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RE: What makes the bitUSD better than nuBits
NuBits is backed by NuShares with some critical differences from how BitUSD is backed by BitShares:
- BitUSD is only created by a super-bull willing to take the downside risk
- BitUSD can be force settled
- BitUSD does not depend upon trusted parties to run bots on exchanges
- Borrowers are Margin Called when collateral runs low which refreshes the collateral backing BitUSD as the price falls.
Currently there are $700,000 worth of NuBits backed by $1M worth of NuShares plus whatever BTC you trust the market makers to hold on your behalf. There is currently $100K worth of BitUSD backed by $9M worth of BitShares. This means that the ultimate source of value backing BitUSD is 60x greater than NuBits.
Comparison to Steem Dollars
The Steem Dollar works similar to BitUSD with a few important caveats:
- Steem Dollars are created by the blockchain to pay rewards, not by Super Bulls seeking leverage
- Steem Dollars are backed by the Steem Printing Press, this means no potential for black swans
- Steem Dollars maintain a 1:20 Debt to Equity ratio or better which means they are backed by 20x rather than 2x collateral ratio.
- There is a 1 week settlement window instead of 24 hours
- The settlement price is the 1 week moving median price rather than the instantaneous price feed.
$9M is the entire market cap of BitShares at the moment. Since not all BTS are tied into collateral for bitUSD, I doubt that the ratio is 60x, but it is surely more than 4x. Would be great to have a simply way to call this kind of data from the node.
Yes, but the value of the BTS in the collateral is derived from being part of a larger whole.
For me, collateral is locked and cannot be traded, transferred or moved. Thus "liquid" BTS are not backing anything.
However, I could understand if people thought of additional "inertia" coming from collateral for bitEUR, bitCNY, bitGOLD, because they reduce the supply of liquid BTS and thus result in reduced sell-pressure and this way support the "peg" during margin calls.
Whether the marketcap of BTS becomes bigger than the sum of the "market caps" of its bitassets needs to be proven first. Hopefully Metcalfe's law applies here as well :)
At very liquid market you dont't have to be BTS bull to short BTC - you're just playing the waves.
Hi Dan, still trying to get my head around this, could you explain why points 4 and 5 are advantageous, please?
CG
They prevent short-term market manipulation from impacting the conversion price unless it can be maintained for over 3 and a half days.
Without this protection someone could request a conversion to STEEM, dump a bunch of STEEM on the market which will push the STEEM per USD ratio up. When the conversion executes they would get more STEEM and then price would recover.
posted on a branch .. ;/
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