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.
Wasn’t it higher before the NSR buybacks?
That’s true. But these are assets that are hard to liquidate.
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.
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?
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.
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.
I believe your explanation is very clear and makes sense and is realistic.
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.
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.
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?
With the benefit of hindsight perhaps a delay in launching would have been beneficial. Difficult to do though after press releases have gone out, there’s lots if eyes on the project and a damn great countdown timer on the front of the website that is screaming towards zero.
Given how exchanges were responding in those early days it’s possible we’d still be waiting for the USD pair now. Nu won’t have been the first organisation to launch before it perhaps should have done and it definitely won’t be the last.
I will agree with you that a focus on direct sales in USD should be a focus for Nu. I’d warn against seeing it a silver bullet cure though. I previously put huge amounts of effort into getting NBT listed on Bittylicious, a service that allowed direct sales. I sold a grand total of 10 NBT despite promoting it quite heavily over several months.
As I say, I do think that direct sales will play an important role in Nu’s future and have code that aims to interface with services like okpay to offer just that. I hope to get that finished and live, other higher priority tasks just keep cropping up along the way.
Exchanges became important, even though they make lots of off chain transactions, when it became very apparent that we needed to gain credibility in order to achieve the targets we needed, like USD pairs. The fastest way to do that was show the exchanges and traders that we had a product that could do what we said it could and stay stable. That did mean that NBT was/is used as a hedging tool, at cost to Nu, but it gave the product a good profile. Seeing the stable price and some huge volumes on CoinMarketCap day after day gave us the bargaining power to start the important conversations with the exchanges.
At each stage though we’ve hit catastrophes that have set us back and set us back.
I don’t think we’ve seen Nu in its final form. I think we’ve seen it hurt and limping but through that it’s still going. I agree that the current mechanism could do with some refining but if it works well enough to get us to the stage where we can do that then I’m happy to support it. If we can get Nu looking a bit more healthy, then we can concentrate on B&C and get the whole wider project back on track. The only way we can do that is by doing things to assist. I’m heartened to see that there are still people here helping to move Nu forwards.
Describe how such a calculation would be performed. I’m not familiar with it.
Why does that not suffice? The spread generates revenue even if the volatility of the value transfer asset affects its value, which is a separate factor. It’s impossible for us to lose money directly from the spread trading.
Return of investment for what?
We are aware that Nu is not sustained on transaction fees yet. Why do you keep mentioning this? The potential of Nu is at scale. Investors that make an effort to understand their investment will recognize that.
What’s your point? I’m not an oracle or genius enough to have everything figured out.
You never replied.
Yes, to take part of future proceeds from NuBit demand (and Nu revenue). The funds Nu receives from the customer for a NuBit is the proceeds. NuBit sales are not revenue but incentive to sustain the NuBit economy in times of declining demand. The shareholder-specified ratio of those proceeds gets stored in reserve assets as Tier 1–4. The other portion is transferred as Tier 6 via buybacks into the NuShare market cap or via dividends to shareholders.
Already invested shareholders are aware of this dynamic if they didn’t invest blindly in Nu.
Nu’s liquidity model relies on NuShare sales to access Tier 6 funds. Are we in agreement?
I might have my economic terms not entirely right. I’d be glad to have them corrected. Perhaps some mention of revenue should be income?
where are stored the assets bitcoins and nushares that belong to Nu?
at some exchanges or private client wallets that Nu controls?
All shareholder Bitcoins, NuBits, and NuShares are accounted for with addresses or location (exchange) in the most recent supply and reserve reports. I will post an updated report Friday night.
Exchange accounts are controlled by me or @woolly_sammoth. I control all off-exchange Bitcoins in a local wallet. I control US NuBits at B71AkDjzm4S24KoXGoq6W3hynexAyNb9FV and NuShares at SaaP8P3TH8HU27MBkhH6j8EhQ9AvAEY27J in local wallets.
Here’s how I’d do a calculation of the NAV of funds at exchange. If you want to know the NAV of funds at exchange, you calculate the value of the assets and subtract the liabilities. As the liabilities are negative amounts, you effecitvely add up the assets and the liabilities
For the sake of simplicity we ignore the spread.
NBT are valued in USD, so you calculate the USD value. Say you have m NBT at exchange.
When trading NBT/BTC with x BTC on exchange this means
x BTC * y USD/BTC = z USD
m NBT * 1 USD/NBT = m USD
NAV = z + mIf you start trading with 10,000 NBT in the NBT/BTC pair, you should soon have a NAV of over $10,000 if you really make money from the tiny spread.
BTC volatility and the trend of customers to sell NBT when BTC rises and buy NBT when BTC falls, leads me to the conclusion that the NAV declines.
You can only know for sure if you do calculations, but the failure of decentralized liquidity provision through pools in times of high BTC volatility speaks volumes. It was for economical reasons that the pooled liquidity providers pulled funds from liquidity provision. They could calculate.
Without a spread big enough to compensate the BTC volatility caused trading and the exchange default risk, Nu loses money at exchanges.
To remind people of the numbers. The potential may be at scale. The present is looking differently. Focussing only on the potential without looking at the presence is shady. My version would read like this
But I’d like to add a condition: only if Nu manages to get transactions on the blockchain or adjust the spread when trading at exchanges.
My point is that you talk about ventures like they were available on a road map. They aren’t. But they should be.
Sorry for having never replied. I thought it’d be obvious and you had it in mind as you were talking about ventures shareholders pursue. And I beg your fogiveness for not scanning once again through the forum for all the proposals that have been made.
Off the top of my head Nu should try to make money from pretty much any business traditional banks are involved in
In addition there have been proposals like my QGM-ETF.
Be aware that I’m no paid supporter and I don’t have any reason to contribute anything. Yet I do contribute for the minuscule hope that Nu could wake up and turn around.
I’m seriously not trying to bring Nu down.
If I wanted to, I’d not do it in the forum, but by exploiting its flaws.
Please keep that in mind if you find my comments harsh or nagging.
Blockheight: 1,377,254
Existing: 838,081.4141
Parked: 21,052.9257
Liquidity Operations*: 575,324.8412
Liquidity Operations**: 8,151.2400
Bittrex: 20,733.8912
Cryptopia: 5,045.1601
NuLagoon Tube: 27,421.8698
Nu-owned: 636,677.0023
Circulating: 180,351.4861
* BJLmVRdGFi4q7Zidwzr4CPPsLT6pozR31a
** B71AkDjzm4S24KoXGoq6W3hynexAyNb9FV
Existing: 2,000,000
Parked: 0
Liquidity Operations*: 2,000,000
Circulating: 0
* YhSEw9AGBJ3KtqLrxeQrcsTVk5u57pA88m
Blockheight: 1,377,254
Existing: 3,317,971,542
Liquidity Operations*: 399,999,940
Liquidity Operations**: 18,000,000
FLOT 1***: 64,344,685
FLOT 2****: 5,940,000
Cryptopia: 43,736,956
Poloniex: 14,903,437
Nu-owned: 546,925,018
Circulating: 2,771,046,524
* SiyWZ1WCedKRXLg7u8fmVkUtF3JRC9QATv
** SaaP8P3TH8HU27MBkhH6j8EhQ9AvAEY27J
*** SvtGbNjWE49pTM2TiUZrYKSNkxTJx75mmC
**** Snvrc5q82wfe2NjEjaQAyStpPKseWrsNqn
Dollar amounts represent BTC in USD.
BTC = 1,309.63 USD
Tier 1–2
Bittrex: $20,352.49
Cryptopia: $8,391.49
Tier 3 (Not in effect)
Tier 4
Liquidity Operations*: $32,517.61
* 17owruzTRANDYwCq77bSABQLXBxx3QaCea
Tier 5
Refer to parked amounts for current utilisation.
Tier 6
Monthly liquidity of NuShares: $3,043,360
Total Tier 1–4
$61,261.59
Circulating US-NBT: 180,351.4861
Reserve percentage: (50 - 180,351.4861 / (2,000,000 / 25)) / 100 = 0.4775
Equilibrium reserve: 0.4775 * 180,351.4861 = 86,118
Current Tier 1–4 reserve: 20,352.49 + 5,360.98 + 3,030.51 + 32,517.61 = 61,262
Minimum Tier 1–4 reserve: 0.20 * 86,118 = 17,224
Daily move to equilibrium: 0.01 * (86,118 - 61,262) = 249
Equilibrium is Nu having $86,118 in Tier 1–4 reserves. We have $61,262. When $24,856 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.
Just for the record. New investors should know who is in control of Nu. It is @jooize who said he has no clue how an NAV calculation should be performed.
And now he knows how it works just by asking. I don’t believe there are stupid questions, you don’t have any background in how education works apparently. No one came to this planet fully qualified. Those who asked and learned became qualified. It would have been really stupid if he had not asked as many other who do not know and would have acted if he knew. Any more concepts of use for Nu you want to have explained? I for one would like to learn a few 
