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Stable Liquidity is all T4 liquidity denominated in native Nubit units. This includes all stable cryptocurrencies and contracts like NuSafe that are denominated in USD with reference to US-NBT.
Dynamic liquidity is all T4 liquidity denominated in other units. This includes the BTC and PPC multisig, but does not include any collateral for current operations as that is not considered operating liquidity.
Outstanding Nubits & Overflow
The oustanding nubits in the network is equal to the quantity of circulating nubits minus the sum total of T4 stable liquidity, but must be no less than 250,000 US-NBT. Any overflow calculations concerning dynamic liquidity will use outstanding nubits instead of circulating nubits when performing the calculation. Explicitly, stable liquidity like NuSafe will not be used directly as buy side liquidity when calculating BTC overflow.
FLOT is encouraged to set up a tether address and begin selling nbt and btc for tether (with no less than 4 signers at 60% required consensus or greater). A price of no less than $0.99 is to be used. The reserve will be limited to 25,000 USDT. Improvising an executor upon signer consensus is encouraged, as is patience and a practiced hand when selling the USDT. It is mostly possible to panic sell USDT in the current market at poloniex, however a near 1:1 USDT:NBT ratio can and should be sought after when selling to maintain the peg.
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Verify. Use everything between and including the <motionhash></motionhash> tags.
I’m going to hash this soon. Please note that FLOT is not obligated to buy a single USDT until they reach consensus to do so. That includes setting up a multisig, getting comfortable with the concept of tether, and establishing a profitable purchase of USDT for either NBT or BTC.
This is up for voting. Please be aware that the only immediate effect would be to decrease NSR buybacks and increase BTC and PPC holdings by changing the way we account for NuSafe (it is not BTC and should not count toward the 15%).
The tether clause basically separates buy executors from sell executors. It realizes that buy execution can be decentralized (USDT can come from anywhere) while sell execution needs to be somewhat central (we need to send the USDT to an address). For selling, improvising an executor on Poloniex to sell on a liquid market like once a year shouldn’t be too hard. And future motions can improve this when someone steps up who wants to be permanent (or semi-perminent) USDT executor.
By the way, think ALP on NBT/USDT pair on poloniex and a T3 USDT custodian. Just as a possible execution method.
So does this motion tell Nu (if it passes) to convert a portion of T4 into Tether?
Right now, consensus tells us that we need to have 15% of circulating nbts into BTC FLOT + NuSafe (USD) on top of those 15%.
Would that Tether reserve be put on top of that?
As Tether (USDT) is USD stable it should be treated like NuSafe: put the USDT funds on top of the 15%.
The limit of BTC reserves on T4 is due to the volatility of BTC and to reduce the risks that originate from that.
Both NuSafe and USDT don’t face that risk. That’s why funds should be put on top.
The bigger the ratio of reserves in relation to circulating NBT, the later NSR need to be sold to support the peg.
Currently, we count NuSafe as BTC. If we grow our stable reserves like tether, eventually we will sell all our BTC for NSR because our stable reserves will be over 15%, and we will enter a weird negative BTC state that doesn’t make sense.
Once this motion passes, we count stable liquidity like NuSafe as negative NBT for the purposes of calculating outstanding NBT. Then, the 15% is pure BTC. As a consequence, PPC and other dynamic reserves would also take into account stable reserves when calculating overflow.
This motion reduces buybacks in favor of a more logical form of accounting that won’t result in us holding negative BTC amounts. It is not ‘on top of’, it is a coupled relationship.
Imagine we hold $500,000 stable liquidity and there are 1 million nbt in circulation. That would mean we would want $75,000 in btc. Without this motion we would have to hold -$350,000 (that’s negative) which wouldnt make sense. If it were on top of, we would need $150,000 in btc.
Still on the fence with this and you assume this adding to the FLOT tasks. I haven’t seen a positive acknowledgement from them yet.
Also don’t like the centralised aspect of Tether as a reserve. These funds can be relatively easy be seized or nullified overnight because a government thinks that would be the best thing to do e.g. when they find out that Tether is used by terrorists or for child pornography. The question is; Is that risk higher than BTC or e.g. Peercoin diminishing in value vs the risk of value gains? I struggle to find this answer for myself and given the limited support for this motion I believe I’m not the only one.
This would be indeed a nice feature.
So let us recap.
We have one motion that says that 15% of Nubits in circulation should be held into T4 reserves.
Those reserves are 2-fold: stable liquidity + dynamic liquidity.
Right now we have some btcs into dynamic liquidity held in BTC FLOT and some usds into stable liquidity held in an exchange.
The OP’s proposal intends to take some part of those reserves and convert them into Tethers to put them into dynamic liquidity.
Am I correct?
Tether is stable liquidity. This proposal spells out a way in which there is clear incentive for FLOT to buy stable reserves: to reduce outstanding nubit debt (which in turn reduces our holdings of messy dynamic liquidities). It then goes on to provide a mechanism by which FLOT can buy those reserves at will. This would make for a healthy relationship that fosters FLOT to measure the value between easily liquidated dynamic liquidity and the easy accounting of stable liquidity.
If someone knows how to make a tether multisig without going through kyc, this would work just fine. Otherwise it’s dead in the water.