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.
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?
Selling shares is a stabilization mechanism. Of course selling shares when the system is already stable would drop the price. As would not selling shares when the system isn’t stable.
Discontinuing NuShare sales for that potential relies on Nu being able to function without them, which I assume @tomjoad believes is possible.
I do not understand how we would get US NuBits back on track without NuShare sales, or a rise in NuBit sales. Simply with Park Rates (Tier 5) to motivate NuBit sales?
Selling a limited number of NuShares in good times rather than bad times is an idea that @Sabreiib posted about a couple days ago.
I see what you’re saying, but I can think of a reason for it. Tier 4 reserves may be high because of high NuBit sales (meaning there may not be an urgent need for NSR sales), however every month we have expenses: development on the core protocol, NuDroid updates, contractor expenses, especially the high cost of liquidity provision. All these expenses are paid out in NuBits, which are not backed by Bitcoin from actual sales. Selling a limited amount of NuShares during good times may help to make up some of the money we put out to keep the network running. This would be done because final revenue through transaction fees is still too low to pay for the monthly expenses we have. I’m not talking about a lot (like $100-200k), just a limited amount which wouldn’t destroy the NuShares market cap.
To support Nu’s main product there isn’t much choice beyond trying to sell NSR. As I said before, if we don’t allow selling NSR for peg defense then there is also no reason for buyback either. Fundamentally we need a way to earn revenue from NBT volume and also capitalize on our market influence - when times are good, of course. I asked for revenue sharing with NuLagoon but they didn’t like it; it’s not an easy job and my only hopes are on BCE.
Do companies in the real world do what I’m talking about above, issue limited amounts of new shares during good times in order to raise capital for something?
In real world,companies with much profit will buyback share at high price, then they either destroy them or reward some employee.
Some people misunderstand this behavoir, the action’s precondition is the companies have plenty of cash/profit.
In real world, there is another type of companies want to sell share HIGH and destroy debts, it’s called “debt-to-equity swap”.
Both behaviors above are smart, however,
1)buyback share @high price with bad fianance status is stupid.
2)sell share at low price for “debt-to-equity swap” is also stupid.
To sum up, buyback share if you have much profit, or sell share @ high price to destroy debts when you have tons of debts after share price lifted to high level artificially.
Nu has done one stupid thing(buyback high with bad financial status), and have to do another stupid otherwise you die.
You always find two sub reports in financial report of public companies, cash flow report and equity-liability report.
The “good” and “bad” “cash flow” status of Nu are influenced by outsides, it fluctuates, if BTC price had not risen, Nu may keep "“good” cash flow status today, but the “equity-liability” status is relative stable and easy to predict a company’s fate although some people deny to admit Nu is a company. A ORGANIZATION living without outside donate is a company, whatever you call it, DAC or DAO. It must comply the basic economics rule, IT tech can NOT change basic economics rules, even satoshi’s bitcoin comply the gold standard theory hundreds of years agao.
If you want to be rich and deserved to be rich, equip yourslves with decent financial/accounting knowledge. We are far far from Satoshi’s economics level.
Sometimes the learning curve needs to be steep…
Thank you for this short private lesson.
Nu will learn from this if and when it’s going to survive this situation.
Is it fair to deduce that instead of buying back NSR we should have distributed those funds as dividends? If we had a solid record of regularly paying out dividends it would attract more investors who would buy the NSR. Buying back NSR only caused current shareholders to dump and those who didn’t are now bagholders