In short, it proposes a symbiotic relationship between the supply of NuBits and the value of NuShares:
"Specifically, I am proposing that in most cases, instead of distributing dividends, proceeds from the sale of NuBits be used to purchase NuShares in the open market, which are then burned. This is commonly done with equities and is known as a share buyback. Due to low liquidity in the NuShare market, we can expect such activity will have a marked positive effect on the NuShare price. This high NuShare price will enhance our ability to sell NuShares later when we are in the opposite part of our economic cycle and need to support the NuBit price. Therefore, we will have two complimentary mechanisms which are the exact inverse of one another:
"When NuBit demand is low, NuShares will be created and sold while NuBits will be purchased with the proceeds and burned. NuShare supply increases as NuBit supply decreases. This depresses the NuShare price as it supports the NuBit price to the pegged level.
"When NuBit demand is high, NuBits will be created and sold while NuShares will be purchased with the proceeds and burned. NuBit supply increases as NuShare supply decreases. This inflates the NuShare price as it suppresses the NuBit price to the pegged level.
“Fortunately, no protocol or even client changes are needed to do this beyond what is already approved by shareholders and scheduled for our 0.6.0 release. Whether dividends are distributed in addition to share buybacks being done will be up to shareholders to decide on an ongoing basis”
There seems to be no intrinsic reason under this new arrangement why Nu should use or rely on PPC for dividends
Would anyone from Nu like to comment further? Thank you
I’m not from Nu, but visit the forum as often as I visit Peercointalk.
I might tell you what impression I have regarding that motion.
In my opinion this motion is by no means the end of dividend distribution in the form of Peercoins. I understand the motion as an intermediary means of keeping value in NuNet instead of distributing it as dividends.
Blatantly NuNet has an impressive history (if you want to call less than half a year that; dealing with crypto currencies it is a history), but is far away from generating revenue on a regular basis.
I expect dividend payment to continue once there is regular revenue for NuNet. There are a lot of ideas how to generate revenue, but at the very moment Nu is fighting hard just to keep the peg with exchanges dying like flies (excoin, bter, ccedk DOS’ed for some time)…
Share buy-backs are a clever way to increase the market cap of NSR and consolidate voting power in the hands of those who view Nu as a long-term DAO and not a short-term speculative bet.
the only way of getting value out of that system without affecting NSR or NBT price is paying dividends:
[url=https://nubits.com/about/faqs#why-are-nushare-dividends-paid-in-peercoin]Why are NuShare dividends paid in Peercoin?[/url]
We require an asset external to our system to distribute dividends. The purpose of creating NuBits is primarily to meet increased demand for NuBits in a way that prevents the rise of the NuBit price. If we distributed NuBits to shareholders instead of bringing them directly to market, there would be no way of knowing whether shareholders would hold them or sell them, or for how long they would hold them. It wouldn’t permit the network to tightly control the supply of available NuBits, which is necessary to maintain the pegged price.
So why Peercoin? We do not have confidence in the decentralization or sustainability of proof-of-work assets such as Bitcoin, so we needed a well distributed proof-of-stake asset external to the Nu network. Peercoin is a popular and stable proof-of-stake asset with a strong community backing it, and is notable for having been the first implementation of proof-of-stake.
I don’t see an end for paying dividends in the form of Peercoin. It’s more like a pause until there’s really something to pay…