With the last crash, values of NuShares and NuBits got within only 2X of each other. That’s not healthy. Why are users holding on NuBits instead of NuShares? The whole point of this project is to split the supply and volume and have low supply / high volume of the coins, and high supply / low volume on the shares. The coins are inflationary so I was not expecting users to hold onto them. They should be used only for exchange, short-term hedging etc.
If this project is ever to recover and be successful, the coins supply should stay in the millions, with large volume and tx fee revenue, while the shares value can grow to much more, like some altcoins that are worth billions USD. The peg can only be strong and get stronger if the ratio between the two valuations increases as NU grows.
Can only speak for myself, the few NBT I have are parked for at least a couple of weeks. I doubt whether I would buy more NSR when they become available in the current market. I rather keep them as long as park rates are being provided. If the peg is lost the NSR will also be worthless, so no matter what.
Well that just confirms to me that parking is counterproductive. As a tool to maintain the peg, it can only delay buybacks, which at best might be useful to handle short spikes. But even there, doesn’t it take as long to vote emitting new shares than to increase park rates?
The only store of value are the shares, and the only mechanism that makes sense is emitting and burning them to regulate reserves. That works perfectly fine as long as the peg is maintained, and coin transactions get paid to shareholders. The value proposition of this project is very clear, and it’s still perfectly there.
To get things going, here is suggestion. Please let me know if it makes sense at all. I think we should burn all currently parked coins and replace them on the same addresses by an equivalent value of shares. That would reduce the requirement for reserves, allowing us to do a large share buyback and try to get the price going again. It’s a bit silly to see NU missing the current rally, while the only reason we maintain high reserves is because people are holding coins instead of shares. That’s not what this project is about!
I thought the project was about a stablecoin and when enough of them are sold there is potential that the shares rise. It is not the other way around. Your proposal may at best only work as a short term fix to increase the share price temporarily, but eventually you want to sell NBT again. Without sold NBT, basically no NSR value.
I do agree that there should be a frictionless NBT/NSR market/exchange though, many have already advocated for that without success.
When we sell a nubit, we make $1 but become liable for 1$, so if we are serious about the peg it should have no impact on the share value. It’s only valuable as far as this coin can now be exchanged by users inside NU instead of outside so we get the tx fees instead of some douche we don’t like. But incentivising users to hold coins that don’t move only forces us to maintain high reserves for no benefit. The cool thing is that the FED, BOC etc. will never allow coins to be profitable, so users should never have a reason to hold them. While transfers are definitely expensive using regular currencies, and that’s what we want to go after.
Coins are not or shouldn’t be profitable. The use of those coins should be, e.g. fees, loans etc. Crypto can transfer value cheaper than fiat, so I believe that is where the real value and promise is. Reducing friction and with that improving markets.
Parking temporarily protects the coin from large sell-offs when the NSR value is already depressed. It is a last resort to ease the pain, not taking away the problem, just spreading it out the cost in the hope that better times are ahead.
I agree that focus shouldn’t be on holding but on usage of the stable coin. Unfortunately hedging on exchanges being the main target is not the most profitable one. It is relatively simple to do but it comes with great risk, due to volatility. The only reason would be to maintain liquidity to maintain the peg.
Maintaining reserves is always required to some extent and is more a emotional than a rational issue. People want assurances that when they sell they get their money back. If everyone sells at the same time due to panic there won’t be enough to pay back.
I believe more thoughts need to go into modelling the reserves. Reserves are only expensive when not used, there is challenge to make them cheaper or even profitable. E.g. by short-term lending. We had all these discussions in this forum before, but it never happened for some reason. The volatility and the (regulatory) risks are apparently still too high to make this profitable for anyone.