Wall Observer - NuShares price movement tracking & discussion

[GreatScott]

I am so lost right now. PPC isn’t bought for dividends with NBT so there is no NBT inflation at all resulting from it. I don’t think @Sentinelrv was proposing that there was, though.

[Nagalim]

so where does the money for ppc distributions come from?

[GreatScott]

NSR price under $0.001852, how is this even possible?

so where does the money for ppc distributions come from?

Profits, when they exist. Either BTC or USD profit from custodial operations that net one.

Though, at this time shareholders have expressed that they would prefer to instruct a custodian to buy and burn NuShares on the open market.

[Nagalim]

I see distributions as being on the opposite end of the tool spectrum as park rates. I see burning as a way to deal with daily business operations for custodians. I don’t really see Nu making additional money, because Nu’s business is adoption, not earning USD. We are making a way to translate fiat into crypto, so we can channel all profit and all inflation into one market: the NSR market. That must be where we take our distributions from and call it a profit of the system; we must be exceedingly smart about how we do it and only do it when we can afford the inflation.

I know I’m being loud about this and I plan on being more quiet in the future, as I believe people have heard me out at this point. Thank you, @GreatScott in particular for taking time to have this conversation.

[GreatScott]

NSR price under $0.001852, how is this even possible?

I don’t really see Nu making additional money

I must say I differ here. We are going to make a profit if this is going to be considered a success, we just haven’t made the right relationships or realized enough adoption to achieve this yet.

It will be much harder to make these relationships if we inflate the NSR market without abandon, I feel. NSR is our bargaining chip for such partners, just like any other business.

Thanks for being loud like me! I tried the quiet route after my dividend motion didn’t net any votes, but then you came along. It’s good to bounce these things off each other. Your vision, while I still disagree with a lot of points, has caused me to appreciate what we have today a bit more. I still feel we need to be really conservative with printing NuShares, though.

[Nagalim]

See, cause with a statement like that I feel like we’re on exactly the same page.

NSR price under $0.001852, how is this even possible?

It will be much harder to make these relationships if we inflate the NSR market without abandon, I feel. NSR is our bargaining chip for such partners, just like any other business.

I deeply agree, that’s why distributions should be done with extreme caution.

I’m arguing for a heavier link between the NSR price and Nu’s success, so that we can truly tout a high price as a true bargaining chip. I actually consider it to be a transparency issue, believe it or not.

NSR price under $0.001852, how is this even possible?

I still feel we need to be really conservative with printing NuShares, though

Yes, I very much agree, but what I want the network to realize is that printing NBT when the NSR/NBT ratio is low is equivalent to printing a lot of NSR. The only thing it would take to realize this is a burn motion at the low NSR/NBT price point. If we are banking on shareholders not passing such a motion, then we are hedging the market. Eventually there will be a panic break and a black swan situation and low NSR/NBT burns to reduce NBT inflation will be passed.

[GreatScott]

NSR price under $0.001852, how is this even possible?

I’m arguing for a heavier link between the NSR price and Nu’s success, so that we can truly tout a high price as a true bargaining chip.

I feel the price of the shares should be solely set by the free market without much interference beyond inflation for clearly beneficial partnerships or emergency funding to maintain the NuBits peg. I am talking break the glass to use the fire extinguisher emergencies. This is where we collide.

[Nagalim]

But then you’ll always have the worst nsr/nbt pricepoint for auctions or however burns happen in your model.

[GreatScott]

NSR price under $0.001852, how is this even possible?

But then you’ll always have the worst nsr/nbt pricepoint for auctions or however burns happen in your model.

Individual and public bids seem to be the way these will take place going forward. We cannot expect to have a good price when we are desperately selling shares, just as someone just recently found out on their own.

[Nagalim]

I am offering a fix: allow custodians to burn to hedge the nsr/nbt market using a decentralized process like NuPool. The capstone would be risk based compensation for market orders that counter nsr price spikes and black swan events, but that’s a complicated model and nu isn’t ready for it yet.
The alternative is crucifying nu on the open market any time we want to counter nbt inflation.

By the way, do you agree we should only distribute if park rates are zero?

[GreatScott]

NSR price under $0.001852, how is this even possible?

The alternative is crucifying nu on the open market any time we want to counter nbt inflation.

By the way, do you agree we should only distribute if park rates are zero?

I do not know that I would call it crucifying Nu, but I have no interest in Nu using resources to support the price. It is a distraction from our goal of defending the NuBits peg.

Distribute NSR if park rates are zero to raise buy side liquidity? If park rates are zero this should assume that buy side liquidity is high and there should be no reason to distribute NSR.

[Nagalim]

When I say distribution I mean ppc distribution. I’m just asking if we can agree at the very least that there should never ever be a ppc distribution while parkrates are nonzero.

[JordanLee]

NSR price under $0.001852, how is this even possible?

I’m just asking if we can agree at the very least that there should never ever be a ppc distribution while parkrates are nonzero.

That is my opinion.

[GreatScott]

I’d be hesitant to use the word never, but absolutely I agree with the point. Every custodian has the freedom to make their own terms. There may be a model that comes in the future where profit is inevitable and not dependent on the health of the peg.

Imagine a BTM operator that integrates NuBits into BTMs and distributes a portion of the profit off of BTC fees to shareholders as dividends, while keeping the NBT purchases at 0% fees. Perhaps the BTM owner got a loan or NSR agreement that leads to the incentive to return so much value to shareholders.

[Nagalim]

I think you make a good point, but I basically think if the BTM wants to return value to the system they can simply buy nbt and burn it.

[GreatScott]

I think having this flexibility may lead to a NSR price that is not so sensitive to the health of the NuBits peg. Another option would be purchasing and burning NuBits with the profits, but if there is a regular dividend coming in, shareholders may be more comfortable taking the risk holding their shares as opposed to dumping them and placing a low NSR bid via motion, which I feel is self detrimental to Nu in the larger scope.

EDIT: Had my thoughts backwards in text.

[Nagalim]

I’m confused by your wording. Why would dividends make shareholders dump? I understand the desire to make Nu seem profitable, I’m just wary about it only being that: an illusion. If parkrates are nonzero then shareholders believe the peg is not 100% secure and I find it difficult to justify taking profits. The whole thing is fungible from my perspective and distributions should only happen when we clearly have profit in addition to what’s required to maintain the peg. That situation most likely is not the case if shareholders are still voting for nonzero parkrates.

[GreatScott]

NSR price under $0.001852, how is this even possible?

If parkrates are nonzero then shareholders believe the peg is not 100% secure and I find it difficult to justify taking profits.

We agree here, but at times you have mentioned buying and I assume burning NuShares “if the price is too low”. I see dividends and NuShare burning as two different ways to achieve the same thing. Namely, returning value to shareholders when there is something to return.

Would you agree that we should never be burning NuShares under the same circumstances as we should never be distributing dividends?

[Nagalim]

No, I don’t agree because I don’t believe burning should be used to realize profits but instead to keep nsr price fungible with nbt peg support.
When nsr is low and nbt buy support is high, burn. When both are low, increase park rates.

I see where you’re coming from: if nbt buy support is high park rates should be zero. However, sometimes the right move is a little of column A and a little of column B (buy nsr, burn it for nbt, park it). Park rates and distributions, on the other hand, are distinct opposites in my mind.

[GreatScott]

NSR price under $0.001852, how is this even possible?

No, I don’t agree because I don’t believe burning should be used to realize profits but instead to keep nsr price fungible with nbt peg support.

Here we are back where you need to explain how burning NSR for NBT makes us buy side liquidity to buy NuBits back from our customers. I argue it does the opposite in that it takes away buy support.