Supply, Reserves, and Equilibrium (superseded by automation)


#534

Just use a static % like 50%. This complicated quadratic formula is obnoxious and not thought through at all.


#535

If you want something stupidly complicated, you could cook up something using hyperbolic tangents:
[complicated calculation](http://www.wolframalpha.com/input/?i=plot(0.5x-0.25xtanh(x%2F2000000),%7Bx,0,510%5E6%7D))


#536

Thanks @Nagalim, even though you don’t even have a single word to say within this network. We should appreciate your input as those who hold the majority are not aware of anything you are talking about. Good luck for anyone investing into this project!


#537

Could you please outline what each part of this calculation is:

Reserve percentage: (50 - 523,851.1593 / (2,000,000 / 25)) / 100 = 0.4345

I see the 523k NBT circulation, but what determimes all the other numbers and why were they chosen?

I guess 50 acts as 50% maximum reserve, but what is 2m, & 25, and why isn’t 80,000 written instead?

I assumed these numbers were dynamic, but if that isn’t the case it clearly won’t keep the reserves at sensible levels with continuing growth.

As @Nagalim says, a simple percentage would make a lot of sense for determining the reserve amount, along with the simple 1% move towards equilibrium each day.


#538

I assume the idea is to aim for a 25% reserve at 2mil nbt, but then the equation breaks down from there, basically. However, no one really knows because this was implemented unilaterally by phoenix.


#539

I think it makes sense to reduce tier 1–4 reserves with scale, but I have no input about how to shape the curve at this time. I’ll ask @Phoenix about it if he doesn’t post here.

80,000 was simply a shorthand number I used in the beginning. Writing it in verbose form makes much more sense.


#540

You could make it piecewise and just have it be static at 25% once you reach 2 mil.
plot
Of course, the curve looks dumb.


#541

Or simply staged / tiered e.g:

0-2m 45%
2-4m 35%
4m+ 25%

Edit for clarity: if circulation goes over one threshold, the lower tiers are still in play for the corresponding amounts, so each rate only affects amounts within its band.

As I’ve said before, I feel that there are particular risks if growth in NBT in circulation is rapid, so I think the reserve percentage should remain fairly high while growth is rapid, and I don’t expect a 25% reserve would inspire much confidence in Nu at any stage, and confidence is essential for the functioning of the system.

If everyone knows that a 25% of NBT supply selloff for any reason may seriously challenge the peg, and a few big holders may own more than this amount due to recent rapid growth from a tiny base (e.g. if someone bought 20 million NBT), confidence may be low enough for a ‘run’ on NSR to occur & do serious damage.

At 50% reserve levels, confidence would likely be significantly higher, so fewer people will join in on a run. A run becomes more & more unlikely the higher the reserve, though I think 100% is unnecessary & not viable without alternative revenue streams that could reward shareholders.

It would be interesting to see what reserve levels the community generally thinks would be ideal.


#542

Tiered is a very bad idea because of what would happen at the discontinuities. Kinks in the curve are bad enough, discontinuities would cause serious issues.


#543

What issues could tiers cause if this is calculated manually on a weekly basis?


#544

Think about what happens if there are weekly fluctuations. One week the reserve required is 900k, the next week it’s 700k, when the circulating nbt has only changed by 1k. So you sell off large amounts to try to ditch 200k, then the next week you buy it all back, then the next week sell it all off again. I realize that there is a 1%/day rule, but why would you want a system that is buying 1k/day one week just to sell it all off just as fast the next week?

Fluctuations in buyback rates are a source of loss for Nu. This is something i feel no one really understands.


#545

The difference from one week to the next could only be a fraction of 1k if the supply changed by 1k, unless you apllied the higher rate to lower rate amounts, which would indeed be a terrible idea.

For example, with the rates from my previous post:

2,000,000 NBT circulating: target reserve = 2m x 0.45 = $900,000
2,001,000 NBT circulating: target reserve = (2m x 0.45) + (1000 x 0.35) = $900,350

Hope that clarifies what I’m proposing.


#546

Ah, i see, yes that works fine.


#547

Perhaps reserve ratio ‘bands’ would be better terminology due to ‘tiers’ already relating to various types of liquidity reserve that Nu holds.


#548

The current formula for calculating equilibrium reserve level is based on a linear scaling of the reserve from 50% at zero currency supply to 25% at 2 million USD and greater. I am responsible for the formula. I don’t pretend it is perfect. The 2 million mark as well as the 50% and 25% reserve levels were round numbers chosen without methodical analysis of data. Still, doing a good job of setting up these types of formulas requires complex and detailed knowledge of our market, how reserves interact with NSR sales, and many other factors. It isn’t something very many people are in a position to optimize.


#549

Were you planning for the numbers be reassessed as circulation approaches the 2m level, or would you prefer to adjust the method ahead of this to show what planned reserves would be in the event of high levels of growth?

I expect that giving clarity in the current and future planned reserve levels would be very important to anyone looking to buy large amounts of NBT.

Edit: on re-reading @Phoenix’s comment I see he stated 25% is for 2m and greater, so that clarifies the current thinking beyond 2m NBT.


#550

Supply 2017–07–15

US NuBits (US-NBT)

Blockheight: 1,489,048

Existing: 1,339,910.3937
Parked: 28,919.9098

Liquidity Operations*: 468,028.8312
Liquidity Operations**: 0.0000
Bittrex: 70,541.0120
Cryptopia: 69,887.7411
NuLagoon Tube: 27,421.8698
Nu-owned: 635,879.4541

Circulating: 675,111.0298

* B71AkDjzm4S24KoXGoq6W3hynexAyNb9FV
** BKjVpyCjFrSYwCMsYNtPMCH74aGyBB4NBf

Chinese NuBits (CN-NBT)

Existing: 2,000,000
Parked: 0

Liquidity Operations*: 2,000,000

Circulating: 0

* YhSEw9AGBJ3KtqLrxeQrcsTVk5u57pA88m

NuShares (NSR)

Blockheight: 1,489,067

Existing: 3,319,540,485

Liquidity Operations*: 180,231,802
FLOT 1**: 64,344,685
FLOT 2***: 5,940,000
Cryptopia: 11,949,828
Alcurex: 76,262,498
Nu-owned: 338,728,812

Circulating: 2,980,811,672

* SaaP8P3TH8HU27MBkhH6j8EhQ9AvAEY27J
** SvtGbNjWE49pTM2TiUZrYKSNkxTJx75mmC
*** Snvrc5q82wfe2NjEjaQAyStpPKseWrsNqn


#551

Reserves 2017–07–15

Dollar amounts represent BTC in USD.

BTC = 2,241.89 USD

Tier 1–2

Bittrex: $64,232.93
Cryptopia: $4,514.54
Cryptopia: $91,791.88
Alcurex: $1,773.00

Tier 3 (Not in effect)

Tier 4

Liquidity Operations*: $275,660.42

* 17owruzTRANDYwCq77bSABQLXBxx3QaCea

Tier 5

Refer to parked amounts for current utilisation.

Tier 6

Monthly liquidity of NuShares: $110,569

Total Tier 1–4

$437,972.77


#552

Equilibrium 2017–07–15

Circulating US-NBT: 675,111.0298
Reserve percentage: (50 - 675,111.0298 / (2,000,000 / 25)) / 100 = 0.4156
Equilibrium reserve: 0.4156 * 675,111.0298 = 280,576
Current tier 1–4 reserve: 437,973
Minimum tier 1–4 reserve: 0.20 * 280,576 = 56,115
Daily move to equilibrium: 0.01 * (280,576 - 437,973) = -1,574

  • Equilibrium is having $280,576 in tier 1–4 reserves.
  • Current tier 1–4 reserves are valued at $437,973.
  • Buybacks for the amount $1,574 per day will begin.

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


#553

Supply 2017–07–22

US NuBits (US-NBT)

Blockheight: 1,499,823

Existing: 1,339,933.4152
Parked: 30,698.9098

Liquidity Operations*: 517,947.0267
Bittrex: 77,983.8989
Cryptopia: 66,965.6810
NuLagoon Tube: 27,421.8698
Nu-owned: 690,318.4765

Circulating: 618,916.0289

* B71AkDjzm4S24KoXGoq6W3hynexAyNb9FV

Chinese NuBits (CN-NBT)

Existing: 2,000,000
Parked: 0

Liquidity Operations*: 2,000,000

Circulating: 0

* YhSEw9AGBJ3KtqLrxeQrcsTVk5u57pA88m

NuShares (NSR)

Blockheight: 1,499,836

Existing: 3,319,969,478

Liquidity Operations*: 185,230,202
FLOT 1**: 64,344,685
FLOT 2***: 5,940,000
Cryptopia: 16,394,339
Alcurex: 95,435,907
Nu-owned: 367,345,133

Circulating: 2,952,624,345

* SaaP8P3TH8HU27MBkhH6j8EhQ9AvAEY27J
** SvtGbNjWE49pTM2TiUZrYKSNkxTJx75mmC
*** Snvrc5q82wfe2NjEjaQAyStpPKseWrsNqn