[Withdrawn] Motion to prohibit Tier 6 NSR sales above a total 1,000,000,000 NSR supply

Motion RIPEMD160 hash: TBD

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Shareholders will not pass NuShare custodial grants for the purposes of maintaining a NuBits price peg if the circulating supply of NuShares exceeds 1,000,000,000 NuShares, or the equivalent NSR amount after re-denomination occurs.

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It has become very clear to me from watching NSR trading volumes over the past six months that almost nobody here is purchasing NSR anymore. I think the biggest factor for this behavior is that there is no hard cap on the supply of NSR; in an emergency, NSR could become worthless with unlimited dilutions possible. This is a tremendous problem that this motion will solve.

This motion does not prescribe any additional controversial mechanisms into the liquidity operations model. The current supply of NSR is approximately 794,000,000 right now, so this motion allows FLOT or a representative to sell up to 206,000,000 additional NSR to defend the peg if necessary. Should that not suffice, the network will have to use higher parking rates or other options, such as capital controls, or allow the peg to temporarily break.

NuShare adoption has suffered because there is no perceived scarcity. Without a large pool of NuShareholders, our NuBits adoption suffers due to the lack of vocal advocates. I know I haven’t personally purchased NSR in months even though I believe strongly in the future of the network. Should this motion pass, I will be resuming my accumulation of NuShares.

This motion puts an effective hard cap on the supply of NuShares at 1,000,000,000 as originally specified in the release white paper, except in two circumstances:

  1. Where shareholders dilute NSR to fund a profitable expansion of their business (eg. a 100,000,000 NSR grant to fund B&C Exchange)

  2. The minting reward (currently about 2% per year).

This motion is the bare minimum required to re-instate scarcity into our NSR model. This motion will properly allocate the risk of NBT ownership between the users and shareholders, as opposed to the unlimited liability we’ve imposed on shareholders in the current model, all while still providing robust Tier 6 NSR sales protection.

I’m interested in feedback from data feed providers in particular, as I need your support for this motion to pass. The motion content is written to be as uncontroversial as possible to assure its passage. Let’s make NSR scarce again while still providing significant protection for NBT users.

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I must be the only one still buying, but I do see your point. It would help to instill more confidence in myself and others if we knew that everything we own won’t suddenly vanish one day due to heavy dilution. There’s no point in owning NuShares if this could happen in the future. Everyone will stay away because of the possibility. I’m interested in hearing how many others no longer buy NuShares as well for this very reason.

Tongue-in-cheek I could ask whether NSR holders first need to pass a motion to make void this motion, before they can pass an NSR grant to support the peg :wink:

This is assuming this motion passes, which I expect it to do.

The nice thing about this motion is that it’s a declararation of intent, but if NSR holders (the ones who own the NSR then - this is not necessarily the same group that currently owns NSR) in the future rather support the peg by diluting NSR beyond 1,000,000,000, how shall this motion prevent that?
This is not about a contract with an external party, which future NSR holders should make void by another motion (ideally with a transition, if necessary!), instead of just violating it (NuLagoon is a good example for that).
This is a motion (of current NSR holders) that shall limit the power of (future) NSR holders.
I fear grants are more powerful than motions in this area and this motion can only be a declaration of intent - of the current NSR holders.
As that, it’s great!
But it has some limits. I had to spell those out.

In my opinion this is an act of cowardice and has no actual influence. If a comprehensive model can come up with a way to avoid a black swan event and maintain a cap on share supply, i might vote for it. The motion proposed here is nowhere near a full model and will only cause unneccessary restrictions on shareholders.

Currently, FLOT only holds 25 mil nsr. It is impossible for FLOT to dilute more than 25 mil nsr without strict shareholder consensus to print more nsr. That fact has more sway and power than this motion ever could.

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@tomjoad, I admire your persistence in pursuing this, in your eyes risk on dilution for Shareholders. I have difficulties to believe that existing Shareholders or new Shareholders are not buying shares just for this reason. I think the reason that the NuBits network doesn’t boom as some might have expected, but just steadily gets hold on the ground, is a far more likely reason that investments are relatively low. By now the Shareholders looking for a quick buck or illusive dividends have probably left and their shares likely have been absorbed by Shareholders who are there for the long game.

Another argument against your artificial restriction is that protectionist measures like Shareholders protecting themselves against bad decisions and the resulting dilutions, generally allow and encourage bad behaviour and tends to short term all or nothing decisions by those who are subject to it. To me that devalues my shares as the risks of such behaviour increases when those limits are hit. I rather choose to have a slow dilution with reasons than a sudden large devaluation when it comes to it.

As Nagalim indicates there are already motions in place with caps to a dilution of just 25m which doesn’t even allow for the almost 200m NSR dilutions you are proposing. To raise those caps we will need consensus of all Shareholders which are not likely to happen unless bad decisions have been made (in hindsight) and Shareholders want to correct them and not leaving the US-NBT owners in the dark.

Shareholdership comes with risks, potentially high risks with our young network. As I have said before trying to walk away from responsibilities and accountabilities beyond some artificial limit looks bad and I believe will have a negative PR effect on the network likely resulting in less US-NBT sales and even less demand of NuShares.

I’m sure myself and some others are more than happy to buy chunks of your shares if you think you can’t afford the risks, prefer to invest in “safe” real world assets or maybe prefer to make a quick buck somewhere else.

I think it is far more important to focus energy in increasing the demand for NuBits and be prudent with expenses. This is far more likely going to eventually result in an increase in demand of Shares than anything else artificial as limiting Shares supply. I will propose further investments in NuDroid soon, just to make some steps in that direction, but I, and for sure others are desperately looking for other initiatives to support an increase in NuBits demand. I sincerely hope that we will have you aboard in that quest.

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This is good. However, while I’m not sure dilution risk is why existing shareholders aren’t buying more shares (assuming they’re not), I feel like the concern has some merit from the perspective of people looking at investing in Nu. Have we already, or can we make it more clear-cut how much Nu will dilute NuShares in order to protect its pegs? A declaration of intent—as masterOfDisaster put it—may not be without benefit.

I find this interesting. I’ve understood it as such that a motion can override any previous motion, which makes any change to Nu as quick as the time to pass one motion. What is the origin of that function, and could we change it?

That is exactly what this is:

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Writing motions in stone disabling motions to be overridden would stifle the agility of the network. If we think there are more important motions which needs to be sustained for a longer time, I suggest we introduce motions which needs to pass with e.g. 75% or more votes. Any such motion would only be able to pass with 75% of the votes itself. Basically introducing a kind of constitutional law.

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I very much like the idea of a constitutional law!

While it’s easy to declare a set of motions, which requires 75% to pass, it will be hard to create rules to define, which motions are part of that set.

And that could still not prevent an NSR grant from passing…

I’m disappointed to see arrogance and personal attacks replacing responses that actually address my concern.

Our network cannot answer the question “How many NSR will there be?” with any degree of accuracy. Bitcoin, Peercoin, and Ethereum can. Until we can improve the answer to that question, new investors who are unfamiliar with NSR will ignore us, and that’s a shame. I’ll withdraw this draft.

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I am sorry to hear that you decided to withdraw your motion. I ll share my thoughts anyway if you do not mind tonight.

A bit unfair to single out one sentence from a comprehensive response including arguments about your motion. I made an effort to respond obviously with content you didn’t like. I would have preferred more of a discussion. That would also be fair to others who hadn’t had a chance to respond.

Awesome, looking forward to it.

No reason why we still can’t have that. Anyone can repost the motion if we feel it is needed.

There’s a difference between a commodity with fixed supply like bitcoin and an asset with stake in a company like nushares. Also, bitcoin could hardfork to a higher supply cap any time it has consensus. We are better at forming consensus around controversial decisions than miners, I don’t see that as a bad thing.

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Sorry for the delay.

I appreciate your efforts to find ways to increase the value of NuShares.
I would like to thank you sincerely for that.
But I do not think personally that limiting the number of shares to 1b is a long term solution.

Mainly, NuShare should not be regarded as a kind of crypto gold as bitcoin is.
Therefore the quantity of issuable NuShares should not be limited.
The reason is because NuShares represents a company in DAC, a company that lives on the Internet.

I do no think the number of corporate stocks (ex: Google) you can issue is capped per se.
It should be the same for Nu and NuShare.

I believe that if we have a profitable business model, Nu will not have to issue new shares a bit akin to Google which does not need to issue new shares to stay afloat unless they want to raise even more money, which could happen to Nu as well.

Imagine Nu’s business model works well = the peg is perfectly pegged.
Yet, Nu might want to raise money and then in that case will have to issue new shares, which might go beyond 1b NSRs.

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I agree NuShares should be flexible in supply. I chose the number 1 billion because it approximated what I thought was a reasonable percentage dilution of about 25% in an emergency (from ~800 million). Perhaps I should have suggested a percentage initially, so it would work with different circulating supply figures. Regardless, our network must come to a consensus on a percentage of dilution that would be acceptable in an emergency, or the market will continue to price in higher levels of dilution risk to the valuation of NuShares than is necessary. The value of NuShares has been persistently impaired because of this.

In every motion I introduce, whether passed or withdrawn, I acknowledge there will be differing viewpoints to the solutions I offer and that politely stated contrary opinions don’t bother me. Diversity of opinions is a strengthening factor for our network. However, in this case it is not debatable that our inability to succinctly articulate a defined NuShare supply (where even “800 million + up to a 50% emergency fund” would be acceptable) makes things difficult for investors who are trying to value NuShares. This is a basic tenet of value investing and I’m surprised some shareholders seem to defiantly reject this widely held truth. In a catastrophic emergency, the value of NuShares will collapse because they rely on NuBits demand, and the dilutions required to compensate 90% of NuBits holders will be enormous.

Until we explicitly define the percentage we are willing to dilute NuShares in a catastrophic emergency, the market will continue to price that risk into the value of NuShares at an extremely high theoretical upper bound that may never occur. NuShares have fallen from 13th or 14th in market cap to 38th today, and very few people here are willing to accept that NuShares’ lack of perceived scarcity is a significant contributing factor. I hope others will join me in trying to fix this; otherwise, I expect the value of NuShares to continue to remain far below its true potential value.

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The number of maximum share dilution is 25 million. It would take a shareholder vote to increase this number. That means the maximum supply possible without an explicit shareholder vote (which would nullify any capping motion anyway) is ~815 million. Remember that the share supply is also inflated via minting.

That’s false.

This quoted motion states NSR will be sold until buy side liquidity is returned to 25%. It’s dishonest to suggest that 25 million is a “maximum” because that’s all shareholders have voted for as of today. We have sent no clear signal to the market that dilutions would cease after 25 million if buy-side liquidity hasn’t returned to the desired levels, and in fact have stated the exact opposite in the quoted motion. This uncertainty has needlessly impaired the value of NuShares, as I said in my previous post.

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What do u think of ethereum which seems to have sky rocketd in price while there is no theoretical supply limitation because of PoS? Please correct me if i m wrong. Also nxt price has plummetted while the supply is limited to 1b.

As I quoted here:

It is not the lack of a fixed supply that hurts us, it’s the lack of a predictable supply. I’m not familiar with Ethereum, but a quick search shows that the supply will increase somewhat predictably because of a number of factors. That predictability (or unpredictability to some investors) is priced into the market cap of Ethereum. Investors constantly ask themselves what an asset is worth, what it might be worth tomorrow, and what might impair that value.

I suspect NXT has lost value because other blockchains are introducing better innovations. A fixed supply isn’t a panacea for a higher market cap.

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