It’s not might be , it’s super critical that we plan and let people know we are ready to buy back their bitcoins and maintain the peg as bitcoin price falls. The peg will be there in the south-bound half of regularly scheduled roller coaster show of bitcoin price.
As long as bitcoin keeps going up and down we will be in business, even if we could run out of buyside sometimes. The good part is that the buy side reserve is announced every week and auditable with the open source buyback calculator at any time, so customers should know how much buy side bitcoin Nu has in stock. As in any business, it’s first come first served, especially when bitcoin price is rising.
At the same time we should keep improving our service quality: liquidity (amount, balance, frictionless movement between tiers), spread (tight but as a function of volatility), reserve level (30% anyone? bolster NBT/USD pair as it is also fiat reserve), trading channels (more than just Polo and the Tube, enable nubit-fiat PEGs), infrastructure (no downed explorer at critical times, automation in most FLOT activity)
After Nu’s basic functions are validated in a few bitcoin price waves, we can consider expanding our services – more types and nubits, nicer looking Nushares unit…
Customers can expect continued service and shareholders can expect buybacks and/or dividends in cyclic modulation as long as Nubit-bitcoin trading dominates Nu’s business.
It’s good to find such a post, which deals with lessons that can be learned from what we experienced with this BTC price surge.
One obvious lesson (at least obvious to me) is that we need to increase the level of BTC reserves until the volume of USNBT in circulation has increased sharply.
You ask “30% anyone?”? Count me in! But I have an idea that might alter the flat percentage rate idea a bit.
All other tasks will be a bit harder than that, but just like increasing the buy side offset buys us time to get NSR sold, increasing the reserve buys us time to work on the other tasks.
Thinking about the introduction of additional pegged products, made me realize that there’s an alternative to keeping 30% in reserve to have an increased buffer.
I’d like to have us think about another parameter next to the ratio of the reserve in relation to the volume of units in circulation:
a floor level, that must always be maintained.
Something like $150,000 in BTC (just a suggestion, of course subject to discussion) that need to be held in reserve, before for all BTC above this are subject to the x% regulation, which doesn’t need to be 30% in this case. Maybe 15% still do?
As long as single actors might use Nu products to hedge tens of thousands of USD value, we need to be able to cope with that.
If my brain works better than when I couldn’t do simple multiplications, this should lead to more agile (=more often ocurring) NSR buybacks and NSR sales, tying the value of Nu’s products closer to the value of the shares.
I haven’t thought enough about attack vectors, but my first impression is, that this increases both the trade volume and the stability of the NSR rate, because buybacks and sales are not perceived as so extraordinary as they are now.
i would like to ask the math guys if NSR buybacks did any good in this specific case (BTC bull period).
Or it is was a risk that went south?
If we believe that BTC will continue to exist and prosper for a very long time
(due to hype, advertisement, increase use, for whatever reason, i don’t really care)
then we should keep a large amount of BTC as reserves and decrease the buyback to a minimum?
With more BTC reserves there comes an increased collateral risk.
This is the main reason to not just keep all BTC from sale proceeds.
We need to find a sweet spot between 0% and 100% BTC in reserve.
Plain 15% wasn’t sufficient as we learned a few days ago.
Agree with decreasing buybacks for a while
However we shouldn’t make the mistake again to bet on one horse. We should diversify our reserves. Bitcoin should probably be a large chunk (60%), but we should really think about reserves in Litecoin and Ethereum which are both highly liquid. This besides Peercoin we already have passed a motion for. Also NuSafe proved to be valuable.
I believed the reserves were really too low and have been advocating for increases since a while, but buybacks were more popular under more short-sighted shareholders keen to make a quick profit. It has now been proven that the NSR reserve is not that valuable any longer and appears to be a bad store of value during crises. We have bought back NSR for around 0.0028 and are now selling for almost half. Not a great deal. Any other reserve would have done significantly better. Something to think about going forward.
Price of all alt coins go down when btc price goes up. So reserves in altcoins add diversity but will lose value when needed. I think tether, bitusd, and btc options contract will be better. Btc options in principle could cover 100% reserve.
a) the zero reserve cannot give enough confidence to customers, if something bad happens, LPC may refuse to help. We all knowt that when you are rich banks are keen to lend you money but if you become poor, banks shut door to you.
Then use BKC/NBT pair because BKC is relative stable.
BTW, if LP use their own money and quantity is large, anonymity is meaningless. e.g. Governments know there are 500,000 persons real ID trading cryptos on exchanges around the world, so what?
BKC indeed might have some potential I only start to realize.
Anonymity is never meaningless, if you can protect yourself and the ones you love.
Ultimately it can be a matter of life and death, depending on where you live and who is after you.
People have been harassed and worse for less.
I hope it won’t get that dire, but I’m a great fan of trying to be prepared.
We are far, far away from hundreds of thousands of LPs and users.