QUESTION:
I’m trying to understand the process and schedule of issuance of 30 million reserve in 3 phases, via endowment, to market maker to manage price and liquidity during the adoption curve. The 3 phase release described in white paper left me with confusion I’d like to clear up.
If each phase of release is to endowment and then to market maker does the phase last until that 3rd (10m) are fully sold in to the market - to greater more widespread number of adopters (adoption phase)? The 1st phase includes Innovators and Early Adopters which are 2.5% and 13.5% (16% of 100% adoption curve) - but of what total number of adopters? Simply until 10 million tokens are sold? Does number of holders matter? Is there KYC or identity checked for account ownership? The BPC mentions 3 groups and a metric for seats: initiators (early leaders), founders (early adopters) and holders. There seems to be some correlation with number of holders with a sizeable holding? Within this I’d ask further detail about the 1st phase (10m), the ratio of market share between the Innovators and Early Adopters? Following on to second phase (10m) - is that sale aimed at bringing aboard the early majority adoption (34%)? Leaving the final phase (10m) for late majority (34%) and laggards adopters (16%) together 50% of adopters with 33% market share at highest target prices? Would the phases somehow differentiate old to new adopters and somehow sell amounts of new releases to new adopters - like seats accounting?
ANSWER:
There are 30m reserve ndau, sold along the Target Price curve, in 3 phases of 10m each, with each 1000 ndau sold being at a very slight price increment above the prior. The point of the divisions into three phases is to make a complex curve more easily understandable qualitatively. The first phase is a rapid growth early adopter phase in which the price increments result in a smooth exponential growth function from $1 to $(2^14), doubling 14 times. The third phase is an equilibrium, smoothly doubling once. And the second phase provides a transition / inflection smoothly bridging the growth rate in phase one to that of phase 3, while providing 4 doublings of growth in the process. The total potential Market Cap thus created by these reserve ndau, if all sold, going through 19 doublings, is designed to be reasonable size capacity % of total global stores of value, should the market ultimately choose ndau to serve that purpose at such a scale. ndau is designed to work perfectly fine if growth of Market Cap reaches an equilibrium at any earlier point as well. There is no specific time associated with each phase. If a few large pools of capital decided in 2019 that ndau was a good choice for allocating a meaningful portion of their holdings into, and in total that added up to over $17B of ndau purchases, that would move the ndau Target Price through the end of phase one and into phase two immediately the second they completed it, whenever that was. Or if ndau were on exchanges and purchased in small amounts by millions of holders adding up to the same total, the result would be the same. It’s not the number of holders that drive up the Target Price into new phases – it’s the total ndau purchased from the reserve of 30m. Today we do track identity as this is suggested as appropriate to us by counsel and our hope is that once fully bootstrapped into decentralization, counsel will suggest it is appropriate to open ndau purchases up to exchanges which trade in non-security digital currencies, as well as general dispersion of ndau between holders independently, beyond which tracking of identity can’t be done unless holders wish to voluntarily privately identify themselves to custodians for their own protection.
Currency Seats are simply defined as ndau accounts that hold 1000 ndau or more, and the first three and first three thousand such Seats play special roles in the BPC governance system since they control choice of six of the BPC delegates. There isn’t a specific attachment of the terms Innovator or Early Adopters to ndau functionality – I believe those are terms relating to general concepts in diffusion of innovation theory that loosely correspond to the parts of the shape of the ndau Target Price curve. Approximately 2/3 of the first 3000 Seats have been acquired thus far. Therefore, anyone acquiring more than 1000 ndau into a single account is gaining a Seat as of today. When an account drops below 1000 ndau for any reason, it loses its Seat and the next oldest account with greater than 1000 ndau automatically gains it, so there is a dynamic nature to who holds these seats, even after all 3000 are first held. The above is a concise description of the meaningful elements to the price curve and the impact on seniority/size of acquisition on additional governance features. The terms like late majority and laggards relate more to comparing the ndau Target Price curve to the diffusion theory than they have specific meaning within ndau.