Park Rate Voting

[Nagalim]

testing/optimizing against past data

I don’t believe the parking function is fundamentally repeatable because the structure of Nu, the blockchain, and the risk associated with Nu are all changing. Finding a function for this seems like an impossible task.

[mhps]

Finding a function for this seems like an impossible task.

There are methodologies. Parameterize and fit. Monte-Carlo simulation. It can make a pretty good MAster’s degree thesis. The problem is we don’t have a lot of data.

[mhps]

The wall has been in more or less balanced state for almost two days. If the wall keeps balanced like now for another 15hr, I think shareholders can consider lowering voted park rates, knowing that it will take a few days to come down.

@willy, it’s likely that 5-day moving average gives important clue on how the park rates should be set. Could you add 5-day MA to https://alix.coinerella.com/charts/?select=48h_4h_15min_combined_ma_percent ? It doesn’t have to show by default to avoid cluttering.

[willy]

5-day moving average

Just to clarify. You want a five day moving average, not a five day window, right?

[mhps]

Right, Five day moving average. See here and here

Since 5day MA changes slowly, you can sample the 4hr MA results every hour and average the latest 120 samples to get 5day MA ,so the cost of resource is small. There will be one new data point on the plot every hour.

[mhps]

The wall has been in more or less balanced state for almost two days. If the wall keeps balanced like now for another 15hr, I think shareholders can consider lowering voted park rates, knowing that it will take a few days to come down.

There are only 2000nbt parked but the wall is balanced. We need more parked nbt to help replenish the rreserve.
I suggest the park rate set to

32% @ 11 day
16% @ 23day
8% @ 1.5 mo
4% @ 3mo
0% @ 6mo

The above base-2 exponential distribution of park rates will give the same total premium to any none-zero period. It encourage choosing the shorter periods due to less opportunity cost. Shorter periods require frequent renewal which aligns with Nu’s need to adjust the total amount of parked NBT acccording to liquidity and Standard.

With the base-2 exponential distribution Nu has only one parameter to adjust re park rates: the total premium. This will make operation and analysis easier.

[Nagalim]

This is in line with my analysis here:

A method for picking park rates

Concerning time binning of park rates, I will use integer n to represent a bin of length t days at rate R and C for total cost to the Nu network: n-1 is of length 0.5*t If you vote for R at n, there is no reason not to vote for R/2 at n+1 because C=R*t = (R/2)*(2t) The inverse (2R at n-1) cannot be extrapolated because we don't know the rate at t/2 This means there is no reason not to vote for a very small park rate at 64 years if you vote for any park rate at all. R'.n can represent R for bi…

[cryptog]

32% @ 11 day16% @ 23day8% @ 1.5 mo4% @ 3mo0% @ 6mo

that makes sense.

will modify my rates.

[Cybnate]

32% @ 11 day16% @ 23day8% @ 1.5 mo4% @ 3mo0% @ 6mo

This goes against my logic of the risks of parking and ensuring Nu gets the best deal.
With that setup, it would encourage people to park for very short amounts of time at a premium for Nu.
That is high maintenance for whoever wants to park and relative low returns. Not attractive. For Nu it means that the velocity of money parked is very high meaning that parked money is returned in shot periods. I believe that is not a good thing when we have low reserves. It encourages a yo-you effect which will cost more.

I will stick with:
3% for 23 days
6% for 1.5 months
12% for 3 months

I might add the 24% for 6 months when reserves continue to be low. This would provide an opportunity to set aside NuBits for longer, usually an attractive opportunity for investors spreading their risk profile.

[mhps]

With that setup, it would encourage people to park for very short amounts of time at a premium for Nu.That is high maintenance for whoever wants to park and relative low returns.

We have to recognize that parking is not designed to give out perks. It’s a mechanism to adjust the amount of circulating nubits. High maintenance is a direct result of high volatility of nubits demand due to high volatility of BTC prices.

The premium for Nu you refer to is a cost to have people’s fund parked. There is ZERO difference between 3% for 23 days and 6% for 11 days as far as premium is concerned, because once fund is parked, the interest rate is fixed. The difference is that the latter gives people more incentive to park due to less opportunity cost.

parked money is returned in shot periods. I believe that is not a good thing when we have low reserves.

If you don’t want the fund returns, keep offering park rate at an effective rate.

I might add the 24% for 6 months

That is a horrible idea because I don’t believe we know anything about the liquidity and reserve situation in more than a few weeks. What business are we in to offer people 24% pa for extended period of times?

[Cybnate]

High maintenance

If you don’t want the fund returns, keep offering park rate at an effective rate.

I believe you understand me wrong. High maintenance for those who would park their money. We need to sell parking, not make it difficult for those who may want to park.

That is a horrible idea because I don’t believe we know anything about the liquidity and reserve situation in more than a few weeks. What business are we in to offer people 24% pa for extended period of times?

Again, we need to make it attractive to sort our issues now. I don’t like to take a mortgage on Nu but as I said when the situation gets dire enough I wouldn’t hesitate to do so. Doing nothing or selling even more shares is also not that attractive. Unfortunately we can’t vote for maximum amounts parked. Otherwise I would have voted for say 10k long term parked (6 months), 20k medium term(1-3 months) and 30k short term or something similar to get to 50k parked. That way we could determine the cost and risks better.

[mhps]

We need to sell parking, not make it difficult for those who may want to park.

Getting x% pa for 6 month is more hassle than getting 4x% pa for 1.5 months because you get the same premium but your fund is out of reach for 4.5 months more.

I think we should offer very attractive rates for short periods and lower them when the situation gets better to encourage people to lock-in to the better rates.

Otherwise I would have voted for say 10k long term parked (6 months), 20k medium term(1-3 months) and 30k short term or something similar to get to 50k parked.

I have to know at what rate to say I’d support it. If Nu doesn’t sell shares to cash in its growth, i don’t know where can Nu get the cash to pay for interest in the long term.

However if we can develop a lending market and connect park rates and market interest rates, that would be great.

[Cybnate]

i don’t know where can Nu get the cash to pay for interest in the long term.

Selling USNBT or EUNBT or XNBT etc I suppose. People buying NuBits and other pegged coins to park, using NuBits and other pegged coins resulting in buying and transaction fees for the Nu network. Investing in the future.

[Nagalim]

If you offer 24% on 6 months it is logically consistent to also offer 12% at 1 year and 6% at 2 years and 3% at 4 years.

How can you get the money to pay for parking rates by selling new product? That new product will just get parked at those same parking rates and now you’re on the line for even more money.

Park rates are not to be used when we are expanding supply (i.e. buying back shares). They are for a short term recession. As such, we need to consider how short term we think the recession is, then vote for high rates on that time period and drop off with base-2 from there.

[masterOfDisaster]

I updated the park rates in my data feed:

masterOfDisaster's Nu datafeed - BETA

A detailed explanation of the adjustments will follow. I won't provide such a detailed explanation for all updates of the data feed, but as there's not much experience with park rates and how they affect the market, I wanted to make sure this updated gets accompanied with a reasoning for it. It's necessary to have that reasoning to be able to learn from it for future situations. I adjusted the park rates to: { "blocks" : 16384, "rate"…

[Cybnate]

If you offer 24% on 6 months it is logically consistent to also offer 12% at 1 year and 6% at 2 years and 3% at 4 years.

Mathematical logic may differ from marketing logic. I believe that is the case here. Offering rates beyond 6 months is taking a mortgage even further into an unknown future. Not something to take on lightly.

How can you get the money to pay for parking rates by selling new product?

Selling product means we can can top up reserves, isn’t that obvious? I’m really intrigued and puzzled by the reasoning of your response. It goes against any of my logic. Are you trying some kind of experiment?

As such, we need to consider how short term we think the recession is, then vote for high rates on that time period and drop off with base-2 from there

Agree, with determining the recession period and adjust the time periods of the rates. However any rates beyond that, base2 or not, are taking a mortgage into a future Nu we shouldn’t take unless absolutely necessary to survive. That’s why I don’t set rates beyond 3 months. So mathematically you might be right from an overall cost perspective ignoring certain aspects. From a marketing perspective and common sense I think you got it wrong. Just my opinion.

[mhps]

Selling product means we can can top up reserves, isn’t that obvious? I’m really intrigued and puzzled by the reasoning of your response.

I think i understand what nagalim said as I was thinking the same. What i thougt was if we were offering park rates, that is when there are too many nbt floating around. You can’t expect to sell more products when there are already too many.

Offering rates beyond 6 months is taking a mortgage even further into an unknown future. Not something to take on lightly.

I think nagalim just used 1, 2, 4 yrs as examples to explain the math. He didn’t mean that rates for those periods should be offered.

I don’t set rates beyond 3 months

excellent.

[Cybnate]

that is when there are too many nbt floating around. You can’t expect to sell more products when there are already too many.

I was not suggesting that at all, I was talking about new products. E.g. eu-NBT and X-NBT.

I think nagalim just used 1, 2, 4 yrs as examples to explain the math. He didn’t mean that rates for those periods should be offered.

Hope you are right. Still don’t get the math anyway. Increasing rates for longer periods makes sense, inverse base-2 not as posted before.

[mhps]

Last year at about this time the wall got very imbalanced (buy side 18%). Jordan urged

I continue to be surprised and concerned that rates are not being raised. There is no doubt in my mind that shareholders are mismanaging park rates and have been for at least a couple weeks. The peg can only take so much of this type of mismanagement. If it is pushed too far we will lose the peg for a period. That will cause the NuShare price to be lower for an extended period, if not permanently. It can remove many hundreds of thousands of dollars from the market cap. The cost of the parking that is needed is likely around 1,000 NBT. Shareholders are risking losing perhaps 500,000 NBT in market cap by refusing to spend 1,000 NBT on parking. That is an extremely poor decision that is highly unlikely to be in the interest of shareholders.

This time things are much better. The FLOT is doing Jordan’s balancing job. Park rates are offered by the shareholders.

However a thing different is that there have been less than 3000 nbt parked. I am a little surprised.

Is that because people are speculating there will be a higher rate?
No one knows for sure.

or the rates are too low?
On bitfinex people are lending hundreds of BTC at 3% pa. So if Nu offers 5% it should be already very attractive. I suspect outside of the community not many know about high park rates and people in the community know about the 50-80% pa LP reward rates.
Action recommended: advertize high, limited-offer, park rates outside the community.

or the non-zero durations are too long and people don’t like the opportunity cost?
We should offer non-zero rates to the shorter periods in volatile times. Since there are rates of 12.8%pa@3mo, there is no reason not to provide rates for all shorter periods at the same premium according to base-2.
Action recommended: set attractive short term rates
32% @ 11 day
16% @ 23day
8% @ 1.5 mo
4% @ 3mo
0% @ 6mo
provided that the shorter periods are adjusted often (like once a week).

[Cybnate]

Good to see a push for advertising. Let’s aim to park a decent amount. So investors can make a decision to set funds aside for a fixed amount of time. Not just for a few days, but like Bitfinex for longer and sustained periods.

On the other hand we don’t want to take a mortgage to far into the future so the rates are limited to 12% for 3 months right now. That is a good balance. Please ensure you vote for:

3% for 23 days
6% for 1.5 months
12% for 3 months

or just subscribe to my datafeed.

I recommend opening a thread on Bitcointalk to start with and then inviting the shareholders to post there to keep the thread actual with rates and terms. Open to other ideas.