[Draft Motion] Remove Tier 6 (NSR Sales) from the network’s liquidity operations

[tomjoad]

So if this passes, Nu will have absolutely no intention of ever removing NBT from circulation perminently?

The network already has transaction fees that destroy NBT, and shareholders have signaled their intent to introduce volume-dependent transaction fees in the next wave of development. Those volume-dependent transaction fees will be a powerful, permanent deflationary force on the circulating supply of NuBits.

Other deflationary supply mechanisms during a crisis, like RNA, have been proposed but not yet garnered majority support. I’m sure other techniques will be proposed in the future.

This motion is being presented because Tier 6 (NSR Sales) has been shown to be ineffective at reducing the supply of NBT without collapsing the market capitalization.

[Nagalim]

The market collapsed before nsr sales. It collapsed when the buy side ran out. It will remain collapsed until we bring the buy walls back. I’m confused how this motion helps us get out of the hole we’re currently in.

[tomjoad]

The market collapsed before nsr sales. It collapsed when the buy side ran out.

Exactly, because shareholders have shown a commitment to upholding motions. When the buy-side ran out, users knew that NuShares would need to be diluted as per Tier 6 of our liquidity operations model, and so they sold their NSR.

This motion does not solve the current problem of low NBT demand. We need NBT demand to increase again, which is possible and likely when a BTC bear cycle begins again. Or, shareholders can choose to offer higher Tier 5 parking rates as a temporary measure.

This motion solves the fundamental problem of why NuShares have fallen from 15th to 52nd in market cap; a lack of perceived scarcity.

[Nagalim]

Nushares dropped because confidence in Nu keeping the peg has been lost. I highly doubt demand will just drop in our laps and we’re already offering interest rates that greatly exceed most any other economic system out there. I think it’s very clear that park rates are ineffective at garnering nbt demand.

[masterOfDisaster]

The NSR sales are the only way to directly support the buy side, that works to some degree.
2.4 million NSR git sold and put 6.9 BTC on buy side.
NSR sales can remove NBT from the market, e.g. if the 6.9 BTC get traded for NBT and the NBT get burned.
Tx fees could do that too, burn NBT, but there are just too few tx to put much hope in in at the moment.
Park rates don’t remove NBT from the market, on the contrary: they create additional.

If we remove NSR sales now, we are dead in the water and can only hope for a miracle to happen.

I wouldn’t wonder, if we cause a bank run by NBT holders that wait and don’t sell at a premium of 5%.

And I wouldn’t wonder, if shareholders realize that and sell their NSR like there’s no tomorrow, knowing that there might be no tommorrow without the NSR sale.

This could cause the NSR rate to drop even more than NSR sales ever could.

Even if it pans out - what good is an increased NSR rate, if we can’t utilize the asset in which Nu “parked” so much BTC proceeds?
To support current shareholders abandon a sinking ship?
…because without NSR sales, this ship will be sinking.
We are in a dire situation.
Without NSR sales I don’t see a way for Nu to survive.
It will be hard even with NSR sales.

Prohibiting NSR sales now is irresponsible.
Once the FLOT NSR reserve runs out, I hope shareholders are wise enough, act responsibly and grant FLOT with fresh NSR to have them sold.

[Sentinelrv]

and we’re already offering interest rates that greatly exceed most any other economic system out there. I think it’s very clear that park rates are ineffective at garnering nbt demand.

I’m not so sure about that. Have you been reading this discussion thread starting here?

Why are tier 5 and 6 (park rates and NSR sales) only being partially utilised?

Have these rates been advertised in Poloniex's chat room, or are we assuming they already know about it? Just because people park doesn't mean that the NuBits were bought from an exchange. They may have been sitting in a wallet up until now, which does us no good and wastes money. We need people at exchanges to know about the rates, so they can buy.

In that thread I’m talking about the fact that shareholders are afraid to advertise parking rates because the interest rates seem abnormally high to the point they would scare people away rather than encourage them to park. The thing is though that we’re not advertising the correct rates. We’ve been advertising APR, which is a yearly rate. If we’re advertising an APR rate of 50% for parking 22.8 days, that is only 3.13% interest for a single park period. If somebody parks, then they’re not going to receive 50% interest. Nu will only end up paying out 3.13%, which is significantly smaller than we’re making it appear in our advertising. 50% interest sounds fishy and unsustainable, where 3.13% does not.

We could be doing multiple things wrong here. We could be assuming that NuBits users already know about the park rates by looking at their clients. They may not be looking at their client or even know about the raised rates. Shareholders may not be advertising park rates for fear of causing panic selling like @Cybnate mentioned, so few people may even know about the opportunity to park. And shareholders would fear advertising because they’ve been using the wrong rates to begin with, which are crazy high.

We should only be advertising interest rates that people will actually receive in a given park period. Anything beyond that gives you crazy high percentages which Nu won’t have to pay out anyway, unless shareholders were to hold parking rates at the same level for an entire year, allowing people to park many multiple times. For example, on Poloniex chat we should be saying something like the following: “Nu is offering 3.13% for a 22 day park period.” Not Nu is offering 50% APR to park NuBits. It’s not true because they won’t receive 50% interest when their park period is up and it most likely scares people away. Please read the discussion I linked. I go into it a lot more. I feel like we’ve been going about the advertising of park rates all wrong, which could be one of the reasons they’re not as effective right now.

[Cybnate]

Once the FLOT NSR reserve runs out, I hope shareholders are wise enough, act responsibly and grant FLOT with fresh NSR to have them sold.

Supportive of that, although I hope the 25m would be adequate. I would encourage Shareholders to buy Shares just now. Just see it as an additional ICO to kickstart liquidity operations and pay for the ongoing operations and developments we all voted for. And they are cheap! I just bought a few at least to compensate the dilution created by the sales. Buy low, sell high they say.

[Sentinelrv]

I agree that trying to store our reserves in NuShares has ultimately failed, however I am hesitant to abandon the current tier 6 right at this moment due to the fact that we still need to build our tier 4 buy side reserve back up. Bitcoin reversing course doesn’t necessarily mean that people will come back to NuBits when they see what our current situation is. If they see that we are taking the necessary steps through NSR sales to build our reserve back up, then they may be more willing to come back to NuBits if Bitcoin reverses in price.

The best time in my opinion to discontinue tier 6 may be after we build our reserve back up and we no longer need to sell NuShares. Our increased tier 4 reserve will provide a larger buffer, which means park rates won’t need to be used as much. We surely wouldn’t need to jack the rates up as high as we have them right now. At the moment though we have no tier 4 buffer, which is why parking rates need to be so high. Once that reserve gets built back up through NSR sales, then we can rely on tier 4 and parking rates more and discontinuing tier 6 would make more sense. In the present situation though we unfortunately need it.

There is also the possibility the reserve could be filled by offering other products like our presently planned pegs to the Euro, Yuan and SDR or the potential fixed supply currency, but I fear the market may reject these new products if we offered them now because of our current financial situation. Again, NuShare sales would be the only way to get us back on stable footing to the point where the market can trust us enough again to accept and purchase our new products. So once again, I think we need tier 6 right now, but later on after our reserve has been increased we can remove it. Unfortunately, it most likely means some NuShare dilution until the point comes where we don’t need it anymore.

[Sentinelrv]

I would encourage Shareholders to buy Shares just now. Just see it as an additional ICO to kickstart liquidity operations and pay for the ongoing operations and developments we all voted for. And they are cheap! I just bought a few at least to compensate the dilution created by the sales. Buy low, sell high they say.

This is what I have been doing to support the network. I bought around 333k the other day not only to get cheap NuShares, but to help support the price in the face of the sales.

[Sentinelrv]

@tomjoad, I have a question about your actual motion text here…

Tier 6 (NSR Sales) will be removed from the network’s liquidity operations. Tier 5 (Parking Rates) will be the final line of peg defense unless new Tiers are introduced through future motions.

Are you speaking about tier 6 only in the context of defending the peg in low demand cycles as a final line of defense? What about high demand cycles? I see you wrote this below it…

This motion will make NuShares (NSR) more desirable to own because of the predictable and limited nature of any future supply increases.

Are you speaking here of minting rewards or actually using NuShare sales in a limited way other than as a last line of defense? For example, let’s say we use tier 6 in this instance to get back on track with our tier 4 reserve. After tier 4 is filled, we pass this motion to discontinue use of tier 6. Afterwards, Nu hits good times again and the NuShare price is higher than ever. During these good times, would this motion allow or prevent us from being able to sell NuShares in order to tap our higher market cap for things like filling our reserve even higher or gaining funding for other projects?

We have always sold NuShares when we’re in low demand cycles and at the bottom of our market cap, but never when it’s high where we could use it to benefit us. Does your motion prevent us from being able to do this? If not, it might be best to spell this out more clearly in the motion text.

I have heard others voice this concern as well, so I wanted to make sure it was clear.

[mhps]

I agree that trying to store our reserves in NuShares has ultimately failed

I think this conclusion is too early. Buyback did push up share price significantly. That memory is still in many people’s mind. Knowing that there will be buyback someday encourage people to buy.

[Sentinelrv]

I think this conclusion is too early. Buyback did push up share price significantly. That memory is still in many people’s mind. Knowing that there will be buyback someday encourage people to buy.

Nagalim also said this about it…

[Draft] motion to increase the percentage of reserves

Proof is in the pudding. The question is how many shares does it take to right the ship and if it is more or less than the burned shares.

[mhps]

I think it is a matter of fine tuning rather than throw Tier 6 out f the window.

[jooize]

Park rates don’t remove NBT from the market, on the contrary: they create additional.

I bet you know this and refer to the end result, but parking removes NuBits from the market until unparked, which could be enough time and opportunity for the network to improve beyond the cost of interest. I haven’t understood if that’s how we can use them now, though.

I agree that trying to store our reserves in NuShares has ultimately failed,

I think this conclusion is too early.

Concur.

FLOT NSR Operations (buy side)

Assuming Nu regains liquidity and begins keeping larger reserves (or otherwise improves the issue), then NuShares at moments such as this may become seen as the investment opportunity we believe it to be.

NuShare sales in combination with buybacks should work a lot better when demand is where I believe it should be, by how I value Nu. Have we been in this bad a situation before? I imagine our current lack of liquidity doesn’t make us attractive to invest in while we also continue applying downward pressure on the shares they’d buy.

As long as NuBits keeps surviving using NuShare sales, Tier 6 should function? Or am I thinking faultily? We need to survive to prove that it works, and need investors to risk their funds until proven.

[mhps]

Agree.

NuShare sales in combination with buybacks should work a lot better when demand is where I believe it should be, by how I value Nu.

I tend to think auction is better than forced selling NSR on the market.

[tomjoad]

Afterwards, Nu hits good times again and the NuShare price is higher than ever. During these good times, would this motion allow or prevent us from being able to sell NuShares in order to tap our higher market cap for things like filling our reserve even higher or gaining funding for other projects?

This motion would strictly be limited to diluting NSR for the purposes of peg defense.

To your first point, if NuShares are in “good times” that means that NuBit sales are robust. This means there should be no need for NSR dilution to increase Tier 4 reserves, because the network can simply retain more of the proceeds of NBT sales.

To your second point, any NuShare dilution that isn’t accompanied by a corresponding increase in another asset will destroy our market capitalization. This should be obvious to all shareholders by now. Diluting NSR to raise funding for other projects may not impair the market cap when shareholders receive an asset in return, such as the original offer to receive BKS in exchange for NSR. I would support NSR dilution in that instance.

Smart shareholders see that we haven’t committed to making their assets scarce and valuable, and so they continue to sell. $0.001464 per NSR now.

[MaVo]

Smart shareholders see that we haven’t committed to making their assets scarce and valuable, and so they continue to sell. $0.001464 per NSR now.

This is one of the most misleading statements I have ever read on this forum.

[tomjoad]

This is one of the most misleading statements I have ever read on this forum.

I would encourage you to expand on this statement, as it’s not very helpful for understanding your disagreement with it.

[MaVo]

I was thinking about asking you to elaborate on your statement, but I decided it doesn’t make much sense to ask for something that I can make up myself.

[jooize]

I don’t get it. NuShares can undeniably be considered lacking in scarcity because of Tier 6. Whether NuShare sales is a good idea many disagree about, and how valuable NuShares can be in either case is debatable, but I find it easier to see and more intuitive for NuShares to be more valuable without NuShare sales, assuming Nu is stable.

Is the misleading part that the cause of NuShares’ market value could be solely from Nu’s NuShare sales and not from other shareholders selling?