Here is the finalized motion text and hash for my proposal to modify the way that my custodian grant would be structured. For reference, here are the prior discussions about my proposal draft.
MOTION HASH: eaa95d4d23ecf46e42aed90ba95448d50cb9c5e8
(Hash generated using Chrome and http://crypo.in.ua/tools/eng_ripemd.php)
To vote for this motion, enter the hash in your NuShares client.
Thank you for the consideration.
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The successful passage of this motion will alter the contract between the custodian of Grant B7mmVdVQ1SNNcT9zuQRK1B3Cbvo8vHeoB1 (“Grant KTM” - 1,800,000 NBT + fees) and the Nu Shareholders regarding how dividends on the sale of granted NBT will be paid out.
The proposed structure of dividend payouts will adjust from the current “period sales goal” system of variable length and fixed percentage, to that of a monthly, fixed percentage system based on the total amount of buy-side liquidity available to the Nu network.
Rationale for Proposal
Many assumptions were made when Grant KTM was initially introduced by Kiara Tamm and passed by the Nu Shareholders. Two important assumptions turned out to be incorrect:
The belief that in addition to Grant KTM, the Nu network would have access to a significant amount of liquidity from LPCs. This additional buy-side support would be a backstop that would allow the payment of dividends to shareholders on the schedule as proposed;
That the main market that Grant KTM would be operating on would be NBT/USD, rather than various NBT/crypto markets.
The inability to forecast those two conditions has made it both difficult and dangerous for Grant KTM to be operated in accordance with all of the conditions of the original proposal. This motion is an attempt to course-correct the grant’s operations and provide shareholders with their expected dividends, in full, while simultaneously attempting to continue to stabilize the Nu liquidity pool as the network grows.
Like any successful venture, growing the business is the surest way to support the distribution of profits to shareholders. Simplifying the dividend distribution process and making it predictable to all shareholders provides an improvement to a system that has proven to be extremely variable and needlessly complex and difficult to manage.
By tying dividend distributions to the size and success of the Nu network rather than to the previous schedule, it is the intent of this proposal to gracefully and appropriately compensate shareholders for the expansion of the network. At the same time, should there be slow or stagnant growth, the custodian is able to protecting the Nu network’s NBT holders’ interests by making sure that a steady supply of buy-side liquidity is available for NBT repurchase and that it isn’t dangerously reduced by contractually obligated dividend distribution schedules.
Adjusted Operation Details
If passed, the dividend payout schedule previously approved will be modified as such:
- The “Period 001” dividend’s remainder (20,000 NBT of PPC) will be paid within 72 hours of the passage of this proposal to satisfy the previously voted on motion. The completion of this distribution will satisfy the original “Period 001” dividend target of 70,000 NBT. Once this dividend has been distributed, “Period 001” will be the last of “sales goal”-based dividend cycles.
- Declaration Date - Moving forward, the custodian will pay dividends every thirty (30) days, with the first distribution to commence thirty (34) days after this motion has passed. The four (4) days will be used to satisfy the first criteria (final distribution for “Period 001”) and to begin the collection of Nu network liquidity data.
- The amount of the dividend to be paid out will be proportionate to 2.5% of the average amount of liquidity available to the Nu network (sum of buy-side plus sell-side liquidity) during the thirty (30) days preceding the date of the distribution.
- Data will be made available to the Shareholders for review and validation that the dividend distribution is appropriate given the average liquidity of the network. The tool to report this is still being selected, but the custodian is leaning heavily towards using @woolly_sammoth’s open source project, Nu Data (https://bitbucket.org/mj2p/nu-data). This way, Shareholders can also generate the same reports to independently confirm what is being reported and to act as a back-up source of data should there be an unexpected and catastrophic technical issue with the custodian’s version of the tool.
- Holder of Record Date - Dividends will be distributed to shares held as of 00:01 GMT on the declaration date.
- Distribution Date - The distribution date will be no more than 72 hours after the declaration date.
- Should the calculated amount of dividend distribution exceed the available amount of buy-side liquidity that Grant KTM controls, sell-side NBT will be used to purchase the remainder from other Nu custodian’s buy-side holdings at the then-established market rate. Existing buy-side funds held in PPC will be used first to satisfy the dividend.
- If additional dividend custodians are in operation concurrent to Grant KTM the percentage used to calculate the dividend distribution will be reviewed. If it is in the best interests of the Nu network, the percentage may be adjusted by the custodian without the requirement of an additional motion being passed.
- By approving this motion, the Shareholders grant the Custodian the right to determine if there is sufficient cause to withhold dividends for a time period. For instance, if the value of holdings has declined significantly due to external factors, there may be cause to suspend a period’s upcoming distribution. Should a situation develops that could result in a period’s distribution being withheld the Custodian will notify the Nu Shareholders in advance of the decision being finalized.
- The Custodian also reserves the right to increase the dividend distribution percentage beyond the base 2.5% in times of externally-influenced holdings appreciation. By doing this, the Custodian can disseminate network profits to the Shareholders at the time that they occurred, rather than holding the funds and risking a reversal.
- The duration of Grant KTM’s operation is impossible to project; it will depend on the rate that the Nu network grows. For now it is expected that operating costs for the nine (9) months will be manageable within the original grant’s fee. In August, 2015, the Custodian will evaluate the situation and review the cost of operations to see if this is still the case. If additional fees are required in the future for any reason, a new grant proposal will be submitted to the Shareholders and they can decide how Grant KTM’s operations will move forward.
- Once the funds held by Grant KTM have been exhausted through dividend distributions the operations will be considered concluded and a post-operations report will be prepared for the Nu Shareholder.
Example Period Dividends
Period: 15-JAN to 14-FEB
Avg. Buy-side Liquidity: 180,000 NBT
Avg. Sell-side Liquidity: 182,000 NBT
Declaration Date: 14-FEB
Holder of Record Date: 00:01 GMT on 14-FEB
Distribution Date (approx.): 14-FEB to 16-FEB
Dividend (at 2.5%): 9,050 NBT
Period: 14-FEB to 16-MAR
Avg. Buy-side Liquidity: 291,000 NBT
Avg. Sell-side Liquidity: 242,000 NBT
Declaration Date: 16-MAR
Holder of Record Date: 00:01 GMT on 16-MAR
Distribution Date (approx.): 16-MAR to 18-MAR
Dividend (at 2.5%): 13,325 NBT
Period: 16-MAR to 15-APR
Avg. Buy-side Liquidity: 400,000 NBT
Avg. Sell-side Liquidity: 392,000 NBT
Declaration Date: 15-APR
Holder of Record Date: 00:01 GMT on 15-APR
Distribution Date (approx.): 15-APR to 17-APR
Dividend (at 2.5%): 19,800 NBT
Period: 15-APR to 15-MAY
Avg. Buy-side Liquidity: 700,000 NBT
Avg. Sell-side Liquidity: 800,000 NBT
Declaration Date: 15-MAY
Holder of Record Date: 00:01 GMT on 15-MAY
Distribution Date (approx.): 15-MAY to 17-MAY
Dividend (at 2.5%): 37,500 NBT
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