Draft - Motion to adjust dividend payout schedule from KTm's first proposal

NuShares Motions
#4

I am not adverse to this modification to my initial proposal. I have questions that I would need to have answers for before I could fully support it.

  1. Persistant operations will be time consuming. It is true that today’s state of affairs with NuBot make it less work, but there is still overhead that will be required to keep ahead of “the next vote”. What triggers the need for a new grant? If it is not based on a sales goal (as my original proposal was) what liquidity balance needs to be attained to move from “here” to “there”?

  2. I would like to see a mechanism or process put into practice that would allow me—or any other custodian who has a similar arrangement—to be able to provably destroy NBT if it is required. A burn address or another process that shareholders can validate for themselves would be sufficient though I am sure that there are other options that may be better for the network.

  3. When a vote is cast to grant an additional amount of NBT I would like to have the “second” (or “seconds”) already identified. This person, persons, or organization would be the recipient of the funds should I be unable or unwilling to continue operations at some point in the future. I do not yet have a suggestion for how this “second” could be identified or voted on; it is something I will need to think more about (and am open to suggestions).

  4. Over what timeline would the dividends be collected? If the goal is to pay out a maximum of 5% of the total grant, over some period of time, the network could be even better protected by only withholding 0.5% or 1% per sale. If my math is correct, a hypothetical situation would be this:

Day 1:
SELL 1,800,000 NBT / BUY 0
// During the next day, 50k NBT are purchased
Day 2:
SELL 1,750,000 NBT / BUY 45,500 NBT / HELD 500 NBT
// The final position ends with 100k NBT in added buy-side liquidity
Day 3: 
SELL 1,650,000 NBT / BUY 144,500 NBT / HELD 1,500 NBT
// This continues until the total withholding is equal to 5% of the original grant amount, 90k NBT. When that is reached, the dividend is paid, and the original grant will no longer have withholdings made against it.
// Following this model differs from a straight 5% withholding:
Day 1B:
SELL 1,800,000 NBT / BUY 0
// During the next day, 50k NBT are purchased
Day 2B:
SELL 1,750,000 NBT / BUY 47,500 NBT  / HELD 2,500 NBT  
Day 3B: 
SELL 1,650,000 NBT / BUY 142,500 NBT / HELD 7,500 NBT
// etc.

  1. In the scenario above, once the dividend is paid, what are my obligations to the shareholders?

  2. Would a dividend withholding be made after every sale, at the end of every day (based on the then-current buy side), or using some other mechanism?

  3. Reporting would (presumably) be easier. I am waiting for @Ben to come back from his vacation, but within the next day we will launch the first publicly accessible reporting tool showing my operations. Once the shareholders have had a chance to review it, we’ll need to discuss how it would need to change (if at all) to support this new model.

I’m going to have more questions but those are the first that came to mind.

//KTm

#5

Good questions. I’ll add two thoughts:

  1. Burn addresses are easy to create and verify. That should not cause any trouble.
  2. The primary purpose of this motion appears to be to phase out dividends from this custodianship entirely, so the specifics of how and when the second dividend would be paid are not as great a focus as some of the other aspects of the motion.
#6

I think a 2.5%-5% dividend is reasonable over the lifetime of a hybrid/buy side grant. I also like the reduction in complexity which hopefully would maintain or reduce the fees the custodian will charge the shareholders for the grant operations. This includes reducing the dividend payouts to e.g. at 50% mark and at the end when the grant if fulfilled. Regarding withholding during operations, I would leave it to @ktm to find an optimum between securing dividends and the amount of administration and reporting. Maybe that is just monthly or if fully automated daily.

I agree with @ktm that we need to strengthen the continuity by identifying ‘seconds’. Ideally those ‘seconds’ take part in the operation of the grant for a small percentage and are building trust with the Shareholders (aspiring custodians) or are already trusted operators of similar grants themselves now or in the past.

@chronos I don’t think this motion tries to phase out dividends from this type of custodianship, but interesting to hear whether OP thinks differently. I agree with others that at this stage NuNet’s share price should provide enough benefits to shareholders. There is a risk though that interest in maintaining the peg would diminish until it is too late. The dividends are a good incentive for Shareholders to keep things running smoothly and not only rely on share price increases.

#7

I suggest “no dividend” at all. thanks for your operation ,@KTm

Our NSR price is maintained at high level due to KTm’s LPC hardwork, this is enough for me to vote KTm as LPC and get her/his rewards.

I suggest we issue more NSR rather than using sale of NBT to develope Nu system.

#8

Equity = Assets- Liabilities

Asset: USD/BTC on buy wall, and NSR
Liabilities: NBT

If we exclude NSR, our equity is negtive because some NBT leaked as dividend.

So NSR is our main source of asset, NSR will help NBT peg in case of emergency.

Why not directly spend our NSR by issue more and leave NBT along?

For instance, we need 4000$/NBT to develope an andriod version wallet, we issue 1.3million extra NSR, thun all NSR holders diluted by 0.13%, NSR price may drop, but after that project completed, out Nu system get benefited and NSR goes up to even higher. We give 1.3million NSR to matthew if he wanna join Nu community or we give him BTC/USD after an auction.

Our NSR holders make dicision to spend ourselves’ money(NSR) and get benefit or punishment.

3 Likes
#9

If currency burning were implemented, this NSR issuance could become possible.

#10

I believe both the dividend and the currency burning ( **Draft** motion for currency burning ) are useful tools. They are not mutually exclusive in my opinion and should be able to be used as deemed appropriate by the shareholders.

#11

IMO,

  1. Dividend is good, but should be used when Nu system has more profit in future.
  2. NBT burned for NSR is also useful tool, but this is the last solution when none volunteers will help our pegging and in emergency we have to negotiate with the NBT holders about NBT/NSR ratio, and NBT holders may put us in a very disadvantage position by giving low NBT/NSR ratio offer.

Our NSR value mainly comes from the NBT sale quantity rather than dividend paid, plz reference AAPL. Stop dividend in initial stage of Nu, and buy wall is stronger, then no NBT burning needed.

#12

Here’s my question to OP and shareholders in general …

Reducing the dividend payment schedule from 10% to 5% could effectively double the lifespan of the grant and double the payment periods that a custodian must process. What do we do when the shareholders vote for an existing custodian to act a certain way but the custodian doesn’t feel that they’re being compensated adequately for the additional effort?

Seems like a dangerous area to test, imo. I’d much rather see additional large LPC’s stepping up to take on some of the responsibility. We’re going to need the money supply eventually, and probably sooner rather than later. There are several trusted community members here already that could fill this role.

pb

1 Like
#13

I’m still waiting for more feedback on this, and for people to give their opinions on @KTm’s questions. However, I thought it would be good to address this point:

I think it would make much more sense to reduce the number of dividend payment periods to two, with one dividend payment coming at the halfway mark ($45,000 in this case, although we just did $50,000) and then the second payment at the conclusion of the grant ($45,000 again, or $40,000 in our current operations).

I’m not sure there’s a downside to it. The custodian would have less to worry about, and shareholders would be incentivized to hold onto their shares rather than day-trading them. Dividends for major corporations are paid quarterly, so there’s no reason we should be stressing our custodians with daily or weekly dividends (as would be likely near the end of the current payout schedule with KTm). This reduced-frequency payout schedule would also serve a benefit because custodians would no longer feel like they are being under-compensated for the transactional work they do; rather, their compensation would largely be determined by the level of responsibility they accept for maintaining the integrity of Nu’s financial operations.

#14

The extension of the operations that @pennybreaker is referring to is because @KTm’s grant would move from an “operating until dividends have depleted the grant amount” to “operating until some point in the future”.

The custodians would have less to deal with, sure, because they would not need to be tracking daily sales, but it most definitely increases the length of time that the grant would operate.

I’m conceptually in favor of what is being proposed, but I’d like to see more discussion when it comes to how a custodian can provide a limited dividend grant and not be tether to it for an indeterminant amount of time.

#15

Its clearly a point to be added in future proposals . Multiple exit conditions instead of just one, chained with logical operators.

Definitely a lesson learned from our first ever large custodian operation.

#16

I don’t want to get too far off topic here but would like to point out that day-trading creates volume and popularity. Two very good things for all shareholders.

Also, it seems to me that reducing expected dividend earnings by 95% would make a lot of people more inclined to day-trade rather than hold.

#17

I tend to think custodian motions currently passed are contract signed. Shareholder can express their wishes to change the terms of an existing motion but the relevant custodian has to agree with it for it to take effect.

#18

Would modifying the custodial fee to reflect a length of time served, like an annual salary, be more appropriate in this structure?

At 5% (or 2.5%, or 1%) it would probably be easiest to put aside the first 5% of sales and then save the rest in reserve. This would eliminate daily requirements for tracking. Or, set aside two or three blocks of payments that up to 5%.

@KTm do you generally support this motion? If so you might be the best person to raise it in final form. I think consensus is developing that the custodial terms you were elected to should be unchangeable without your consent.

1 Like
#19

I wonder why there needs consensus be developed… You can’t shouldn’t force somebody to do anything this person doesn’t like to do and in this special case that differs from what has been agreed on.
This is a contract.
That can be altered, but only if all parties of that contract - in this case the voting NuShares holders and the custodian - agree!

For sure @KTm needs to agree!

Nu can be glad to have custodians like @KTm and should never intend to breach an agreement with them. I mean, NuShares holders want custodians to stick to their part of the contract. NuShares holders need to do the same.
The rest is for the voting upon new or altered motions, grants, etc.

3 Likes
#20

Totally agree. Honestly I think a bonus should be given to KTm for the extra work and care she has given as the first and major liquidity provider. Extra reward for extra dedication.

1 Like
#21

No need for this, for sure. The community’s patience has been excellent and I can ask for nothing more than that.

I support the direction that this motion goes in, but I’m still unclear about the mechanics. I’ll address my concerns in after my next comment:

This is a valid point. A contrary opinion is shareholders would also be disappointed if the Nu ecosystem took a hit because there was a “run on the bank”. Perception drives a vast amount of trading in the cryptomarkets in these early days. We’re not supporting a deep enough amount of liquidity yet to be able to absorb the damage that concerted FUD campaign could generate unless we stay as close to 100%-backed as possible.

If I were to be asked (and the shareholders agreed to my modified proposal) to move to a system like this, I would structure the dividend payments to be issued every one|two|four weeks (for an amount to still be determined; one that is healthy for the ecosystem, but not unbalancing or too small). These dividends would be made until the agreed to payout was reached.

Topics for community discussion before I can submit a new proposal:

  1. I’ve been giving a lot of thought lately to how I can generate profits for the shareholders using the current grant. I would like to set up a trial run that would last one to two weeks. During that time period I would increase the sell/buy spread by a small amount. The profits on this spread would be tracked and at the end of the trial, the shareholders will be provided a breakdown (and full trade logs) showing what the net result was.

  2. @jmiller and I are the only major custodians granted NBT directly running bots right now. We have LPC’s, too, and I’ve very thankful for them. What I’d like to see is a disbursement of my initial grant to a series of custodians voted on by the shareholders. It could be as simple as one or two new ones to start, each who would receive a distribution by me of (arbitrary amount to be discussed, but call it 100K NBT). They would then need to work in concert to manage the funds like I am (as a “spread-profit taker”) and support the markets.

    I don’t plan on going anywhere, but it has been brought up many times on this forum that shareholders would like to see a reduction in individual custodian risk. From my understanding, multiple custodians on a single exchange pair is imminent, so we could continue to support everything that we currently are, but also protect against times that a custodian’s bots may drop offline due to technical issues.

A personal note:
My goal has always been, and continues to be, to make Nu a success. My profit will come from an increase in NSR’s value, which was accurately mentioned earlier in this thread as a by-product of successfully making markets for NBT and by generating funds to issue dividends to shareholders. While I’m not obligated to reveal what I am using (and have used) portions of the grant fee for, I’d like to give the shareholders insight into it. A portion has been used for on-going operating costs. I have bot and Nu daemon servers running on different secured hosts that allow me to place my bots in geographically advantageous locations. I also have been putting portions of the funds into play to help promote the Nu ecosystem (through tipping and other bonus payments to people working hard on the system). A significant portion hasn’t been used – mainly because any “unbacked” NBT are a minor danger to the system until it gets large enough to support it – and will last me at my current burn rate for a number of months.

My time is worth a lot, but I see giving that as a shareholder service that ultimately may benefit me as a shareholder. I see people in this community tirelessly working towards the goal of mass-adoption of Nu without asking for compensation. It energizes me to continue to do the same thing.

I consider these these are the “Dark Ages” of the Nu ecosystem…not because they are economically bad or that we’re fighting distrust or despair, but because we’re working in the “dark” without a lot of support or tools to make it easier. I’m committed to working with the community and the Nu development teams to improve this. I see the work that each and every one of you are doing and I want you to know that it will make a difference and the world will be a better place because of it.

In closing, if the community find ways to continue to be patient with me as I work through the struggles, and continues to support my efforts, we’ll get through these next couple of weeks and months. We’ll find ourselves in a place full of reports, transparency, and opportunities.

… see what happens when I travel for work and am gone from the forums for too long? I start to write massive tomes of scattered opinions.

//KTm

5 Likes
#22

If you had not already considered doing so, I would recommend that you set up a separate conversation with @pennybreaker and @Chronos to get their opinions on the type of spread that could be sustained and what that would mean for peg maintenance.

I’ve acted as intermediary at times between you and @desrever regarding the withholdings functionality on the bot, but I’d also recommend that when you have a chance, that you two have a formal discussion here on the boards (or in a PM) to make sure that the bot code is configured in such a way that you can meet any future agreed-to structure.

An update on public reporting – As I noted in a different thread, once we tested the reporting tool on a live custodial setting, I identified areas where it wasn’t working correctly because the data being returned didn’t match what was expected. I’ve made significant progress refactoring those areas and have been working with the NuBot team to make updates to the way that the bot logs its actions. I don’t have an ETA yet for the final release, but it’s being worked on as quickly as possible.

In the meanwhile you may want to manually prepare a follow-up report to give shareholders insight into the operations of the grant. I apologize for the delay and the added burden that it places on you. I want to make sure that there are no issues with the data being presented because IMHO it’s better to not have the information than it is to work off of incorrect information.

1 Like
#23

I will do that.

…and do this, too.

Yes, it has been far too long without a reporting. I have obligations I must attend to right now, but I will make this a priority to have as soon as possible for the shareholders.

Thank you for your work on the reporting tool. From what you have shown me, it is shaping up very to be very powerful tool for we custodians.

//KTm