The first grant was 100k and it’s all sitting in T4 as btc right now. We are using them for buybacks. This is wonderful if the demand is real. We must be wary of a ‘buy slow sell fast’ attack though. I think we should increase the threshold from $80k for buybacks to a % of the nbt in the wild, like @masterOfDisaster wants. Since we’re changing that number so quickly, now is the time. Imagine if we keep dropping 150k nbt/week. The nbt supply will double in a month.
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We might be under attack actually I was thinking. Anyone with the same feeling?
It makes sense. Any concrete idea for that percentage?
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Introduce a motion then. I would support a very limited motion dictating that we should always keep 15% of the circulating supply of NBT in T4 funds. It would be much more likely to pass quickly than the detailed motion @masterofdisaster is proposing.
My motion draft is not that much more detailed, but it is in some areas e.g. dynamic where static behaviour has significant drawbacks.
It tries to focus on the most important area of Nu’s business: providing liquidity in a reliable way.
It has recommendations to guide the voting/granting behaviour of shareholders to fill the NBT funds to support the sell side and it refills the T1-3 sell side quite reliably.
Proceeds from sold NBT will be distributed, but only those funds in excess of what is consider required to keep the peg if NBT holders want to sell NBT to Nu.
What’s the reason to vote for band aid motions (for single problems) instead of a motion that is more complete?
People not willing to think this through?
If that’s the reason, attackers will soon be ahead of Nu’s processes…
While i completely agree with @masterOfDisaster in that I would prefer we have a well-thought out plan rather than a pieced together structure. That said, we already have what we already have and this argument is referencing a number in a motion that has been passed and acted on for a month now. So I will be proposing a new motion about this like @tomjoad suggested if no one beats me to it.
@masterOfDisaster suggested 12% global reserve. @tomjoad suggested 15%. Anyone else have opinions, or should I just pick whatever number I fancy at the time?
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The hashed proposal text explains that 33,000 of the 100k has been promoted to tier 3. At that rate, the 100k will be gone in a week. Of course, it is possible it won’t last that long, so this is urgent.
It is driven by the need for additional tier 4 sell side liquidity, yes. @FSRT has been slower than I would like in completing final steps for safe handling of funds. I imagine if the situation became more urgent that FSRT would respond favourably to the pressure. However, we shouldn’t endanger the peg as a means of applying pressure to FSRT to finish. Peg maintanence is priority one. We need backups and redundancy when it comes to keeping the peg.
We all understand liquidity operations can be improved, and they will be soon with FLOT. Today we have to use what works right now.
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Anyone can see where it is going. So far, all of it has gone to NuLagoon in exchange for BTC, which I have detailed in other posts.
I am also excited about increasing the pace of development. If our market cap stabilises far above its previous base of about 1.5 million then we will have some options there. However, that is unrelated to this custodial grant. I will ask for development funds in NuBits, and when sold by contractors they will apply pressure on the sell side. That will organically decrease funds available for share buyback.
So it’s just going through NuLagoon, it’s really going to the people buying from NuLagoon. So again, where is it going? Presumably people are buying NBT and holding it. As @cryptog is concerned about, how do we know most of those NBT aren’t being held by a single attacker?
My guess is that this is organic NuBit demand. Our NuBit transaction counts have about doubled over the last two weeks compared to earlier periods. There is little evidence one way or another, however. With that in mind, we are well prepared to handle any sudden sell volume with more than 500 BTC in tier 4, park rates that have been at zero for many months, and the possibility of tapping our market cap at a higher level than has been the case in many months.
I can see this doesn’t feel good to many shareholders. It doesn’t appeal to the geek in us that wants clean and automated multisig solutions. It may feel like I am demanding more resources when I was just given so many. That isn’t really an accurate take because the resources aren’t being consumed, they are being pumped back into the market cap.
We should all be overjoyed that we are working on the problem of excessive NuBit demand. This is what winning looks like. We are in a very strong position. Now we need to meet the market demand for NuBits with supply.
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I understand that you may be sensitive to that, but that’s not actually my concern. My concern is that we give a ton of NBT to a single attacker, thinking it’s genuine market demand, and then we invest all the money that attacker gave us and when he comes back to sell all at once we have to back out of all our investments in a hurry.
The concern I have with this motion is actually the same concern I would have if FLOT were operational and asking for a new $150k grant every week. It’s like @masterOfDisaster says, if we don’t think through the possible attack vectors now we’ll be one step behind and end up getting taken for a ride.
Just to be clear, I am voting for this grant because I don’t think even this much would be enough to really cripple the network if there were an attack. Still, I would like to steer toward solutions that make it so that we don’t even have to worry about how many NBT we’re putting out in the wild.
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how exactly an attacker could attack nu?
by destroying the peg and sell all his nubits for a loss?
We could have a motion to suspend the buybacks for the next 4 weeks or something.
I plan on making a post about balance sheet attacks later, spelling them out as I see it. There are several attack vectors, most of which are highly risky for the attacker and all of which require a lot of liquidity. Basically, the one I’m referring to is the one where the attacker just keeps buying NBT from the network until they own a large portion of the NBT debt, then sell all at once. It’s one of the simplest attacks that causes people to fear <100% reserve systems like ours. I am advocating switching from a fixed $80k threshold for T4 to a % reserve threshold.
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It will be important to keep game theory considerations in mind when analyzing attack vectors.
The ultimate question an attacker would ask prior to starting is whether or not the attack would be profitable for him (financially) or his interests (such as harming our perceived quality to promote a competitor) and then how likely success is.
This is an underrated benefit of NSR for NBT burning. Shareholders have already signalled previously that they are very willing to use that tool when necessary. Given that the NSR market cap is many multiples higher than NBT right now, as well as our robust T4 liquidity, I doubt an attacker would view our network as an easy target. They would have to update their odds of a successful attack with that information. I certainly wouldn’t want to try a buy slow, sell fast attack right now.
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We could have each motion for each single issue we want to have addressed, making it hard to keep track of all of them and their relation.
It’s already confusing:
- a motion to sell NSR and burn NBT
- a motion to adjust 1)
- a motion to sell BTC and burn NSR
- Jordan’s draft for FLOT
- Nagalim’s draft for FLOT
- my draft for FLOT
- grant for 150k NBT
- T4 dividends
ALL deal with liquidity operations:
filling reserves (peg in danger), a fix for too many NBT in circulation (peg in danger), a fix for to little NBT in circulation (peg in danger), a fix for too many BTC on T4 buy side (volatility risk), etc.
You could reduce that to two motions:
- one to structure liquidity operations that adjust dynamically to a changing market and changing reserves - hint: I’m speaking of 6)
- one to deal with funds in excess
In fact you could stuff all into one motion, but I find it useful to separate “liquidity operations” from “revenue distribution business”.
To make it short and simple my draft (which seems complex, but is less complex than the set of motions Nu already has or will soon have…) deals with liquidity and
- some thresholds that trigger actions
- automatic adjustment of buy and sell side reserves to NBT in circulation (distribute revenue, burn NBT)
- balancing of the buy and sell side
- contracting sell side (NBT buyback) preferred by selling BTC
- if BTC reserves run dry, refill reserves by selling NSR
- inflating sell side (NBT distribution) in exchange for receiving BTC or NSR
- recommendations for NSR holders to grant NSR or NBT based on level of reserves
Distributing revenue has been left out intentionally - the funds in excess that should be distributed could be defined by the motion nevertheless!
An idea for that is in the intro. It has been left out of the motion draft to not mess with the current NSR buyback motion.
It’s up to the NSR holders whether they prefer a set of band aid solutions or a sound framework.
Having no useful rules for the FLOT forces the members to discuss, trying to interpret the NSR holders’ will in times they should act.
Having all spread across a dozen motion makes it hard to keep track and consider the effect of changes in one motion to other motions.
You can start to read, discuss, improve motions that try to draw a bigger picture, or wait for the next motions:
- motion to adjust T4 buy side to NBT in circulation (announced here) here it is!
- motion to postpone NSR buybacks (proposed here)
…others will follow…
It’s time to engage in:
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Perhaps this might be going off topic, but we could break it out to another topic if it’s disruptive.
I’d like to hear what people who understand the system more than I do thinks about @masterOfDisaster’s approach. He (correct me if otherwise) lays out arguments that are attractive to me, but I don’t trust my own understanding enough to make a conclusion.
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Shareholders seem to want to pass many less-complex motions in a row, which of course has the danger of losing sight of the forest due to all the trees, as MoD points out. I almost feel like we’ll need to make a motion just to tie all the other motions together into one coherent plan of business. I say we have at it with the bandaids, then pass an overarching motion that invalidates all the preceding motions once the shareholders have a greater concept of consensus for Nu operations.
I’m disappointed too, but sometimes the shareholders need to be coddled.
I think it’s very much on topic, because the generic topic is liquidity operations.
And you shouldn’t trust mine! 
My proposal is just a draft. I’m not sure whether the thresholds are good and the actions are wise.
They are just as good as I could make them.
And they will very likely not stay the same even after such a motion has passed voting.
There need to be feedback loops to include experience.
But first it needs to start!
Try to understand it, try to attack it, try to improve it!
Start discussing it!
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