Let's say there is 10 million EMU at ten cents and an order for 1 million EMU in excess of supply appears. Then the network automatically creates 1 million more EMU to satisfy the order, 500,000 to existing holders and 500,000 to hatchers. This is what confuses me.
So we have a new buyer who wants to buy, but the new EMU is going to existing EMU holders and hatchers. Where does the new buyer get the 1 million EMU from?
Separately, we now have 11 million EMU (presumably), but the original EMU holders have 10.5 million, so their share went from 100% to 95.45%
Is the price charged to the purchaser increased by ~5% so that the value of the 10.5 million post purchase EMU is about the same as before the purchase?
How can all these mechanisms be stabilized? It would seem that under any sort of real world supply and demand scenario, the market value will oscillate and the reality is that the original EMU holders will continue to get a smaller and smaller share. In order to maintain their ownership percentage, they would need to continue purchasing EMU continuously. It almost seems designed to create an unsustainable price feedback loop.
Please explain mathematically how the adding of new EMU into the system doesn't dilute the prior EMU holder's value.
James
P.S. I don't expect you will answer this as there seems to be a pact of silence around this issue. I have asked this question in half a dozen emunie forums, without any responses.
1. If you buy 1 million you get it from another user. Like it works in bitcoin and nxt.
2. In the moment you buy or exactly after you buy that 1 million, the system creates another 1 million (They don't tell exactly when). 0.5 for the users and 0.5 for hatchers. This money will be created by the hatchers and get distributed via mediators (looks kind of centralized but in emunie they don't speak about this...)
3. Yes, your shares goes down in percentage. In the long run you will have about ~50% of the initial percentage you owned in the start. So for taking profit is no that good for the investor, you get 50% profit when it works but, you take 100% loses if system goes down...
4. I think this system is stupid and broke. Because when price goes down EMU price will change (because they don't take EMU back), so it is completely useless.
5. Pump&Dump is great for hatchers they get 50% of the new rising market. Imagine going up from $10M to $50M... hatchers get $20M LOL
So it will end like bitcoin, all the people will set up lot of hatchers there will be pools and it will be centralized (or maybe this won't be possible IDK), but for sure it will be a huge waste of power and hatching race.
Now can we focus in NxT?
I don't think your answers are what happens, that is why I wanted someone who knows the details of emunie to answer. The key part of my question is that there is an order in EXCESS of supply. Basically a large buy order comes in, but the orderbook is not able to handle it. Instead of taking out higher and higher prices, the system seems to automagically create EMU out of thin air (just like fiat!) and fill the order. Clearly this will stabilize the price, but without knowing what the parameters are, it is impossible to model.
Based on what I read, I think the original EMU holders of 10 million EMU could end up with <1% EMU if 990 million EMU are purchased. Now all of the new EMU gets created (hatched from eggs?) at some price point based on some formula. Again, no amount of digging allowed me to find out any details of these most critical aspects of emunie. It does seem to have a userbase about 10% the size of NXT, it does seem to have a user friendly client, it does seem to have a lot of features in common with NXT, it is even using same version of JRE.
emunie peoples, I am not attacking you, I just want a straight answer so I can model what EMU price behavior will be. Maybe I might even invest! From what I have read it almost seems that if there is any reasonable amount of buy side volume, the system can arbitrarily set the price. I just am not smart enough to figure out how if the money supply is created to match peak demand, that it wouldn't simply fall during other times. Is there also a mechanism to support the price? What about dilution of existing EMU holders? How does an EMU holder control his hatching to maximize it? So many questions, all I get are videos of user interface and beta testers testimony that it is the greatest thing since sliced bread.
Has anybody modeled what happens to the EMU system under large scale use?
James
