Nu is not a ponzi scheme because it winds down if nbt demand decreases.  I could say something like "the nbt marketcap is backed by the nsr marketcap", but it's vastly better than that because nsr holders have the final say in the process.  They will struggle to create more market demand for nbt not because they fear nbt going insolvent but because they want to stop nsr from diving.  An nbt user is entirely isolated from that risk.  Nu uses momentum like a ponzi scheme does, but aside from that they are not very similar.

This is your fundamental issue.  NBT is not backed by reserve, it is not really 'backed' by anything because having a reserve is not useful in a decentralized system, it is only a liability.  Our 'reserve' is NSR, it allows us to separate the volatile part from the stable part.  If we want to increase NBT supply, destroy NSR and issue NBT; if we want to increase NBT demand, create NSR and burn NBT.  If NBT demand continually trends toward zero, then yes NSR price will continually drop.  If NBT demand continually increases, NSR price will continually increase.  Neither of these cases will happen, instead we will just have a functioning system that can operate a peg.

Now let's talk about expenses.  You're looking at 100% returns on liquidity provided at times when we have low liquidity.  That means we can talk real numbers:  about 70,000 NBT of liquidity on both sell and buy side combined is pretty average recently.  That means that in the first year of operation, the NSR marketcap will only be diluted by ~$70,000 (It is currently over $1M) by liquidity operations alone.  And that's just the first year, subsequent years are expected to drop in cost, possibly sharply.

There are many flaws in what you're saying.  You're starting out by saying that the peg will break, then saying that when that happens everything will fail.  My counter argument centers around the fact that the peg has broken many times on individual exchanges, and we've gone to $0 buy side support before.  Yet NBT is still worth $1.  How can that be true if what you say is true?

There are tiers to our system.  Liquidity is what you are calling '% backing' and it is only the first defense.  It represents how much money we can mobilize near-instantly to reestablish the peg.  To balance our liquidity and leverage the NSR market for additional support, we perform share auctions and buybacks.  As a final, overarching mechanism we can implement parking (interest) rates and peercoin distributions.

You keep trying to talk about % backing.  If you are stuck in that paradigm, fine, let's talk real numbers for % backing.  Yes, there are 600,000 NBT in existence, but 400,000 NBT are held by trusted people currently as a reserve because we are not fully able to create and destroy NSR and NBT yet (still a work in progress).  That means the total 'debt' for Nu is $200k while it's NSR marketcap is $1.7M (% backing = 850%).  Let's even go so far as to say they all sell them at once (a situation which would in reality never happen).

So your only question here is can Nu absorb a $200k loss without NSR going to $0?  If you look at the NSR marketcap it's clear we can.  If we print 200mil NSR and sell them at $0.001 (which would be reasonable in my opinion) we could buy back and every single NBT at $1.  Since you said the peg was broken in this hyper extreme situation, we wouldn't even have to pay the full $200k because NBT is being sold on the market for less than $1 if the peg is broken.  Buying back every NBT would make NSR bleed red, but we could do it.

The real question is why would we (the crypto community) do that?  That would destroy our momentum.  Yes, we would survive it.  Yes, the nbt/usd peg would be reestablished.  Yes, we would finally show doubting people like you that the system clearly works.  But we would burn all the great actors that have played a part in this movement thus far.  The better option is to continue to support this working system, as it has actually succeeded at separating the volatility out of its unit of account.

If your issue is black swan events, I would argue that intelligent use of developer money can turn the tide until the immediate crisis is averted for a more long-term issue where we can pass motions to rectify the issue.  Jordan Lee himself proposed this as a tier of liquidity in case of dire need.

Additional profit is a whole different conversation.  We don't need to make 100%/year, we only need to make 100% of the average liquidity, which is like $70k, and future operations will cost less and generate more support.  There are many sources of revenue available once we have widespread support, such as modified transaction fees and NBT loans.  You're looking for a complete money-making business that has a net return within 6 months of its creation.  This technology is so new it makes bitcoin look like a grandfather.  The prospects for Nu are extremely high and it is changing continuously.  Rest assured that the fundamental economics of it make sense and the only barrier to our pure profit is some hard work, dedication, and time.

You are thinking about it the right way now, it is like a company.  Do you really think $100k/year is more than we can ever pay back?  The NSR marketcap fluctuates by more than $100k in 1 day.  Companies like Tesla have liabilities in the millions.  Our assets will grow.

NSR holds its value because of the investment to infrastructure we have in Nu.  Even beyond the actual infrastructure, what you have to realize is that history of maintaining a peg while simultaneously having market volume is what gives NSR its true value.  The longer we hold the peg, the more valuable NSR becomes.  There is a concept of reputation here.

By the way, the buy support went to zero a couple months ago, which prompted the NSR auction motion that bought back 6,000 NBT in the last month.

I just realized you're calling liquidity rewards 'dividends'.  We have an actual dividend mechanism that distributes PPC to all minting NSR holders, but it will not be used again until we have surplus profit to distribute.  The liquidity rewards are currently paid in NBT, but we are rapidly moving toward a system where they are paid in NSR.

If NBT dies, NSR will certainly be damaged a great deal, I have no illusions about that.  What I am saying is that even if 0 NBT exist, NSR's blockchain and history still exist and carry with them all the tools (wallets, programs, what have you) that would allow a functioning peg, to be revitalized at will.  As long as there is demand for a pegged cryptocurrency, NSR can print NBT to satisfy that need.  If they have a history of keeping NBT = $1 even when there is no market demand for it, why wouldn't people trust it enough to just use it as a unit of exchange?

The way trustless liquidity provision works is by making API calls for a particular user account on an exchange on the behalf of a client.  The client (you) runs a python script which places orders and lets the server verify where its orders are placed.  The server then registers a liquidity reward every minute and sends the reward once a day.  The system is trustless, meaning that you can read and edit the python script you run in any way you wish without compromising the integrity of the operation.  If your orders are not where we want them to be, we will not credit you.  You do not have to run any code you cannot read and edit freely.

Actual trades are not registered by the server and do not count for or against your reward.  On an NBT/BTC pair, you can see how this introduces complications of losing funds when BTC price declines or fluctuates greatly.  On an NBT/USD pair, however, it should be clear that actual trades do not hurt the liquidity provider but are rather a source of profit depending on the allowed spread.  NBT/fiat pairs are also reasonably stable and provide a similar benefit.  The high liquidity rewards are because liquidity providers are either on a volatile BTC market or providing on an exchange with dubious solvency.  B&C exchange will change this and should drastically lower liquidity rewards in the long term.

Nubits2 could steal all our utilities cause they're all open source.  However, they would lack our momentum, history of maintaining the peg, nsr distribution, and world class developing team.

The only nbt/USD pair is on ccedk and is compensated like a btc pool because ccedk may or may not be insolvent.  I personally run a nbt/cny pool on bter which used to be %1.5/month and will be %4.5/month after this new grant proposal passes.  Tllp is a new system, and we're still growing and expanding.  That, in additional to the other considerations mentioned, is why liquidity provision is so costly: the tech is very new.

The server checks your orders by making api calls in your name.  You must have the api secret to the exchange account to get credited for the orders.

Yah, I mean we are probably not as conscious of marketing schemes or whatever as you might expect.  This is still a 'best endevors' project and we haven't ironed out all the issues and inconsistencies across the board.  We are working on a liquidity pool marketing website, but this is what we have for now:

https://discuss.nubits.com/t/liquidity-pool-marketing/2166/13

As an added bonus, you can see that I got the link to talk to you from Sam.  He's the one working on the tech, so his pools are probably the most stable and certainly provide the most liquidity.
I have made a website for my pool (http://nupond.net), but if you want the most professional experience you might want to try Sam or Henry's pools (Henry's NuLagoon is not trustless, but it's a solid investment opportunity).

Coin volatility is certainly an issue.  If you are looking for a pool without volatility, try my nbt/cny pool at http://nupond.net
The rate is 0.15%/day.  The main risk in that pool is exchange default.  If you want to support the pool on poloniex, you will be using nupool run by willy and wooly sammoth, which will certainly have btc volatility risk.  Try here: https://nupool.net

I dont get this idea,but I use NU as a free park to keep value when BTC is high i try to get NU and like now i get btc, been working well for me,better thn USD.