Author Topic: NuBits  (Read 80065 times)

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Offline Shentist

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on BTER you see only tradingspikes a couple of days. if it would be true, that someone is buying (without the bots) the pattern would be a totally different. I stick with bitUSD.

Offline Chronos

The custodian(s) that operate the bots periodically put out reports on their holdings.

The good news: it's not necessarily opaque.
The bad news: from what I can tell, that $140000 is pretty much the entire buy-side fund, give or take a little. What kind of buy support does BitUSD have?
« Last Edit: October 14, 2014, 08:44:12 pm by Chronos »

Offline biophil

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Rates will have to rise way more than 0.002% before they'd be any indicator of the health of the peg. A better metric would be the amount of buy offers for NuBits at the pegged $1 price. Right now, according to the client (which reports via RPC), it's at about USD $140000, spread across a couple different exchanges. This means that, if $140000 of NuBits were suddenly sold, the peg would be in trouble.

If that number goes down, that's bad for the network, but if it goes up, it's a sign of growing demand.

He's saying that changes in the interest rate will be an indicator. The interest rate just increased from 0% to 0.002%; that means maybe the NuShareholders are trying to get people to park, because demand for NuBits is decreasing. Maybe.

The number of buy orders essentially tells you nothing, since we have no idea how much the trading bots have on reserve that they haven't entered as orders. If we could actually see the bots' reserves, we could use that to measure NuBits' health. Right now if $140,000 NuBits were sold, my guess is the bots would immediately throw up another $140,000 of buy orders at the peg.

Trading bots with "secret" reserves... sounds like a very opaque system.

Yeah, I need to look into that... I remember reading somewhere that supposedly NuShareholders are supposed to be able to monitor these reserves. If they can, it seems like it would be difficult to keep it secret for long. Maybe it's actually more public than it seems.

Not that I'm defending NuBits, no sir.
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Offline bytemaster

Rates will have to rise way more than 0.002% before they'd be any indicator of the health of the peg. A better metric would be the amount of buy offers for NuBits at the pegged $1 price. Right now, according to the client (which reports via RPC), it's at about USD $140000, spread across a couple different exchanges. This means that, if $140000 of NuBits were suddenly sold, the peg would be in trouble.

If that number goes down, that's bad for the network, but if it goes up, it's a sign of growing demand.

He's saying that changes in the interest rate will be an indicator. The interest rate just increased from 0% to 0.002%; that means maybe the NuShareholders are trying to get people to park, because demand for NuBits is decreasing. Maybe.

The number of buy orders essentially tells you nothing, since we have no idea how much the trading bots have on reserve that they haven't entered as orders. If we could actually see the bots' reserves, we could use that to measure NuBits' health. Right now if $140,000 NuBits were sold, my guess is the bots would immediately throw up another $140,000 of buy orders at the peg.

Trading bots with "secret" reserves... sounds like a very opaque system. 
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Offline biophil

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Rates will have to rise way more than 0.002% before they'd be any indicator of the health of the peg. A better metric would be the amount of buy offers for NuBits at the pegged $1 price. Right now, according to the client (which reports via RPC), it's at about USD $140000, spread across a couple different exchanges. This means that, if $140000 of NuBits were suddenly sold, the peg would be in trouble.

If that number goes down, that's bad for the network, but if it goes up, it's a sign of growing demand.

He's saying that changes in the interest rate will be an indicator. The interest rate just increased from 0% to 0.002%; that means maybe the NuShareholders are trying to get people to park, because demand for NuBits is decreasing. Maybe.

The number of buy orders essentially tells you nothing, since we have no idea how much the trading bots have on reserve that they haven't entered as orders. If we could actually see the bots' reserves, we could use that to measure NuBits' health. Right now if $140,000 NuBits were sold, my guess is the bots would immediately throw up another $140,000 of buy orders at the peg.
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Offline Chronos

Rates will have to rise way more than 0.002% before they'd be any indicator of the health of the peg. A better metric would be the amount of buy offers for NuBits at the pegged $1 price. Right now, according to the client (which reports via RPC), it's at about USD $140000, spread across a couple different exchanges. This means that, if $140000 of NuBits were suddenly sold, the peg would be in trouble.

If that number goes down, that's bad for the network, but if it goes up, it's a sign of growing demand.

Offline Markus

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A good indicator for diminishing demand for Nubits will be their parking interest rate rising.
I've had a look here (https://blockexplorer.nu/status) the last couple of days and it always said no rates available. Today for the first time:

Quote
Park Rates in Effect
No. BlocksRateDuration
8,1920.002%5 days 16 hours

Offline Empirical1.1

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Regarding the cause of the high NuBits volume:


NuBits is traded on bter.com.   The NuBits devs maintain a bot which trades NuBits on bter, with a very large supply, and low spread.  There were thousands of bitcoins worth of nubits available on the ask, and hundreds of bitcoin worth on the bid side.  The bot fixed the price of NuBits very close to $1. 


On bter, volume in trading bitcoin into USD or CNY is quite low.  Most trades there are between bitocin and altcoins.    If someone had a large amount of bitcoins on bter during the bitcoin price crash last weekend, and they wanted to hedge their position, they couldnt just sell the bitcoins into cash, wait for what they thought was the bottom, and then buy back.  The spread was too large, and the volumes were too low for this to be possible without massive slippage.


However, due to the NuBits bot, and its low spread and high volume, it WAS possible to sell into cash.  And people did this.  Thousands of BTC worth of volume traded back and forth between BTC and NuBits, with NuBits essentially acting like USD.


This is why NuBits had such high volume.



Takeaways:
A market maker bot operating on a small spread, with a large capacity to buy and sell will do a VERY good job at both enforcing a peg, and providing liquidity!   It will be heavily used in the absence of other market makers who are providing liquidity.


I anticipate that there will be a lot of volume in bitUSD as well in the future, once we have a similar market maker bot buying at .995 and selling at 1.005, with hundreds of thousands of bitUSD available on both the bid and ask.

Fascinating explanation. Thanks for the perspective.

They also had at least some high volume that did not represent market demands because the walls their bots had in place were shifting frequently and crashing into each other during the most volatile period.

 +5% Thanks for explanation

Offline Ander

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They also had at least some high volume that did not represent market demands because the walls their bots had in place were shifting frequently and crashing into each other during the most volatile period.

This is also part of it.  Possibly even most/all of it.  But it could also have been people hedging their bitcoins.
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Offline starspirit

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Regarding the cause of the high NuBits volume:


NuBits is traded on bter.com.   The NuBits devs maintain a bot which trades NuBits on bter, with a very large supply, and low spread.  There were thousands of bitcoins worth of nubits available on the ask, and hundreds of bitcoin worth on the bid side.  The bot fixed the price of NuBits very close to $1. 


On bter, volume in trading bitcoin into USD or CNY is quite low.  Most trades there are between bitocin and altcoins.    If someone had a large amount of bitcoins on bter during the bitcoin price crash last weekend, and they wanted to hedge their position, they couldnt just sell the bitcoins into cash, wait for what they thought was the bottom, and then buy back.  The spread was too large, and the volumes were too low for this to be possible without massive slippage.


However, due to the NuBits bot, and its low spread and high volume, it WAS possible to sell into cash.  And people did this.  Thousands of BTC worth of volume traded back and forth between BTC and NuBits, with NuBits essentially acting like USD.


This is why NuBits had such high volume.



Takeaways:
A market maker bot operating on a small spread, with a large capacity to buy and sell will do a VERY good job at both enforcing a peg, and providing liquidity!   It will be heavily used in the absence of other market makers who are providing liquidity.


I anticipate that there will be a lot of volume in bitUSD as well in the future, once we have a similar market maker bot buying at .995 and selling at 1.005, with hundreds of thousands of bitUSD available on both the bid and ask.

Fascinating explanation. Thanks for the perspective.

They also had at least some high volume that did not represent market demands because the walls their bots had in place were shifting frequently and crashing into each other during the most volatile period.

Offline donkeypong

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Regarding the cause of the high NuBits volume:


NuBits is traded on bter.com.   The NuBits devs maintain a bot which trades NuBits on bter, with a very large supply, and low spread.  There were thousands of bitcoins worth of nubits available on the ask, and hundreds of bitcoin worth on the bid side.  The bot fixed the price of NuBits very close to $1. 


On bter, volume in trading bitcoin into USD or CNY is quite low.  Most trades there are between bitocin and altcoins.    If someone had a large amount of bitcoins on bter during the bitcoin price crash last weekend, and they wanted to hedge their position, they couldnt just sell the bitcoins into cash, wait for what they thought was the bottom, and then buy back.  The spread was too large, and the volumes were too low for this to be possible without massive slippage.


However, due to the NuBits bot, and its low spread and high volume, it WAS possible to sell into cash.  And people did this.  Thousands of BTC worth of volume traded back and forth between BTC and NuBits, with NuBits essentially acting like USD.


This is why NuBits had such high volume.



Takeaways:
A market maker bot operating on a small spread, with a large capacity to buy and sell will do a VERY good job at both enforcing a peg, and providing liquidity!   It will be heavily used in the absence of other market makers who are providing liquidity.


I anticipate that there will be a lot of volume in bitUSD as well in the future, once we have a similar market maker bot buying at .995 and selling at 1.005, with hundreds of thousands of bitUSD available on both the bid and ask.

Fascinating explanation. Thanks for the perspective.

Offline Ander

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Regarding the cause of the high NuBits volume:


NuBits is traded on bter.com.   The NuBits devs maintain a bot which trades NuBits on bter, with a very large supply, and low spread.  There were thousands of bitcoins worth of nubits available on the ask, and hundreds of bitcoin worth on the bid side.  The bot fixed the price of NuBits very close to $1. 


On bter, volume in trading bitcoin into USD or CNY is quite low.  Most trades there are between bitocin and altcoins.    If someone had a large amount of bitcoins on bter during the bitcoin price crash last weekend, and they wanted to hedge their position, they couldnt just sell the bitcoins into cash, wait for what they thought was the bottom, and then buy back.  The spread was too large, and the volumes were too low for this to be possible without massive slippage.


However, due to the NuBits bot, and its low spread and high volume, it WAS possible to sell into cash.  And people did this.  Thousands of BTC worth of volume traded back and forth between BTC and NuBits, with NuBits essentially acting like USD.


This is why NuBits had such high volume.



Takeaways:
A market maker bot operating on a small spread, with a large capacity to buy and sell will do a VERY good job at both enforcing a peg, and providing liquidity!   It will be heavily used in the absence of other market makers who are providing liquidity.


I anticipate that there will be a lot of volume in bitUSD as well in the future, once we have a similar market maker bot buying at .995 and selling at 1.005, with hundreds of thousands of bitUSD available on both the bid and ask.

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Offline CoinHoarder

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There is no proof that the $2MM initial supply was even created by infusing $2MM USD.  I suspect barely any of their market cap began as more than: Each nubit = $1 = one breath of air


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That is very true there is no way to prove that the $2 million Nubits were actually purchased with USD/Peercoin/Bitcoin, since it was done off the market. We can only take their word for it, but I really hope that this wasn't the case.
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Offline carpet ride

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Can someone explain to me though why they have such high volume, ($1 million 24 hours) but the CAP of Nubits is staying the same, this week, circa $2.3 million? I don't understand.

NuBits market capitalization isn't changing, because the supply of NBT hasn't measurably changed and the price per NBT hasn't fluctuated much. CMC reports market cap as:

 * Marketcap = Price x Total Supply
 * Prices are calculated by averaging the prices at the major exchanges weighted by volume

Source: bitcointalk.org/index.php?topic=199685.0

Yes, since the price stays at $1 (until if/when it fails) then the market cap should closely resemble the demand for Nubits. If you guys remember prior to Nubits' launch they were soliciting for wealthy "market makers" to provide liquidity: http://www.peercointalk.org/index.php?topic=3190.0

Quote
The NuBits project needs people/entities with substantial funds available to them to conduct automated exchange operations on an ongoing basis. No capital gains or losses are possible within the scope of the needed trading activity. Your funds will not be passed to anyone working on the NuBits project. You will need to deposit funds in your own account at an exchange and run a trading bot we will provide. Your principle risk will be exchange default. You will be compensated a negotiated rate for this risk. You will not be in a position to fill this role unless your net worth is well into the six figures USD or higher. Full details about the role you may fill and the NuBits project itself will be given to qualified candidates. Persons/entities that fill this role will be eligible to purchase shares of our venture immediately.

If you look at the market cap history, you can see the market cap for Nubits started around $2 million dollars. In other words, I speculate that this ~$2 million is the above solicited market makers. Subtract $2 million from the current market cap... $2,282,597 ... and you get $282,597 worth of demand for Nubits. In other words $282,597 is the "real" market cap from demand by the end users.

In comparison, the bitUSD market cap is sitting at $357,394 a large majority of which (~100%?) is actual demand from end users and not as purely a mechanism to provide liquidity and temporarily stabilize the price to $1. We were first and gained somewhat of a network effect, we have the lead as far as demand goes, we had a much more fair release of BTSX vs Nushares, we have a better underlying solution for a stable decentralized cryptocurrency, and our "market peg" is pretty damn accurate as it is currently sitting at $0.990355 per bitUSD. There is literally nothing to worry about, although I think we can all agree we would benefit from some marketing.

The only thing that puzzles me is Nubits' volume which is insanely higher than ours. This can be manipulated though, so I wouldn't give too much credence in the volume being higher. For instance, today's volume of $858,192 worth of Nubits could be bought for $1716.384 since CCEDK/BTER both charge 0.2% trading fees. It is for that reason I think the market cap is a better indicator of demand. Since the Nubits "market makers" started out with about $2 million worth of Nubits, you can assume that they will indefinitely keep $2 million worth of Nubits to provide liquidity and hold the market peg temporarily until changing the interest rates or printing new money can bring it back to equilibrium.

Maybe I am completely wrong, but I find it hard to believe the volume is not being manipulated considering the dynamics of the situation and the kind of volume CMC has been reporting. The Nushares holders could compensate the market makers for the 0.2% trading fees by printing more money or raising interest rates, so again it could be easily manipulated by the whole system.

Another theory is that since Nubits is still very new, they are still playing around with the interest rates and printing of money ratios to hold the market peg at a $1. Perhaps they were at first (possibly they still are) setting the interest rates on Nubits too high which would cause more demand. Which would then cause the Nushares holders and the market makers to have to print and sell more Nubits to maintain the market peg, thus creating somewhat artificial volume by both the demand of too high interest rates and the selling of the printed Nubits to maintain the market peg.

So, I think the market cap is a better measurement of the success of bitUSD vs Nubits and more closely resembles demand from end users (minus the ~$2 mil market cap Nubits started at.)

There is no proof that the $2MM initial supply was even created by infusing $2MM USD.  I suspect barely any of their market cap began as more than: Each nubit = $1 = one breath of air


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Offline CoinHoarder

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Can someone explain to me though why they have such high volume, ($1 million 24 hours) but the CAP of Nubits is staying the same, this week, circa $2.3 million? I don't understand.

NuBits market capitalization isn't changing, because the supply of NBT hasn't measurably changed and the price per NBT hasn't fluctuated much. CMC reports market cap as:

 * Marketcap = Price x Total Supply
 * Prices are calculated by averaging the prices at the major exchanges weighted by volume

Source: bitcointalk.org/index.php?topic=199685.0

Yes, since the price stays at $1 (until if/when it fails) then the market cap should closely resemble the demand for Nubits. If you guys remember prior to Nubits' launch they were soliciting for wealthy "market makers" to provide liquidity: http://www.peercointalk.org/index.php?topic=3190.0

Quote
The NuBits project needs people/entities with substantial funds available to them to conduct automated exchange operations on an ongoing basis. No capital gains or losses are possible within the scope of the needed trading activity. Your funds will not be passed to anyone working on the NuBits project. You will need to deposit funds in your own account at an exchange and run a trading bot we will provide. Your principle risk will be exchange default. You will be compensated a negotiated rate for this risk. You will not be in a position to fill this role unless your net worth is well into the six figures USD or higher. Full details about the role you may fill and the NuBits project itself will be given to qualified candidates. Persons/entities that fill this role will be eligible to purchase shares of our venture immediately.

If you look at the market cap history, you can see the market cap for Nubits started around $2 million dollars. In other words, I speculate that this ~$2 million is the above solicited market makers. Subtract $2 million from the current market cap... $2,282,597 ... and you get $282,597 worth of demand for Nubits. In other words $282,597 is the "real" market cap from demand by the end users.

In comparison, the bitUSD market cap is sitting at $357,394 a large majority of which (~100%?) is actual demand from end users and not as purely a mechanism to provide liquidity and temporarily stabilize the price to $1. We were first and gained somewhat of a network effect, we have the lead as far as demand goes, we had a much more fair release of BTSX vs Nushares, we have a better underlying solution for a stable decentralized cryptocurrency, and our "market peg" is pretty damn accurate as it is currently sitting at $0.990355 per bitUSD. There is literally nothing to worry about, although I think we can all agree we would benefit from some marketing.

The only thing that puzzles me is Nubits' volume which is insanely higher than ours. This can be manipulated though, so I wouldn't give too much credence in the volume being higher. For instance, today's volume of $858,192 worth of Nubits could be bought for $1716.384 since CCEDK/BTER both charge 0.2% trading fees. It is for that reason I think the market cap is a better indicator of demand. Since the Nubits "market makers" started out with about $2 million worth of Nubits, you can assume that they will indefinitely keep $2 million worth of Nubits to provide liquidity and hold the market peg temporarily until changing the interest rates or printing new money can bring it back to equilibrium.

Maybe I am completely wrong, but I find it hard to believe the volume is not being manipulated considering the dynamics of the situation and the kind of volume CMC has been reporting. The Nushares holders could compensate the market makers for the 0.2% trading fees by printing more money and giving it to the market makers or raising interest rates on Nubits, so again it could be easily manipulated by the whole system.

Another theory is that since Nubits is still very new, they are still playing around with the interest rates and printing of money ratios to hold the market peg at a $1. Perhaps they were at first (possibly they still are) setting the interest rates on Nubits too high which would cause more demand. Which would then cause the Nushares holders and the market makers to have to print and sell more Nubits to maintain the market peg, thus creating somewhat artificial volume by both the demand of too high interest rates and the selling of the printed Nubits to maintain the market peg.

So, I think the market cap is a better measurement of the success of bitUSD vs Nubits and more closely resembles demand from end users (minus the ~$2 mil market cap Nubits started at.)
« Last Edit: October 07, 2014, 03:32:48 pm by CoinHoarder »
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