Current Liquidity

Liquidity
#180

Sure, we could do dividends and take more money out of the system while we’re still fledgling, we certainly could do that and hope the marketing benefit would offset the cost.
You don’t need to trust my software. Just trust the block chain, and the moment I break protocol everyone can tell and run the numbers themselves. My first auction was off by 1.0999 nsr and mhps caught it. The auctioneer does not have to be the reservoir, the trust does not have to be held in one person. There are endless possibilities for further decentralization using seeded auctions as a jumping off point.

Ultimately, seeded auctions are not so much a software as a protocol for fair and transparent auctions. They are first and foremost a way to maintain the peg.

#181

This is a common misunderstanding. At an enterprise level, share buybacks and dividends accomplish the exact same transfer of value to shareholders. In the case of dividends, shareholders who prefer buybacks will use dividend funds to purchase shares (and increase their percentage equity in the Nu network). In the case of share buybacks, shareholders who prefer dividends will sell some of their shares at the higher prices.

There is no difference in the amount of funds “leaving the system”. If there were, we would see corporations exclusively use one method or another. After all, corporations strive to maximize the return on investment for shareholders.

#182

how many undistributed NuShares remaining from JordanLee holding will they be burnt or auction off

#183

About 190mil. He will burn them when nsr grants become integrated into the protocol.

#184

So ultimately with distributions we are rewarding the minters and not the nsr traders. I’m not going to say that’s bad, because I mostly identify as a minter, and distributions are directly beneficial toward me. That said, I am also an nsr trader, and that side of me kind of says there’s no point ever buying nsr high if we only have distributions and no buybacks.
It’s certainly an important conversation. I am excited about my auctions and I’m sorry if I downplayed the use of distributions. However, with illiquid nsr markets I think more price discovery is preferable over taking direct profit. Still, if someone proposed a distribution grant I would definitely consider voting for it based on the wording involved.

#185

how can that be I thought there was only 187mil and 100mil auction off for B&C and 87 mil

#186

That auction failed, then we auctioned just a few mil off to burn some nbt. The remaining 180-something million nsr will be burnt. We get the 10,000 NSR = 1 BKS for free (0 nsr dilution).

#187

ahh ok thanks

#188

Dividends, like interest, has a powerful draw that share buybacks don’t have. I also like to see a dividends distribution. Extremely thin NSR liquidity on the market is another reason to prefer dividends.

However I guess the curreny sell side reduction is related to B&C share payment. When B&C starts to pay dev team with NBT, the buy side will start to lower. This is just a guess. Pegging operation should mainly follow liquidity readings, so we should still think about NSR burning (or dividends distribution) and NBT providing.

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#191

Is someone going to propose a distribution grant?

#192

Wouldn’t we be jumping the gun just a bit?

#193

What are we waiting for? The buy side has been 10k above sell side for days now. We have the ability to grant NBT that can be dropped on the big buy wall and exchanged for PPC to be distributed.

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#194

Indeed.

#195

Is the procedure getting a grant voted and going buy PPC on the market to distribute divident or buying NSR to burn?

#196

For NSR burn I still believe in my auction method. For PPC distribution, PPC has experienced a good bit of price discovery at this point and while it is volatile it is vastly more stable than NSR. I am advocating a NBT/dividend distribution via market action, similar to what has been done in the past.

#197

the gap between buy side and sell side has shrank.

#198

What are we waiting for? The buy side has been 10k above sell side for days now. We have the ability to grant NBT that can be dropped on the big buy wall and exchanged for PPC to be distributed.

Call me a pessimist but I don’t consider +10k NBT buy side to be nearly enough of a safety margin at this point in the network’s life to be jumping into discussions about dividends.

If I could be shown how the network has made 10k NBT in profits I might be convinced to vote for an action to distribute dividends, but at this point in time I don’t believe we should be micro-managing day to day supply fluctuations without more data.

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#199

We have been micromanaging. Nu auctioned NSR off because the buy side was 268NBT less than the sell side. If that motion isn’t modified we should at least be consistent when the sell side is too high for a week.

#200

The design of the network calls for sell-side custodians to be elected when liquidity is imbalanced though. With the percentage imbalance hovering at and above 20% the past week, at what threshold would you consider the imbalance structurally significant? Our network generates revenue and profit from the sale of new NuBits, which will probably be needed soon if demand is growing again.

#201

My understanding is that this is neither revenue nor profit as it creates a liability - a liability to keep the peg and therefore the need to buy each of the sold NBT back if the NBT owner desires to get back USD, BTC or whatever currency or asset is offered by Nu.

At the moment only the transaction fees can be counted as profit.

Sell-side custodians will be elected when there’s more demand for Nu than the liquidity operations can handle.
Soon there might be buy-side custodians (after protocol 2.0 is productive and NSR grants are available) to handle oversupply of NBT as well.
But a revenue model beyond transaction fees is not yet established.
Still this might be enough to build a sound business on it.
With the NuDroid wallet and use of NBT beyond hedging BTC volatility there might be lots of transactions.
Nu is still young and needs to evolve.
Selling NBT is not generating profit.

Yet I think dividiends is a matter that can be discussed. It’s a viable way of distributing money to the NSR holders who collecively keep the peg with the value of the NSR they hold.
In times of NBT oversupply they suffer from a dilution of their property and pushed down NSR exchange rates by NSR being sold for NBT.
So it might be considered to distribute dividends in times of NBT shortage (sell NBT, buy PPC, distribute them).

This might sound like I ultimately consider sale of NBT profit. On the contrary I consider sale of NBT the creation of a liability and want to compensate the NSR holders for that by distributing dividends.

The only other option I see to compensate the NSR holders would be a share buyback; this would keep the money in the Nu network.
The decision whether to distribute divideneds or to buyback NSR is up to the NSR holders as they are the owners of the Nu network.

With the thin NSR market liquidity I doubt that a NSR buyback is the better choice compared to dividend distribution.
A buyback might push the NSR price far up - far enough to let those who are willing to dump to make some money. And once Nu needs to buyback NBT by selling NSR the NSR price plummets and former sellers can buyback cheaply.

That is only one of the possible scenarios, but a not totally unlikely one.

So I think two questions needs to be answered by NSR holders:

  • under what circumstances / at what thresholds shall wealth be distributed to NSR holders
  • what’s the appropriate way of doing that (NSR buyback or dividend distribution)

If the thresholds are not chosen wisely, sell-side and buy-side custodians would be continually coming and going - I think that’s where @Ben tries to point at.

With the coming months and expecting B&C Exchange to sell NBT to fund the exchange development I rather see buy-side custodians coming and agree that now is not the perfect time to talk about distributing dividends AND share buybacks.

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