[Passed] Peercoin FLOT Reserve

[Nagalim]

@cybnate @crypto_coiner @jooize @mhps @masterOfDisaster @dhume @cryptog @dysconnect

Please get a multisig together and tested before april (15 days). 3-of-5 would be fine, i know @dysconnect and @cryptog expressed hesitations.

[masterOfDisaster]

Please post PPC pubkeys here:

FLOT PPC Operations (buy side)

Relevant FLOT Operations Thread FLOT US NuBit Operations (sell side) FLOT Bitcoin Operations (buy side) FLOT NuShare Operations (buy side) FLOT BlockShare Operations (buy side) Tier 4 Fund Management [Passed] Peercoin FLOT Reserve Create multisig transaction with Cointoolkit (Daology article) Multisig #1 Address pM68K72BBa2KX7Kj2qY5jgTB3AmCUKFQmV Inspect address with Cointoolkit. Redeem script 53210234139729dd413c84a71a0bfd6f236790be861b37311cef3240277c940e4b0c0721031209e2f8429e0fd724607bf…

[crypto_coiner]

At your service–

[mhps]

This

Another 5% of the BTC overflow will be used to purchase PPC to place in the multisig account.

does not agree with this

if the PPC reserve exceeds 5% of the circulating NBT, …

in how PPC reserve is calculated. Is it 5% of the buyback pool (circulating nbt minus 15% minus nusafe) or circulating nbt ?

[masterOfDisaster]

Why not? 5% of the overflow are used to purchase PPC until the PPC reserve exceeds 5% of the circulating NBT.
One defines when to buy PPC and the other until what threshold is reached, no?

[mhps]

OK. It would be great if this ambiguity can be removed.

[Nagalim]

MoD is correct, those are two different situations and could in theory be different numbers. For simplicity i just made them both 5%.

So we have two conditions that can be met both, either, or none.

One condition is ‘btc overflow’ which happens when the standard is positive (i.e. we have more than 15% btc reserves). When this condition is met we seek to buy nsr and ppc with a market velocity of 5% of the btc overflow for each.

The other condition is ppc overflow which has not happened and likely won’t happen for some time. That condition is met when we have 5% ppc reserves with reference to the circulating nubit debt. So:
ppc reserve - 0.05*(nbt debt) = ppc overflow
The market velocity is such that 5% of that overflow is sold for btc.

When both conditions are met the portion of btc overflow that would be used to buy ppc is instead used to buy nsr.

I know it’s complicated, but I thought there was sufficient precident for overflow mechanics that shareholders would understand. I’ll do my best to clear this all up in the upper tier motion. Using the language of the ‘standard’ will be helpful I think.

[mhps]

I know it’s complicated,

It is. I have worked on the buyback script for more than 6 hours today and is still not getting all the cases right.

[Nagalim]

Practically speaking, just ignore the ppc overflow stuff for now. The only changes that matter are like i listed.

1. No more nusafe in buyback calculations
2. Reduce velocity from 10% to 5%
3. Mirror any nsr buys with ppc buys

Let’s just stick with that for now. The complication only comes when the ppc reserve starts filling up (where we’ll need to start using a ppc price feed), but we’ll probably be operating with a different iteration of this motion by then.

[mhps]

a ppc price feed

already got that working. btc-e avg ppc_btc. that was the easy part.

[Nagalim]

What are you coding in? I can probably show you if it’s something im familiar with.

[Nagalim]

All calculations should be done in units of US-NBT

1. Calculate circulating nubuts
   A. N = blockchain nubits
   B. R = reserve nubits
   C. CN = N - R

Skip step 2 for now, this hasnt passed yet
2) Calculate outstanding nubits
A. S = stable reserves
B. ON = CN - S
C. ON = max( ON , 400000 )
from here on i will use CN and make no more mention of ON

3. Calculate peercoin overflow
   A. P = value of ppc reserve using feed
   B. PO = P - 0.05CN
   C. PS = PO0.1
   D. If PS > 1000, take PS to be sold on the market for btc

4. Calculate BTC overflow
   A. B = value of btc reserve using feed
   B. BO = B - 0.15CN
   C. BS = BO0.05
   D. BS is the bitcoin standard. If BS > 2500, take it to market to buy nsr.
   E. Is PO > 0?
   Y->do step D. in this list again, so 2*BS is used for nsr
   N->take another BS to market to buy ppc

Tada!

[mhps]

I have got most of it working. some details in your steps are still missing e.g.

N->take another BS to market to buy ppc

at what rate? 10% as in NSR buyback?

[Nagalim]

BS is the standard. It’s given in units of US-NBT, so you would be buying $BS of ppc.

You’re probably thinking of BO, which is the bitcoin overflow. BS is the derived standard market velocity rate of change thingy. The letters for BS come from “Bitcoin Sell”, to be honest. ‘S’ being ‘standard’ is a happy coincidence.

Also, note there are 4 constants in this equation that are less than 1. 3 of them are 5% (2 market velocities and 1 reserve size), one of them is 15% (btc reserve size). In theory, all 4 could be different numbers.

[mhps]

OK the script is working but this week’s result is banal.

Using these testing parameters

# testing# parameters
#circNBT=xxx000
#ppcReserve=yy000
#nuSafe=30000
#bp=400 # BTC price
#pp=0.0010 # PPC price
# total btc buyside
#echo 300 > templist

# the reserved amount of Nubits excluded for buyback calculation.
reserve_fraction=0.15
# PPC reserve against circulating NBT
PPC_res_ratio=0.05
# rate of PPC reserve overflow buying BTC
PPC_buy_BTC_rate=0.1
# NSR buyback ratio against buyback pool
NSR_bb_ratio=0.05
# PPC reserve fill ratio against buyback pool
PPCres_fill_ratio=0.05
# NSR buyback threshold
NSR_bb_threshold=2500
# threshold of PPC reserve overflow buying BTC
PPC_buy_BTC_threshold=1000

Here are some sample test results of the calculation part:

Tier 4 buy side funds total 200.000000 BTC, 110000.000000 PPC, and $30000.000000, valued $154000.000000 (385.000000 BTC)

Of the 800000.000000 NBT in circulation, 15.00 percent (120000.000000 NBT) plus NuSafe are reserved and excluded from the share buyback calculation (375.000000 BTC).

385.000000 - 375.000000 = 10.000000 BTC in the share buyback pool.
The standard is 5.00 percent of this, 0.5000 BTC (equivalent to approximately 200.00 USD)

0.5000 BTC (~200.00 USD) will be used for share buyback next week, subject to a $2500 threshold.

PPC reserve (110.000000 BTC) exceeds 5.00 percent of all circulating NBT by 10.000000 BTC, 10.00 percent of which 1000.0000 PPC (equivalent to approximately 400.00 USD) will be sold for BTC, subject to a $1000 threshold.

Another one

Tier 4 buy side funds total 100.000000 BTC, 110000.000000 PPC, and $30000.000000, valued $114000.000000 (285.000000 BTC)

Of the 800000.000000 NBT in circulation, 15.00 percent (120000.000000 NBT) plus NuSafe are reserved and excluded from the share buyback calculation (375.000000 BTC).

285.000000 - 375.000000 = -90.000000 BTC in the share buyback pool.
The standard is 5.00 percent of this, -4.5000 BTC (equivalent to approximately -1800.00 USD)

Pool is not positive. There will be no buyback next week.
PPC reserve (110.000000 BTC) exceeds 5.00 percent of all circulating NBT by 10.000000 BTC, 10.00 percent of which 1000.0000 PPC (equivalent to approximately 400.00 USD) will be sold for BTC, subject to a $1000 threshold.

yet another one

Tier 4 buy side funds total 300.000000 BTC, 90000.000000 PPC, and $30000.000000, valued $186000.000000 (465.000000 BTC)

Of the 800000.000000 NBT in circulation, 15.00 percent (120000.000000 NBT) plus NuSafe are reserved and excluded from the share buyback calculation (375.000000 BTC).

465.000000 - 375.000000 = 90.000000 BTC in the share buyback pool.
The standard is 5.00 percent of this, 4.5000 BTC (equivalent to approximately 1800.00 USD)

4.5000 BTC (~1800.00 USD) will be used for share buyback next week, subject to a $2500 threshold.

PPC reserve (90.000000 BTC) is less than 5.00 percent of all circulating NBT by 10.000000 BTC,. 5.00 percent of buyback pool 4.5000 BTC (equivalent to approximately 1800.00 USD.) will be used to buy PPC to fill PPC reserve.

[mhps]

If PS > 1000, take PS to be sold on the market for btc

This BTC goes with the BS below?

Y->do step D. in this list again, so 2*BS is used for nsr

Where in the motion said the above?

N->take another BS to market to buy ppc

What if BS<0 ? What if BS would over-fill PPC reserve?

[Nagalim]

What if BS<0

Right, this is the only place where i forgot to place a threshold. It would be consistent to just say 2500 minimum.

What if BS would over-fill PPC reserve

Then we take care of it next week. If it isn’t full this week, we buy more. The ppc price can change a lot in a week.

This BTC goes with the BS below?

No, this btc doesnt exist yet. Taking peercoin to market is a week long process. The proceeds from PS will be used for BO next week, but this week just give the ppc to the executor and let them do their thing.

Where in the motion said the above?

the overflow BTC that would be used for PPC purchase should be sent to the NSR buyback executor instead to purchase and burn NSR

[mhps]

N->take another BS to market to buy ppc

What if BS<0 ?

I mean if BS<0 there won’t be any fund to buy ppc, so the above logic is incomplete (missed a case where BS<0.)

What if BS would over-fill PPC reserve?

I mean another case missed is e.g. BC=5btc PPC_reserve should be 10btc but now only has 6btc in it. If you take another BS (5btc) you will not only fill the PPC_reserve to 10 btc you even have an extra 1 btc left. Now what do you do with that 1 btc? I assume the 1 btc is sent back to the btc pool.

Y->do step D. in this list again, so 2*BS is used for nsr

Where in the motion said the above?

“do step D. in this list again, so 2*BS is used for nsr” means to me that “if the PPC_reserve is full, take another 5% of btc buyback pool to buyback NSR”. I don’t think the motion said that. The quote you made

should be sent to the NSR buyback executor instead to purchase and burn NSR

also means extra BTC should not be used to buy NSR.

So in this post it should be

Y -> do nothing besides D in 3.

[Nagalim]

BS<0

Again, if BS < 2500, don’t use the btc for anything. I’m sorry i didnt explicitly specify this in the motion, but clearly the logic is incomplete without it. Just use 2500 as the minimum, it has precident.

I mean another case missed is e.g. BC=5btc PPC_reserve should be 10btc but now only has 6btc in it. If you take another BS (5btc) you will not only fill the PPC_reserve to 10 btc you even have an extra 1 btc left. Now what do you do with that 1 btc? I assume the 1 btc is sent back to the btc pool.

You’re assuming both 100% efficiency and a constant peercoin price. If you lift those assumptions you can see that it would be prudent to perform a full standard of peercoin purchases even when ppc is just a hair under the filling threshold. This means every week that btc is overflowing we will be either buying or selling ppc. That is by design, because dynamic pools change value rapidly anyway and trying to design for a stable dynamic price is a futile venture.

also means extra BTC should not be used to buy NSR.

Im honestly confused by you here. If both ppc and btc are overflowing, use 10% (2*BS) for nsr. If only btc is overflowing, use 5% (1 BS) for nsr and another 5% (1 BS) for ppc. This means a total of 2 BS of btc will be brought to market each week that we are overflowing, despite how full ppc is.

[mhps]

Again, if BS < 2500, don’t use the btc for anything. I’m sorry i didnt explicitly specify this in the motion, but clearly the logic is incomplete without it. Just use 2500 as the minimum, it has precident.

Before the comprehensive liquidity model passes, I will treat the 2500 threshold an execution praticality issue. That means BS>0, <0, ==0 will be treated as distinctive cases. The end result will be the same in the calculator output anyway, like shown above

4.5000 BTC (~1800.00 USD) will be used for share buyback next week, subject to a $2500 threshold.

Pool is not positive. There will be no buyback next week.