While I regret the tone of some of the Bitshares supporters in this thread, I fail to see any serious arguments from the Nubits crowd as to why their system is not a fractional reserve system. I see a lot of handwaiving from Hyena about how we should:
- Trust the custodians because it's not in their interest to run away with our money
- "The custodian is putting their PERSONAL capital at risk"
- "To have a cryptocurrency that is not volatile, a degree of human intervention is needed. There's simply no other way"
- there are exchanges that have NBT/USD trading pairs and that's where the peg is originally maintained. The NBT/BTC traiding pairs are just some random internet people doing arbitrage
The first one is such a poor argument I'm surprised you even dare use it. This has been proven wrong time and time again in the real world, Karpeles being a great example. Any time people have access to large amounts of money there is a risk of them running away with it, period.
Second argument: Unless I'm mistaken the user "Kiara Tamm" has access to at least 1.8 million NuBits. How much of her own money did she put up in order to do so? Zero as far as I can tell.. Why do you feel comfortable trusting her with that amount of money? From what I can tell looking through her posts she's already made huge losses on the price slide of PPC from 1.4$ do ~0.3$ today.
The third argument: that's a big statement that you cannot back up with anything. It might be, it might not be.. While Bitshares also has human intervention for now in the form price feeds, a major difference from NuBits is that no humans have the ability to run away with money as is the case for Nubits.
Fourth: Looking at CMC i see 0 volume for NBT/USD, the major volume is for NBT/BTC, meaning the custodians must have taken huge losses from the fall in BTC price.
Or from Jordan about how:
- Fractional reserve doesn't apply because the system is designed to not hold reserves.
- The system has several tiers of liquidity so there's nothing to worry about
At the end of the day what matters is: if there is a "run on the Nubits bank", can the custodians make everyone whole? It seems to me the system relies on a great deal of obfuscation to make this possible, through the "tiers of liquidity" and a general lack of transparency. At the current point in time it appears to me as if the first three tiers of liquidity would not be sufficient. If the fourth tier is activated, it would cause a big fall in the NuShares price so it is not at all clear it would be sufficient. Was the recent fall in NUShares price due to this tier getting activated for example?
That leaves the fifth tier, parking through interest rates. The efficiency of this tier is unknown and by the time it is needed the trust in the system might already be gone, at least if the process were known to the public.
Can the public know at any one point what tier of liquidity is being used? If not, the system may hold until someone figures out what's happening, at which point it will most likely collapse. It's similar to how exchange prices can hold up to a certain degree until the final proof that they've been hacked or "lost" all the deposits becomes available.