusions.
But tell me, wouldn’t it have been wise to have exchanges trading NBT/USD first and start the project then?
I mean, it’s pretty much a prerequisite to stay in line with the white paper to have NBT/USD pair.
Just as custodians providing liquidity with non-Nu owned funds would have been.

When became exchanges that important knowing that they don’t create a lot of on-chain tx?
The NBT for the custodians was granted by the shareholders. Their choice.
But after abandoning the NBT/USD pair it was pretty much sink or swim.

Can we agree that focussing on NBT/USD with custodians who provide liquidity with own funds while avoiding BTC assets brings Nu in a more sustainable situation?