Remember SR1 hedging? Now you can hedge your wallets.

Theres an altcoin called nubits thats pegged to the dollar. I dont get how it works myself, this chart explain the process flow. Looking at the historical price it looks like they succeeded.

https://www.cryptocoincharts.info/pair/nbt/usd/ccedk/1-year

https://www.coingecko.com/en/price_charts/nubits/usd/90_days

They explain how the price is kept stable here(https://nubits.com/about/price-stability):

Two Potential Scenarios

What happens to the $1.00 US stable price if the demand for NuBits exceeds the available supply?

When demand is increasing, more NuBits are required to maintain the price at $1.00 US. NuShareholders will vote to introduce new NuBits into circulation with a grant to a custodian. This custodian then places the NuBits up for sale on an exchange.

What happens to the $1.00 US stable price if the demand for NuBits is less than the available supply?

The price support mechanism of offering interest for funds taken out of circulation is extremely robust. What is required for this mechanism to fail is unanimous consensus of all market participants that NuBit demand will certainly never increase above its previous peak. When this occurs, it means that NuBits are obsolete and they are not meeting a need. It doesn't make sense to not use something today because it may become obsolete someday. As this outcome approaches, NuBits will shift from the hands of ordinary businesses and people into the hands of speculators tolerant of high risk in exchange for possible high rewards.

When the peg is lost, it will go straight to zero. And, it doesn't necessarily mean the failure of Nu, just of the individual currency.

To demonstrate the robustness of the peg, let's imagine a future where NuBit demand is only 10% of its peak. It is obsolete and demand has been in decline for three years. Nearly everyone has given up on it. However, there are a handful of individuals who believe there is a 30% chance that NuBits will still have value in a year because they are NuShareholders and plan to implement a bold and daring plan to change the protocol to meet different needs than NuBits have in the past. These individuals would buy NuBits if there was 400% interest rate offered for one year. So it will be offered by NuShareholders and taken by the speculators, and the peg will stand at $1.00 US. When this large sum of NuBits is created and unparked after one year, then the situation is much worse if demand has not picked up due to the success of their bold plan to redefine NuBits. Perhaps then even these shareholders and speculators will give up on it. In that case NuBits would not be worth less, they would be worth nothing. And not many people would care or be affected.

However, the system can handle even multi-year dips in demand gracefully and recover. All that is required is for some people to believe there is some chance that total demand will reach a new peak. This is a nominal peak, not inflation adjusted peak. So in a case where NuBit demand declined for three years and there was 13% inflation over those three years and an average of 4% annual interest was required to create sufficient demand for NuBits during those three years, then the amount of real value stored would not even have to quite reach its previous peak in order to push interest rates down to zero, signaling a healthy system.

Given rapidly rising levels of wealth in the world today combined with inflation of USD, the total proportion of global wealth held in NuBits can enter a widely acknowledged permanent decline, and as long as the decline rate is not too sharp, the system will still be sustainable.

In summary, the primary support mechanism is very robust and is not expected to fail partially, but rather completely after NuBits have passed from the hands of ordinary businesses and people to speculators willing to take great risk for great reward, having long signaled that it was in difficulty.

If NuBits are a success, then this scenario is far in the future. In the meantime it can do much to meet a wide variety of needs. Everything dies or goes away in the end, but that is hardly a good argument against living or using a technology you find empowering.


Comments


[1 Points] 1mjustlooking:

Interesting, will look into this. Thanks. Any experience yourself with this crypto currency?