[Passed] Motion to begin NSR buyback immediately

[JordanLee]

I agree with @desrever that the mechanics of the share buyback should be clarified a bit. Rather than randomized purchasing though, I think we should strive to maximize our price discrimination in our purchases - meaning that we should attempt to purchase as many NSR as possible with a set amount of funds.

The most effective way to do that would be to create NSR buy orders that escalate over time…

… however, it will take more of @JordanLee’s time to do this

I agree this sort of approach would result in purchasing the most NSR.

I’m happy to specify details of the repurchase, but I am quite sensitive to additional demands on my time. Perhaps the best approach would be to hand off the purchase funds to @tomjoad for purchase each week. I would suggest to start bidding at 10% or 20% below the current market price and move up from there. If someone can compose a paragraph or two detailing how repurchase will take place I will put it in the motion (after some negotiation and perhaps edits).

[tomjoad]

If someone can compose a paragraph or two detailing how repurchase will take place I will put it in the motion (after some negotiation and perhaps edits).

I’m willing to conduct the buybacks if shareholders don’t oppose it. Here’s a sample draft motion text for the buyback process. I’m sure it can be improved with input from everyone.

BEGIN DRAFT

TomJoad or a motion-elected representative will conduct NSR buybacks with any excess Tier 4 funds provided to him or her by Jordan Lee each week. The purchases will take place over the period of Monday through Friday, with a single-price purchase order updated once per day on Poloniex or the generally accepted highest volume NSR exchange. The purchase order will be discounted from the last completed market trade by 30%, 20%, 10%, and 0% for Monday through Thursday respectively. If any excess funds remain on Friday they will be used to purchase NSR from the sell wall on Poloniex, up to a maximum of Thursday’s market price plus 50%.

If any funds remain after this they will be recycled to the following week. If the entire purchase order is filled on a Monday, a 5% discount will be added to each day the following week. If the entire purchase is not filled on a Monday, the following week will be the standard discount above. TomJoad or the elected representative reserves the right to attempt private off-exchange sales through the BitMessage address BM-2cVFzzfWwKkdxLmgZwhSFfGmKwqDrddDfv if the NSR purchase price is discounted greater than 30% from the market and finalized within 24 hours.

TomJoad or the elected representative will provide details of the previous week’s NSR burn before the following Monday period begins. In the event TomJoad or the elected representative is unavailable for a week the Tier 4 funds will be added to the next buyback period, unless shareholders vote by motion to elect an alternate facilitator. TomJoad or the elected representative will abstain from purchasing or selling personal NSR during periods of share buybacks.

END DRAFT

This text should give us the ability to price discriminate to a high degree without burdening me with hour-by-hour price monitoring.

[JordanLee]

Thanks Tom. I have added your proposed text to the body of the draft motion in the original post.

I will wait a little longer for additional suggested changes, then hash it.

[tomjoad]

One additional line I would add is that “TomJoad or the elected representative will abstain from purchasing or selling personal NSR during periods of share buybacks”. It occurs to me that I would be in a privileged position to purchase NSR if heavily discounted offers arrive through BitMessage, and a privileged position to sell NSR into a shareholder-funded buy wall prior to posting a purchase order on the exchange. As long as I’m not engaged in any transactions the process remains fair.

[Nagalim]

It’s interesting that share buybacks happen on exchange and share sales happen in auction. I would rather they happen this way when compared with auction, so I like to favor this motion. I’m worried, however, about the situation where the peg undergoes a good deal of sell pressure and we do not have tier 4 funds to support. In this case, we will implement park rates and an automatic share sale will be triggered. Could this motion lead to a situation where we are selling and buying nsr at the same time?

I guess my question comes down to what the threshold is for using tier 4 funds to support the peg.

[masterOfDisaster]

I don’t know of a formal or mathematical expression that can tell us what the size of the reserve should be, but here are some facts I’m using to arrive at the recommended tier 4 buy side size of $80,000

I can basically follow the reasoning to have 80,000 NBT value in tier 4 buy side liquidity.
I just don’t understand how 250,000 NBT in the wild minus 50,000 buy side volume (tier 1?) from pools leads to NBT 80,000 buy side liquidity required in tier 4. Is it because the 50,000 NBT are tier 1 buy side and there are 120,000 NBT more in tier 2 -3?

It would be helpful to have a kind of formula that includes tier 1 - 3 buy (and sell?) sides.
The currently 300,000 NBT in wallets that are more or less in control of Nu are a special circumstance that needs to be taken into consideration - and you did that.
Maybe be after BCE there will be other projects causing big amounts of NBT under control of Nu? Nu development funded with NBT grants in my opinion fit that category.
So this should be included in the formula as well.

If I try to put your reasoning into a formula it looks like this:
NBT value in tier 4 = (total NBT) - (NBT controlled by Nu) - (buy side liquidity tier 1, 2, 3)

I’d like to differentiate between buy side liquidity of ALP and NuLagoon, because the buy side liquidity from ALP pools can evaporate in seconds, whereas the buy side liquidity of NuLagoon can only be removed twice a week.
That should be considered with a factor between 0 and 1 (that needs to be determined (based on historic tier 1 fluctuation?)) for each type of liquidity operation.

What about this:
NBT value in tier 4 = (total NBT in the wild) - (NBT controlled by Nu) - n * (buy side liquidity tier 1)_ALP - m * (buy side liquidity tier 1, 2, 3)_NuLagoon

I have no tier 2 and 3 liquidity of ALPs included because we don’t know about them.

These formulas are just an attempt to give the calculation of the tier 4 liquidity a start.
In reality it will be much more complex.
The value in tier 4 won’t be adjusted daily.
But the calculation of the recommended value in tier 4 should be calculated frequently to be able to follow a trend the next time the value of tier 4 liquidity gets adjusted.
A snapshot of the liquidity in tier 1 to 3 at the point of time when tier 4 gets calculated won’t do.

It would be nice to have the (un)seeded auction back and finally have it converted to a seeded auction to balance tier 4 liquidity!

[JordanLee]

One additional line I would add is that “TomJoad or the elected representative will abstain from purchasing or selling personal NSR during periods of share buybacks”.

Done.

[mhps]

because the buy side liquidity from ALP pools can evaporate in seconds,

Nu could encourage liquidity provision when liquidity is low by setting the interest rate higher when liquidity is low. For example it seems easy to implement for ALP – just fix the total payout every minute so that less total liquidity gets to earn more interest for the remaining liquidity providers. This fixed perminut pay out also allows removal of fixed target, simplifying operation, and feels fairer to the liquidity exceeding the target (they can earn interest as everyone else)

[Nagalim]

fixed perminut pay out

This is a very cool idea. Can you or I make a post about it? Possibly turn it into a motion eventually? There’s a lot to talk about there, as it changes the dynamics such that shareholders directly control things a lot more. Removal of fixed targets would be immense but it also necessarily increases amount of money paid out per month (no more rollover dollars) assuming fixed pool rates (i.e. rates would need to go down). Though you’re very right about it simplifying a lot of the economics.

[cryptog]

Tier 4 buy side liquidity in excess of $80,000 shall be used to conduct NSR buy backs and burns

I think it would be a nice way to further reduce the counter-party risk of Tier 4 while at the same time increasing the wealth of shareholders.
By the way, who would manage the remaining 80k in Tier 4? It also needs to get decentralized and counter-party-risk-free.

[crypto_coiner]

Over 300,000 NBT sits in B&C and Nu wallets, and will be slowly spent on development and other expenses. By itself, this will put sell pressure on the peg. We don’t know if other factors will provide enough buy pressure to counteract this, but there is certainly a good chance it will go this way. If it doesn’t, NSR sales can be used to reverse any earlier NSR purchases. This is the best approach because it reduces the size of the reserve in the interim, which reduces exchange rate and other loss risks.

Does it suggest that this buy back draft intend to elevate the NSR price in preparation of shares sales if case we need to put some pressure on the buy side of the peg?

[JordanLee]

By the way, who would manage the remaining 80k in Tier 4? It also needs to get decentralized and counter-party-risk-free.

I will be for right now. An effort has been underway for me to transition out of that, as detailed here and here.

[JordanLee]

Does it suggest that this buy back draft intend to elevate the NSR price in preparation of shares sales if case we need to put some pressure on the buy side of the peg?

I hope it will elevate the NSR price in preparation for larger, additional share buybacks resulting from continued increases in demand for NuBits. But no one knows what will happen with NuBit demand. We will let ongoing liquidity and park rate data guide us in choosing between NSR buybacks and NSR sales.

[JordanLee]

This has been hashed for voting:

7b4955e91781e0e32f1e0c0c974fd4a7a9f972a3

The Verify link doesn’t work because @assistant is unavailable right now.

[CoinGame]

[Cybnate]

Supporting this interim solution awaiting further tier 4 management improvements as result of management changes. Added to my datafeed.

[Yurizhai]

Voted.

[crypto_coiner]

After several review, the motion seems reasonable and that does not hurt NSR value. Voted

[cryptog]

I think this proposal is reasonable and needed: a relatively substantial amount of funds remain in Tier 4 to protect the peg if needed (this plays the role of an insurance) while at the same time the network starts doing a buy back of NSRs since it has enough buy side liquidity (to give some returns to shareholders as a reward for expanding the network)

7b4955e91781e0e32f1e0c0c974fd4a7a9f972a3 voted.

[JordanLee]

Share buybacks currently have 38.66% support, and the number is still rapidly rising. If this motion passes before the end of Friday UTC, we will begin conducting share buybacks this weekend.