[Voting] Motion to express that shareholders prefer dividends instead of NSR buybacks

[GreatScott]

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.

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?

[Ben]

So when dividends were being distributed, the PPC was purchased on PPC/NBT?

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.

[cryptog]

there is no liquidity on markets.

I agree on that.

NuShares have no value, at all.

I totally disagree. Whatever the monetary value is, NSR enable you to vote, which is huge.

Many community members have invested too much into Nu, they have invested because they want Peercoin to succeed; they want Peercoin dividends

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.

[GreatScott]

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?

[mhps]

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?

In the situation I described above, dividends will be purchased with proceeds selling printed NBT. So PPC will be bought with BTC or USD.

[GreatScott]

In the situation I described above, dividends will be purchased with proseeds 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.

Peercoin from the CCEDK PPC/NBT market did account for some of the funds used for the distribution

[mhps]

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.

[GreatScott]

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.

[mhps]

@GreatScott
Please elaborate what market will is being diluted with NuBits.

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.

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.

[GreatScott]

Using NBT to buy PPC is no different than using NBT to buy a cup of coffee, which is fine.

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.

[cryptog]

Good question.
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.

[cryptog]

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.

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.

[GreatScott]

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 a very good observation. And I want to thank you for your comment as a data feed provider. I really appreciate it.

I suppose the dividend insider trading problem could easily be solved by utilizing the record date section of the dividend distribution. It does not have to be set to the date that the dividend is being distributed. For example, it could be sent to all shareholders 30 days prior or something similar. Though, maybe I am misunderstanding the “Record date” section of the dividend function in the client.

[cryptog]

. For example, it could be sent to all shareholders 30 days prior or something similar

So you are suggesting that dividends distribution are more insider-trading-proof than nsr buy backs because of the ability to announce distribution in advance but we could announce buy bacsk in advance too via a motion.
I feel insider-trading proofness is not criterion to select dividends over nsr buyback.

[GreatScott]

So you are suggesting that dividends distribution are more insider-trading-proof than nsr buy backs because of the ability to announce distribution in advance but we could announce buy bacsk in advance too via a motion.

No, and I am not even claiming insider trading is the main issue here per se. I am more concerned with how the markets will react and whether the goals of NSR buybacks will be effective at raising the NSR price to a point where all shareholders are satisfied, which everyone seems to think is a given which I am the only person expressing concern that this may not be a given.

[Ben]

[…]which everyone seems to think is a given.

“Everyone.”

Hyperbole does not help your argument. Just in this thread alone I’ve seen a number of differing opinions and expectations of the outcome of NSR buy-backs.

A broad discussion, like this one, is good because it brings up concepts that people can digest and reflect on.

Ultimately though, isn’t the topic going to be determined on a case-by-case basis as new custodians submit their grant proposals for shareholder vote? The economic landscape of today is going to be different from tomorrow or next month/year/decade.

[GreatScott]

Ultimately though, isn’t the topic going to be determined on a case-by-case basis as new custodians submit their grant proposals for shareholder vote?

Jordan already did the same thing I am trying to do.

[Passed] Motion to end LPC operations of KTm, Jamie and NSR sales of Jordan

When NuBit demand is high, NuBits will be created and sold while NuShares will be purchased with the proceeds and burned.

[Ben]

Jordan already did the same thing I am trying to do.

Jordan, like you, expressed an opinion. His opinion, like yours, carries weight, but what shareholders chose to vote and the consensus that is reached is the final say.

This week it could be advantageous for shareholders to vote for a buy-back, next week it could be dividends, and the time after that a hybrid of the two or something completely different. There are no absolutes.

It could be that we are talking about the same thing, but in a different way.

[GreatScott]

but what shareholders chose to vote and the consensus that is reached is the final say.

This is why I posted this motion and I tried to write it so that at any time in the future shareholders may still use it to make this opinion known. I see no reason to withdraw it, but it is safe to say it doesn’t have anyone seconding it at this time.

[pennybreaker]

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.

You are correct. I just meant that whenever Peercoins are bought with NuBits and issued as dividends the NuBits are no longer part of the liquidity pool and unless buy side liquidity is adjusted to continue matching these an imbalance of solvency is created which pushes us closer to the definition of a fractional reserve. If you really think that the tiered dynamic reserve is enough to buy every NuBit back, I would have to disagree, although I do believe that it is currently enough to keep the peg stable since it is unlikely that we will face a bank run situation any time soon.

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.

This is certainly a challenge that must be faced but I don’t exactly see it as a bad thing because it means people are using NuBits for something because they work as intended. This trading volume has been very good for popularity. When the NuBits market cap is worth 1 billion, these losses will be quite negligible in comparison to the attention this volume has given the project. This attention has some value in it’s self.