Park Rate Voting

[Nagalim]

I can confirm. There is no reason to vote 1% on 1 month and not vote 0.5% on 2 months for this very reason.

[dysconnect]

We can set rates for longer periods, just in case it takes care of corner cases. Say 0.25% 1 week and 0.25% 1 year, then everything between 1 week and 1 year would have 0.25% interest. We then set a curve if we want.

Again, although parking is a cost to the business, we have never avoided to pay it. For the past year, parking expenses at 3.4k is around 0.6% of total NBT in ciruculation. Liquidity costs would be like 20% of all NBT by next April. If we can set a 1% park rate and save just a tenth of liquidity costs that would already be worth it; I hope we can save more, and to know that we need to experiment.

Chances are that at 0.25% park rate most people won’t park long-term. But if we’re lucky there could be people who, say, park their NBT for 1 week every week; this information would then be extremely valuable.

[Nagalim]

everything between 1 week and 1 year would have 0.25% interest

I’m not positive, but I don’t think that’s right. I think it would be 0.25% at 1 week, then go down to 0% for most of the year, then go back to 0.25% around 1 year.

Everything else you said is spot on.

[mhps]

If we can set a 1% park rate and save just a tenth of liquidity costs that would already be worth it

The cost paid for liquidity buys Nu liquidity.

The cost paid for liquidity buys Nu nothing, actually at times when buy side is low, costs Nu liquidity.

[cryptog]

I have the impression that interest rates are only useful at emergency situations: the buy side is very low and we need to offer immediately a strong incentive to freeze a good chunk of nubits so that it can buy Nu time to replenish the buy side at Tiers 1-2 and 3- .
In the past, we have at least witnessed such situations where parking was crucial, it seems.
Therefore at times when liquidity walls are balanced, as it is currently the case, I would be in favor of 0% interest rates over all periods.

[masterOfDisaster]

the buy side is very low and we need to offer immediately a strong incentive to freeze a good chunk of nubits

I agree that keeping the buy side of NBT under control is of paramount importance - even more important than keeping the sell side under control.
And exactly that - helping the buy side - can be achieved by providing NBT holders with a persistent incentive to remove buy side pressure.

It seems I’m quite alone with this view, but that’s ok
My thinking in an overly simplified way is: nobody can save anybody from buying NBT at prices above $1, but Nu should always offer $1 per NBT when people want to get rid of their NBT.

In case the sell side gets low Nu doesn’t have a viable decentralized way of bringing NBT to the market.
There’s only the strategic reserve if quick action is required. It’s on a multi signature address. It’s decentralized and that’s good. But do NSR holders know who the signers are? Do they know how many? Do they know whether the signers are still available?
I acknowledge that it’s decentralized, but I claim it’s not viable. Such a grant should be made close to the time it’s required.

The seeded auction would be able to solve both the trouble with buy and sell side liquidity issues without involving parking interest.
NBT and NSR grants would be made available to seed either one side or the other of the auction - depending on which side needs to be propped up.
Unused funds would be burned, new grants would be made. This could be a cyclic process, maybe even on a daily basis.

That way Nu could effectively influence buy and sell side.
Nu doesn’t have that.
Brilliant ideas have already been written down. If I’m not mistaken, this problem (verified here) can be solved by seeded auctions as far as I understand them properly. Maybe @Nagalim can comment this.

NSR holders seem to be not interested in it.

Effectively only parking interest remains to lower the amount of NBT hitting the buy side hoping that people park if things are close to getting pear-shaped. NBT buy backs and burns are considered something special that happens only rarely (and only in even bigger emergency)

For the sell side there’s the hope that a NBT grant that passed on October 16th 2014 is still available when needed.

So I’m trying to make the most of parking rates.

I’d be happy to spend my efforts on a more sophisticated solution, but I don’t know how.

[Nagalim]

We need to be careful not to mix B&C philosophy with Nu. Nu does not sell NBT for $1, as that would create a price ceiling. Rather, Nu controls supply to match demand such that the price is ~$1. This can result in NBT being more than $1 at times and <$1 at other times.

MoD points out a very valuable point: when we increase supply, where does it come from? If we just give out the nbt, poof it’s gone and now we’ve got liability. In the past we’ve done ppc distributions when selling nbt. This is viable, but difficult to do in a decentralized manner.

The seeded auctions are surely a cure for this, as increased nbt demand could be met by an nbt seed. All new nbt entering the market would cause nsr to be burnt at the going rate, thus solidifying the profit into our business model.

Then, increasing park rates would cause a short term increase in nsr price and a long term decrease. At that point, a smart economy would realize this as having the same economic properties as a loan and would provide a reasonable, though small, interest rate. There is danger here, of course, as over borrowing is always dangerous. However, all great economies operate at some small amount of debt.

Without the economic tie between nbt and nsr, park rates are not really useful except as a last ditch attempt at reviving a dieing economy, which is why I’m still voting 0% on all time frames.

[masterOfDisaster]

We need to be careful not to mix B&C philosophy with Nu.

It’s not so different after all…

Both sell tokens at 1 USD.
Both need to distribute revenue - in case of BCE it’s sold BKC, in case of Nu sold NBT are treated as such.
While BCE favours doing that by dividends, Nu would chose wise to keep it corporate internal (NSR buy back and burn).
In the end both ways would be available for BCE and Nu.

The big difference is that Nu promises to buy NBT at 1 USD while BCE doesn’t.

…seeded auctions would work for BCE as well as a way to distribute BKC - BKC purchasers would need to buy BKS on the market to participate in the auctions

[mhps]

all great economies operate at some small amount of debt.

In normal economy money are borrowed to be invested to create more value. So an growing economy is in debt in a healthy way. In Nu currently new money parked are not invested, it’s temporarily loaned to Nu to bolster the buy side liquidity. This appear to be working. So far parking is understood as a tactical tool without any clear further profound effect to increase the value of Nu.

[Nagalim]

seeded auctions would work for BCE as well

I don’t think so. With bkc, the auction price would not be representative of the BKS/USD price. Also, this would constitute a BKC buyback, which I would be opposed to.

Seeded auctions to determine share price are really something that Nu is in a unique position to do.

In Nu currently new money parked are not invested

I agree, which is why I am voting 0%. If we were constantly reinvesting in Nu via burn gateways, the story would be more similar to a ‘normal economy’.

[masterOfDisaster]

Also, this would constitute a BKC buyback

nope - just seed only one side! The seeded auctions would be a way to distribute money to BKS holders not by distributing dividends, but by reducing the number of BKS.

[Nagalim]

seed only one side

Very interesting. I’d be worried about the long term stability of the auction, but that might not be a concern. I’ll have to think on it for a bit.

[masterOfDisaster]

I was thinking of a way to reduce the number of BKS in a decentralized fashion, e.g. after urgent funding for something has been done by BKS grant and sale.
And seeded auction came to my mind

[cryptog]

The parked nubits amount now to 5k roughly.
One week ago, I recall it amounted to 30k or so.
The impact on the buy liquidity has been negligible it seems.
It seems that soon Nu would have 0 parked nubits. In that situation, if the buy side becomes higher than the sell side for some period time and shareholders can be reasonably confident that the buy side liquidity is strong, I think we would be able to consider seriously selling NuBits for the first time in months…In fact I believe we have not experienced any sales this year.

[crypto_coiner]

Wise suggestion –

[cryptog]

Now the totalparked is 2k NBT.

When is it expected to reach 0?

[crypto_coiner]

To which extent Parking rate is a efficient tool to control supply and swiftly respond to demand?

[Nagalim]

It’s not swift, it’s our most longterm solution. It’ll be vital once we have a thriving economy in my opinion.

[JordanLee]

It’s not swift

With the 2.0 release, it is three times as swift as it used to be. Parking rates can be raised up to 3% per day, approximately.

[Nagalim]

Still, distributed consensus is a slow process. But it’s true that the network is plenty responsive to shareholders’ whims.