Proposal to Operate a NuBits Grant to Provide Early Stage, Dual-Side Liquidity and Shareholder Dividends

NuShares Passed Grants
#1

Good morning. My name is Kiara Tamm.

I apologize in advance for introducing myself to the larger Nu Community in this manner. For reasons of confidentiality I was asked to maintain a low-profile until it was time for me to submit my proposal to provide support for a prospective custodial grant. I have, however, been in contact through BitMessage with a number of major shareholders and believe that they will support my election as a grant custodian.

Now, with the release of this proposal, I plan on expanding my presence on these forums. I strongly value my personal privacy, so I will not bear any ill-will to those Shareholders that need additional assurances before voting to entrust a grant of this size to someone. I do expect that my proposal can carry enough votes to be confirmed, but until the votes are cast and tabulated within the blockchain, I will need to wait and see.

As a Nu shareholder, I’ve already cast the initial vote for this proposal, so it is live and available for additional shareholders to cast their own votes within the Nu RC blockchain.

If my proposal is accepted by the Shareholders, I intend for my future actions as an elected custodian to be the way that I build trust with the community at-large. But enough about me…on to the proposal:

I have posted my proposal as a private Gist on my Github account. This was done so that the community can be made aware if any changes made to the document (through the version control system), and so that it can easily reviewed by Shareholders. If amendments to this proposal are required, I will clearly call them out within this topic.

Proposal to Provide Early Stage, Dual-side Liquidity and Shareholder Dividends

MD5 (ncgp_10-sept-2014_ktm.md) = cd4c67e956264e20858249d15a47285b

Details

Custodian: Kiara Tamm
Submission Date: 10-Sept-2014
Requested Grant Amount: 1,800,000 NBT
Custodial Fee: 36,450 NBT (2.025%)

NuBits Grant Address: B7mmVdVQ1SNNcT9zuQRK1B3Cbvo8vHeoB1
Vote Amount: 1,836,450 NBT

Contents of the Proposal

  1. Abstract
  2. Goals
  3. Justification
  4. Grant Operations
  5. Dividends
  6. Commitment to Transparency
  7. Risks
  8. Custodian Information
  9. Supplemental Materials

Thank you for your consideration. If you have any questions about the terms or mechanics described in the proposal, please do not hesitate to ask.

//KTm

2 Likes
[Closed] Motion to cease shareholder-funded NBT/PPC operations
Draft - Motion to adjust dividend payout schedule from KTm's first proposal
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Question about selling pressure aka the buy wall
History of the Nu Network (Feedback Please)
[Passed] LPC grant request for supporting NBT/USD on CCEDK
#4

Hi Kiara,
welcome onboard.

Thank you for taking the time to put this together, I will review it as soon as possible.

1 Like
Disagree LPC's Proposal - Nubits is a business!
#5

Hi Kiara,

It is good to have you aboard judging based on your proposal. As others have ready said, it is setting a high standard which I appreciate. I will instruct my wallet to vote for your proposal which I believe will set us up for success.

However I did wonder about something when reading your proposal. Not sure if you are in the position to answer this or that is out of scope, so alternatively I would be happy to receive an answer from others in the community. Given the tables and numbers around dividends, it appears to me that dividends are paid to all shares, including those not yet issued. Is this correct? And if so, I’m wondering whether these dividends should be redirected to create value elsewhere. Please your views.

Looking forward to your response.

#6

the profits will be placed in support of buy-side liquidity at a price of $1.00001

Is there a particular reason for that .00001 ?

#7

Hi, Cybnate! Thank you for taking the time to review the proposal and for your endorsement.

The dividend distribution models that I included are grounded in the functionality of the protocol. Dividends are released proportionately to all addresses that contain nushares. There is no way to set up a list of excluded addresses. This simple fact benefits the network. A rogue custodian cannot selectively send dividends to one population of shareholders at the expense of the rest of them.

If appointed, I will distribute to all shareholder addresses because I have no other option. I prefer this model, because I do not have to make a judgement (that can later be questioned).

I will only speak for what I know: the shares you refer to as “not yet issued,” are. While they may be locked away in cold storage—a presumption on my part, I do not have information about this side of the network, other than be aware that it exists—they most certainly are under someone’s control.

When I enquired about these shares during my research, it was explained to me that the initial investor (investors? I am not sure) who funded the project has committed to not using these “undistributed” shares to mint blocks. I suspect that this does not mean, however, that the owner of those shares will not reap the benefits of ownership through the distribution of dividends.

I do hope that the person or persons in that position take into consideration the long-term needs of the network. My concern is tempered with my knowledge that without their investment we would not be having this conversation, so rationally, that reward is justified for their faith in the project.

#8

In the plot below, isn’t the value on the y axis supposed to be NBT instead of NSR?

https://camo.githubusercontent.com/6e30136aa3e1d3f0525788fbb3dfb0d747b8943b/687474703a2f2f6c61706c6f61642e636f6d2f696d6167652e75706c6f6164732f31302d30392d323031342f6f726967696e616c2d34363334313932353039616535643136306434326164653262343031636431622e706e67

#9

Yes. The extra $0.00001 (as tiny as it is) was intended to keep the reinvested proceeds of the sell-wall above the price that the liquidity custodians were holding their buy-wall.

I am operating under the assumption that the liquidity custodians would prefer a situation where their funds were not used, unless they were needed. In my proposal, with all things considered, the Grant’s buy order would be higher than the liquidity custodian’s buy order, so it would be picked up first when someone wanted to sell. This way, the Grant’s funds are recycled appropriately, and does not have to compete.

I hope I am clear in my explanation. If I am not, I can try a different phrasing.

#10

Yes, it is. Thank you for catching that. I will make sure to update that when I make the first revision to the proposal. I will let others read through for a few more hours, in case other typos or modifications are discovered (I found a couple that I missed in my final editing pass) of this nature.

One item that your comment made me reflect on is just how “big” of a change can be made to the proposal before it is no longer the same proposal.

Clarifications and edits to fix typos (at least, to me) are OK. Should any structural changes to the terms of operation, however, will require me to resubmit with a new grant address and amount, because I do not want there to be an issue that a shareholder who previously voted for the proposal changes their mind because they do not like the updated terms.

Do others agree with this statement?

#11

Excellent presentation, @KTm. Thank you for giving me the opportunity to discuss this with you over BitMessage, and I am glad to see that some of my suggestions made their way into the final document.

I will take it, and the rest of the comments posted here under consideration before making my decision later today.

#12

What does this mean, under Dividends?

A premium may be required to attain a better price.

If I were buying a large amount of peercoins, I would emphasize the exchange(s) with the greatest market depth.

The proposal indicates that it may attempt to create arbitrage opportunities for other traders. I believe that any created arbitrage opportunity represents lost shareholder value that is being gained by other traders. If a trader can find a better price on another exchange, which is the definition of arbitrage in this context, then the custodian should be doing business on that exchange directly, in order to cut out the middleman and reduce cost.

KTm, can you please explain in more detail how the proposed purchasing approach will result in a maximized peercoin dividend for shareholders? Thank you.

1 Like
#13

You are right and this i a delicate topic . idea: Maybe the proposal for grant should initially be posted on the forum without an address for voting. After a first round of review has been performed by shareholders and some of the major concern have been addressed, then its time for voting.

2 Likes
#14

Agree, would like to see that approach. We are having a similar approach for the Peercoin Marketing Fund. Depending on the size of the request there is time to discuss and refine a proposal before being voted on. The submitter is still in control of the final submission, but a public consultative approach towards the community is valuable I believe.

1 Like
#15

Another alternative approach is to have a section in the proposal which is called “Flexibility of the grant” in which you specify that, some thing can change due to revisions and you specify what can changes and in which boundaries .

Someone can still vote for a grant knowing that , for example, “The way in which peercoin will be bought will be re-evaluated on a monthly basis for the best interest of shareholders”

#17

I agree with Cybnate, and would like to propose future custodian proposals should be submitted without a grant address + value pair, at least until there has been an opportunity for Community review.

#18

KTm, I did not receive a reply on the below. Could you please address this question? Thank you!

#19

Chronos,
Sorry for butting in, but I think I may understand the answer to this.
It is now confirmed that CCEDK will be allowing us to trade a NBT/USD pair. This means that proceeds from the sell of granted NBT will be in USD, which is not the easiest thing to transfer to other exchanges. This would require the custodian to purchase Bitcoin (most liquid market = least amount of price slippage on large orders), transfer it to a different exchange, then buy Peercoins. The cost of this maneuver (in fees and slippage) could end up being more than putting USD up for sale on CCEDK’s PPC market, at a very slight premium, with the intention of allowing arbitrage to do the work for you.
This approach accomplishes a few things: a) It’s possible to get a better average price, since your very large buy orders will be less likely to drive the price higher before they’re filled – with arbitrage, the orders will just flood in from other markets to be filled at your slight premium. b) It’s possible to get a better average price because you’re cutting out a lot of extra fees, plus avoiding unforeseen fluctuations in the price of Bitcoin. c) We reward CCEDK for being the first exchange to list NuBits by giving them a huge piece of the PPC market.

Hope this helps.

1 Like
#20

Pennybreaker, thanks for the reply. Your explanation makes sense, but it doesn’t seem to align perfectly with the proposal at hand. You mention keeping all dividend funds at CCEDK (or the exchange(s) where they became USD) until PPC is acquired. On the other hand, the proposal describes spreading the USD over multiple exchanges before it becomes PPC.

I might be misremembering, though – the original Github Gist proposal is not reachable at the moment. Can the links in the opening post please be double-checked? Thanks!

#21

That’s very strange, it was working earlier. I’ll send a note to Kiara and let her know.

#22

I apologize for the delay in responding. I had a couple of things that I needed to take care of to close out a couple of existing projects, so I could focus on Nu going forward. Couple that with a well-needed break with the family and it meant I didn’t get online much.

The issue with Github should be resolved. They had flagged my account as a possible bot, and had locked it while they investigated. Strangely, they didn’t send an email about it, just left a message when I logged in that said to contact them. The key take-away here being that if anyone else goes the same route that I did, and uses Github as a repository for information like this: remember to fill out your profile information. That seems to be the big red flag for Github’s spambot.

Now, to address your questions about the dividend distribution. Pennybreaker’s analysis of the dividend is accurate, and I’d like to add two more points to his list:

  • At the time of the publication of this grant proposal, we did not know which exchanges would be available on Day 1. CCEDK was a possible option, but there were still questions. In the case that we didn’t have a solid exchange with USD support available, we were going to have to use a C2C market (BTC/NBT, PPC/NBT). This would have facilitated a much better transportability between exchanges for the purposes of acquiring dividends.

  • The timeline that I’ll be working with to get dividend funds purchased and readied is 72 hours. It is not reasonable to believe that I can just drop a big order out on the open market and wait for it to be filled. The time frame provides a narrow margin for trying to identify a good entry point; rather than trying to make the best of the current market.

It’s most certainly my intent to maximize shareholder value and to return the best possible number of peercoins per dividend distribution period, so activities taken while acquiring those peercoins will be done to forward that goal.

#23

The same happened to me yesterday, I sent them an email and they fixed it.