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2015/01/16    NuBits: Where Do Dividends & Network Revenue Come From?

1) How exactly is this system producing revenue?

“Shareholders elect dividend custodians and create new NBT for them, which are created by the network after a vote. The custodians sell the NBT on the open market. With the proceeds, they distribute dividends to shareholders. If demand for NBT rises, this can create a lot of dividends. If demand falls, custodians may end up selling the NBT very slowly, or not at all, in order to help maintain the peg.”

2) Why is it going to shareholders?

“Shareholders receive dividends as a reward for buying NuShares. Think of it like buying stock in a company that pays dividends.

It goes to all shareholders, equally distributed. Shares that have not yet been sold from the premine will also receive dividends, and Jordan has pledged that those proceeds will be used to fund core development.”

3) What’s the role of Peercoin?

“NuBits will create a demand for peercoins, in order to pay dividends. If all shareholders immediately sell the peercoins they receive, the net effect will be zero. However, if shareholders keep some dividends, the extra demand could increase the price of peercoins.”

Example of an issuing of Nubits:

“The shareholders elect a custodian and create 100,000 NBT for them ( in what is called an ‘expansion block’).
Demand is healthy and the custodian is able to sell them to people who want to use NBT. The custodian turns around and uses the profits to buy Peercoins, then pays them out to the shareholders. As the whitepaper mentions, a custodian is likely to be a shareholder himself, so his intentions align with the other shareholders. The revenue goes to the shareholders as that’s kind of the point of the system. There is revenue to be made in the network, and you are buying shares in that potential revenue.”

 

Source:  https://discuss.nubits.com/t/where-do-dividends-network-revenue-come-from/182/2

 

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