Warning: Liquidity engine-sell low buy high


#1

Due to liquidity imbalance between NBT and NSR, we sell NSR at one quarter of buying price 1 month ago, this is the weakness of liquidity engine.


#2

Did you not foresee this scenario absent of meaningful liquidity on the buy side of NSR and a decrease in the crypto-asset reserves? I think this is the risk we take in choosing buybacks over dividends. NSR would be less volatile if Nu chose the latter, in my opinion. Ultra-volatile is appealing to some though, I suppose.

Last time this happened, Nu stopped selling NSR and left NBT customers high and dry. To truly test the liquidity engine’s merits, we must follow the liquidity model. Share value aside, I think this is an interesting time to watch the Liquidity Engine finally prove itself in a downward cycle.


#3

The liquidity engine doesn’t need the NuShare price stable, it needs buyers and sellers. As long as investors believe NuBits will be more successful, the rational decision is to buy NSR in opportunities like now and sell when the Asset Reserve grows more valuable than the Equilibrium Reserve figure, likely from sold NuBits, capital appreciation, or spread trading. Shareholders can only adjust to the facts of the economic model and current conditions by acting differently with their shares.

While the model works in an NuShare market with little depth, long term we want to reduce the Asset Reserve which may only be possible with a deep NuShare market.

Naïve speculators of NuShares likely participate as part of liquidity and will find us with more exchange listings, but they’re not as reliable for backing as the fundamental believers who will seek us out to acquire NuShares for profit when buybacks resume.