[Withdrawn] T4 Dividends

[masterOfDisaster]

I think the current version of the motion is in a very reasonable state (for the current situation).

Share buybacks are easier for the shareholder because they require no action, while dividend keys must be exported and then possibly transferred to an exchange and sold.

That should not overly concern those who hold equity in Nu which requires much more than exporting dividend keys.

I suspect shareholders commenting on those questions can help us understand what the best course of action is.

Shareholders seem to be shy, but they are able to vote for this motion if they are in favour of it

To sum the effect of this motion up in my own words.
First weeks
Tier 4 buy side in excess of $120,000 will be used for PPC dividends and NSR buybacks with ratio 1:2 (5% : 10%).

Next weeks
As long as the tier 4 buy side stays between $80,000 and $120,000 only NSR buybacks will be conducted.
This is supposedly the more effective way to improve the market value of Nu and the motion takes this into regard by preferring it.
I only say supposedly, because Nu so far only had multiple one-time dividend distributions (in different forms: PPC, BKS), while this motion makes ongoing distributions (for some weeks) possible. And even with this motion in place it will be hard to tell the effects from the NSR buyback apart from the effect of PPC dividends; without additional motions, there might be NSR buybacks without dividend distributions, but no dividend distributions without buybacks!
I generally agree that especially with the low market depth of NSR buybacks have an immense effect on NSR price.

If PPC dividends would increase the market depth of NSR (and possibly the value of NSR by creating a continuous demand for NSR) it would be very positive in case Nu comes in a situation where it needs to grant and sell NSR to buy back NBT!
With the current liquidity of NSR you could as well plummet the price as you can boost it with little value being traded.
PPC dividends (potentially) increasing the NSR price - and more importantly the NSR market depth - could pose a benefit that might mitigate the reduced effect of NSR buybacks on market value.
And if that could be derived from the effects of the combination of dividends and buybacks, I would propose an amendment to this motion that always distributes revenue as a combination of dividends and buybacks with a certain ratio:

If dividends were to be disbursed, I would prefer to see 15% to 25% of the share buyback amount each week allocated to dividends

Future
Even if the tier 4 buy side funds exceed $120,000 again - because a big amount of NBT needs to be sold to the market in a short period of time - NSR buybacks will be conducted with double the value than PPC dividends (10% opposed to 5%).
Like @Nagalim pointed out that means for PPC dividends will always be less than 33% (5/15) of the buyback/dividend pool available.

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In case (much) more NBT are being sold, I’d like to see an adjustment of the values ($80,000; $120,000; maybe even the percentages).
I just can’t imagine having a static buffer for a dynamic number of NBT in the wild being sufficient.
That should be something for the agenda as soon as a lot more NBT are in the wild.

[Nagalim]

First weeksTier 4 buy side in excess of $120,000 will be used for PPC dividends and NSR buybacks with ratio 1:2 (5% : 10%).

This isn’t quite accurate. It’s only a 2:1 ratio if T4 has infinite funds. For example, with $160k in T4, dividends are 5% of $40k while buybacks are 10% of $80k, giving a ratio of 4:1, or 20%.

[masterOfDisaster]

Nope.
Buy side funds in excess of $120,000 will be used with ratio 1:2.
The overall ratio of PPC dividends in the first weeks is smaller, because there will be additional 10% of $40,000 used for NSR buybacks.

[Nagalim]

I see what you’re saying, good way to think about it. The percentage I was talking about was the same one JL was, which was is the ratio of the total dividends to the total buybacks.

[masterOfDisaster]

Right. That’s why I like the numbers you recently put into this motion so much:
Even if the tier 4 buy side funds exceed the limit at which dividends kick in, the ratio between dividends and buyback funds is reasonable.

And dividends will be - once the tier 4 funds are down to $80,000 - less frequent than buybacks.
This claim is based on the assumption that I expect rather tens of thousands of USD value in NBT (and eventually CH-NBT, EU-NBT, X-NBT) be brought to market per month than hundreds of thousands of USD value; at the start of the new products might be different, though.

[Nagalim]

I think we can revisit the hard numbers in this and the buyback motion once we have the FLOT in place and we have more information.

@tomjoad any comments about execution, as the share buybacker? I realize you may not be supporting this, but should it pass it would be best if the distributor and the burner coordinate. Also, the distributor will need access to T4, or at least be given the appropriate weekly allotment.

[tomjoad]

Nope, @NSRBuyback would work with the distributor in whatever way the motion text specifies. If the network begins performing share buybacks and dividends simultaneously it will make sense to schedule the activities, with dividends first and buybacks afterwards.

[Nagalim]

This is now up for voting.

[Cybnate]

Tier 4 Fund Management Discussion

I’m also supporting share buybacks over dividends. Dividends will cause value to leak out of Nu. I believe that the Nu DAO needs the funds they have to invest in development, operations and marketing. When there is a sustainable source of income a percentage can be paid as dividends. I this stage I don’t see adequate evidence for that.

I think the share buybacks have their role now and are storing value in NSR we might need to extract later when funds are needed for development, operations or marketing. Dividend distribution does have the theoretical effect of creating demand as mentioned in this thread, but will also leak funds out of Nu. My bet is that less than 50% will be invested back in NuShares.

Therefore not supporting this motion.

[Nagalim]

I will not argue about the effects dividends might have on price when compared with buybacks, as I think you’re mostly right there. The way I am looking at this motion is that it is a method by which we can further reduce counter party risk without completely unhinging the NSR price. In fact, I think that the BKS dividend showed that a dividend is actually a very good way to plummet the price at a specific time, allowing us to perform timely buybacks to most efficiently absorb that market reaction. Instead of comparing dividends to buybacks, think about the synergy when we combine them in the proper manner.

This motion is not about dividends vrs buybacks. It is about the benefits of having dividends on top of buybacks.

[cryptog]

a0a57d12ec67ac6816532f8a0afffd9b7ce14329 verified and voted.

[cryptog]

@assistant motion vote a0a57d12ec67ac6816532f8a0afffd9b7ce14329

[assistant]

Hi @cryptog

Here are the details for the Motion Vote on a0a57d12ec67ac6816532f8a0afffd9b7ce14329:

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##a0a57d12ec67ac6816532f8a0afffd9b7ce14329
Blocks: 3221 (32.210000%)
Share Days: 913707163 (30.016345%)

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[luxiang7890]

Dividend is to reduce the value of NSR, repurchase is to enhance the interests of shareholders, to enhance the market value of NSR, but also to enhance the visibility of NSR, absolute support for the repurchase, at this stage does not support dividends.

[Nagalim]

I disagree that dividend reduces the value of nsr. It reduces our positive liability without directly contributing to an increased price, sure. However, there are beneficial consequences to shareholders having on-hand liquidity during a period where most shareholders have most of their liquidity locked up in shares to anticipate the buyback.

[cryptog]

New executor required by January 18, 2016

hat buybacks have approached $20,000 per week.

in New executor required by January 18, 2016

I hope we would start to distribute dividends soon.
Imagine that instead of having 20k of buy back we have 20k of dividends.
Assume that you have 1m NSR.
It would give you 100 NBT a month. Not bad.

[Nagalim]

It’s not instead, it’s in addition to. So we would have given ppc to everyone that held in addition to the buybacks to those that sell.

[Dhume]

I especially like an occasional dividend distribution as a means of a marketing tool.

[tomjoad]

One consideration is that as time progresses, dividends will become less and less efficient due to NSR abandonment. Any NSR that is abandoned or forgotten about will still automatically receive PPC dividends. This represents lost shareholder value. The key difference is that buybacks deliver 100% of the value to all active shareholders, but dividends deliver 100% of the value to all shares, regardless of activity.

Because there is no difference between buybacks and dividends in terms of value delivered to shareholders, we should prefer buybacks more and more as time progresses.

[Dhume]

Oh I didn’t realize this, is there no way to not distribute PPC to “NSR” addresses that do not claim them? For example in say an X week timeframe? Does this also mean there might be considerable unclaimed BKS from the BKS distribution? Do we have any data about this or is technically not possible?