Furthermore, speculation of future dividends have an effect on the current market price. This is a fact. It will be much more complicated to speculate on NuShares now as buybacks are the preferred method of returning value to shareholders as nobody knows how low the NSR price will go before a buyback is a possibility.
This is quoted from Jordan’s plan when there is a big demand for nbits:
It is quite possible that there is so little NSR liquidity it’s not possible to buy NSR with the proceeds at any sane prices in a reasonable short period. We expect shareholder to sell share to absorb the price surge. But people tend to hold when the price goes up! Now this is when dividends in PPC could come to the rescue. The proceeds could be used to purchase PPC which has a much deeper liquidity pool, and distribute the PPC as dividends.
There you go, buyback and dividend are both needed in different situation.
This is precisely the problem I envision happening. People will panic sell when the buy back program is over, including outside investors who only got into NuShares to attempt exploit the buy back program.
I still see no reason that buy backs should take preference over dividends.
Unnecessarily diluting such a small market with too many unbacked NuBits is a reason. Quite frankly, the case has been well made for why we really need to see additional market growth before more dividends are issued.
I liked your OP because I appreciate the discussion and I disagree with some of the language that I have seen that suggests dividends should be completely replaced with buy back. I am not voting for your motion because I disagree with the language that says dividends are the preferred method. I would like to see both used and I would like to see a more tangible decision about what criteria would need to be met for dividends to be a healthy choice. Presenting a reasonable idea of when to expect this is something I believe potential investors need to see.
Please elaborate what market will be diluted with NuBits if shareholders prefer dividends.
I am not proposing dividends any time in the near future. I am saying once we figure out how to make a profit, it will be distributed as dividends. That is unless a motion calls for share buy backs for some reason. I do not think the case has been made to have share buybacks be the default position.
Every NuBit sold for Peercoin is a NuBit that is no longer controlled by the shareholders. This is dangerous in a market as small as the Nubits market because we need to be a solvent as possible until this thing really catches on.
Cool. Me too.
I was little concerned about this too but it seem that most of the opinions expressed in this thread do not believe this to be the case. I’m glad to see the conversation.
Judging by a few of the comments about this issue that bring up “helping Peercoin”, I think the Peercoin price fall may be a large motivator for, seemingly, nobody taking the side of dividends anymore. It was a pretty big deal the first few months of NuBits that dividends were a brilliant and efficient way of returning value to shareholders. I remember the tweet about the first dividend transaction and it was indeed an amazing thing for DACs and Nu. It was said that Peercoin was chosen because PoS is more secure, not because NuBits had a lot of Peercoin holders.
If this is the case, and the Peercoin market is affecting your decisions on this, then you just do not understand how volatile markets work. The only thing you are trying to do to NSR is what you tried to do for PPC, albeit not very long. I must say that I feel it is pretty disingenuous on a couple levels. I do not come from the Peercoin community and I did not invest in NuBits so that it will benefit seemingly unrelated investments of mine. You should not be making decisions about Nu based on what happens with other volatile markets. And NuBits customers should not have to rely an any volatile market, be it Peercoin or NuShares (Tier 7 liquidity).
[quote=“GreatScott, post:41, topic:1822, full:true”]
I think the Peercoin price fall may be a large motivator for, seemingly, nobody taking the side of dividends anymore.[/quote]
This at least isn’t the case for me. I’m still buying Peercoin, especially now that it’s cheap.
So when dividends were being distributed, the PPC was purchased on PPC/NBT? What is the difference between that and distributing NBT as dividends, which we were trying to avoid?
A majority wasn’t, according to @KTm’s comments at the time. Peercoin from the CCEDK PPC/NBT market did account for some of the funds used for the distribution but a large proportion were purchased on PPC/BTC markets on CCEDK and other exchanges.
I agree on that.
I totally disagree. Whatever the monetary value is, NSR enable you to vote, which is huge.
Peercoin and Nu are different projects.
I did not invest in Nu because I wanted Peercoin to succeed.
And Nu can always change later on the instrument used to distribute dividends from Peercoin to something else.
Do you think NSR buybacks are better than dividends and should take preference?
In the situation I described above, dividends will be purchased with proceeds selling printed NBT. So PPC will be bought with BTC or USD.
Right, that was my impression as well. It appears it was not completely the case, though.
There have been a lot of ad hoc action at the front line. I am mainly concerned with what would happen when Jordan’s vision (partly quote in my post above) is to be realized.
This is my concern as well. I feel we are putting ourselves and NuBits owners at great risks if we rely on the NSR market to such a degree at opposite ends of the cycle.
Just imagine if we needed to access tier 7 liquidity right now. It will be equally hard to remove NSR from circulation. We should not rely on this market in any regular capacity is my opinion.
I would much rather prefer inflating NSR during the bad times and retaining dividends during the good times. Maybe some share buy backs if times are really good, but dividends should be our prime method for returning value to shareholders. That is all that this motion says.
I don’t understand. A Nubit is “controlled” by shareholders if shareholders make sure there is enough liquidity in one of the tiers to buy the Nubit back. The tiered liquidity is a dynamic reserve if you like to think that way.
Using NBT to buy PPC is no different than using NBT to buy a cup of coffee, which is fine.
The way I don’t like to see Nubits being used unfortunately is as a BTC price hedge by speculators. When BTC price goes up, NBT gets dumped; when BTC price drops, NBT got bought at the expense of Nu network’s worth. When BTC price goes up and down, value bleeds from Nu to speculators.
If a NuBit customer buys a cup of coffee, it is not related to this discussion. We try to avoid distributing dividends as NuBits because it works against defending the peg. Any NuBits we traded for Peercoin to distribute still need to be bought back. This is why the dividends should be purchased with BTC from the buy side liquidity.
This issue is a bit off-topic from the motion, and the motion doesn’t change this one way or another. In order to perform NSR buybacks, we still need to have excess buy support funds.
I think it depends on the purpose.
If the goal is to increase the value of NSR, I think both are useful although granting a dividend would give you at the same time some cash. This is assuming that NSR has a decent liquidity.
If the purpose is to remove NSRs from circulation because you want to limit the spread of voting power, then NSR burning is the way to go.
I feel that NSR burning (buy back) can serve multiple purposes.
I also feel that both might be the subject of insider trading the same way if ever this is one day the case.
This is the main problem that I see right now too.
Proving a stable currency costs a lot.
That is why LPCs should be highly rewarded and since shareholders have not been willing to pay a lot so far, we have seen only a few LPCs so far.
But a high reward would create a lot of inflation in a small amount of time.
How can the network sustain such an inflation while maintaining the peg?
Well, I think the only solution is when we have a Nu economy where actors are happy to use NuBits without bothering about exchanging with FIAT. In other words, those actors are confident in the fact that they would be able to exchange for FIAT when needed, but they actually never do so.
But then again in order to have such an economy we need sufficient buy side liquidity, which implies enough LPCs.
We are in a chicken-and-egg configuration.