NSR burning instead of dividends --- why it's bad

[Hyena]

Although I would rather see the price of NSR rise than receive dividends, the method of burning nushares instead of distributing dividends is risky.

The decision to buy or sell nushares from the open market will be known in advance and it would allow people to front run us and reap the benfit. For example, if a selfish nushareholder knows that NSR will soon be bought from the open market they would buy nushares and set a sell order at higher price.

What is more, if they knew that nushares will be sold on the open market to enforce the nubits peg a malicious nushareholder would dump their nushares on the open market. We cannot allow secrecy either because then the person responsible for buying/selling the nushares could abuse their power for their own good.

The same problem is actually with dividends too. If we know that peercoins will soon be distributed as dividends, speculators could try to pump the PPC price up prior to the dividend acquiring.

This has probably been discussed before somewhere in the forums but since I still see insights about seeing the NSR + NBT system as a whole, I suspect that such risks need more community attention.

[Nagalim]

Nsr and nbt burns should be a daily thing, done in a decentralized way such that anticipating them is equivalent to anticipating the market. In that case, you can easily see that market shorters are not bad, they are in fact the necessary market makers.

With my proposed nsr auction, we may end up with people selling before the motion passes so that they can buy back lower, that is why I am proposing small volumes over longish time periods, to decrease market influence. But yes, centralized auctions are far less preferred than decentralized offers for traders to burn themselves. However, with nsr grants still unimplemented, centralized auctions are our only choice.

Dividend distributions should be done as the opposite to parkrates, and therefore should never occur while we have nonzero park rates. We should also make a decentralized method for dividends, but I think we have a long time to refine that as park rates are a long way away from zero.

[Hyena]

Yes, slow and gradual buying/selling could solve the problem. About dividends, perhaps dividends should be paid in nubits? Then there would be no point in front running the dividend distribution

[Nagalim]

Distributing with nbt is equivalent to distributing nsr (as the nbt will eventually be burnt for nsr anyway to protect the peg) which is equivalent to increasing mint rates. Increasing mint rates may be a good alternative to ppc distributions, I’ll have to think about it.

[mhps]

This has probably been discussed before somewhere in the forums

Yes.

[Voting] Motion to express that shareholders prefer dividends instead of NSR buybacks

Motion RIPEMD160 hash: d8f15ec75da05c9446c1ab11c8d32124888fd783 =##=##=##=##=##=## Motion hash starts with this line ##=##=##=##=##=##= The purpose of this motion is to gauge and express shareholder opinion that dividends are the preferred method for receiving the value in which shareholders are entitled to instead of NuShare market activity. No action need be taken by any custodian or team member upon passage of this motion and it does not affect any current or future terms of any such prop…

[crypto_coiner]

A market by conception is centralized - what does it mean to have it decentralized and/or distributed?

[Nagalim]

If we allow the burn protocol to be used by daily traders and control the burn rates via continuous shareholder voting, like we do with parking and we plan to do with fees, it will decentralize the burn operations. Centralized is when Jordan has a reserve, decentralized is when no one has a reserve, that’s the fundamental difference.

[crypto_coiner]

If we allow the burn protocol to be used by daily traders

That’s interesting -

[Sentinelrv]

and control the burn rates via continuous shareholder voting

Isn’t this how burns were originally going to be setup by Jordan? We ended up going with the simpler approach of NuShares custodians.

**Draft** motion for currency burning

Indigoman is to be credited with originally presenting the idea of burning currency in exchange for NuShares. This change is consistent with the original intent of the network's design: to separate the risk asset from the transactional asset. Exchanging currency for NuShares represents a major improvement to our currency product. It will invalidate the criticism some have voiced that our system will make currency holders bag holders. The following is the proposed text of a shareholder motio…

Burning a specific amount of currency

@JordanLee asked me to work on a new motion for currency burning. I'm not sure the discussion about voting continuously for a rate or for a specific amount to be burned has reached a consensus so I bring it back in another topic. The proposed alternatives are: The shareholders vote continuously for a conversion rate. The effective rate is the median of the past X votes The shareholders vote for an amount of currency allowed to be burned at a fixed rate The shareholders vote for an amount of…

[Nagalim]

Right, we decided 4 months ago that we needed NSR grant proposals and that decentralized burns are the step after that. I still agree and think it’s the solution to everything in this thread. A proper NBT>NSR burn cannot even be done without NSR grants, so clearly that’s first. The step after that is to decentralize, which I personally believe should happen by allowing for a continuous vote on the rates via a hard fork.

Burning a specific amount of currency

This is a simple and consistent solution and as long as the long term vision is to decentralize this process further (e.g. through an auction system)