This statement is an argument for restricted network access, to increase the friction within the system to make capital outflows more difficult. In a crisis we want to prevent NBT from being converted to USD at a rate that exceeds our liquidity operations. Tier 6 (Restricted Network Access) is a temporary application of major friction (which could be 10%, 20%, 50% tx fees, whatever shareholders decide is warranted for the magnitude of a crisis). This friction will allow shareholders to use Tier 7 (NSR sales) more effectively and with less dilution. Point 45 from the paper addressed the concept of capital outflows, which is the biggest threat to our peg:
- In crisis situations, or when a crisis may be imminent, there could be a temporary role for the introduction of CFMs on outflows. For example, when countries face domestic or external shocks that are large relative to the ability of macroeconomic adjustment or financial sector policies alone to handle [e.g. our liquidity operations model], or when the size or duration of the shocks are highly uncertain, CFMs [i.e. Tier 6 (Restricted Network Access)]may help to prevent a free fall of the exchange rate and depletion of international reserves. When a crisis is considered imminent, CFMs may be desirable if they can help to prevent a full-blown crisis.
There’s no reason volume-dependent transaction fees couldn’t be structured in a way to have quicker response, whether through a decreased block voting window, or faster network blocks in a future state. Current network limitations shouldn’t influence our imagination of better tools.
Fair enough. Points 3, 4 and 5 appear to be the remaining points of contention. Here are my thoughts:
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We have to imagine NuBits from the perspective of a widely-used product five or ten years from now. This means a state where 95%+ of all NBT in circulation are off-exchange in peoples wallets. Most of us don’t hold USD on Forex exchanges. You’re correct that if the majority of NBT are on exchange, the damage will be done regardless of what transaction fees we vote for. I don’t see exchanges holding mass NBT as a likely state a decade from now, especially with the development of decentralized exchanges like B&C Exchange.
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I admit I don’t understand this point. It seems to be a general declaration that anonymity/security will suffer, but I don’t understand the context. Could you provide an example for my benefit? How would these aspects suffer relative to a normal transaction fee?
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100% Tx fees are the most extreme example. Perhaps I didn’t explain it well, but this was my relevant paragraph to this point:
The concept may be easier to understand as @woodstockmerkle described it, as a technique to decrease the velocity of money. A punitive transaction fee will still allow users to transact on the network, but they will be paying a premium transaction fee price to do so. Shareholders could however set a 100% transaction fee (on both NBT and NSR as @Sentinelrv suggested) if they wanted to completely stop the flow of NBT through the blockchain (temporarily, of course) while they coordinated NuShares sales in a responsible way, as opposed to selling to whoever had available capital in the first hours of the crisis.
Absolutely not. Discussing new tools is always valuable for the network, even if we don’t have a set schedule for its use. We believe parking rates are valuable, even if we don’t know exactly what they will be set at.
It can slow down the fall entirely, allowing responsible Tier 7 (NSR Sales) to take place, as I posted in my updated content. Over a long enough time period, it could right the peg by destroying enough NBT. This is less desirable than a multi-pronged approach with Tier 7 (NSR sales) that would end the crisis quicker of course.
This tool is voluntarily applied, and powerful. I don’t see why shareholders are afraid to incorporate it into a liquidity model, because it will make Tier 7 (NSR sales) more effective. I will continue to debate its effectiveness until it is placed for hashing in two days. It may not pass immediately - or ever, depending on shareholder views - but I think there is value in signalling we are prepared to consider real-world economics in our currency management. I appreciate that you took the time to respond more fully.
