[Voting] NBT burn / NSR sale

[Nagalim]

Motion RIPEMD160 hash: 567dbf1fdd9ef5c99583c7af26fac85d57a0d39e

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@JordanLee will oversee the selling of 5 million (5,000,000) NSR and the use of the resulting funds to purchase NBT, then burn them in a public transaction. The sale will start 15 days after the passage of this motion, will last 30 days, and will proceed to sell 1 million (1,000,000) NSR every 6 days in a cycle as follows:

Day 1: Any bid for the full 1,000,000 NSR of over $.0025 / NSR using market prices for valuation of non-USD or NBT currencies will be accepted via bitmessage or email (nsrauction@vistomail.com). At the end of the day, the highest bid will be awarded NSR and the remaining 5 days in the cycle will be ‘dead’ days.

Days 2-5: NSR will be placed on a sell order on Poloniex starting at $.004 and lowered in even steps every 12 hours. Bids will also be accepted via bitmessage or email (nsrauction@vistomail.com) but not for less than the sell order price and with a minimum bid size of 200,000 NSR. Once the NSR is purchased in its entirety, the remaining days in the cycle will be ‘dead’ days.

Day 6: The remaining NSR in the cycle is sold on the open market at the best possible price.

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Verify. Use everything between and including the <motionhash></motionhash> tags.

[tomjoad]

I don’t support open-market selling at all. Far less damage occurs to the share price of NuShares when they are sold through auction.

[Nagalim]

How do you know that?

I want to see NSR sell orders, put up by Jordan. I argue that that is more transparent and well advertised than any auction could ever be.

He doesn’t need to do it personally, “Jordan Lee” is just a pseudonym after all, and any number of bots can be used or developed. Perhaps via this motion the Pybot may even be modified in a presentable manner such that we can more easily channel funds from NSR creation to NBT burns this way. Then one day, maybe we’ll decentralize it.

[JordanLee]

I agree with @tomjoad that open market selling is an approach that is likely to cause unnecessary market cap damage. Regulatory matters are unclear and different in every jurisdiction, but this approach has additional risks in that regard when compared with selling to business partners.

If I understand the motion correctly, it would require me to run TLLP for indefinite period of time. That might not be the best use of my time, but it also violates best practices for maintaining my privacy.

I would be happy to comply with a motion that directs me to transfer NuShares to another custodian if others are willing to be more flexible.

[Nagalim]

I have fundamentally altered the motion, such that you could even do an auction if you want (if you can find the time). All I want is for nbt to be burnt, honestly.

I am open to increasing the NSR amount, but not decreasing it.

[creon]

This is not the actual design. I don’t like doing something this way although it could be just done as designed, i.e. through grants.

[Nagalim]

This isn’t meant to be affiliated with @creon in any way, other than that if another burn motion is proposed that addresses the concern in a better way, I will withhold hashing this motion.

[JordanLee]

I would prefer to see a more specific proposal. Two viable approaches are an auction and sales at a fixed price. We have experience doing both, but I would say sales at a fixed price has worked better. If you choose to go that route a price should be chosen, which could be fixed (0.0025) or relative to the market rate (at market rate, for instance). An expiration should be specified as well as a start date (which might be relative to the time the motion is passed). Contact info should be specified as well. We can use nsrauction@vistomail.com and the standard BM address as well if you like.

Any other details I’m missing that should be included?

[creon]

I will withhold hashing this motion

Please not, let the blockchain decide. You may have a point in the sense that this way would probably be much better controllable and Jordan could focus it on adding future buy side liquidity. It is not the design, but maybe the right thing to do here.

@JordanLee I like your question. A fixed price might lead to market manipulation before and after the sell operation. I think making it relative to the market rate would be reasonable - and maybe to sell only up to 33% of the average daily volume per day to avoid too much price influence.

[JordanLee]

Another detail I would prefer to see is rather than using the funds as buy side liquidity, simply have NuBits purchased and burned using a transaction that is publicly revealed. Placing BTC on the buy side requires ongoing action. It is easier to just spend the BTC on NuBits and then burn them.

[Nagalim]

I picked a fixed volume limit because it is far easier to implement and gives the same idea: the sale should take at least 10 days.

[JordanLee]

and maybe to sell only up to 33% of the average daily volume per day to avoid too much price influence.

The intent behind this is quite sensible. It reminds me that minimum purchase sizes are preferred to lighten the workload. May I suggest $1000? People who want less can get it on the open market. The restriction suggested may complicate the sale. A queue would need to be formed and probably only one sale could be completed per day. It is certainly true that sales like this cause the buy side on the open market to disappear. Perhaps the best approach overall is to sell only small sums that will likely be sold in a single day so that the disruption to the market is very brief. Perhaps 4 million is good for that reason: it won’t disrupt open market trading very much.

[JordanLee]

I picked a fixed volume limit because it is far easier to implement and gives the same idea: the sale should take at least 10 days.

That works and we can comply with that. Can we set a minimum purchase of 400,000 please? That would be the functional maximum as well. With this design a queue will form which means only the first requests to purchase placed in the first minutes or hours after the auction opens will be filled. It may make sense to prohibit multiple orders as a result. This design basically means the first ten requests get filled.

[Nagalim]

I feel the way this motion is phrased, you can set whatever minimum bid you want: you could do 133,333 each day on the open market at variable volume orders, or clump them into one day auctions of single 400,000 bids spaced by 2 days (which you clearly seem to prefer). You will have 15 days to distribute information about your plan after the motion passes.

[Cybnate]

I would like to see a few more of the details in the motion itself, but I’m supporting it in principle given the already high interest rates for a longer period of time which are clearly not solving the apparent oversupply we have. We have to try something else.

[creon]

Right, restricting the volume has major drawbacks. But its just so easy to manipulate the NSR price. Taking the Poloniex market as reference, a 40 BTC buy (~ the amount we want to encourage) would lift the price to 1430 SAT. A sell of 1 million NSR would already push the price down to about 750 SAT.

So, for example, if we attach the price to the market price then anyone with 1M NSR can simply sell the NSR to create a price around 800 SAT in order to buy four times the amount at this artificially lowered price. This was nicely solved by the blind auction model, but since we are aiming for another strategy here, we should reconsider these things.

One model I know from my small repertory of financial instruments is the fish market idea: On day one Jordan offers to sell NSR at a fixed price of 0.4 cent and decreases the sell price every day by 0.05 cent (example). Everyone can take the offer every day, or gamble on a future lower price while knowing that all NSR might be gone by then.

@Nagalim Maybe we should think about selling even more. At auction price the 4M NSR would give us 8,000 NBT buy side liquidity, with 0.25 cent (larger than current market value) it would be 10,000 NBT. Selling around 5M NSR would make it more likely to approach the 10k I think. Or we show faith into Jordan’s trading skills and simply say that he should sell any amount of NSR within X days until we received Y NBT, at best price of course.

[Nagalim]

I will increase it to 5mil.
500,000 every 3 days.

Day 1: auction; any offers over $.0025 will be collected. NSR is awarded at the end of the day to the highest bidder.

Day 2: fishing; NSR price will start at .0035 and be lowered semi-hourly until $.0023 is reached after 24 hours. This will be done on exchange or via auction, at Jordan’s discression.

Day 3: open market; NSR must be sold on exchange within 24 hours at the best price possible.

Rinse and repeat. If NSR are sold on day 1 or 2, the remaining days in the cycle turn into dead days to give downtime between auctions.

[creon]

I hope there is enough awareness and participation among traders to make the day 2 approach work on an hourly level. What do you think about enlarging the “day 2” procedure to 5 days (i.e. a 7 day cycle in total) and make it a million NSR?

EDIT: And let’s not call it fish market method I call it this way because I learned it when I was 10 years old and my father took me to a Dutch fish market. The scientific community most likely adopted another terminology.

[Nagalim]

Why do you prefer day 2 over day 1, and I’d be super interested in your thoughts on the lower bound on fishing and how long we should hold it for.

[creon]

There are advantages and disadvantages. The blind auction allows for an arbitrary large price in theory, while the price decreasing method naturally has an upper bound which must be picked carefully. On the other hand, the auction model also allows all NSR to be sold at the minimum bid (again, at least in theory). It allows for more speculation and market manipulation, because suppressing the price might lead to an overall lower auction bid and could give me an advantage. This all is not possible if the price is adjusted top down.