Supply, Reserves, and Equilibrium (superseded by automation)

[MaVo]

Time to sell some Chinese Nubits!

[ConfusedObserver]

I honestly didn’t read your post because the only matter I am interested in discussing with you is the return of 13 BTC everyone agrees (even people who wish to destroy Nu agree) you stole from shareholders.

It’s cheap how you hide behind that accusation of yours trying to evade discussions and questions.
I’ve recognized that you like to create narratives.
Please register that I have no 13 BTC no matter how hard people agree.

The only of the both of us who demonstrably lost shareholder funds is you. I’m not saying you stole it. But you did financial damage to Nu while I did not.
I’d state how big the damage was, but you refrained from telling publicly.
May I ask you how many NSR you lost?

There is broad consensus you have committed felony theft against NuShare holders and that you are a Chinese authoritarian who is quite fond of hyperinflation, like the pathetic authoritarians that lead China in a century of humiliation. Your time is over. You and your kind lost. Deal with your defeat.

The broad consensus only exists in your narrative. But you could create a motion and I’m damn sure you could show blockchain consensus for that complete farce, too.

If I were fond of hyperinflation, I’d simply love Nu.
Tell me, by what factor did the mismanagement that circled around the promoting and conducting NSR buybacks to create a dangerously low level of reserves inflate NSR supply?
My time is over? My time hasn’t even begun. My investments run well and I’m glad that I didn’t invest in Nu

Your time is over if you don’t get your economics 101 sorted out.
Without NAV of exchange trading and a full accounting, shareholders won’t even know when the time is over.
You will know it. You have the numbers. You just don’t publish them. Why don’t you publish them, if you are such a fan of transparency?
Please spare me the same old story of transparency on the blockchain.
The single most point of losing money for Nu is trading NBT/BTC at exchanges. You don’t find that on the blockchain. And if you don’t prove me wrong I continue repeating it. Because the logical conclusion of people trading NBT/BTC is that they make money with it. They buy NBT when BTC falls and sell NBT when BTC rises. That’s why I ask for the NAV. There you could see it.
Would they lose money, they’d stop. Simple as that. Looking at the charts they did almost stop, but for other reasons, like lost confidence. But once they were trading lots of money. Just to be at the wrong end of the stick? C’mon…

Once I had said “Change the course and I’ll become shareholder”.
Meanwhile I perceive that just as learning exercise for me and others.

[ConfusedObserver]

@Phoenix, any update regarding the amount NSR you held on behalf of Nu and which you lost?

[jooize]

people new to the forum should nonetheless have the chance to find out that @jooize has zero background in finance and absolutely no clue what he is doing and, also, that the people who do bring some finance knowledge to the table are supposed to be banned from this forum.

Indeed, I have zero background in finance. Yet, I can provide value in and outside liquidity operations.

Recovering the peg required understanding of the liquidity model and markets. A Chief of Liquidity Operations was appointed to carry out that mission. Executing the tasks does not require the same expertise.

and, also, that the people who do bring some finance knowledge to the table are supposed to be banned from this forum.

Because @ConfusedObserver had for a long time been posting spiteful remarks and instead of methodically building basis for his accusations and suggested flaws he kept spreading them in barely relevant discussions.

You’ve provided almost no value and even anti-value the entire year of 2017.

Anyone interested I suggest read the topic where I argue the problem down to the bottom.

[MaVo]

You’ve provided almost no value and even anti-value the entire year of 2017.

I haven’t provided value to you personally, that is true. And the “anti-value” you are talking about is the “pro-value” for anyone not being @jooize or @Phoenix or anyone hoping to find people buying their NSR at a too high price. You won’t stop me. And I promised you that the delisting of NSR from Poloniex was a done deal. Change your attitude, little kid.

[jooize]

We’re in agreement regarding spread trading, though you consider volatility of the asset (BTC) directly related and I view it as a separate factor. End result is the same.

10,000 US-NBT purchased and returned net $100 from spread for Nu. Say Bitcoin is at 1,200 USD at the time the NuBits enter circulation and 1,150 USD at the time they leave circulation via a BTC/USNBT value transfer pair.

10,000 / 1,200 = 8.3333
10,000 / 1,150 = 8.6957
8.3333 * 1,150 = 9,583
10,000 - 9,583 = 417
417 - 100 = 317

A customer buys 10,000 US-NBT for 8.3 BTC. Bitcoin falls 50 USD, then they return their 10,000 US-NBT and receive 8.7 BTC. That’s a net loss for Nu of 317 USD.

NuBits’ main purpose is to move that volatility exposure from customers to shareholders. Zero reserve would theoretically eliminate reserve assets and their volatility as a factor, though in practice there may be a lag between the backing pair and value transfer pair (such as NSR/BTC and BTC/NBT). Zero reserve requires a mature NSR market with investors who know what they’re doing. Investors did it by proxy last year when they recovered the abandoned US-NBT peg. The money was provided. We want to automate that procedure with minimal friction.

For rational increase in value of NSR, the loss described from customers successfully hedging in NBT must be covered by equal failure to hedge, other income, or be resolved with zero reserve. The asset may also stabilize, but that seems unlikely.

Until then, using a reserve asset is the only way we know to do this. Using USD as reserve asset carries other risks not being decentralized.

---

Decentralized liquidity providers withdrawing funds in times of high volatility causes problems, but how critical? If Bitcoin stabilizes again, would decentralized liquidity providers return? That’s an interesting topic I suggest breaking out of this thread and continue.

[jooize]

What?

[MaVo]

The answer to that question will follow soon.

[MaVo]

Even highly scaled business models fail under the pressure of procyclicality effects. The assumptions you make are CAPM like, and CAPM has proven to be a weak model. “Investors who know what they are doing” - that sentence alone is ridiculous from a game theoretical perspective, particularly in the context of a highly scaled NSR market.

[jooize]

Okay. How would you do it instead?

[MaVo]

That is an extremely difficult question. I wouldn’t post an answer here without being invested in Nu. The problem is that Nu is under control of a scammer, not under control of someone who is looking to solve a very interesting problem. If @JordanLee was the person he pretended to be for quite a long time. I guarantee you that this forum would yield incredibly productive discussions. There were a lot of smart minds here, and precisely because they are smart, they are now gone.

[MaVo]

Oh, and to get this straight: I don’t have a concrete answer in mind.

[jooize]

Glad to have a real conversation. How about Augeas?

Attention, forum administrators

What is the narrative of @Phoenix’ reign of terror?

Additionally, what am I doing that’s corrupt?

[MaVo]

How about Augeas?

you think the motivation behind Augeas is clear? I strongly disagree. Everything is possible.

Additionally, what am I doing that’s corrupt?

You take bonus for opinion, not for performance.

[MaVo]

You take bonus for opinion, not for performance.

And if you took it for performance, well, that would be really pathetic

[jooize]

you think the motivation behind Augeas is clear? I strongly disagree. Everything is possible.

My question didn’t have an opinion behind. It was to ask whether you could go to Augeas and build a superior model with them. It’s not that simple of course, so let’s leave that.

Taking the bonus for opinion would mean that he sees value in me perpetuating a flawed model? Doing it while being aware of it being flawed would make me corrupt.

You didn’t address what he’s done as a scammer.

[jooize]

Supply 2017–05–05

US NuBits (US-NBT)

Blockheight: 1,388,501

Existing: 838,266.6110
Parked: 24,356.4557

Liquidity Operations*: 545,324.8312
Liquidity Operations**: 49,849.9800
Bittrex: 19,127.3256
Cryptopia: 3,553.2535
NuLagoon Tube: 27,421.8698
Nu-owned: 645,277.2600

Circulating: 168,632.8953

* BJLmVRdGFi4q7Zidwzr4CPPsLT6pozR31a
** B71AkDjzm4S24KoXGoq6W3hynexAyNb9FV

Chinese NuBits (CN-NBT)

Existing: 2,000,000
Parked: 0

Liquidity Operations*: 2,000,000

Circulating: 0

* YhSEw9AGBJ3KtqLrxeQrcsTVk5u57pA88m

NuShares (NSR)

Blockheight: 1,388,501

Existing: 3,316,976,821

Liquidity Operations*: 320,000,040
Liquidity Operations**: 84,422,140
FLOT 1***: 64,344,685
FLOT 2****: 5,940,000
Cryptopia: 40,361,434
Poloniex: 0
Alcurex: 10,013,835
Nu-owned: 525,082,134

Circulating: 2,791,894,687

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

[jooize]

Reserves 2017–05–05

Dollar amounts represent BTC in USD.

BTC = 1,556.87 USD

Tier 1–2

Bittrex: $33,245.57
Cryptopia: $7,520.43
Cryptopia: $7,182.92
Alcurex: $155.69

Tier 3 (Not in effect)

Tier 4

Liquidity Operations*: $21,876.36

* 17owruzTRANDYwCq77bSABQLXBxx3QaCea

Tier 5

Refer to parked amounts for current utilisation.

Tier 6

Monthly liquidity of NuShares: $2,001,741

Total Tier 1–4

$69,980.98

[jooize]

Equilibrium 2017–05–05

Circulating US-NBT: 168,632.8953
Reserve percentage: (50 - 168,632.8953 / (2,000,000 / 25)) / 100 = 0.4789
Equilibrium reserve: 0.4789 * 168,632.8953 = 80,758
Current tier 1–4 reserve: 69,981
Minimum tier 1–4 reserve: 0.20 * 80,758 = 16,152
Daily move to equilibrium: 0.01 * (80,758 - 69,981) = 108

Equilibrium is Nu having $80,758 in tier 1–4 reserves. We have $69,981. When $10,777 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.

[ConfusedObserver]

A customer buys 10,000 US-NBT for 8.3 BTC. Bitcoin falls 50 USD, then they return their 10,000 US-NBT and receive 8.7 BTC. That’s a net loss for Nu of 317 USD.

NuBits’ main purpose is to move that volatility exposure from customers to shareholders.

Wow, that looks like NSR holders pay for traders successfully betting on BTC volatility.
That’s quite strange considering that Nu designed NBT to be USD stable, which wouldn’t have that dependence on BTC volatility.
What shall NSR holders do, if they have no more money to foster exchange traders?

We’re in agreement regarding spread trading, though you consider volatility of the asset (BTC) directly related and I view it as a separate factor. End result is the same.

BTC volatility is the factor, which needs to be reflected in the spread. There are other factors like exchange default risk, but one of the most important variables is the volatility.
Otherwise NSR holders bleed out.
You did the math yourself.

Decentralized liquidity providers withdrawing funds in times of high volatility causes problems, but how critical?

Ask someone with in-depth knowledge, someone who was here back then.
It looks like in early 2016 the liquidity was almost killed by decentralized liquidity providers pulling funds from liquidity provision during high BTC volatility.
How critical was that? I don’t know.

There were a lot of smart minds here, and precisely because they are smart, they are now gone.

There are still some not totally dumb minds here