Ending counterparty risk now and holding an NSR auction

The Plaza
#1

I designed Nu to maintain stable currency pricing as currency passed through cycles of increased and reduced demand. Cyclical changes in the level of demand are inevitable and the system can gracefully handle those changes while maintaining the peg. We can see that we are in the midst of a time of reduced demand as indicated by the recent decline in buy side liquidity. This means it is time to use interest rates as well as issuing new NSR where the proceeds will be used to buy NuBits or increase buy side liquidity. Shareholders won’t have the ability to create NSR by themselves using the protocol until the next protocol change is introduced. However, I have the ability to simulate this with the undistributed NSR I control.

It is true that much of the reason why this is needed is the losses that have occurred as a result of poor shareholder speculations. Shareholders have lost value in the BTC held by myself, KTm and Jamie. They have also taken large losses with the shareholder funds lost at BTER and Excoin. It only makes sense that shareholders would experience a dilution of their shares as we take steps to regain this lost value. Some people have the perspective that shareholders have been unlucky by having experienced these losses. While it is possible there is some validity to that perspective, it is not helpful. A much more helpful and empowering perspective is that shareholders made poor choices that increased risk far beyond what it needed to be. We are essentially a subset of Bitcoiners, who can be characterized as aggressive risk takers. So shareholders have taken risks on the value of BTC, on the reliability of exchanges and on the reliability of myself, KTm and Jamie. The risk taken on myself, KTm and Jamie have worked out so far. The speculation on BTC price and exchange default risk went quite badly, on the other hand. The notion of taking large unnecessary risks with network assets is very much at odds with trying to maintain a sure thing like a pegged currency. It won’t create trust in the stable value of NuBits. It is a serious mistake. It is contrary to the design I first revealed last April and have reiterated loudly ever since.

Here is a quote from my opening paragraph in Decentralized liquidity without counterparty risk not yet implemented, globally pinned for weeks, so that it has been the most prominent message on our forum. I believe it needs even more attention than it has received:

The urgency and prominence I assigned to this message has proved very appropriate. If we want the Nu network to succeed, we must send a strong signal that shareholders are committed to containing risk by implementing the design in full, and not a centralized, deformed variant laden with counterparty risk as shareholders have decided to do to date. I certainly wouldn’t bid on NuShares unless I saw shareholders make this commitment to quit their gambling ways. To demonstrate this commitment, shareholders need to pass this motion and they also need to quickly pass additional (existing) LPC proposals that provide liquidity with zero systemic risk by utilizing private funds. If this is done, our solution will have the credibility needed to have a successful NSR auction.

So, I’m proposing that we hold a blind auction for 100 million NSR in two weeks time. Bids would be accepted via Bitmessage or an email address dedicated to the purpose. Bids will only be accepted from business partners, which means you are or will be active in creating value for the network outside the scope of being a shareholder. The top price, lowest price and total funds raised will be revealed publicly at the conclusion of the auction. NBT, BTC or PPC will be accepted as payment, with a 2% surcharge added to bids when PPC or BTC is used. The exchange rate used for PPC and BTC will be the price at the time bids are due. Multiple bids from the same individual will not be accepted.

I invite comment on these proposed actions, both the implementation of the original design that excludes counterparty risk and the NSR auction. I see the former as necessary to ensure the success of the latter.

5 Likes
[Passed] Motion to end LPC operations of KTm, Jamie and NSR sales of Jordan
Wake up Shareholders! Raise Park Rates Now or FLOT Will Need to Start Selling NuShares to Increase Reserves!
History of the Nu Network (Feedback Please)
[Withdrawn] Motion to create a new Tier 6 (Restricted Network Access) of liquidity
#2

Do you intend to give 100m nsr to a single bidder?
If this the case I cannot participate into the auction since it would require probably at least 100k nbt, i guess.
I think that raising money from a pot and distribute the shares to each participant in proportion to the amount contributed to by the participant would be much better.
Setting a min amount is probably needed.
That way i feel you would be able to raise more money and distribute to more shareholders.
Could you clarifiy on that?

#3

A blind auction would probably work this way:

  • Each bid is an offer to buy a specified amount of NSR for a given price
  • At the end of the auction, the highest offers that sum up to 100M NSR are accepted
1 Like
#4

Yes. I was thinking a 2000 NBT minimum.

Perhaps we should put a limit of the number of NSR that can be bid for to prevent this outcome. What does everyone think about a 30 million NSR limit per bidder?

1 Like
#5

Can you elaborate on this? What is required to count as “business partner”? Would an exchange be a business partner?

I agree with @cryptog that the details of the auction should be clarified, since a “blind auction” only means that the bidders don’t know of each others bid. If you say that JL is allowed to serve fractional bids then its an easy calculation as you say. Otherwise its a knapsack problem if you want to maximize the return.

How do you want to ensure this without asking for private information?

#6

“This means it is time to use interest rates as well as issuing new NSR where the proceeds will be used to buy NuBits or increase buy side liquidity. Shareholders won’t have the ability to create NSR by themselves using the protocol until the next protocol change is introduced. However, I have the ability to simulate this with the undistributed NSR I control.”

–> that makes sense

#7

What’s the intended proceeds with the 100mNSR sell?

#8

Most likely to buy back nbt and burn them to support the peg.
At current price Nu could raise 400k NBT.

3 Likes
#9

I think it depends on the intention.
I feel the intention is to raise as much money from shareholders as possible while keeping some constraints on the time required to raise the money.
At 2000 NBT min, it looks like you are having in mind a min of 0.002 NBT per share coupled with a 1m NSR lot min buy. Which would correspond to a total of 100 shareholders’ contributions to get 100m NSR.
This is of course theoretically possible and probably good from a distribution perspective (I would want personally to distribute voting power as much as possible) but obviously timing consuming to check each contribution and make the coordination.
10 shareholders each buying 10m NSR at 0.002 NBT is quicker to manage.
But in that case, it would require 20,000 NBT…, which would eliminate most shareholders, and therefore have a bad distribution configuration.

From my perspective, (minimizing required time, maximizing raised money, maximizing distribution) is the ideal package.

1 Like
#10

BTW, I have not received any bitmessage addressed to “all shareholders” from Jordan Lee since Oct/2014.
I am using Bitmessage 0.4.4

#11

Bids will only be accepted from business partners, which means you are
or will be active in creating value for the network outside the scope of
being a shareholder.

i understand the interest in attracting active business partners, i dont have anything against that, except that it limits the potential buyers, i think everybody should be able to participate in the auction.

#12

I propose 20/25 million to be auction and the last 5/10 million to be distributed to shareholders later on a specific date this distribution can be done with list of shareholder under Nubits Nushares shares distribute dividends get list export list ect same way that would be to distribute ppc but in Nsr form or any method you see fit once the date is set and announced I see a lot share holder buying more nsr until that date and new buyers of nsr knowing there is something to look forward too maybe even a pre date sell order on some exchange at low price and giving shareholders a chance to buy last 5/10 million undistributed shares

1 Like
#13

Given the wording presented, I think it is reasonable to assume that anyone who is willing to be an active member of this community would qualify. If someone is reading this announcement, chances are they would qualify under that definition.

1 Like
#14

With A>B, which has precedence over which in the following case?

1m nsr at A price or 10m nsr at B price

?

#15

1m nsr at A

The word “highest” here refers to price, not the quantity of NSR. The quantity of NSR bid on does not effect the chances of your bid winning. However, there is a 2000 NuBit minimum, so NBT price * NSR quantity >= 2000 must be true for your bid to be considered.

1 Like
#16

Ok got it. Tks.