ahh ok thanks
Dividends, like interest, has a powerful draw that share buybacks donât 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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Is someone going to propose a distribution grant?
Wouldnât we be jumping the gun just a bit?
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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Indeed.
Is the procedure getting a grant voted and going buy PPC on the market to distribute divident or buying NSR to burn?
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.
the gap between buy side and sell side has shrank.
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 donât consider +10k NBT buy side to be nearly enough of a safety margin at this point in the networkâs 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 donât believe we should be micro-managing day to day supply fluctuations without more data.
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We have been micromanaging. Nu auctioned NSR off because the buy side was 268NBT less than the sell side. If that motion isnât modified we should at least be consistent when the sell side is too high for a week.
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.
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 thereâs 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. Itâs 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
- whatâs 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 thatâs 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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This statement is a misunderstanding of the design of Nu. Iâm not sure why so many shareholders seem to view NuBits as a promissory note; itâs a digital currency. As far as I can tell it is impossible to have a decentralized promissory note with 100% guaranteed perpetual redemption value. Currencies are flexible tools that reflect market sentiment, and are always able to completely collapse in value if demand disappears. This is true for every national currency in the world. NuBits should be no different. Currencies scale far more effectively than promissory notes too; itâs a reason why BitUSD will never be a global tool.
Itâs important to emphasize that it is impossible for shareholder funds to be held by a custodian in a zero-reserve system if we want to advertise that we are free of counterparty risk. If NBT demand increases, the revenue from NBT that are sold to meet that demand will need to be distributed as dividends, used for share buybacks, or used for projects like NuDroid.
Yes, it has. The sale of new NuBits are a source of revenue for shareholders. This has been true since Day 1 of the network. That revenue can be used for dividends, share buybacks, or shareholder projects, but it cannot be held by a custodian acting as a bank. That would introduce counterparty risk to our system, and would introduce the risk of another catastrophic event occurring like the February exchange hackings.
Would you prefer seeing the $1.00 peg lost instead? If NuBits demand increases, either dividends, share buybacks, or allocation to existing projects like NuDroid must occur. Otherwise, we are not a network free of counter-party risk. I agree thereâs a discussion to be had about what level of imbalance between liquidity walls constitutes a need for additional sell-side custodians, but if the imbalance worsens we must act decisively or risk our pegâs integrity.
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Iâm always interested what you are referring to when you talk about the âdesign of Nuâ as if it werenât a distributed and autonomous organization. Surely you are not referring to the design as it was a year ago, before burn mechanisms and NSR grants were acknowledged as being integral to the function of Nu. Surely you are speaking of some grand design that has yet to be accomplished, as we still have not realized the vital concept of NSR grants and burn gateways. And in that grand design you have no more insight than any of the rest of us.
My perspective on the design of Nu is that of tiers of market control by shareholders, tiers that we are building as we grow:
- Directly compensated liquidity provision, displayed in the Nu wallet
- NSR/NBT burns, portrayed solely by auction prices that Nu participates in
- Parking and PPC distributions, revealed on the block chain
- Variable Fees, not yet implemented
- Future motions and revenue
Nubits will not collapse in value if demand disappears, that is a naive perspective. If NBT demand disappears overnight, shareholders will create NSR until the peg is reattained. They would have very very little incentive not to, especially if automated burn mechanisms like my auctions are more prevalent. The only situation where the peg is fully lost is equivalent in principle to the situation where NSR hits $0 value and our consensus mechanism is worthless.
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Iâm puzzled by your comments. My comments were limited to pointing out that - as currently designed - one of Nuâs primary sources of revenue is from the sale of NuBits, as specified in the white paper. This is an indisputable fact of our current operations. Of course I have no deeper insight than anyone else, my comments are based on the white paper and successful shareholder motions. I didnât mean to imply any special knowledge.
Jordan Lee recently announced that we have successfully transitioned to a zero-reserve system. I donât see how shareholder funds can safely be held without counterparty risk if not used for dividends, share buybacks, or shareholder projects. If you have a solution to how this can be done, all shareholders would be very interested in hearing about it.
I think our shareholders have taken to saying âNu has no revenue modelâ as a habit and it is very damaging to our brand and public perception because it isnât true. Even secondary revenue mechanisms like variable transaction fees are just methods for encouraging the purchase of new NuBits to replace those that are destroyed.
History is littered with failed currencies, so I disagree with you that Nu has some sort of special immunity to basic economics. NuShares derive the majority of their value from the expectation of future NuBits demand. An unimaginable crisis that leads to zero NBT demand is likely to permanently impair the value of NuShares if NBT is the only product/service of the Nu network.
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This is a most likely occurrence, but not a direct consequence. Nu can indeed theoretically recover even in the event where every single NBT is bought back and burned. That is where Nu differs from all other currencies that have ever existed, aside from BTS.
âAs currently designedâ and âspecified in the white paperâ are distinctly different. The difference is the transition to a zero reserve system via NSR grants. We used to be a reserve-based system where NuBits were sold for revenue. We are now a zero-reserve system where NuBits are created by pushing value into NSR via dividends, buybacks, or infrastructure. Being able to continuously turn revenue into NSR buybacks allows us to leverage NSR auctions for NBT burns on the flip side of the coin. You can model this as âselling NBTâ but it is a much more enlightening perspective to see it simply as allowing NBT to freely flow into and out of NSR. We are not really buying and selling NBT, we are instead issuing it and backing it with our consensus mechanism.
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Nice way to put it regarding the backing of NBT.
NBT is backed by NSR, which represents a piece of ownership into the first decentralized central bank in history of Humankind, independent from Rotschildâs influence, called Nu.
So NBT is backed by the inventiveness and the high moral of Nuâs shareholders.
In this view, NBT is a liability compared to NSR which is an asset.
Still, I still think that selling NBTs is Nuâs first way of generating revenues because I do not have any issue right now with selling liabilities.
But with NBT/NSR bi-directional exchange via the issuance/burning mechanism for both tokens, emphasized by your idea of automatic auction by the way, makes potentially NBT/NSR both sides of the same coin.
So we could argue also that NSR is a liability and NBT is an asset, if I play devilâs adocate.
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This is exactly the duality that I hope we can bring to the table. Parking rates are the way to use NBT as an asset to increase the price of NSR when NSR price is low. That realization can only happen once frictionless burn gateways are acknowledged as a necessity to the basic function of Nu.
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How about +20k? Weâre at 62.5% buy and 37.5% sell.
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