[Voting] T4 buy side / BTC - maintaining and refilling value

[Nagalim]

constantly buying and selling on the open market means we eat the spread a lot.
Seeded auctions are another story.

[masterOfDisaster]

constantly buying and selling on the open market means we eat the spread a lot.

That’s why there needs to be a big distance between the thresholds at which Nu buys (>15% of circulating nubits in T4) and sells NSR (< 5% of circulating nubits in T4).

Seeded auctions are another story.

for which Nu rather sooner than later needs to get ready.
FLOT could participate in the seeded auctions with multisig addresses, right?
That would delay payment of the participants until after the FLOT has signed the tx, but it would allow a decentralized operation of the seeded auction.
Without a script that automatically handles the generation of the mutlisig tx to the auction participants it could easily be used to lead DDoS attacks on the FLOT.

[Nagalim]

Yah, seeded auctions aren’t an issue, they can even be done natively on the block chain.

I see your point about using bigger thresholds, how can we calculate what the effect is?
So if 100% are BTC, then how much does BTC have to change by before it triggers our thresholds? I think if we look at it this way we can see why we’re in a pickle: if the BTC price is volatile on the order of 5 or 6% per week, we could end up buying one week and selling the next over and over. This would be bad for us, in my opinion. However, is it really worth squeezing a few extra %, or do we need to think of maybe a floating threshold, or what?

[masterOfDisaster]

if the BTC price is volatile on the order of 5 or 6% per week, we could end up buying one week and selling the next over and over.

With 5% volatility the value of T4 funds will move by 5% and not 5% points, e.g. from 10% to 10.5% or 9.5%

[Nagalim]

You’re right, my math is bad. So, if we have 12.5% and the price moves by x% to get to 15%, x=15/12.5-1 = 20%. So the BTC price would have to be consistently volatile on the order of 20 or 40% per week to really cause an issue. That sounds fine to me, actually. Let’s stick with 5% and 10% thresholds.

[masterOfDisaster]

Interested readers have recognized that the FLOT is starting its operation.
The means to execute what’s defined by this motion are available - not in full, because the operation of the FLOT is still being ramped up.
But this motion will take some time to pass.
As there hasn’t been substantial criticism of the draft in general, this is promoted from [Draft] to [Voting].

[Sentinelrv]

Shouldn’t we also define a specific percentage where NuShareholders are advised to begin raising parking interest rates? @JordanLee has repeatedly described selling T6 NuShares as a last line of defense to protect the peg and something that should be done only after parking rates have proven to be ineffective after an extended period of time.

I tend to agree with this and suspect it may be the reason why this motion has failed to gain traction so far. I’d rather exhaust all possible methods of supporting the peg before diluting my NuShares. As such, I would like to define a threshold at which point shareholders should attempt raising parking rates BEFORE FLOT engages in NuShare sales. If the parking rates prove to be succesful in raising the buy side until real demand returns again, then NuShare sales may not be needed at all.

As an example, tier 4 Bitcoin drops below a certain defined threshold and NuShareholders raise parking rates. Buy side returns because of the synthetic demand brought by increased parking rates. When real demand returns again and FLOT is forced to bring NuBits to the sell side, tier 4 will be replenished with Bitcoin all without having to resort to NuShare sales. On the other hand, if parking rates don’t have any effect and the tier 4 buy side Bitcoin funds continue to drop, then NuShare sales would kick in.

Maybe we could alter the current motion to change the “SHOULD” sentence to parking only, while leaving the “MUST” sentence about NuShare sales.

For example…

• It is advised that NuShareholders SHOULD raise parking interest rates when the total value in USD of the currencies held in Tier 4 buy side falls below 10% of the circulating nubit supply.
• The Tier 4 buy side reserve MUST be increased by selling NSR when the total value in USD of the currencies held in Tier 4 buy side falls below 5% of the circulating nubit supply.

What do you think? If not this, at what threshold should shareholders raise rates to prevent NuShare sales from taking place?

[masterOfDisaster]

Why are voting NSR holders not interested in keeping one of the important layers in the multi tier model sufficiently funded?
What are the objections against filling the T4 buy side with funds if it’s degraded to one third of the target value?

Granting NSR on T6 is possible as well and under direct control of NSR holders.
But maybe this is too slow in a market situation which drains T4 buy side down to one third in a few days (possibly draining it to 0; what comes then is not nice).
Grants take several days to pass at minimum.

With this motion the FLOT could prop up T4 buy side by NSR sale in a much shorter time (not until T4 buy side funds are down to at least two thirds, latest if T4 buy side funds are down to one third).

I’d like to know why this is considered a bad idea (support not much above 10%).

[cryptog]

Why are voting NSR holders not interested in keeping one of the important layers in the multi tier model sufficiently funded?

I think it s difficult to understand for most shareholders, including me…

[masterOfDisaster]

I think it s difficult to understand for most shareholders, including me…

Then ask!

Did you read the “TL;DR” part?

It boils down to:
do you think it’s more efficient to start selling NSR in times when the peg is alredy broken (T4 buy side depleted) or in times of a still intact peg (but with a trend to depleting T4 buy side)?

This proposal is especially intended to refill T4 buy side if being consumed by the need to decrease NBT supply.
But it’s also able to help to some degree mitigating BTC (or other asset if part of T4 buy side) volatility.
I very much hope that Nu will rather sooner than later be able to avoid T4 fund volatility risks to some degree.
Until it is able to do so, Nu should be prepared to deal with e.g. BTC volatility.
Especially after crashes of BTCUSD, people might want to trade NBT for BTC.
That can be a problem for T4 buy side if not treated by a proposal like this one.

[cryptog]

The Tier 4 buy side reserve SHOULD be increased by selling NSR when the total value in USD of the currencies held in Tier 4 buy side falls below 10% of the circulating nubit supply.The Tier 4 buy side reserve MUST be increased by selling NSR when the total value in USD of the currencies held in Tier 4 buy side falls below 5% of the circulating nubit supply.

I understand the purpose of the motion and i agree on its main idea but the terms should be more specific in order for shareholders to vote for it, i feel.
Such as ex:t4 must be increased by selling nsr when total value falls below 5% till total value reaches x% of circulating nubits supply .
What do u think,@masterOfDisaster ?

[masterOfDisaster]

Such as ex:t4 must be increased by selling nsr when total value falls below 5% till total value reaches x% of circulating nubits supply .What do u think,@masterOfDisaster ?

I’m eager for adjusting it this way, but thought NSR holders might want to prefer some discretion to strict thresholds and actions.

With the given discretion it would allow NSR sale as soon as the T4 buy side value would fall below 10% of NBT in circulation, but would only force an NSR sale if the funds fall below 5%.
The idea is to make it harder to game the system, because no attacker can know in advance (and steer) what will happen when (e.g. there’s no reaction time for the NSR sale to start)
No one knows how many NSR will be sold and when exactly.
It’s not explicitly stated, but implicitly meant that the NSR sale is not aiming at pushing the T4 buy side value above 15% of NBT in circulation.
Currently there’s no way except for a motion to initialize such an NSR sale.
I tried to anticipate that.

[cryptog]

I think your statement makes sense. I will probably add it to my feeds very soon.

[cryptog]

685bcc7211db2536734042c65d78d150348a3ec5 verified and voted.

[Dhume]

I would like to see us start NSR sales when we drop below 15%, not as a hard limit but in the way you worded so:

The Tier 4 buy side reserve SHOULD be increased by selling NSR when the total value in USD of the currencies held in Tier 4 buy side falls below 15% of the circulating nubit supply.
The Tier 4 buy side reserve MUST be increased by selling NSR when the total value in USD of the currencies held in Tier 4 buy side falls below 10% of the circulating nubit supply.

I feel with DR being discussed and @Nagalim’s T4 Zoology proposal we will soon start voting in favor of reserves on top the current 15% one. It would be weird to have an additional 15-25% reserve but when its depleted not start refilling the 15% reserve until it drops to 10%

[masterOfDisaster]

You are right. This motion would work best when being connected to motions that change values like the 15% of circulating NBT being held in T4.
But how can you know what will happen?
Should we use variables? That would be even more confusing than having more and more motions.
What about having motions that adjust T4 treat that?

[Nagalim]

This actually goes along well with the zoology stuff, at least. Basically, at ~10% zoology will start selling off altcoins and get NSR signers ready. At 5%, we start selling NSR for real. Zoology point 4 is to define the minimum T4 BTC % for each altcoin to start selling off, just like this motion is doing for NSR.

[masterOfDisaster]

It depends on what the NSR holders prefer.
I suppose that most will prefer selling BTC, PPC, etc. to selling NSR - especially as long as there’s only little volume on NSR markets!
Selling NSR late, but not too late, is what I had in mind when creating this motion.
And I think it still makes sense to have motions, that change anything at the T4 value, treat the levels at which NSR sales happen.

[Dhume]

I would like to see this motion ingrained into a bigger motion (combined with the T4 Zoology proposal and DR maybe) so we can define our reserve system in 1 big motion instead of numerous little additions. Would this be possible?

[masterOfDisaster]

I once tried to create a comprehensive motion that would have dealt with T4 and T6.
I had the impression smaller motions would be preferred and didn’t follow that road.