I am trying to understand why and when this was implemented as a strategy. How many NSR were purchased with proceeds from NBT sales and at what price? How many NSR are still on our balance sheet aside from the CCEDK settlement? Is there a motion that can be pointed to which authorizes this action?
That’s a great question. Now that you mention it, I am wondering this, as well.
I’d rather ask the question what strategy Nu should have to hedge against BTC first. I am sure the LPCs and devs made a lot of operational and technical decisions before there is (ever) a motion for each of them. For example @jmiller moved funds away from bter when there was rumor that bter was hacked. I agreed many decisions should be reviewed.
I think buying USD with the BTC would be the only reliable solution.
I totally understand what you are getting at. Not every single action or unexpected step is going to have a motion. This is our future dividends and funds to defend the peg we are talking about though. We currently are increasing the NSR supply ~15% to raise money to defend the peg and pay operating costs. To my knowledge the NSR auction does not include NSR held by LPC’s on behalf of shareholders but I think it should to solve how shareholders will deal with them.
This idea should have at least been discussed in the open somewhere is one thing that I really want to hammer home. The fact that it wasn’t can be twisted all sorts of different ways.
Totally agree. Getting XUSDs on multiple exchanged is an obvious solution. Hedging with futures hasn’t shown much progress.
My curiosity is still raging about this. (bump)
I’m not sure I see it the same way. Those NSR already exist and were expected to enter the available supply. If anything, if I understand the motion that passed correctly, Jordan will be burning a significant amount of the remaining available supply.
If @jmiller holds shareholder NSR on BTER, if and when they are recoverable, they also should fall into the “to be burned” side of the ledger with the rest of her shareholder granted funds as specified by the recently passed motion.
There will be no dividends from these burned funds because there are no profits to distribute.
I am fine with letting go of some of the verbiage I used about the NSR supply, though Jordan said this would have been an NSR Custodian operation had the protocol allowed for it.
Can anyone answer why jmiller bought NSR with BTC from the NuBit buy side funds?
There are a number of reasons that this action was taken.
- The grant had taken significant losses from the recent BTC decline and the market was showing indications of possible further decline into the 100‘s
- The grant was continuing to take losses from usually being on the wrong side of the market - traders tending to buy up BTC in bull markets and sell it in bear markets
- Receiving pressure from the NuBits team to take action to stop the bleeding
- Not being interested in futures hedging since this would require the involvement of yet another exchange and quite a lot of babysitting until an automated solution is implemented
Taking these reasons into account, I decided that an immediate attempt at reducing risk was necessary. The losses taken prior to these actions was approximately 95,000 NBT of the original 200,000 NBT grant. A breakdown of the balance has recently been provided in other threads, so I will not do that here, but consider what these losses would have looked like if BTC had kept falling to the low 100’s or lower.
The NSR buying took place over the course of about a week, at the end of January, and was quickly abandoned once it became clear that BTC was stabilizing and NSR was continuing to decline. There was never any intention to hold more than a million NSR since the majority of the funds were necessary for maintaining the peg. This NSR has never minted or contributed to any vote. It was an easy plan since it did not require moving funds to a different exchange. Other currencies were considered for this purpose but NSR was the only one with decent liquidity and an indication that it rises when BTC falls. The plan was discussed with Kiara, Ben and Pennybreaker before it began.
I can understand why shareholders may feel like this should have been discussed openly. I maintain that my actions have always been with the best interest of the network in mind. At times, this has meant making judgment calls about when to share information for the purpose of avoiding a panic. If after reading this, anyone feels compelled to criticize these actions, I would like to remind you that when the grant was originally passed it was intended to provide sell-side liquidity and then distribute the proceeds as dividends. This has changed drastically, at the request of shareholders, and has turned into a six month long operation that has consumed hundreds of hours of my time and many nights of lost sleep. If you would like to see things done differently, I would strongly suggest that you draft a motion to take over these responsibilities. I can promise that it will have my immediate vote.
Grant balance reports will be provided before each of the planned burns and when the remaining balance at Bter is verified.
Thank you for the clarity on this, @jmiller. I will save any further discussion on this topic in the event this idea gets presented to the public for our input and criticism.
Thanks for the explanation, Jamie. We all appreciate your care and committment. I think we can conclude that
- futures hedging isn’t appealing due to lots of extra work,
- in an urgent situation LPCs could choose ways to hedge that may or may not be the best way, so
- the community should keep discussing and finding ways to reduce LPC exposure to BTC, even BTC prices have stablized.