Park Rate Voting

This is how I determine park rates:
Take any given category n with time t and rate r; choose that category’s ideal rate r’ after time t. Now, category n+1 = ( r’ + r ) / 2 in order to maintain internal constancy, such that all rates for categories greater than n are determined. Do this every t days.


You should find that all the higher bins will tend to have small numbers and you can just kind of cut off at some point. I generally go out to 4 or 8 years, cause it’s really easy to do this kind of linear math for me.
The lower cut off is determined by how often you want to adjust the rates. I tend to go down to 11.4 days.

Can you give an example?

Today rates are 0%. I think in 11.4 days, we want 5%. Those two bits of info are all I need to fully determine park rates using a shortsighted method:

11.4 d: 5%
22.8 d: 2.5%
1.5 m: 1.25%
3 m: 0.625%
6 m: 0.3125%

As another example, let’s pretend the rates currently are like the example above now and I think rates should be 3% in 11.4 days. Therefore, I vote:

11.4 d: 3%
22.8 d: 4%
1.5 m: 3.25%
3 m: 2.25%
6 m: 1.4325%
1 y: ~0.65%

And so on. The math can get cumbersome without a calculator.

Edit: With the current park rates we have now (2% for 22.8d, 1.5m and 3m), that same first example where I want 5% after 11.4d looks like this now:

11.4d: 5%
22.8d: 2.5%
1.5m: 2.25%
3m: 2.125%
6m: ~2%
1y: 1%
2y: 0.5%

Here you can see why I call this the shortsighted method. If the park rates for everything above 11.4d were 5%, but 11.4d was still 0%, this method would drag all the rates down. For example, if I started with 22.8d instead of 11.4d, I would get this:

22.8d: 5%
1.5m: 3.5%
3m: 2.75%
6m: 2.375%
1y: 1.1875%
2y: ~0.5%

If we really want the best picture, we have to decide for each category. With the more complicated model, however, we can forget what’s actually happening with the park rates and just focus in on our ideal distribution.

11.4d: I want 5%
Vote: 5%
22.8d: I’m voting 5% now, I want 5% in 11.4d.
Vote: 5%
1.5m: I’m voting 5% now, I want 4.5% in 22.8d.
Vote: 4.75%
3m: I’m voting 4.75% now, I want 4% in 1.5m.
Vote: 4.375%
6m: I’m voting 4.375% now, I want 3% in 3m.
Vote: ~3.7%
1y: I’m voting 3.7% now, I want 2% in 6m.
Vote: 2.85%
2y: I’m voting 2.85% now, I want 1% in 1y.
Vote: 1.425%
4y: I’m voting 1.425% now, I want 0% in 2y.
Vote: 0.7125%

When I say “I’m voting ___ now” I mean that that’s the vote for the previous category the we just established. This formula allows me to turn my preferred park rates into self-consistent park rates.

For instance, @cryptog has posted his preferred rates as:
– 1.4d: 2%
– 2.8d: 3%
– 5.7d: 4%
– 11.4d: 5%
– 22.8d: 6%
– 1.5m: 7%
– 3.0m: 10%
Which I assume are his actual, real desired rates. In that case, what he should really be voting, in my opinion, is as follows:
– 1.4d: 2%
– 2.8d: 2.5%
– 5.7d: 3.25%
– 11.4d: 4.125%
– 22.8d: ~5%
– 1.5m: 5.5%
– 3.0m: 6.25%
– 6.0m: 8.125%
– 1.0y: ~4%
– 2.0y: 2%
– 4.0y: 1%
– 8.0y: 0.5%

The fact that we can’t come up with a convincing reason to deternine differences in interest rate for different park lengths suggests that they all should be set the same.

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That is a good way to avoid a complex model, but then we need to be extra careful not to set too high a rate for too long or too short a period of time. I’m happy with the distribution we have right now, offer parkers a flat 2%/yr interest if they park between 1 and 3 months.

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buy side is 35k. sell side is 30k.
i will nullify my rates.

EDIT: well instead of nullifying, drastically reduce them.

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I’m reducing my rates as well.

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Reduced as well, here. (inspired from @cryptog rate)

Buy side is 10k lower than sell side. I have increased by annualized rates to 12% here.

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I’m 2% from 11 days to 6 months.

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gap between buy side and sell side is increasing.

time to increase even more the rates.

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buy side: 31k
sell side: 44k

I am raising my rates - 2% 5% 10%

It seems that we should raise the rates to a few percents because of that.

What do you think?

I am raising the rates from 0% to 15% over up to 3 months since the the gap between sell and buy side is more than 20k NBT now (buy side is almost only 50% of sell side) but parking rates do not seem to be regarded as a reliable tool by shareholders in general for adjusting the supply on the short term, any more. Am I correct?

I am raising my rates as well due to the imbalance between buy- and sell-side.

Any suggestion as what to do right now?

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Essentially, nothing. Now let me say a bunch of should be able tos but can’t.

We should be able to raise park rates to create nsr buy pressure. However, we can’t because we don’t have liquid burn gateways.

We should be able to keep a constant, small park rate to spread debt out over time. However, we can’t because of the burn motion currently in place.

We should be able to distribute dividends if the park rates are zero, however we can’t because the low park rates aren’t actually representing health in our network.

All that said, buy and sell side liquidity is pretty well balanced, so if we just shut our eyes to the low nsr price we’re doing just dandy and we should keep on keeping on.

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At risk of derailing this thread, I will respond. If needed, we can move comments out to a separate thread.

More structure in our plans for burning (both NSR and NBT) would be helpful as an iterative improvement. I know you have done some work on that and it is appreciated. I have some ideas I’d like to present but doing hasn’t quite bubbled to the top of my priority list yet. However, I don’t believe it is prudent to create NSR buy pressure by offering park rates. Doing so would increase demand for NuBits, which might allow us to use sale proceeds to purchase and burn NSR, but the approach isn’t sustainable.

The relatively even liquidity walls are telling us the market is absorbing the additional NuBits entering circulation as NuBits unpark. Parked NuBits reached a peak of approximately 105,000 NBT about two and half months ago. Now there are only ~34,000 NBT parked. This means NuBit demand is growing at a healthy pace. I hope to see all NuBits unparked in a month, which would demonstrate there is no need to spread parking out over time.

NuBits experienced a drop in demand in February and shortly thereafter as a result of the losses on exchanges and the loss of venues to trade NuBits at. As currency demand dropped, we saw park rates which ultimately reached 19%, followed by NSR sales paired with NBT burns. That is what the bottom of our economic cycle looks like. Demand began to increase from that bottom, which manifested as an end of park rates being offered, no more NSR sales and drop in the number of parked NuBits. If NuBit demand continues to rise as it has in the last couple of months (I’m not claiming it will as much as I’m just illustrating what the course of our economic cycle is), then we see demand for the 34,000 parked NuBits as they unpark over the next month. If new demand continues, we will see tier 4 buy side liquidity grow to a level where will want to use some of those funds for dividends or NSR buyback and burn.

So, park rates being zero is a sign of network health. Having funds available for dividends or share buyback would demonstrate even greater network health, but it is to be expected that as our economic cycle turns that we would first need to absorb NuBits that are unparking.

If NuBit demand continues to grow at the pace it has in the last couple of months, we will begin to have funds for dividends or share buyback in a couple of months. We can expect the NSR price will respond favourably to that scenario. We just need to continue to focus on ways to increase currency demand while limiting expenses. It is working.

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I think shareholders are confused about the use of park rates and comments like yours are vital for general understanding of park rates.

Thank you

Of course using park rates to increase buy pressure is not sustainable if abused. However, a small amount of continuous inflation is very healthy for any economy and I really admire the foresight of Nu (and JL in particular of course) to integrate a feature like parking from the get go. We should be using it.

No doubt. I would not be here if I thought otherwise. I am just trying to talk about how it could work even better.
Our biggest economic issue right now is a low NSR price. JL made a post last month about how we have distributed a huge amount of dividends this year. That’s freakin fabulous. However, our NSR price is clearly suffering and has been since literally the day after the B&C blockchain snapshot (i.e. the actual moment of distribution). That our liquidity is balanced is, in my opinion, something like a white lie about our economic health. The NSR price is the betrayer of the truth.

By having 0% park rates we are saying Nu effectively has 0 debt. We should not raise park rates only when we reach the bottom of the economic cycle; we should have continuous park rates nearly all the time until we are actually at a state where we believe we have paid off all our debts. I realize the concept of ‘debt’ for Nu is hyper abstract, but one perspective is that Nu is in a rather rare position to pick and choose the interest rates on its loans from the community (this is the same perspective that sees all NBT in existence as liability).

By picking 0%, we are turning away people that are willing to loan us money at a reasonable rate. However, we do not currently have the infrastructure to conglomerate ‘loans’ that we get via park rates into our greater economic system. Therefore, I am currently voting 0%, despite my ideology.

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Small point of consideration - NBT already have 1-3% inflation built in through the monetary policy decisions of the US Fed. Like you, I consider a small amount of inflation to be healthy, but I think we already have it included in our design with our USD peg.

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