Must Read: Seigniorage Shares Whitepaper

Economics
#1

Sounds an awful lot like the Nu network.

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Pebble - 2nd generation currency layer over Bitcoin Stable price — Micropayments capable — Smartphone friendly
Vitalik : the search for a stable cryptocurrency
100% NBT reserve and elastic NSR supply
#2

Thanks for sharing this!

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#3

Must discussed!

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#4

[quote]One simple solution is to distribute i pro-rata over all coin balances. This is the approach advocated by Ametrano in his creative coin stabilisation scheme
dubbed “Hayek Money”[1]. This approach has the virtue of simplicity. All wallet balances are simply multiplied by Qi=Qi􀀀1 in each period to arrive at a new wallet balance. This is very easy to implement technically, the protocol just stipulates the calcula-tion of a rebase factor that is included in each block header. (I think that this is how Friecoin implements its demmurage rule.) It may seem a little awkward
that the nominal value of one’s wallet uctuates withchanges in money demand, but that might be a tol-erable price to pay for a system that achieved coin
price stability.The problem is that this scheme only stabilises coinprice, it doesn’t stabilise the purchasing power of awallet balance. Recall the three functions of money:

  1. Unit-of-Account
  2. Store-of-Value
  3. Medium-of-Exchange
    Price stability is not only about stabilising the unit-of-account, but also stabilising money’s store-of-value. Hayek money is designed to address the for-mer, not the latter. It merely trades a fixed walletbalance with fluctuating coin price for a fixed coin price with uctuating wallet balance. The net effect that the purchasing power of a Hayek Money wallet is just as volatile as a Bitcoin wallet balance. So the self-defeating dynamic of CDS driving out CDT remains.[/quote]

Totally agree, Ametrano’s solution is ridiculous.

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#5

Robert Sams’s solution is

  1. burn share to get coins by auction
  2. burn coins to get share by auction

These directions not bad, but not very practical.

#6

I wanted to open a discussion thread to discuss this. It looks very interesting to reduce the fractional reserve

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#7

we are fractinal reserve because we spend some revenue to software developement and marketing etc, so why not directly spend our NSR to support these activity?

We vote for generate more NSR, the dilution price is for the future of Nu.

Thus NBT can operated on 100% reserve by LPC providing 100% buy wall.

#8

We are fractional reserve because there is no other revenue and we need to profit.

The beauty of the Dual burn auctions scheme is that it makes Nu an opportunity for every one, just like Bitcoin mining in its early days, since the code decides when to start an auction and only the free auction decides the burning rates, Share holders may not like the idea at first, but it will :

  • Free the community from the operational worries, then we can focus on marketing and providing new services and revenues.

  • This open spirit and code controlled system may attract more developers to help the Nu team

  • As the Nubits adoption increases Nushares will get more scarce and much valuable, both in the price and dividends.

  • Reserves worries will come to an end, since it will be up to the code to solve the Nubits over supply and sustain the peg, liquidity security on the exchanges also will be everyone’s responsibility not ours.

But first the system needs other steady revenue to be divided on the share holders other than selling the Nubits, i like the transaction fees as it requires no human operation and no trust needed and reward share holders for what they are really contributing to the network: minting.
Further details may need to be discussed to customize this vision but i think it is very promising.

#9

“there needs to be two types of coin: coin that acts like money
and coin that acts like shares in the system’s seigniorage. For short,
we’ll just call these coins and shares. Coins and shares are identical
in all respects”
—> Did the author just re-package nubits.com contents or something?

#10

I am basically in agreement with Seignorage shares, but I have one major objection.
The system described in the paper explains how to control the exchange rate.
Indeed, this is the system of exchange rate control I recommend nubits adopt.

However, the paper says nothing about the reserve ratio, or how it can be controlled.
Seignorage shares will be highly unstable if the amount of value in the stable asset is large relative to the amount of value in the volatile asset. Essentially, the system design leaves long-term stability up to chance. If you had a major downturn (like we have often see in bitcoin), the whole system could explode.

You need to have an additional monetary policy instrument such as the interest rate and/or txn fees to control both the reserve ratio and the exchange rate simultaneously. Once you have this in place, you can prevent accumulation of excess debt following a downturn. Seignorage shares ignores this problem completely.

Note: there is nothing new in Sims’ paper. Search the bitcointalk forum and you’ll find that all the material in the paper has been discussed before by multiple people. It’s just that people only became interested in these concepts over the last 6 months or so.

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#11

In the proposed method by R. Sams, how is the policy of contracting or expanding the supply, DECENTRALIZED?