Not sure where you got the 7% from, fixed cost does not specify a rate but rather a cost ($/day, not %/day).
Edit:  this was disingenuous of me.  The 7% is correct, but only up to a specified limit at which competition drives down rates which makes the economics fundamentally different from saying a blanket 7%.  Fixed cost is the new model and will be adopted with the NuBot ALP upgrades.

We announce each week how many nbt are in circulation.  It's ~700k.  Coinmarketcap has a hard time accurately giving stats to Nu because we're doing things that haven't been done before.
https://discuss.nubits.com/t/passed-motion-to-begin-nsr-buyback-immediately/2654/120

You are entitled to your opinion.  A lot of people think USD is unsustainable, yet here we are talking about pegging to it as a standard.  All Nu is democratic contracts enforced by a decentralized central banking system.  I'm sorry the success of literally 4000 years of economics to develop the concept of a banking system offends you so.

"Isn't that how a "liquidity pool" works in Nushares... the people fronting the Nubits make interest on their deposits, right? I understand liquidity providers take a risk, but so is the person fronting the bitUSD..."

I'm not sure I fully understand the question here, so I'll go ahead and clarify by talking about Nubits only and leave bitusd out of it.

So there are two parties with nbt: the operator and the provider.  The operator is granted funds by shareholders, and so must be trusted and contracted properly to give out the funds fairly to providers.  The providers then put nbt (and btc) up as market orders on their own account.  They are always in control of these funds, but as long as they prove the market orders are theirs by providing API info, the operator credits the provider and gives out some of the nbt granted by shareholders.

The end result is that we can get large amounts of funds (thousands of $$) by only rewarding a small, continual payout (single digit $/day).  So the shareholders take the risk that the liquidity provision will make the network more valuable than the cost for liquidity while the providers take on all default and volatility risks and get rewarded for it.  Everybody's happy, we make a contract, and the whole system becomes reliable and dependable for customers.

I don't think shareholders want to store TUSD in T4 reserves because of the centralization.  A service like NuVault is much better than something like tether or tusd because when things do hit the fan and the centralized third party fails, at least with NuVault we have the BKS collateral to sell.
Without shareholder support, this is dead in the water.  It basically would devolve into privately funded liquidity operations, getting all the costs without any of the flair that Nu has.  The software is open source, anyone can write a wrapper and run it.  However, at that point using a US-NBT/TUSD market is unnecessary and you might as well just do TUSD/BTC and reinvent tusd as a centralized nbt knockoff.

@Randomaniac Thanks for that... it was a very informative post. I am starting to wrap my head around Nushares. This was also very helpful: https://docs.nubits.com/history/

Quote from: Nagalim on December 31, 2015, 01:37:52 pm

So I made this proposal the last time y'all started getting friendly and I was told you have no product to sell and I should come back after 2.0 comes out when you'll have a 'real product'.  So do you have a real product now?  Wanna hear the offer?

So we get an exchange to put up an nbt/bitUSD pair.  Then, bitAssets hands Nu bitUSD evaluated at $1 each.  Nu then puts up a fixed cost ALP operation on only the nbt buy side for that pair (we can pocket the costs for bot development).  Then, we share the fixed cost between the projects, such that bitAssets pays $0.5 bitUSD for every NBT that we hand out in that liquidity operation.

The real trick is finding the price feed.  It's probably going to be something like $1.1, which is still overpriced, but at least you'll start getting liquidity on the books.  As BitUSD becomes a more stable product, y'all will have a wonderful lesson in liquidity provision as you try to figure out what spread and price feed to use for real-time live-market tracking.

This isn't a proposal to add virtual liquidity, like all the market maker proposals going around in this community.  This will generate real liquidity on a real exchange for BitUSD sell side and NBT buy side, both will benefit.

I like this idea, but I see it as being a risky proposal for whoever fronts the bitUSD for the proposal. First of all, we would need to find someone willing to front a decent amount of bitUSD with no incentive. Technically, there is a little incentive in that if he also owned BTS tokens, then the bitUSD SmartCoin would be more liquid, and thus the BTS tokens more valuable. In this scenario all stakeholders profit off of the risk one person took. This doesn't really seem fair to the person(s) (ideally it would be more than one, but in the example I use one person) fronting the bitUSD.

I like where you're going, but unless I am missing something there is a benefit for Nushares/Nubits/BitUSD/BTS shareholders and all of the risk lies upon the shoulders of the person frontign the bitUSD. bitUSD need to be shorted into existence and bought on the market, so it's not like we can print them and "freeroll" the liquidity operation. How could we tweak your business proposition to make it worth the risk for someone to front the bitUSD (specifically a benefit to the person(s) that front the bitUSD. Raising the money would not be a problem- I see a UIA or a FBA doing that easily, but it seems risky for the party fronting the bitUSD with little incentive specifically for them.

I am still of the opinion it would be better for Bitshares to make its own version of Nubits/Nushares directly on the Bitshares chain. However, it seems your proposal would be much easier to implement and will bring benefits to all communities of shareholders (Nubits/Nushares/bitUSD/Bitshares) from their pegged assets being more liquid. That would at least be a good starting point until enough consensus can be reached (if that is indeed possible...) in the community to integrate these features on chain.

EDIT: One way to provide incentive to the person(s) fronting the bitUSD is to widen the peg, so instead of $1.10 the peg would be set at $1.13, and then instead of giving $0.50 bitUSD back to the person that fronted the bitUSD, you give back $0.53. What do you think about that? I think if there was a decent incentive the bitUSD could be raised easily.. and very quickly.

You say it's risky for the bts holders fronting the bitUSD and say nothing about the shareholders fronting nbt.  You need to understand that liquidity costs money.  You try to 'solve' the cost of liquidity by widening the peg and you end up right back where you started.  If your network can't put up a couple dollars a day for a working product, what good is you whatever a million marketcap?

Ya'll will learn sooner or later that liquidity provision is about opportunity cost and you need to reward liquidity providers with a portion of your marketcap if you want a tight peg.

So I made this proposal the last time y'all started getting friendly and I was told you have no product to sell and I should come back after 2.0 comes out when you'll have a 'real product'.  So do you have a real product now?  Wanna hear the offer?

So we get an exchange to put up an nbt/bitUSD pair.  Then, bitAssets hands Nu bitUSD evaluated at $1 each.  Nu then puts up a fixed cost ALP operation on only the nbt buy side for that pair (we can pocket the costs for bot development).  Then, we share the fixed cost between the projects, such that bitAssets pays $0.5 bitUSD for every NBT that we hand out in that liquidity operation.

The real trick is finding the price feed.  It's probably going to be something like $1.1, which is still overpriced, but at least you'll start getting liquidity on the books.  As BitUSD becomes a more stable product, y'all will have a wonderful lesson in liquidity provision as you try to figure out what spread and price feed to use for real-time live-market tracking.

This isn't a proposal to add virtual liquidity, like all the market maker proposals going around in this community.  This will generate real liquidity on a real exchange for BitUSD sell side and NBT buy side, both will benefit.

That's the reason you guys don't have liquidity or trade volume: you think liquidity is its own reward.  Why should I put my money up as a bitusd sell order and make pennies if I'm lucky when I could put my money up as nbt buy or sell (whatever currency there's a pool for) and make a fixed amount per day?

If you're happy with how liquid your markets are and your daily trade volume, this proposal is worthless.  If you kinda wish people could buy bitUSD easily for less than a 40% markup, maybe you should consider decentralized liquidity services like nupond.

If it's so profitable to provide liquidity for bitAssets why is none doing it?

I'm just barely starting to Google 'minebitshares' but I'm seeing numbers like $10/day for tech and $10/day for rewards.  Lol.  I'm asking like $2/day for liquidity ($4,000.  It would only be ~$0.5/day for a grand, but that's hardly worth the operator fee) and $2/day operator expense and y'all get weird.  I didn't even take the competition between our currencies into account.  Maybe I should ask for $10/day for operator expense just cause y'all are doing a good job of reminding me that we're supposed to be rivals.

Why not?  Because it will cost money.  No one seems to be asking how much and how I came to those numbers.  Those are the questions I would ask anyway.  If I gave you free liquidity y'all would be ecstatic.  If I asked for $1/year, you would still probably be comfortable with that.  If I asked for 100 grand each year, you would probably give me one of those wedgies and send me on my way.  So what is liquidity worth to you?  Start asking that question and you start thinking like Nu.