Unseeded Auction Thread

[Nagalim]

THIS SERVER IS NOW DEFUNCT, PLEASE DO NOT SEND ANY FUNDS

I will be holding the first unseeded NSR/NBT auction this week. It will end on block 394100. Please keep volume small but relevant to the market price. However, the more participants the better it will be! The minimum reward volume is 0.01 NBT and 1 NSR, the respective network fees.

Auction Participation Guide:

Do not send funds from an exchange, send them to your wallet first!
Wallet software: https://nubits.com/download

To participate, send both NSR and NBT in a ratio of NBT:NSR reflecting your ideal NSR/NBT price point.
NBT Address: BNjKzZtFtumiw3VNUVoWTNb8CoEtMZEEoN
NSR Address: SMNjMt4Wu2DKbDavbP6FyxA6nv4ZWgdGEP
You must send all funds from a registered address to participate

Registering addresses: The rigorous method
Display coin features using the display options in the settings menu.

You can now control your outputs so that you send all your nbt with one address:

Do the same with NSR. Tell me your NSR and NBT addresses (nagalimnu@gmail.com) before sending the funds.

Registering addresses: The lazy method
Send your NSR and NBT. Quickly look on http://blockexplorer.nu and find your transactions. Look for the NBT and NSR send addresses and tell me what they are (nagalimnu@gmail.com). Doing it this way risks someone registering the address before you do, so avoid it if possible. Any conflicts of ownership can be easily resolved by me personally, but I’d really rather just not.

Registering addresses: The UNIX method
This only works if you aren’t running windows and your nu is in /bin. Send your auction funds to individual NSR and NBT wallet addresses. Tell me the addresses (nagalimnu@gmail.com). Run the commands:

nud sendfrom Sxxx SMNjMt4Wu2DKbDavbP6FyxA6nv4ZWgdGEP
nud -unit=B sendfrom Bxxx BNjKzZtFtumiw3VNUVoWTNb8CoEtMZEEoN

Where Sxxx and Bxxx are your registered NSR and NBT addresses.

---

You will receive funds once the auction is over and inputs have been processed. It would be best for me if you have the same number of nbt and nsr addresses, feel free to register brand new addresses to receive funds after the auction. Technically, the registration happens in pairs (one nbt address for each nsr address) so feel free to pair them in your message to me if you care for any reason.

I have submitted 10 NBT and the corresponding NSR. I hope others will join me in submitting small amounts for testing and general understanding of what is happening here. This is unseeded, so there is no benefit to Nu aside from the fees burnt and the general satisfaction of the product we have created.

Feel free to pm me your addresses!

[cryptog]

Following this though I must admit that I do not grasp anything except that it could help convert nbt to nsr and vice versa. Sorry for the lack of understanding from my side.

[Nagalim]

That’s it! That’s all it does right now. Please, submit something! The only hard part is making sure all your funds are being sent from the proper address. Just throw in 10 NBT and like 5,000 NSR (that’s a $.002 price point).

[cryptog]

All right. Let me try the thing after checking the whole idea once again.

[Nagalim]

The auction doesn’t close until ~friday by my calculations, so you have plenty of time. Note that you can always send more from either address, and that you know more about the price of NSR as the week goes on, so it might be better to wait till later to submit your bid. Just get it in before block 394100!

The TL:DR of what does it do? is that it averages all the participants’ price points (weighted by volume) and redistributes the funds to everyone based on that average price.

[mhps]

What happens when somone sends “too many” or “too few” NBTs wrt NSR she sends? Say
A sends: 1 NBT 2 NSR
B sends: 2 NBT 4 NSR
C sends: x NBT 6 NSR

what happens when x=0? what when x=6 ? Show the calculation.

[Nagalim]

Let’s say I only submitted 10 NBT and 5,000 NSR and no one else but this ‘someone’ participated. I am submitting a price point of $.002.

A: 11 / 5002 = .002199, .002199*2 = .004398 NBT; 1 /.002199 = 454.75 NSR
Person A receives a lot of NSR for their reasonable NBT contribution. They receive no NBT because 2 NSR is not worth the fee. A sold 1 NBT to me for 454.75 NSR.

B: 12 / 5004 = .00240, 4*.0024 = .0096 NBT; 2 / .0024 = 833.33 NSR
Person B receives more NSR for more NBT. They receive .01 NBT because I round. B sold 1.99 NBT to me for 829.33 NSR.

Give me an example with more numbers if you want, it’s just a straightforward calculation.
It does get a little more complicated in code cause I have to subtract the fee from the totals in a certain way that basically creates a tiny spread to pay for the manysend and rounding errors. (the spread is .02 NBT and 2 NSR)

it’s just:
NBT Received = NSR Sent * [ sum(NBT) / sum(NSR) ]
NSR Received = NBT Sent / [ sum(NBT) / sum(NSR) ]

[ sum(NBT) / sum(NSR) ] is known as the ‘price’.

[mhps]

A sends: 1 NBT 2 NSR
B sends: 2 NBT 4 NSR
C sends: x NBT 6 NSR

what happens when x=0? what when x=6 ? Show the calculation.

Sorry in my example i meant there were A, B, and C three persons participating. Please leave yourself and tx fee out of it for clarity. Who profitted? Who made loss? Are there rules to remember? If it’s a zero sum game, what about with seed?

[Nagalim]

The seed would act as C in the case where x=0 during an NSR seed.
x=6
Price: (1+2+6) / (2+4+6) = 0.75
A: receives 20.75 = 1.5 NBT and 1/0.75 = 1.333 NSR
B: receives 40.75 = 3 NBT and 2/0.75 = 2.667 NSR
C: receives 6*0.75 = 4.5 NBT and 6/0.75 = 8 NSR
Totals:
A traded 0.667 NSR for 0.5 nbt. B traded 1.333 nsr for 1 nbt. C traded 1.5 nbt for 2 nsr.

x=0
Price: (1+2+0) / (2+4+6) = 0.25
A: receives 20.25 = 0.5 NBT and 1/0.25 = 4 NSR
B: receives 40.25 = 1 NBT and 2/0.25 = 8 NSR
C: receives 6*0.25 = 1.5 NBT and 0/0.25 = 0 NSR
Totals:
A traded 0.5 nbt for 2 nsr. B traded 1 nbt for 4 nsr. C traded 6 nsr for 1.5 nbt.

There’s not a whole lot to interpret, there’s no real ‘winner’. Everyone just trades up their funds at the auction price. The point is for Nu to have a market to sell in. An unseeded auction is just so I can test the server and we can develop a baseline for what to expect. Also, it functions as an on-blockchain trading service between our two blockchains.

[mhps]

Everyone wins, everyone loses.

That is too hand-waving. You could calculate each person’s gains/losses and interpret from there. I got the feeling that most people here aren’t follow you.

[Nagalim]

I edited that post. If we assume C is the seed in the x=0 case, we can see that Nu would have managed to burn 6 nsr for 1.5 nbt because the auction closed at 0.25.

[masterOfDisaster]

I was trying to digest this auction stuff.
Maybe I get it wrong, so let me explain it with my own words.
Even if I’m completely wrong it might help understanding it.

What I’m writing here is not strictly true for your unseeded auction here, but for the future way auctions might be held (and for which this auction is a test run).
Basically the auction consists of two auctions:

• one in which an NBT grant gets auctioned
• one in which an NSR grant gets auctioned

Auction participants place bids for one or the other auction or for both (if the situation changes between the bid and the end of the auction).
Depending in the outcome of the auctions you will either burn NBT or NSR in the end.
Both auctions might be included in one.

Is that more or less how it’s designed?

[Nagalim]

You could say it like this, kind of, but there’s an inherent link between the two auctions: the bid for one is the ask for the other. The outcome does not affect which currency is seeded, that is decided by the shareholders (or whatever) nor does the outcome affect the volume of seeded (auctioned) currency by Nu. The outcome only affects the price and therefore the volume of burnt currency.

This auction is unseeded, but that does not affect the way it works, only the economic ramifications (which are practically nonexistent without the seed).

Nu should never submit both an NSR and an NBT seed to a single auction. Participants should always submit both.

The seeded auction works off the principle of ‘build it and they will come’, but I really just want to get everyone on board with the technical aspects of the unseeded auction for now.

[masterOfDisaster]

But there should always be an NSR and an NBT auction running with the same deadline for placing bids, right?
That way Nu can (in the end, after the auction) either effectively issue NBT or NSR while the not issued type gets burned (in parts).
All depends on demand for NBT or NSR.
The NBT and NSR volumes of the next auction are derived from the preceding auction (and so is the price NBT/NSR).
But why would it be no good idea to put both grants (NBT and NSR) into the same auction? Isn’t that in the end the same?
Maybe I still haven’t understood how this is intended to work…

[Nagalim]

(and so is the price NBT/NSR).

No, the price is determined by market demand in this independent auction. The previous auction only determines seed volume, not burn volume. The seed volume is somewhat arbitrary as long as we announce it.

I want to be completely clear that you are talking specifically about the benefits of using a ‘seed’, and that it does not really pertain directly to the auction I am holding this week. These types of dual side ‘auctions’ can be held without any participation by Nu and without any seed being present (which means nothing gets burned).

Seeded auction only:
The key here is that we Announce that we are going to seed only one side, and we let people know what side that is before the auction closes. This means that if no one participates in the auction, just submitting .01 NBT and 1 NSR means you win the whole seed. If we are announcing that we are giving away money to the highest bidder, people will bid.
Essentially, there are only a few differences between this type of auction and the auctions Jordan is currently holding:

1. No minimum bid volume
2. Dual side
3. Auction currency can be easily switched
   Difference 1 allows for vastly increased participation and fair wealth distribution. Difference 2 allows for real competition between NBT and NSR in a very tangible way (given by the auction price). Difference 3 allows for fine control of the auction as a burn mechanism by whoever is supplying the seed (ultimately the shareholders voting on the blockchain).

[masterOfDisaster]

I want to be completely clear that you are talking specifically about the benefits of using a ‘seed’, and that it does not really pertain directly to the auction I am holding this week.

I completely agree.
While I have said that in one of my first posts in which I tried to explain this in my own words

What I’m writing here is not strictly true for your unseeded auction here, but for the future way auctions might be held (and for which this auction is a test run).

I haven’t said that in the next post, although this post was still trying to get behind the scenes.

To make this work, everybody needs to bid both NBT and NSR, right?

The key here is that we Announce that we are going to seed only one side, and we let people know what side that is before the auction closes.

But that means the decision what to seed would be made by the share holders.
If you had two auctions, one seeded with NBT, the other seeded with NSR, the result of the auctions would determine what is seeded and what is burned, determined by demand, no?

[Nagalim]

If you had two auctions, one seeded with NBT, the other seeded with NSR

Then shareholders are subsidizing traders and Nu will almost assuredly lose money. We should only be holding a single auction with a single seed. It would be nice to have the decision made by shareholders, but it could in principle be made by Jordan or whoever holds the reserves. Ideally we would have a binary vote on the blockchain to determine the seed for each auction. Note that the auctioneer does not have to be at all in control of the reserves, the appropriate seed just needs to be sent to the auction addresses before the auction close.

To make this work, everybody needs to bid both NBT and NSR, right?

No, but if you only submit one of the two you are bidding either NSR=$0 or NSR=$infinite, both of which are clearly not indicative of reality. If you want to feel like you won in this auction no matter what you should submit NSR/NBT at a proportion corresponding to your ideal price.

If Frank were to announce that he was going to send 2,000 NBT and no NSR to auction and people believed him for some reason, it would have the same effect as the seed. However, with public motions, people have full confidence that we will actually supply the seed and not send a bunch of NSR at the last minute like Frank might do. It is the public announcement that makes this work so well.

I forgot one point:
4. Transparency
Every transaction is recorded on the blockchain and can be independently verified.

[Nagalim]

I added an auction participation guide to the original post.

[mhps]

This means that if no one participates in the auction, just submitting .01 NBT and 1 NSR means you win the whole seed.

Wait. You also said

if we assume C is the seed in the x=0 case,

which suggested that the reserve is also an auction participant, who only submitted seed amount of fund on one side. In this view the reserve will also take its portion of the auctionn result. So if one submitted 0.01 NBT and 1 NSR, and the seed is not zero, then the reserve and this person will split the seed plus 0.1 NBT and 1 NSR.

So will the reserve take proportional auction result or not?

[Nagalim]

If you have a seed of 1000 NSR, and 1 other person submits 1 NSR and 0.01 NBT, that person gets all 1001 NSR in return, plus some small bit of the 0.01 NBT (which rounds to zero). The rest of the 0.01 NBT (rounded to a full 0.01 NBT) gets burned. That means he effectively paid 0.01 NBT for 1000 NSR.

The point of the seed is to ‘burn’ money, i.e. sell one currency for the other to adjust supply. So yes, it takes the role of an auction participant who’s one sided bid is known by all other participants.