A kind of RNA but mainly for traders, I like this even better as this is a far more likely scenario than end users and merchants suddenly returning their NBT. The professional traders would be first selling (or buying) anyway.
As you are aware I’m not shying away from questioning the current schemes if I think there’s room for improvement.
Using NSR sale to support the buy side is such a thing.
The FLOT is in possession of 25 million NSR. If there’s need to support the buy side by selling NSR you can be sure that I’m going to try to convince FLOT members to do exactly that.
The FLOT is much more agile than an NSR grant, which can be passed by NSR holders. But refilling the FLOT T4 NSR funds would be the next task I’d start once the FLOT would agree to sell NSR way before the situation gets so dire that the value of NSR would likely be much lower and even more NSR need to be sold.
It’s one thing to claim, that NBT are ultimately backed by NSR and wait until the last possible point of time to do exactly that.
Maybe we should adjust our thinking from "NBT are ultimately backed by NSR to “NBT are backed by NSR”.
With NSR being used to support the peg way before the T4 reserves have run dry, a measure like RNA looks much less bad and desperate.
I agree that RNA can be useful. But we need to make sure to do all in our power to prevent it from being used.
I consider selling NSR rather early than too late a prerequisite for RNA.
Increasing the ratio of T4 reserves is in my view another prerequisite, although I’d like to postpone that until tools like NuSafe are available and could be tested. The volatility risk is a serious issue, which is the main reason why we just don’t keep more BTC.
The diversification (beyond including by NuSafe) of T4 reserves is another helpful step.
RNA is great. It’s just not the right time for it.
I’ve experienced what can happen, if there’s a tool for emergencies - it seduces people to be slow in the creation of tools that prevent emergencies.
Just look at the NuBot gateways and what happened to them (and me)…
I’m totally for RNA - later…
With bitcoin having the governance problems it’s having i would be against raising the btc reserve threshold. Money is safer in nsr or an alt, or NuSafe.
I’m hoping to get @JordanLee or anyone else to speak to the above quotes. I also am not a big fan of RNA, but for reasons I’ve spelled out in this thread. Namely, that I don’t think it works without volume-dependence, I worry about the security risks it poses, and I question the application without a fundamental use like governmental taxation.
However, I am not against RNA as a concept. RNA is for sure a real thing that works for governments, there’s really no question about that. The question is about the analogy to Nu txn fees.
I wanted to draw attention to this withdrawn motion again in light of the proven ineffectiveness of NSR sales. I have removed all references of NSR sales as Tier 7; I now believe they should be removed from our liquidity model permanently.
I agree with replacing the current tier 6. NuShares sales just aren’t reliable because the share price crashes when we need it most.
Let me ask you a question though. @JordanLee has said he doesn’t support raising transaction fees like this…
In your reply though, you said that you only intended for RNA to be used in the absolute worst case scenario as a last line of defense where our reserves have been wiped out and raising interest rates proves to be ineffective.
Since activating RNA would be very damaging to our reputation, would you classify our recent situation as one where we would have activated RNA or one where we could have gotten through the crisis by using only tier 4 and 5? Would it have been necessary to activate tier 6 RNA? We would have to have no other option when considering activating RNA. What do you think?
I envision RNA as the worst-case scenario that should only be used when everything else has failed. While we lack precise data, a 10% demand drop like the one we experienced would be easily handled with a higher level of Tier 4 USD reserves and modest Tier 5 parking rates.
I support @JordanLee in his statement that we should maintain a tight spread and high levels of liquidity during normal operations.
In another thread I put some words regarding RNA describing the current situation:
There are not only differences, there are similarities as well.
At the moment it’s more expensive to buy BTC from Nu than it is to sell BTC to Nu.
One could argue, that buying BTC is partially restricted. But at the same time Nu is offering NBT at a tight offset.
More important are the differences
- paying/transferring with NBT isn’t restricted at all; their usability for tx isn’t impaired
- while the tx fee needs to be set by voters, the “restriction” from increased offsets can be automatically adjusted with market aware trading - even per side if necessary (Nu might not want to sell NBT at a tight offset, depending on the market situation)
A high tx fee (that isn’t dependent on the transacted volume) wouldn’t have stopped the big BTC trades on NuLagoon. It wouldn’t be able to stop people from trading funds that are already on exchanges for crazily low prices.
The high buyside offset on the other hand can protect the peg - to some degree and on a degraded level. But it’s working.
At several places, there was the notion that the market can be predicted and the risk from having NBT used to hedge is not big.
Either Nu was very unlucky or the BTC surge had a pattern that made people empty the BTC reserve (except for some buffer), which Nu had.
Nu is low on reserve and the BTC, that were traded for NBT at the begin of the surge, would have increased by over 20% in value.
If BTC nosedives the opposite may happen. An increased sellside offset (im not talking emergency offsets here, but maybe up to 1%?) may do Nu a favour.
Market awareness is necessary and will work better than RNA, being an immediate feedback from the market instead of having a delayed effect, that depends on the shareholders’ votes.
Market aware offsets don’t impair NBT transactions.
You should take (withdrawn) out of the title. Shouldn’t it always be available for people to vote on in case they change their mind? Recent events may have caused a lot of mind changing, but they currently can’t vote because the motion was withdrawn.
By removing the Tier 7 (NSR Sales) information, I’ve materially altered the motion and will need to re-submit for voting. I plan on introducing it again in the next day or two.
I think it is more relevant to post here.
You can vote with NSR no matter what price it has. Nubits don’t need to care about NSR price. If giving dividends is just for encouraging votes, considering only 15% of them are voting, we are paying too much.
So how about this solution:
When we need to dilute N NSR to support the peg, we print M NSR more to fully compensate all addresses that have voted yes on any passed motion in the last 6 months, and only half compensate all addresses minted but never voted yes to any. We basically dilute apathetic shareholders’ share to support the peg
The way to calculate compensation for a legible address is
(N+M) / NSR_money_supply * address_balance
There was also this…
That s a great idea.
I’ll always support that kind of dilution - I proposed it for the BCE upgrade for the same reason: active contribution needs to be honoured. Passiveness might have drawbacks for the shareholders beyond the lack of ability to contribute to consensus and security of the network they own.
I have no objection either
We ought to be careful not to do anything that would alienate shareholders or potential shareholders. The network works quite well with a large percentage of shares not minting. If someone wants to put their money in our network and then forget about their NuShares for a few years, that is OK with me. We shouldn’t refuse money from such shareholders. Doing so lowers our market cap and our ability to fund operations.
We already dilute non-minters with the 40 NSR block reward. That’s helpful. It is also fair because everyone understands that block rewards are part of the deal and that it is a standard feature of blockchains.
Let’s be very careful about punishing any class of shareholder ad-hoc because that could reduce confidence in the future value of NuShares.
That needs to be considered, of course.
Ad-hoc punishment is not as helpful (and maybe rather harmful) as announcing that punishment is, if you can hope to awake some discussing such a punishment.
The discussion about punishing BCE minters, who don’t upgrade (last time I had a look the 4.0 blocks were down to 55%) has a more important reason than this discussion here.
The upgrade of the client at BCE by minters is crucial.
This here is just an option that has, like you explained, potential drawbacks for the perceived value of NSR.
About the 40nsr dilution this is not perceived and understood as such yet and ppl might care.
That they dont care get what minting is.
I believe this is an incorrect wording inherited from peercoin
I don’t see the RNA working at all under our conditions. This could work in an on-chain payment network with considerable liquidity, but not for the off-chain trades on exchanges network we are running now. It wouldn’t help to restore the peg on the exchanges which is where most of the liquidity is. It will also always be too late to beat the bankrun even it was only remotely useful.
I don’t see any other measures than what is currently being done with widening spreads to protect 90%+ of the intended pegged value. This is clearly the last tier and if it fails beyond a certain, yet unknown threshold a sudden bankrun on exchanges is inevitable and the last reserves will be depleted resulting in NBT to be free floating.
I hope we don’t have to try RNA out to prove to you and others that it won’t help to restore the peg or the confidence in Nu as a network in general.
I would have to agree with that. So the only way RNA would really help Nu is if we had already become a payment network with the majority of transactions taking place on-chain, rather than on exchanges where tokens are used in place of real NuBits.