[Withdrawn] Make Firing and Replacing Incompetent Liquidity Providers Our Top Priority

[henry]

Yes. We can temporarily set the offset to ±0.5%, as long as Poloniex is greater than that. Because we promise to provide best spread, so it has to be less than other exchange’s. Will set so in next 6 hours.

[teek]

They are all those things.

In times when the network does well, shareholders benefit, in times when the network suffers the shareholders suffer as well. The shareholders are the network. If some shareholders don’t understand this, they don’t understand what they bought.

This also brings opportunity, if people believe the network will recover then supporting it in dire times IS the investment tool. This is also why the peg is so important though… It’s the only product that keeps the engine running, without it all momentum is lost. Without the peg, there is nothing for people to invest in.

[Confucius]

Perhaps nushares arent an investment tool, but a voting and peg defending tool.

That seems to be the case. So why should anyone buy them? I’m not going to donate anymore money to maintain a peg that gets exploited over and over again by traders. I’m not going to buy anymore NuBits or Nushares. If the network had any sort of profitability, or even if people running it seemed to have consideration to those who bought their product, I might consider it. But not now.

[jooize]

So when T4 runs dry supporting a tight peg in a BTC bull run, T5 and T6 are in your opinion enough to support the peg from failing?Do you think we would be in a better position having no BTC left for many days now?Do you think $0.95 still being kept after 10 days or more (sometimes even better than $0.95) is worse than no support for days?

Using Tier 4 for a wall at $0.95 is just marketing image protection. It doesn’t actually serve our customers, so I think that may be worse. I haven’t been fully convinced there isn’t any value in having some funds up on walls for this. Arguably, it could serve those willing to trade out of NuBits at a loss, giving us extra funds for liquidity.

For Tier 5 to function (customers believing we’ll give them their money), we need to use Tier 6 for refilling Tier 4 and put at a tight spread (otherwise their profits are eaten).

Tier 6 has to be sufficient, unless you can find another way to gain customers.

Am I missing something?

[CommunityObserver]

@JordanLee
The price of nushares is currently at 200 satoshis.
If the price of shares decreases to 100 satoshis, it will take 1 million shares sold to get one BTC.
At 10 satoshis it will take 10 million shares sold to equal one BTC.
At 1 satoshis it will take 100 million shares sold to equal one BTC.

Math:
0.00000100 * 1,000,000 shares = 1 BTC
0.00000010 * 10,000,000 shares = 1 BTC
0.00000001 * 100,000,000 shares = 1 BTC

It could be said that 1 satoshi is the floor, if the market is buying.
Given a price of 1 satoshi (if shares prices degraded):
It would take 100 billion to amass 1,000 BTC (for perspective).
It would take 1 billion shares to amass 10 BTC.

Jordan you have said that dilution of shares doesnt matter if the peg isnt maintained (if I remember this correctly).
Is dilution of shares at a low price a good thing in terms of obtaining BTC (because the share price is so low and that it would require quite a few shares to buy btc)?
Would this low price allow for more investors and voters or fewer? Will this question have pure speculative answer?
In the future (if nushares have a very low price and high coin supply, then price rises), will nushares be bought back and burned to an unspendable address, or kept in reserves? (Will this decision be the result of a motion?)

[nmei]

I agree 5% is just image - it does nothing for the network or the people buying to park.
I’d rather advertise that our central funds ran out due to a run on the market. And promise that when the market swings the other way we will continue to hold the peg.
OR advertise high Park Rates in order to attract BTC even during the swing.

[masterOfDisaster]

Am I missing something?

Liabilities:

Supply, Reserves, and Equilibrium

Total NBT in circulation is 710197.995900 NBT

Assets (BTC)

Get NuBits' liquidity flowing

buy side funds (currently 39.74 BTC)

valued at $575 approximately $23,000

Liablilities to assets ratio: 30:1

The peg couldn’t have been kept at 95%, if people had continued to sell NBT. It would have been necessary to increase it. Market awareness is the key word.
NBT parking wasn’t attractive, because Nu’s books looked bad even before the BTC bull run was at full speed.
NSR sale isn’t attractive for investors as well. They want to wait, knowing they can buy them cheap later - unless BTC makes a big nosedive and NBT users still have confidence left.
Would they have more or less confidence left, if the buy side would be at $0.50 meanwhile?

We are already in the end game. This was no marketing image protection, it was the attempt to buy as much NBT as possible with as little BTC as possible while staying as close as possible to the peg. This would have made it easier for Nu to recover, sell less NSR.

This pretty much sums it up:

Current Liquidity

Creating market awareness is important to allow economic operation of liquidity provision. It's good to start working on a mathematical model. I know already that market awareness will provoke opposition, but I'm damn sure that liquidity provision doesn't work reliably without it (we see it at the moment): you either run out of funds trying to support liquidity provision with high volume at a tight spread not caring about environmental parameters or you run out of liquidity provision at all …

Wanna throw 10, 20, 40 BTC into NuLagoon? Craft a tx and sign it. I’ll sign it, too. I believe it’s wrong and won’t start this myself, but my voice is inconvenient and I have little to lose. I’ll follow you, if you say we take this road.

[nmei]

I agree - we’re in a bad place because of NSR buybacks.
We don’t have much BTC left to offer as liquidity - when and how to apply it is very contentious.
If and when we dilute NSR we say goodbye to more people.
The only thing we seem to have is park rates.

So instead of this thread and closing doors - how about raising park rates and making them known…

[Dhume]

I’m not convinced that putting up the last of our BTC at a 1% spread would have resulted in more parking and more NSR sales.

NSR hasn’t seen proper buy side support for as long as I can remember and parking rates were already offered before we got into trouble and yet very few takers. Clearly T5 and T6 are nice in theory but don’t work in the current climate of a BTC rush.

I don’t believe a 0.95 peg is not useful, in my opinion it most definitely is we give the persons who need to cash out their Nubits a chance to do so at a 5% premium, not ideal but not bad either. Providing a peg on a pair like BTC/NBT is already a premium service we’ve been offering far to long for free. Heavy NSR dilution to grab a few BTC to throw away at an impossible to keep peg is just wealth destruction in my eyes. Selling large quantities of NSR at the current low prices is insane, who’d ever buy NSR again if we would sell them this cheap in bulk.

Shareholder need to think very carefully what they vote for, be conservative with our funds and maintain a weakened peg or throw it all out on the table and hope what Jordan proposes is going to work (which clearly hasn’t so far) and we don’t lose any value we have left in the network.

I’m convinced we can winter the storm of this BTC run with a 0.95 peg until after the halving when hopefully the tide turns. I believe (and I hope I’m wrong) if we take Jordan’s steps we’ll be out of T4 within a week, lose our peg completely and dilute our shares until they’re actually worth 0. I don’t think the network will survive such a hit.

[MaVo]

One thing is for sure: any NSR holder now will be forced to put money into the upcoming NSR sale in order to have a decent chance to benefit from a slight recovery. If 100 mio NSR enter the market at around 100 satoshi, we will definitely have some kind of cap for quite a long time as the incentive to dump at prices that are even far below those that anyone here bought NSR for is quite big.

[JordanLee]

Blaming a drop of buyside to $0.95 for being the reason of parking not being successful is almost ridiculous.

The causal link between abandoning the peg (i.e.- offering to buy NBT for 0.95) and park rates not being attractive is very strong. Think it through. Let’s say I am considering parking for 45 days. The annual rate right now is 25% for 45 days. The actual interest yield is 3.08% for 45 days. So, if I buy NuBits for 100.5, receive 3.08 cents, and then sell for 0.95, that is a loss of 2.4%. No one is going to do that. You would need to raise rates up to 45% just to break even. But you would only break even if the NuBits can be sold for 0.95. What if you could only get 0.90 after 45 days? Or 0.50? Abandoning the peg makes parking a probable loss. And it might be a very big loss.

This is why I am very confident when I say that our incompetent liquidity providers have nearly completely destroyed tier 5 liquidity, or park rates by abandoning the peg.

This is really important to understand, and @masterOfDisaster doesn’t seem to understand. Therefore, on this issue alone, he should be considered incompetent to provide liquidity.

[jooize]

We also have ~8 BTC on @zoro’s gateway and ~18 BTC on yours.

39.74 + 8 + 18 = 65.74
65 BTC ≈ 37000 USD

A lack of tight spread liquidity is incompatible with Park Rates (Tier 5) desirability.

NSR sale isn’t attractive for investors as well. They want to wait, knowing they can buy them cheap later - unless BTC makes a big nosedive and NBT users still have confidence left.Would they have more or less confidence left, if the buy side would be at $0.50 meanwhile?

We are already in the end game. This was no marketing image protection, it was the attempt to buy as much NBT as possible with as little BTC as possible while staying as close as possible to the peg. This would have made it easier for Nu to recover, sell less NSR.

True, but they also better invest early enough to turn Nu around while sufficient confidence remains.

The buy side would be at $0 or the price at which other traders would buy NuBits for without our degraded wall.

If Bitcoin doesn’t fall, then what?

Please convince me I’m wrong, because I will act in the way I believe most in.

[Sentinelrv]

About tier 5, all I can say is what I’ve said before, that I was recently planning on parking NuBits, but decided against it because I’d most likely lose money trying to cash back out at $0.95 cents. I’m sure there are others like me. @Dhume thinks that tier 5 may just not be attractive in a BTC bull run. I personally would have rather parked than put my money in Bitcoin. I have no idea when the bull run will end and could end up losing money because of not timing it right. With parking, at least I know I’m going to get a specific amount of NuBits back as long as the peg is being tightly held.

Perhaps more people were not parking when we did have a tight spread because:

1. We didn’t advertise the right numbers. (Park periods vs APR)
2. We didn’t raise rates high enough to be attractive.
3. We didn’t market the rates to a large enough number of people who might have been interested.

If we go the tight peg and NuShare sale route, we’ll have to do all 3 to get people to park, maybe even advertise rates on a Coinmarketcap ad somehow.

[masterOfDisaster]

The causal link between abandoning the peg and offering 0.95 and park rates not being attractive is very strong.

You miss the point. Park rates didn’t work when the peg was perfectly fine.
Once again you try to inverse cause and effect.

Read it again: the buyside offset were increased, because park rates didn’t work, the NBT demand stayed low and the reserve ran dry.
Remind me: how many NBT were parked, that belong to BCE development funds? Subtract them from the parked total.

This is why I am very confident when I say that our incompetent liquidity providers have nearly completely destroyed tier 5 liquidity, or park rates by abandoning the peg.

I’m confident that you make a witch hunt, because people like me stepped in your way (e.g. when I reduced support for your 1% spread motion), when you wanted to continue just as you please.
Your lack of economical understanding, why the offset of a synthetic peg can and should be variable and follow the rules of supply and demand to some degree speaks volumes.

This is really important to understand, and @masterOfDisaster doesn’t seem to understand. Therefore, on this issue alone, he should be considered incompetent to provide liquidity.

Infalliable Jordan has spoken, follow his lead, just like with the buybacks. @JordanLee, how many NSR did you cash out during the buybacks? Enough to buy NBT to crash the buyside and still buy cheap NSR afterwards?
Would that give you the power back that decentralized bodies like FLOT took from you?
Oh, I know, it was your idea to form FLOT. You only have teh best in your mind for Nu.
The only reason there’s no bank run, which I can think of, is that this all was planned with precision.

As I couldn’t rely on traders not to break the peg in absence of orders from Nu, I put it on my shoulders to improve the configuration of the NuBots, adjust them to the market as good as I could to find a balance between a sufficient peg support and having the funds at the exchange not running out too fast. We just had nothing better.I

Why didn’t you tell me that this is oh so bad when I wrote you that in January?
You didn’t read it I suppose.
You didn’t follow the discussion in the forum regarding offset.
Or maybe you did and only waited until you could put the blame on me?

Yah, burn me alive.
Let Jordan rule. He knows all and all of it better.
@Jordan, it would be nice, if you made some research, before you approach me next time via PM regarding NuSafe, asking silly things, not knowing anything about how it works.
I’m so glad that you are the one who saves liqudity provision from incompetent providers like me.

[masterOfDisaster]

I’d most likely lose money trying to cash back out at $0.95 cents

You lose money cashing out NBT at $0.95 now as well. With parking you make interest and the peg might be more tight, when the NBT unpark.
But maybe Nu is bankrupt when your NBT unpark - who knows?
The $0.95 is an emergency solution. It’s not the permanent level - if Nu can sustain a better peg, it will be above $0.95.

[nmei]

So - in the mean time.
Lets raise rates. Let bitcointalk know. Etc.
But am I supposed to go to BCT with ~25%?

[JordanLee]

This is no time to invent new models. We have carefully crafted a model over two and half years. Adjustments can make sense, like deciding to increase the reserve (this doesn’t change the model), but this is a time to stick to the plan. We need our model the most when we are in trouble. @masterOfDisaster and other have attempted to employ a poorly articulated and poorly thought out model. It won’t work, can’t work and hasn’t worked. Their straying from the model has really hurt us badly. I am being very active because it has become obvious there is not that much understanding of the model I invented, even among liquidity providers.

So I am speaking about that model now to excess. Because it must be understood. Some people are acting like I am saying new things or that I didn’t speak up earlier. Neither of these claims are true in the least. You might say I was more polite a week ago (and now I am receiving a lot criticism for not being polite), but my message has been the same. When liquidity providers lowered their buy price I had a new and active motion to mandate spreads at a maximum of 1%. Does this not clearly indicate I oppose the action of voluntarily dropping the price to 0.95? That action would be prohibited if my motion passed, and for good reason. By the way, I haven’t given up on that motion passing and I still endorse the motion mandating a maximum 1% spread. I started an entire thread earlier that admonished shareholders to make better use of tier 5 and 6, showing that they were being under-utilised. Of course, I have argued that tier 4 is being under-utlised as well. We need to repair the damage done to our liquidity engine and rev it up full throttle.

Once again, I will remind everyone that the system I have designed is intended to reward shareholders for providing excellent liquidity and punish them when liquidity is reduced. The empirical evidence is now very clear that this works as designed. Three times shareholders have dropped liquidity (twice when they very much had other options) and each time shareholders have been sorely punished. Sometimes I think shareholders are like a stubborn 2 year that refuses to learn to not touch the oven after repeated burnings. Have shareholders had enough of getting burned? Have you learned yet that there is a strong causal relationship between liquidity quality and NuShare price. Stop touching the oven!

What we have in our network is a liquidity engine. Ours is not a reserve model. Reserves are there just while the system is immature. I have never heard of anything like a liquidity engine before. It is a novel design made possible by crypto. What I keep telling people here is that it must be used. If you leave it off, it doesn’t work. Liquidity providers, above all, must understand the architecture of our liquidity engine in order to function properly in that role. If they don’t understand it, they shouldn’t be liquidity providers.

[masterOfDisaster]

But am I supposed to go to BCT with ~25%?

Double or triple the APR for up to 3 months, if you want to have a slight chance to get demand for NBT increased.
It would be good to make sure, that BCE development funds aren’t allowed for parking; they are effectively not in circulation.
But how to do that?
Via BCE motion?
Even if all BCE funds get parked - it will be cheaper, if that helps than trying to sell an equivalent USD value of NSR in this illiquid market.

I’ve made up the 50% to 75% APR based on my gut feeling; maybe that’s still to low.
With park rates I really have no experience and I admit it - opposed to liquidity provision on T1-T4

[jooize]

Plan

• Figure out appropriate Park Rates and vote for them. Very important! We need them to function. Discuss!
• Create and publish unified attractive advertisement of Park Rates. If required, pass a motion making FLOT pay for the work with remaining Bitcoin funds assuming they haven’t been spent, or pass a grant if sufficient. It may not need to be that fancy, but I’d rather it be worked on by everyone before publishing.
• Set <=1% spread because Park Rates won’t make sense for customers to utilise otherwise.
• Sell NuShares via auction and on exchange. @FLOTNSR
• Push liquidity to NuLagoon Tube.
• Dilute NuShares and sell more.

We have to show that Nu means business.

[masterOfDisaster]

and other have attempted to employ a poorly articulated and poorly thought out model. It won’t work, can’t work and hasn’t worked.

I don’t comment other than: may the liquidity be with you!
…you incompetent piece of an architect.
You once were different. Once I thought I could believe in you.

Speak out as many models as you wish and implement them youself!