User:Matt ndau/sandbox

ndau is an open-source digital asset created on a proprietary blockchain. Created in the wake of Bitcoin, ndau has self-determining inflationary resistant features which are designed to enable increased value while managing downward volatility.

ndau

Development
White paper	https://www.ndau.io/whitepaper
Developer(s)	Oneiro
Website
Website	ndau.io

Etymology

The name ndau is derived from the "endowment" which underpins the asset and serves to manage monetary policy.

History - The ndau Collective

ndau was created and designed by the ndau Collective, a consortium of over 20 cross-disciplinary experts, developers, economists, and scientists. The Collective was established in 2015 as a distributed, autonomous group for the purpose of improving current cryptocurrency systems.

Oneiro

ntrd

ntrd Ltd

Governance - Blockchain Policy Council

When structuring ndau, the ndau Collective sought to utilize the best aspects of both digital and non-digital currencies and use new techniques to eliminate misaligned incentives. In doing so, the Collective created a self-governing ecosystem whose governance is led by a non-profit organization called the Blockchain Policy Council (“BPC”). The BPC is responsible for the operating policies of the currency and has the power to oversee other entities in the ndau ecosystem.

For each improvement opportunity identified by the Collective, the BPC forms and supervises a working group specific to that particular issue. These working groups include, but are not limited to, ethics, core software systems, privacy, digital governance, public perception, trust management, and monetary and incentive policy.

The BPC comprises nine delegates. The nine delegates consist of three different groups of three individual persons, with each group representing a different class of stakeholders. The three groups are: Initiators, Founders, and Holders. Each group is elected through different election protocols.

Initiators

The first group of three delegates is directly elected by the first three persons who individually control an address in the current blockchain that holds at least 1,000 ndau (known as a “currency seat”) and who are actively participating in the ndau ecosystem. ndau transactions are recorded and timestamped on the ndau blockchain. This chronology determines when an address achieves this status and defines the order of currency seats. Accordingly, a transaction that takes such an address below 1,000 ndau automatically removes it from currency seat status. These first three currency seats are known as Initiators and represent early thought leaders in the creation of ndau and provide continuity in governance of the principles for which it was created. The Initiator currency seats also participate as voters in the following Founders group.

Founders

The second group of delegates is directly elected by the first 3,000 currency seats, known as the “Founders”, in the ordering referenced above. Each Founder currency seat is entitled to one vote for the purpose of electing delegates regardless of the amount of ndau held beyond 1,000 in the currency seat address. Founders represent early adopters of ndau who foresaw, earlier than most, the importance and value of ndau. Founders are important because they were first to inherently understand the long-term vision and value of ndau ahead of the average adopter and financially commit to it. This value derives from and increases through the efforts of all, not just from a concentrated few.

Holders

The third group of delegates is directly elected by all ndau holders with voting power directly proportional to total ndau owned. ndau holders include the currency seat holders of the first two groups. This group of holders will grant representation to later adopters of ndau without creating a situation in which very large new ndau holders can quickly obtain a dominant majority of the BPC delegates.

The nine delegates of the BPC will make decisions about the work of the subcommittees, overall policy, and operation of the ecosystem. The diversity of methods used to elect the delegates eliminates the possibility for any one group to easily dominate the BPC. Such decentralized and diffused origins are beneficial to ndau’s long-term resiliency.

The Endowment

The Endowment (from which “ndau” is named) is a not-for-profit entity that serves as a mechanism by which the BPC can enact monetary policy and stabilize the currency itself. The purpose of the Endowment is to hold the net proceeds from the release of reserve ndau and to use both to provide liquidity to the market by way of the Market Maker.1 The Endowment invests the net proceeds of its holdings according to rules and limits set forth by the BPC. These rules and limits best suit the long-term risk and return policy objectives of the BPC across the spectrum of possible investment environments in order to support a balance of growth and long-term market liquidity.

Issuance

The release of reserve ndau into the marketplace follows a well-defined technology growth pattern. This growth occurs naturally along an S-curve as modeled in the Diffusion of Innovations theory – a theory which seeks to explain how, why, and at what rate new ideas and technologies spread.  Individuals have different levels of readiness for adopting new innovations; the average rate of this adoption is, of course, influenced by the characteristics of the product itself. The theory classifies individuals into five tiers: Innovators, Early Adopters, Early Majority, Late Majority, and Laggards.

Pricing

1. The Target Price The current price at which reserve ndau is sold according to the Target Price schedule.
2. The Sell (or ask) Price The lowest price a seller is willing to sell ndau in the market (may vary across exchanges).
3. The Market Price The Market Maker takes into account observable Buy and Sell Prices and filled orders across the ecosystem and combines them into a single published Market Price.
4. The Buy (or bid) Price The highest price a buyer is willing to pay for ndau in the market (may vary across exchanges).
5. The Floor Price The Floor Price is derived in a way that enables resiliency from currency attacks and serves to induce long-term dependability and liquidity. The Floor Price is calculated dynamically by dividing the Endowment’s total current value by the total number of ndau outstanding and multiplying it by 50 percent.

   

The Soros Scenario

In August 1992, financier George Soros sought to profit by shorting the British Pound. Soros made a name for himself as a currency trader by betting against the Bank of England in what became known as Black Wednesday. He used his Quantum Fund to launch a massive sell-off, having previously built up a position by borrowing £6.5 billion. The Bank of England attempted to prop up their currency by buying Pounds. Soros, however, was selling faster than the bank could buy. With costs of £3.3 billion, Britain’s Central Bank was unable to defend itself from the attack in the currency markets. The government was therefore forced to withdraw the British Pound from the European Exchange Rate Mechanism (“ERM”) as it was unable to keep the Pound above its agreed lower limit in the ERM. Soros’s bet paid off. In the following days, Soros unwound his positions, paid back his original borrowings, and walked away with a profit of approximately £1 billion.

The intrinsic stabilizing mechanisms of ndau discourage a run on the currency similar to what Soros did in 1992 against the British Pound. If an attacker attempted to short ndau by unloading a large amount of the currency rapidly, the SIB would be activated at 5 percent below the Target Price. As a result, the seller would have disincentive to dump the currency: as the Market Price falls, the SIB fee would support it by removing an increasing number of ndau from circulation.

If selling were to continue and the Market Price reached the Floor Price, the attacker would be receiving only 50 percent of the Endowment’s pro rata net asset value with each sale. The other 50 percent would stay in the Endowment, effectively increasing the Floor Price for all remaining holders. In a classic currency run, the market dynamics create uncertainty and panic when more selling occurs. However, with ndau, the dynamics are precisely the opposite. The ndau protocol incentivizes patience in market participants to the detriment of the attacker.

External Links

Official website