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Grant001.1-20140930

Proposal to Provide Dual-Side/Sell-Side Liquidity and Shareholder Dividends (amended)



Custodian Jamie Miller
Submission Date 30-Sept-2014
Revision 0.1.1
Related Proposals None
Requested Grant Amount 200,000 NBT
Custodial Fee 4,000 NBT (2.00%)
NuBits Grant Address B9fv9Di2Y4RxUHzrwjtfq5fetAhqULzWKL
Vote Amount 204,000 NBT



Abstract

This document represents a proposal to act as a Custodian in support of the Nu decentralized network. The terms outlined in this document represent actions that will be taken if Nu Shareholder consensus is achieved by casting votes for the unique pairing of the Custodian's NuBits grant address and requested amount, B9fv9Di2Y4RxUHzrwjtfq5fetAhqULzWKL | 204,000.

This proposal will be confirmed by the Nu Shareholders if this voting pair is written within the majority of blocks:

  • solved during a 10,000 block span;
  • that a majority of blocks solved also represents a majority of the coin age destroyed during the same blockspan

Once the 5001 valid vote is cast, and the coin age requirement has been met, the network will automatically generate and deposit 204,000 NuBits (NBT) into the custodial grant address. From that amount, a custodial fee of 4,000 NBT will be subtracted and the remaining 200,000 NBT will then be deposited into the Custodian's trading account on an exchange (or exchanges) that will support a NuBits / USD or crypto (BTC/PPC) / NBT market.

The specific currency with which granted NBT is paired will be decided by choosing the most liquid market available on the exchange(s) selected. If NBT/USD pairing is selected, the Grant's NuBits will be placed for sale at $1, plus exchange fees. If BTC/NBT or PPC/NBT pair is selected, the Grant's NuBits will be placed for sale at a rate equivalent to the exchange rate of BTC/$1 or PPC/$1, plus exchange fees.

During the execution of this proposal, the initial granted amount of NuBits will be used for dual-side liquidity for the first 90 days. After 90 days of operation, 100% of proceeds will be set aside to purchase Peercoins which will then be issued as dividends to the share holders. There will be four (4) dividend payouts, each consisting of the proceeds from 25% of the granted NBT.

Note: For the purposes of this proposal, the rest of the document will use a NBT/USD pairing for consistency, and to avoid the complexities of estimation when using a fluid exchange rate.



Goals

  1. To provide dual-side liquidity for the first 90 days of the Grant's operation, then sell-side liquidity with any remaining NBT.

  2. To provide shareholders with dividends from the sale of the custodial Grant.

  3. To provide redundancy to the role of liquidity provider.




Grant Operations

All liquidity-providing operations described below will employ an automated trading bot (NuBot) to manage the day-to-day trading.

  • For the first 90 days of operation, the Grant's 200,000 NBT will be placed for sale on at least one (1) cryptocurrency exchange and at most, four (4) cryptocurrency exchanges at the market rate of $1/NBT + exchange fee and will operate in dual-side liquidity mode.

  • After the first 90 days of operation, any of the remaining 200,000 NBT will be placed for sale at the market rate of $1.00001/NBT + exchange fee, the porceeds of which will go directly to the purchase of Peercoins to be issued to the shareholders as dividends. At this point, any funds that are already sold will be immediately used to purchase Peercoins to be distributed as dividends.

  • 100% of granted NuBits will be placed for sale on exchange(s) within 48 hours of Grant issuance.

  • After the 90 days of operation, and once 25% of the initial value has been sold (50,000 NBT), the first dividend distribution will be readied for delivery to all eligible Nu shareholders within 72 hours. Eligibility for each distribution is covered, below, in the Dividend Distribution Details section of the proposal.

  • Each subsequent dividend distribution will occur after the next block of 50,000 NBT has been sold.

  • There will be four (4) dividend distributions periods in total.

  • After the last period has ended, a final reporting of the Grant's operations will be tallied and published publicly to the Nu forums (http://discuss.nubits.com) for community review.


Dividends

The Peercoins required to fulfill the distribution of dividends will be purchased on the open market.

  • Exchanges with a higher amount of Peercoin trading volume are preferred for more reliable order processing; however, if the pair traded is NBT/USD, Peercoins will be purchased on the same exchange due to the difficulty of moving USD across exchanges.

  • Technical analysis will be used to determine the best possible entry points for purchasing Peercoins. For example, if the Peercoin market is determined to be trending downward, the custodian may wait till closer to the end of the period to place PPC orders.

  • The Custodian may split orders between one (1) and up to four (4) exchanges. Splitting the trades across exchanges lowers the exposure risk of exchange default(s).

Dividend Distribution Details

Note: For the purpose of this Grant, all times described will use GMT.

Because the dividend distribution process can take up to 72 hours after the end of the period (or longer, due to unforeseen factors or market conditions beyond the custodian's control), there is the possibility that an offset will develop between the current active period and the period for which the next dividend will be distributed. Dividend distributions will not occur more frequently than once every 72 hour period.

To be included in a period's dividend payout, a Nu Shareholder must be in possession of their shares prior to the point 36 hours before the distribution was announced. For example, if the period dividend is announced on December 3, 2014, at 1:00PM GMT, only Nu Shareholders who were in possession of NuShares as of December 1, 1:00AM GMT will be eligible to receive the distribution from the period.

Additionally, shareholders must consider the following:

  • Dividends will be sent in proportionate amounts to the holdings of the individual eligible shareholders in Peercoins.

  • If a dividend payment for a shareholder is expected to be smaller than 0.01 PPC, the dividend will not be sent.

  • To access their distributed dividends, shareholders will need to export their dividend address keys from Nu to their Peercoin wallet (Core or Peerunity). This can be done before or after the dividend distribution (dividends are allocated in the block chain, but need to be connected to the shareholder's Peercoin wallet) and will need to be run again if new NuShares addresses are created.


## Commitment to Transparency

Reporting

During the operation of the activities described in this proposal, information about the current state of the Grant's funds and past and upcoming dividends will be posted to the Nu forums (http://discuss.nubits.com). Reports will be available with frequently updated measures of the Custodian's performance and accounting of the activities that have been conducted for the benefit of the Nu Shareholders:

  1. Total funds granted
  2. Total funds already paid in distribution
  3. Total funds still in custodian control (close to (1) minus (2), other than trade fees)
  4. Current sale price(s) at which the funds are set, since this could be in BTC, PPC, or USD
  5. Total funds ready for next distribution, valued in PPC
  6. Estimated date of next distribution, based on past sales volume and anticipated NuBits demand
Note: The Grant's reports will not be posted until the proposal has been approved and the operations have started. The final URL of the Grant's reports will be subject to change. Any modifications to the URL will be publicly announced on the Nu forums (http://discuss.nubits.com).

Accountability

This proposal, when passed by the Nu Shareholders, will be considered binding and the Custodian will proceed with the Grant's operations as described. If at any point during the operation Nu Shareholders deem the elected custodian to be conducting actions that they feel differ from what is described here, or if the network's economic forecasts change, a fully certified motion (majority of votes cast) will be required to make amendments.




Risks

The Nu protocol represents a revolutionary form of decentralized asset policy. The predominant risk associated with the Grant's operations is one of an uncertain market. While there is strong theoretical evidence to suggest that the NuBit peg can be maintained for as long as required by the network, it should not be viewed as a certainty. The projects used in this proposal are based on a stable $1.00/NBT peg, and are subject to reasonable change based on evolving market conditions.

If the Custodian determines that the Grant will be under-performing due to external market factors, public notification will be provided on the Nu forums at http://discuss.nubits.com. Should this occur, the Custodian reserves the right to propose a motion to adjust the terms to maximize the Grant's usefulness to the Nu network and shareholder returns.

Should the NuBits market fail to deliver the expected return, the Custodian will not be held liable for claims of lost profits related to operations of the Grant.

External, non-market threats include technical problems, adverse regulatory environments, and the actions of bad actors attempting to gain control or disrupt the Grant. The Custodian will take reasonable precautions to avoid these conditions, such as:

  • Operating the Grant from an off-shore location, with a distributed infrastructure built to provide redundancy;

  • Practicing proper data handling and security practices;

  • Periodically testing backup strategies

To best assure the Grant's security, additional details of the practices to be used to protect it will not be released.




Custodian Information

Contact

Past Performance

This is the first Nu custodial grant proposal submitted by Jamie Miller.

Jamie Miller's status and standing in the community has, to this point, been intentionally kept to a minimum. The details presented in this document should be used to gauge the perceived ability to meet the terms presented in this proposal, and voting-eligible members of the Nu community are encouraged to raise any questions, concerns, or recommendations for improvement prior to reaching their own personal decision.




Supplementary Materials

Period Performance Forecast
Period Start Value (NBT) Sales Goal (NBT) Div. Yield (%) Div. Dist. ($)
1 200,000 50,000 100.0 50,000
2 150,000 50,000 100.0 50,000
3 100,000 50,000 100.0 50,000
4 50,000 50,000 100.0 50,000
END FORECAST: GRANT AMOUNT EXHAUSTED AFTER PERIOD 4
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