Why NuBits peg dropped and how it got fixed

1) What happened in May and June:

Just after the large NuBit sale by a single holder on May 27th, the peg was immediately lowered to 0.95. That is the cause of the failure of the liquidity engine. Period.

Then NuShareholders and the Liquidity team focused on:

- Focus on nsr buy back which lead to fund depletion  and complete halt of funds in tier 4, 5 and 6.
The result was: US-NBT went straight from $1.00 to under $0.20 while NSR went from 500 satoshis to 70 satoshis. 

Between June 2016 and September 2016, about 700 million NSR were spent repairing the damage from the reckless and unauthorized "experiment" 


We dont know where the attack came from --
It could have come from a nushareholder


2) What we have learned:

Directing liquidity operations effectively and efficiently requires expertise very few have. 
Liquidity operation needs to be centralized for now and decentralizing liquidity operations again is a long way down the priority list.
BUT the decentralized nature of the NuBits network remains unchanged. None of the changes NuShareholders have instituted in liquidity operations requires a protocol change. The basic deal and mode of the network remains unchanged. Transaction processing, voting of all kinds and most importantly, the allocation of custodial grants remains completely decentralized and unchanged from how it worked in 2015.

We have a chief liquidity officer: Phonenix (probably the second name of Jordan Lee, the founder of NuBits) -- He raised $300,000 in the two and a half months he has been CLO

NuShareholder must prevent a loss of peg on nubits, because it will be reflected back immediately on nushare

To sum up, NuShareholders would like decentralized liquidity. However, reliable and cost effective liquidity is a much, much higher priority.

3) A lot of debate is going on about:
- whether we should have a business model
- to which extent we should back up US-NBT in reserve.

However Phonenix (not supporting any business model and any model) has earned the consensus by voting (64% of support)
His popularity is growing
Minting is picking up
He is getting paid for his role.

4) Asset price:

We have boosted the asset price without parking, without reserve
400% in 70 days

5) What we are doing now:

We have resumed the selling of US-NBT since the peg was abandoned in late May. When we sell US-NBT from liquidity operations, the funds become part of our reserve and are used to place US-NBT buy orders at $0.995. 

The US-NBT price on Poloniex has stayed within the $0.995 to $1.005 range for all of the last 24 hours. There are $5600 in buy orders at or above $0.995 and an impressive $39,000 in buy orders above $0.975. That is probably more than 13% of all the US-NBT in circulation.

6) The future:

Launching CN-NBT and EU-NBT 

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blog   2016/10/07   gbboy