Updates

peg

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

NuBits: achievements after 15 months of operation [part-2]

"- A healthy core mechanism that has been established

NuBits is NOT backed by fiat reserves but by the value of the issuing "bank" like corporation Nu.

NuBits (NBT) get sold by Nu for BTC and the BTC get invested in development (increasing the value of Nu), share (NuShares; NSR) buybacks and very little in marketing and other activities.

While sold NBT are only temporary revenue (the NBT in circulation are a liability for Nu), NBT get destroyed with transaction fees.
Destroyed NBT are final revenue for Nu.
Nu is still young and evolving, but the peg has been kept at exactly 1 USD.

The close peg is a direct result from the compensation that is paid to liquidity providers to put orders with a close spread on order books;

 

- NBT have all attributes good crypto currencies have:

* the blockchain is being run in a decentralized manner.
* NBT owners can have total control over their NBT by sending them to an address for which only they have the private key (an experimental web wallet is available, though).
* multi signature transactions are available to increase security and allow escrowed transactions.
* the source code is open, but compiled wallets for Windows, MacOS and Linux are available (as well as at least 2 apps for Android: Coinomi (btw. the Coinomi developer is one of Nu's core developers) and NuDroid).

 

- If there's need to adjust Nu, there's the incredibly powerful "motion" feature. 
This has been used for a lot of strategic decisions and can be used for anything that requires a consensus of those who have a stake in Nu. NSR holders (the owners of Nu) can decide what to do.
Nu is a corporation with business process on a blockchain - the same blockchain that processes NBT transactions.

 

- Meanwhile you can use NuBits for hedging crypto currency volatility.

 

- NuBits is in a unique position if the following attributes are important: 

* open source
* decentralized
* being pegged to fiat, but not depending on fiat (not holding fiat as collateral)
* stable!
 

- NuBits has successfully proven that it is possible to create a stable crypto-currency. Imagine that the design of Ethereum had been based on a stable coin (tracking say the dollar / euro) which would be used to pay for transactions and a separate share token that is used to stake out consensus.

 

- NuBits is secure:

* Nu is check-point free for over a year with no problem. 

* Relies on Peercoin Proof of Stake, to which the objections  are purely theoretical and bad theory at that. The only real argument against PoS comes down to whether you can trust humans to come to consensus about something over the long term (weak subjectivity). The fact that some governments (a long-term human consensus process) have existed for hundreds of years kinda flies in the face of the 8 years btc has existed for. Note that weak subjectivity is also used in bitcoin (btc core) and is revealing a lot of politics on the long term scale. Basically, the only flaws Peercoin or Nu have are the same flaws that bitcoin and in fact all governments and human consensus processes face."

 

 

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release   2015/12/11   gbboy

NuBits and the decentralization of finance

Nu is welcoming anybody that wants to contribute to the decentralization of finance.

Nu is welcoming anybody that wants to become a shareholder of Nu, the first decentralized central bank in the world.

If you would like to become a shareholder of Nu, you will need to acquire NuShares, the assets that back the peg of NuBits to one dollar.

NuBits is free of any counterparty-risk. It is not reserve-backed.

The peg is kept solely by buy/sell side liquidity walls around 1NBT = 1USD across several exchanges.

The liquidity is provided by liquidity providers that can contribute in stand-alone mode or via decentralized liquidity pools.

Right now, there are roughly 500k NBT in existence, the buy side liquidity is around 90k NBT and the sell side liquidity around 110k NBT.

The peg has been kept perfectly since NuBits' inception in Sep 2014. Nu has more and more liquidity, with more and more exchanges trading NuBits.

 

But perhaps the biggest thing on the horizon is a totally decentralized exchange called B&C Exchange which would guarantee a very secure and cheap NuBits liquidity for Nu Shareholders.

That exchange which will be released in a few months will be using NuBits as a synthetic dollar to get in and out of the exchange.

In that sense, NuBits is a crypto-FIAT (crypto-dollar), or a crypto-currency pegged to FIAT money (dollar).

 

You have the following links at your disposal, if you would like to get more information.

- www.nubits.com: official web site

- www.discuss.nubits.com: official forum

- https://docs.nubits.com/history : the origin and the beginnings of NuBits.

 

NuBits combines the best of both worlds:

- the convenience and stability of FIAT currencies

- the decentralization of Bitcoin

 

Nu is welcoming anybody that wants to contribute to the decentralization of finance!

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blog   2015/10/12   uploada

Nu is a Decentralized Reserve Bank backing up the value of its Currency in a Decentralized and Distributed Way.

Nu has taken the model of a corp. or org. financed by shareholders , producing a service, that service being ensuring a peg for its token 1NBT = 1USD by providing buy and sell liquidity on NBT/USD/crypto markets.

When demand is decreasing, shareholders decide to invest more money (diluting their share) in their venture to burn NBT.
When demand is increasing, shareholders vote for more NBT issuing and receive dividends (direct = dividend from LPC activity or indirect = share buy back)

But NBT value needs to be backed, constantly and here at Nu, it is backed by a collateral, but not externally, internally, by Nushares value.

"In the beginning Nu's capabilities have been somewhat limited, but the NSR developers, holders and the Nu community evolved the Nu network formidably.
With 2.0 and NSR grants one can truly say that the NBT value is effectively backed by the value of NSR.

If NBT get sold from the Nu network to the market, share buy backs or dividends incorporate or distribute, respectively, the value of the sold NBT to those with a financial stake in the Nu network: the NSR holders.

A share buy back is expected to increase the price per share leading to a higher market value. The difference between the increased market value and the market value before should ideally be close to the value of the NBT that was meant to be incorporated into Nu.

With distributing dividends the value is leaving the Nu network if you look at it on a blockchain level, but economically it's still in the Nu network: in the pockets of NSR holders.

Share buy backs intend to increase the value of NSR, distributing dividends might increase the value pf NSR as well, but in the first place aim to distribute the value equivalent of the sold NBT to NSR holders.

If NBT need to be bought back by Nu, because NBT demand on the market is very low, NSR will be issued and sold.
This will have an effect on the NSR price, it will be pushed down.
But NSR holders have been rewarded for that way earlier with share buy backs or with dividends.
They are incentivized to agree with issuing NSR and selling them, because if they don't, they risk the peg and endanger all their stake in the Nu network."

"The peg is guaranteed by the Nu network. As long as the market value of the Nu network is sufficient, the peg is safe.
There's a layered liquidity model and one layer deals with selling NSR (NuShares, the shares of the "Nu network" corporation) to buy back NBT and burn them. Payouts from liquidity pools are just one of the expenses of Nu. "

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blog   2015/09/26   gbboy

Inflation adjusted NuBits

Just pegging NBT to the USD is not good enough for people who are worried about the Dollar inflation.
The good news is that Nubits can be more stable than USD, by adjusting its value in real time vs inflation.

But this is not a priority right now and will be implemented in second step.

This is how we would implement an inflation adjusted currency:

"Someone would advance a motion proposing the character and code we will use to define the currency, as well as its marketing name. They will also propose the use of a particular source and methodology for measuring inflation/deflation.
If passed, the dev team would need to make some minor changes to the code to include the currency.
Supply would be introduced the same way as NuBits, and on a monthly basis custodians would adjust the peg by configuring NuBot with the adjustment indicated by the economic data source chosen by shareholders in the original motion. This could be a downward adjustment in the unusual case of deflation."

"We anticipate that shareholders will begin using a data feed of their choice to configure their vote rather than manually configuring it as they do today. This will be particularly important with multiple currencies because each currency will require a different management of currency supply to match the demand of the currency in question. Because the management of multiple currencies through manual shareholder configuration of voting is impractical, I strongly support waiting to create additional currencies until there is a diversity of stable data feeds offering voting guidance to shareholders."

Reminder:

"NuBits is intended to the the first implementation of a currency deployed on the Nu block chain. The white paper discusses the idea of an inflation adaptive currency that could also be developed. There's a discussion that has been going on over at the Nu forums that starts to dig into what it could mean and the economic theories that support its creation:"

http://discuss.nubits.com/t/pegging-the-buying-power-of-1-2014-not-1-itself/148

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blog   2015/09/02   gbboy