Author Topic: NuBits backed by NuShares  (Read 4247 times)

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Offline Ander

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Ok.. lets get this cleared up...


If they default on Nubits then they declare bankruptcy and the game is over.

No, they create some NuShares and burn some Nubits, not all of them.  This allows the supply to contract so that it is no longer greater than demand, so that the price can stay at $1. 

It is similar to how the bitUSD supply can contract.   When a short covers and bitUSD ceases to exist, the game isnt "over".
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Offline bytemaster

Any possibility the money for sold NuBits are being used to drive NuShares price up ? Just wondering

It is possible, they only have 100K volume.
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Offline bytemaster

Ok.. lets get this cleared up...

NuShareholders must VOTE on whether or not to default on NuBits.... 

If they default on Nubits then they declare bankruptcy and the game is over.

NuShares have value because they are a license to PRINT Nubits and do what ever they want with the money.

Thus NuShares is essentially a company and Nubits are an uncollateralized corporate bond.   

*IF* NuShares can use the funds raised by its bond issuance to produce enough value to pay off the loan then it can continue. 

Got it.  Easy to explain in non-ponzi terms. 
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Offline vlight

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Any possibility the money for sold NuBits are being used to drive NuShares price up ? Just wondering

Offline Ander

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How it works is that they can burn NuBits by issuing new NuShares in their place.  Essentially, if it begins to fail, they can lose some of their equity instead of letting the thing completely collapse. 


In Bitshares terms, it is as if the 'cover bitUSD short' created BTS and gave it to the former bitUSD owner.  (Instead of unlocking BTS that was tied up in collateral and giving it to the former bitUSD owner). 

This action would have to be voted on by NuShares holders.


The way that NuShares gets value is because they get dividends in Peercoins, but I'm not certain how this works exactly.
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Offline davidpbrown

I took a quick look and really can't make much sense of it. Not liking their forum design either.

It seems that NuShares holders get the benefit of the price trying to rise above $1. They provide guarantee of liquidity on the sell side and the buy side is guaranteed by shareholders signalling to raise interest rates.

https://nubits.com/sites/default/files/assets/nu-whitepaper-23_sept_2014-en.pdf page 9 Buy Side Liquidity and Liquidity Pool Tracking.

Looks like a big money trap that would work for a while only because everyone is stuck in it. :-\
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Offline Chronos

Point (1) is an ongoing discussion in the NuBits forums. The "NBT burn" feature is in the proposal stage. See https://discuss.nubits.com/t/burning-a-specific-amount-of-currency/1049

On point (2), at a high level, value exists when there is a willing buyer.

Offline bytemaster

I have seen a proposal for NuBits to be backed by NuShareholders but would like to delegate some research on the topic:

1) I believe NuShareholders can vote to issue new NuShares to buy NuBits and burn them.
2) How does value accrue to NuShares?   


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Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.