Nu is governed by a decentralized body of shareholders. As such, it is difficult to assess the priorities of such an organization. This motion will serve as a rallying point for shareholder consensus as well as a pledge to NuBits users concerning what they can expect in extreme circumstances. Though future shareholders can always override past blockchain decisions, this declaration will set both precident and default expectations for non-colluding bodies in the network to rely on.
Every item listed in this motion except the last is expressed as a compulsory for shareholders. With that in mind, the ultimate motivation behind each item must be to protect shareholder investments. Shareholders agree that these items are beneficial and perhaps necessary for the health of the network and shareholder investments in the long term.
the minters of NuShares, agree upon the following philosophies of NuBit peg maintenance:
Any economy has interest rates as a way to promote holding and use of the currency unit. As such, interest rates should be provided when the network is not in a surplus state to promote growth. They should be offered drastically when Nu enters a temporary recession. Therefore, shareholders are encouraged to institute park rates at all times excepting when significant NuShare buybacks are in effect. During share dilutions, park rates are expected to enter a greatly inflated state. Shareholders should seek to find interest rates that hold the network in a low-interest state, to achieve network stability in the long term.
When network reserves are trending below their target and stable reserves are being sold to protect the peg, shareholders are encouraged to increase network fees. The effect is two-fold, firstly to generate additional funds and secondly to increase friction on the flow of NuBits between exchanges.
As all dynamic and stable reserves are sold off to protect the peg other than the primary functional bitcoin reserve, NuShare auctions will weigh on the shareholders to turn the blockchain key for each wave of shares. To keep consensus and understanding amongst NuBit owners and shareholders alike, the year will be broken up into fiscal quarters. A fixed amount of NuShares per quarter will be budgeted to FLOT to protect the peg in economic downturn.
FLOT has been given 25 million NSR for use to preserve the peg. Every 3 months, starting with January 1st 2016, that supply will be replenished. This constitutes the extent of NuShare grants shareholders are prepared to perform to protect the peg as well as a pledge to continually attempt to pay off NuBit debt each quarter.
If FLOT has 0 NSR in the reserve, one must assume that the network has entered a dire state. If the NSR reserve has sold all its shares in a 3 month period and park rates have accelerated to a large store of blockchain debt then the network will begin to withhold funds from speculators. This will manifest as a network spread where the sell price of a NuBit is multiplied by a number larger than 1 and the buy price by a number less than 1. In so doing, the network sacrifices the involatility of the peg to lower maintenance costs. As the NSR reserve will continue to be replenished at a constant rate, this will cause NuBits to be taken out of circulation faster and put back in slower. This is the final defense of shareholders to protect the fundamental distribution of shares and keep the blockchain safe from cryptographic attack.