Future Dividend Distributions

Nagalim 2015-08-01 00:27:51 UTC #1

I thought we should get the ball rolling on potential dividend distributions. Let’s talk numbers and strategy for maximum effect.

If we distribute periodically and consistently, this should generate some additional public interest amongst the peercoin crowd. What other benefits are there to using a payment plan? What benefits are there to distributing rarely in large amounts?

How about we distribute 1,000 NBT worth of PPC each month? A custodian can be hired to slowly buy the ppc over the course of each month at the best prices possible, then distribute the next month on the first.
What are the pros and cons of this plan?

Ideas to improve NSR market velocity - discuss

Cybnate 2015-08-01 01:09:44 UTC #2

The perception of giving away PPC as dividends while the network is just bleeding value because there are no actual profits is for me the key reason to not support the distribution of any dividends. This until we really need to expand the amount of NuBits in circulation by 15% or more to meet the demand. At the moment any demand increase is already met by creating/funding the liquidity pools and custodial grants such as NuDroid.

Nagalim 2015-08-01 01:28:07 UTC #3

I’m not sure which number you want to use for ‘in circulation’, but if we use the 500,000 NBT in existance, that means you don’t want to OK the expenditure of 1,000 NBT per month unless we are 75,000 NBT in the green?

I think that by the time we decide that we need to put more NBT into circulation to match demand we’re already doing it too late. If we distribute 1,000 NBT each month (most likely through B&C) for ppc we will learn to operate with that weight, and shareholders will see the value in participation. With all the exciting things that are coming out in the upcoming months (Nu 2.0, B&C, Nu Anniversary) I think we will have plenty of opportunity to increase our monthly costs. JL says we should be spending 10k/month, yet liquidity is only costing about half that. I’m asking for an increase in operating costs for Nu by ~20%, which would bring us to ~60% of our 10k budget.

cryptog 2015-08-01 02:53:04 UTC #4

I think it is a good idea for increasing exposure of Nu.
Plus 1000NBT is not much.
We can try 3 months first of all and see the reaction from the market.
Nu lost 100k NBT worth of shareholder money when exchanges were hacked and yet the peg has been kept.
I do no think 3000 NBT would be a huge risk plus buy side is higher than sell side.
I am in favor of such an initiative.

Cybnate 2015-08-01 03:44:19 UTC #5

I’m not in favour to distribute dividends when no value-add has been created.

Artificially increasing the money supply with 1000 NBT a month without any proof of growth or higher demand is not changing that. In my opinion it will have a negative perception as it will be short term win and putting the peg at risk. When money supply have to shrink are we prepared to pay back those dividends? Not likely and from thereon going downhill quickly.

If you want to do marketing just call it a give-away or a dividend experiment, don’t make things up which are not there yet. Doesn’t provide trust in the long term which we need.

crypto_coiner 2015-08-01 03:57:03 UTC #6

I second that initiative - If Nu is a business, shareholders, should think about the policies around div. dis. seriously

cryptog 2015-08-01 04:09:15 UTC #7

Let us not forget we lost opportunities to increase our liquidity back in dec-jan just because shareholders were reluctant to giving up a few k NBTs and then we lost more than 100 k NBT with the hackings.

Nagalim 2015-08-01 04:48:44 UTC #8

We need a volunteer to carry out the distributions if we want to put this action to vote. I would rather not be responsible for any more of Nu’s money so perhaps someone else could step up. It seems like 1,000 NBT/month for 3 months might be something a majority could agree upon.

pennybreaker 2015-08-01 05:50:47 UTC #9

Sure, but lets not forget that NSR is not just shares in some company that you hope will go up in value one day. Being a shareholder in the Nu network is something that requires participation. Why not roll a small monthly dividend into an operating expense budget? We want people to buy, hold, pay attention, and participate. Knowing that a small dividend can be expected on a regular basis could help accomplish that on a much bigger scale. 1000 NBT per month is a small price to pay for something that would certainly bring value to the network, in the form of user participation, stock holding (more minting = more secure), and marketing.

Can we quantify the value that this could bring to the network? If so, it is worth considering being added to an expense budget. Lets not forget that taking some calculated risk is also part of running a business.

I’ll bet we could persuade several regulars to pledge their dividends to peg maintenance, for a certain period of time … like the next three to six months.

Oh, and if we ever need to use NSR to buy up excess NBT, it sure would help to have a liquid market. There, just found you a little more value in expensing a small monthly share ownership incentive.

mhps 2015-08-01 10:26:58 UTC #10

@Cybnate is right that calling it dividends when there is no profit (is there? quarterly? monthly? anyone is counting?) can be confusing and/or be seen as manipulating. I agree with @Nagalim and @pennybreaker that it’s an interesting thing to try out to let more people understand Nu. So I think it should be a marketing / PR operation –

Nu publically demonstrates its unique dividend distribution mechanism by offering all NuShare holders dividends for a limited period of time (e.g. once a month on a random date for three months)

A give away “dividend” will be offered to every address who voted for a dummy motion, no matter whether the motion passes or not, to raise awareness and to encourage trying out of the voting capability of Nu. If you vote once (mint a block with a yes vote), you get the give away. To sweeten the offer to new small owners, the give away can have rules to cap how much spoil a high value address can get.
A normal motion to extend the give away for another term will be debated and voted on. If and only if it passes, another “dividend” will be offered in the same way, or whatever way the motion ends up saying.

Fun and exciting enough yet?

mhps 2015-08-01 11:39:32 UTC #11

Of course most announcement and discussion will be on bitcointalk and reddit. We don’t need to promote this within nubits.com community.

Nagalim 2015-08-01 11:44:06 UTC #12

Is this easily done? Also, what stops me from making many 20,000 NSR addresses to receive the dividend? Just time and network fees right? So we’d need to keep the reward small enough that people aren’t super motivated to do that. The window for something like that would also need to be quite large in order to give people time to vote for it (1 week to start minting, who knows how long to reliably mint with just one 10,000 NSR output)

I like the idea though. What if we called it a coupon instead of a giveaway? Like ‘vote for this coupon’. Then, what if we made the reward something that people only really want once? Like access to a restricted video game or something?

mhps 2015-08-01 14:29:45 UTC #13

It can be done by scanning the blockchain. I was thinking giving a 30-day window so that every 10k block can have a chance. Most of the votes will be from the rich addresses. If you go to the Distribute Dividends panel in the wallet you will see there are like a couple of hundred addresses with meaningful balance. Yes someone can split N million NSR and make N hundred mintable 10k blocks. The cost is tx fee of N NSR plus 7 days of minting income N/500144040*7 NSR (assuming 500m NSR are minting), making it about 800N NSR.

dysconnect 2015-08-01 15:39:52 UTC #14

Though I’m sure somebody raised this previously: when NBT is stable we might be able to afford printing 2% of money supply per year to match USD inflation.

This isn’t economically rigorous but as we’re providing a service we have some space to compare this to how real estate or businesses raise prices in response to inflation.

So far 2% equates to a bit less than 11k NBT. It’s much more than what we’ve paid for parking (a bit more than 3.4k that I just checked) but much less than yearly TLLP costs at current rates (estimated >100k).

Assuming we can shave off a great deal of TLLP costs, or increase the money supply in response to NBT demand (making TLLP costs negligible), we might be able argue we can get something out of that 11k - 3.4k = 7.6k and distribute it as dividends, or pay for some other developmental costs.

The point is we need to find a convincing argument that we’re financially healthy enough to give out dividends, and that argument can be made into a pitch that we deliver to the wider crypto community.

cryptog 2015-08-01 15:58:36 UTC #15

If buy side liquidity is higher than sell side liquidity for a sufficient amount of time (say 1 week), then we can print out nubits.
I think this in itself is an indicator of good financial situation.
Recently, buy side liquidity has been higher than sell side overall for more than 1 week, it seems.
It think we could print out easily 1k NBT with a negligible risk.

Cybnate 2015-08-02 00:41:16 UTC #16

Of course we can, US and Eurozone can also print a few billion with negligible risk. Well, that is what they think. Where to draw the line?
I don’t think having the buy side higher for 1 week on tier one is a good indication of the health of the network. We are still starved off an information stream to provide us with what reserves are in tier 2 and tier 3. Without I find it very difficult to state we are healthy and making profits or not.

Having said the above, I’m definitely interested in proposal to do some marketing for NuShares. When someone can pull off a good advertising campaign for 1000 NBT I’m all for it!

mhps 2015-08-02 03:53:05 UTC #17

That we don’t know if there is a profit is only part of it. The lack of transparent finance information of Nu is also a reason why Nushares prices are low – people are not confident in knowing what is going on under the hood. Sell/buy side liquidity is only one parameter. It’s not only incomplete to reflect the whole finance/economy condition, it’s not consistantly acted on either.

Park rate is not very good either because it has a big human factor in it.

Can we agree on a convincing indicator such as asset/liability (NSR market cap / NBT market cap) ratio, and report it on monthly, quarterly, yearly basis? When the quarterly or a certain moving average is above a threshold Nu prints NBT, sell them to buy PPC and distribute dividends (or buy NSR to burn), when it is below the threshold, Nu prints NSR, sells them to buy NBT to burn.

masterOfDisaster 2015-08-02 12:23:58 UTC #18

Basically my thinking is very much the same.
But…

I think that point of view is valid as well.
I’m convinced that paying regular dividends should go hand in hand with revenue made by Nu.
But doing marketing to advertise NuBits might be required to bring Nu into a position where adoption, use and fees generated by that provide Nu with revenue.
The NuDroid grant already does that by paying for a banner on CMC

Apparently adoption and use are even more important than fees, because the more NBT that are in the hands of people, the lesser the total amount of NBT that is hitting the buy side.
People holding NBT in their NuDroid to pay for stuff (I’m holding some in my NuDroid, although I haven’t found a shop accepting them (or BTC) so far), providing liquidity or forgetting them in wallets are good for the liquidity situation of Nu.
I’m in favour of paying dividends in terms of doing that as marketing.
I’m no so sold on paying dividends without Nu generating revenue.

Paying dividends to make people aware of Nu might be a (financial) risk that Nu needs to take.
If nothing happens and Nu stays largely unknown beyond hedging traders, Nu will have to face harder times than with some thousands of NBT distributed as dividends.

Once the protocol 2.0 is live (August 25th 14:00 UTC) the dividends can be paid without having an effect on the liquidity situation by funding them with an NSR grant.

If the NSR market is still by then, Nu can consider participating in the currently “unseeded auction” to make NBT from the granted NSR.
That would require a lot more participation in the auction.
I kindly ask those who aren’t already familiar with that auction to go in for it.

The next paragraph is in no way intended to criticise NuDroid or the marketing of it. I’m very fond of NuDroid and think that @Cybnate and @MatthewLM did an amazing job.
I’m very glad that @Cybnate applied for that grant!

But if Nu can afford to pay money for such a software (which created a very useful mobile wallet!) and for putting up a commercial banner, it should be allowed to think about other ways of doing advertisement.
In difference to the CMC banner the money that could be distributed as dividends would stay more or less in the reach of Nu.
For reference:

cryptog 2015-08-04 06:38:08 UTC #19

I agree on the above-mentioned statement.

On the balance sheet, those 1000 NBTs (whether distributed as dividends or spent in a banner) are the same.
So the question is what would be the most effective way to promote NuShares?
I think financial gain is something people look for intrinsically.
So I would say distributing dividends.