Hello LBIer. Today we or going to look at the possibility of putting a plan together to start LBI token buybacks. I see some user's requesting this so I've put my think cap on and put together an idea to share with you guys for some feedback. 1st off and I could be wrong but SPI is the only hive-engine token that offers a buyback to investors for 95% of the 5-day average price. The plan is for LBI to offer the same but they are very different funds so let's get started.
For LBI to offer buybacks, it needs to have liquidity and access to funds for when investors decide to sell out and take profits. LBI has a hell of a lot of powered up LEO and not so many off-platform investments. This is a problem because if 10% of investors decide to cash out over the course of a few months, that's all our off-platform investments gone and it would be impossible to rebuild that. Remember that 50% of earnings now go to dividends, 10% goes to SPI and 15-20% is earned in HIVE and powered up. There's not alot of bacon left to invest off-platform are at all, to be honest. Using off-platform investments to provide liquidity for an LBI token buyback would kill the fund. This option is not available to us right now.
If investors really want a buyback from LBI, we would need to use some of our powered up LEO balance. It is the only option, I would rather not but it's the only option and the best thing to do long-term for LBI's growth. Like I said in other words, using off platfrom investments will stunt our growth.
There are a few ways we could do this.
- Permanently have a power-down in place so we can cash out investors at any time
- Offering the buybacks for every month, quarter, 6 months or yearly and power-down accordingly.
I prefer the second option and I think quarterly would be best. Make it so that cash outs are available on weeks 13,26,39 and 52. We can collect names for people that wanna cash out in a discord server. I mean, you request in the comments on our posts on LeoFinance and we'll record it to discord or you can DM SSUK. After that, you have to make sure to send your LBI tokens back to @lbi-token before the weekly report is posted that week so on Friday at the lastest to be safe. LBI's next 4 quarterly dates will be...
#39 - 18th September 2021
#52 - 18th December 2021
Year 2 #13 - 19th March 2022
Year 2 #26 - 18th June 2022
That should give you a good idea. Doing it quarterly also gives the option to power down HIVE if required and more options are always better when it comes to offering liquidity. Offering a buyback all the time basically drains earning potential as a certain amount of LEO would always be out of use as we rinse it between liquid and powered up LEO.
We could also have some sort of minimum amount to cash out, 100 pops to mind for some reason. I dont really mind are not but someone will suggest having a min amount for sure so I'll beat whoever you are to it. I think selling under 100 on hive engines is not a huge task. It takes me 20-30 minutes of work to process a buyback and for $10-20 worth of tokens that were we are gaining only 5%, maybe not that much worth the effort to be honest.
If @lbi-token were to power down 25-50% of its LEO balance a week before, it could be enough to fill all buybacks. After they are complete, I cancel the power down and repower up what was not used.
What would happen to the bought back LBI tokens?
.
.
.
hmmm?
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.
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What else?
So there is the gist of what I've been thinking about and how we could go about this. LBI is a long term investment and selling out at this stage is like drinking milk instead of waiting for the cheese 😋 Im just home from work and thinking of food. Point is, compounding is the same as snowballing and at under year 1 year, we're not even fully set up yet and as diverse as we should be. Anyways, that's what I was thinking, thank you for thanking the time to read through the post, I welcome feedback. I might not reply back to everyone but I do read them all. Fridays and Saturdays are my busiest HIVE/LEO days so im not being rude.
Let me know what you think are share your idea and see what other think :)
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I have an idea, let the market handle it.
How about that? Does GM, Coca-Cola, or Home Depot have a standing, "you can always sell us your shares if you dont want them"? No they do not.
LBI tokens were distributed and sold on the open market. Anyone who wants to sell is free to do so. That is what markets are for.
Engaging in mental gymnastics over how to give a guarantee return is waste of time in my opinion.
As stated SPI is a bit different from LBI. With this one, the proposal is hindering future growth in an effort to appease people who want to sell. Well, my answer is to head to H-E and sell if that is the view.
Also, we should keep our off chain investments to a minimum. The goal is to have LBI as high as possible in terms of LEO. We know that is too much if off chain, the value of the token, priced in LEO, can decrease in relation to the value off chain.
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I agree,
A few people with suggested a market maker, that could be a way to automate it let it run by itself, everyone's happy. Your right, im not bothered with having to start power-downs and track people sell backs orders.
Sorry for the short reply man, i left yours to last and it's taken me 30 minutes to answer the rest quickly :'(
I agree with @erikah. If someone(s) wanted to cash out some LBI, I would think you could publish a post (or add it to the regular LBI posts) letting people know that x amount of LBI is available at whatever price and give current HODLers a chance to buy it up. Or even new investors. It would basically be the same as putting it on the market but the difference would be that it would probably get a lot more visibility in one of the regular posts. I know I read them all and vote them as it's in all of our best interests to do so.
Maybe go this route at least until the fund gets built up some more and there are stronger alternatives to do the buyback as opposed to having to power down and lose some of our curation power for a week...
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A few have suggested a market maker, that could be worth looking into.
I have a suggestion. Not sure if it's good or bad, but it can't hurt to discuss it.
Those buy backs could be funded by new buyers. LBI is capped, so the only option to buy is the market, but not everyone is willing to pay the market price. You could be the middleman between those who want buyback and new investors. Basically shares would change hands and funds could be spared.
I know this would probably not cover all the shares and supply and demand is unknown, but still, worth taking into consideration.
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That's what hive-engine does, it's the middle man.
I know but why involve HE.
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IMHO, what @erikah proposed is a always good option on the table either way (whether we implement buyback rules or not).
We offer buybacks to those who want out, but let's consider different approach - let's set a portion of our income (f.e. the Hive we get from H-E) and post some buy offers on H-E. Bought tokens are to be burnt. This will decrease the number of LBI in circulation, give another option for those who want out to get out. This will also add to the LBI token demand and will increase the value of shares of other holders without crippling our growth
That's not a bad idea.
It's would be small amounts but i guess it alls helps
I don't think the market is necessary for that. It can be provided with liquidity by providing a permanent purchase order.
The order would be financed with 5% of the profits.
That would be nothing, maybe 30 tokens per week.
I do not understand what you mean? It is the endowment of a fund, if it is not consumed it accumulates and creates a liquidity support. If it is consumed, it is because people consider that the token is not worth it.
The value of something not only lies in its tangible value, there are also associated risks to consider.
not gonna sell my LBI tokens anytime soon with the exception of them reaching some insane prices like $100 a pop :P
That's more like it :)
I'm a few years away from even thinking about selling but I think the quarterly idea is a good one.
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Great to have your feedback as always.
It all sounds massively tedious and complicated to me. Wouldn't it be much easier to just put a small LBI market maker into place, that trades for a profit to everyone involved?
Also, is the dividend paying to SPI really going to last into perpetuity? If so, wouldn't that make LBI on the long term for sure an inferior investment to SPI?
Tough questions perhaps, but I feel they need to be asked somewhere...
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It would be tedious and a market maker is a decent idea. It's harder when HIVE is 81 cents and it costing 1000 BEES, haha.
SPI has 18 months of growth on LBI and it got the HIVE airdrop and was able to dump around 90k STEEM. The SPI div's is not forever, i'd guess we'll switch back over to HIVE 1st quarter of 2022.
Good questions :)
And very good answers! 👍
I'm glad I asked them :).
The minimum amount buy back seems reasonable, Hive-Engine when it comes to small amounts is pretty easy to use. One concern I would have is that I feel there should be a ceiling on the buy back also. When LBI are purchased even a small amount of investigation would show it is a Long term token.
By having the open buy back there is a risk of people using that function as a means of making LBI a short term investment. Any artificial decrease in the amount of investment power I feel would be a detriment to the earnings potential.
It works for SPI, because like you said SPI is a liquid pool with off chain assets.
I agree i dont wonna start power downs and stuff. A few people have asked about it in the comments of others posts, enough people for me to write a post about it. This post is more to highlight the only way LBI can offer buy backs is by powering down LEO and nobody wants that so it a like reversing thing. You want buy backs you can have them but there's a cost if that makes sense.
I like that idea!
95 % or even 90 % buyback would be nice :)
Oh 90% 🤑
Well if I only had to choose from the two options then the 2nd one sounds better. Do you think its possible depending on how things go that the new LEO tokens coming in can cover the LBI being bought back? I would think that each week has a decent amount of LEO being generated and it would be enough to buy back a portion
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only around 20-25% of earned LEO is available each week. 60% in div's and operators fee and 15-20% in HIVE earning which are powered up to delegate to leov.voter. Not alot of wiggle room considering we need to be investing into something as well.
I believe the market should decide and if people want out they can sell them through Hive Engine. Like all investments, you should buy in knowing all the risks. (I tell myself that every time I think of my Cakepop tokens.)
I also think you will be distracting yourself from the goals you have for LBI in having to deal with this.
That said, I would like to see some LBI burned to increase my percentage share so maybe the market maker idea could work. but give us a warning before it starts as I would like to get some more at lower prices.
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I seen someone suggest a market maker, i've looked into them before but i'll revisit and see if it would be worth spending 1000 BEE on. $800 atm. Automating it would be the way forward.
If it ever set up, there would be looks of notice as would be begging for liquidity providers, lol.
Sounds like a wonderful idea, have you thought about a delegation option that then pays out those buy backs? It has worked will for Bro and has seen the token parachute up!
No, I never considered it. It's been a few months but I used to tracked all of brofi tribal earnings, incoming, outgoing, buy and sell orders. At the time, they were buying back 10.5 BRO tokens per day and issuing 15 per day as rewards. They hold back 20% for brofund. They were earning 13.125 BROs worth of tribal tokens per day in total and losing 2.875 BRO per day. It's a good service for those that use it and is a small price to the Brofund to pay. I doubt brofi has any effect on the BRO token price and it's more to do with Ray being super HIVE bullish and having alot of supporters (im one).
Hahaha me too. My only regret was not buying more but I have that regret with ALL the tokens I'm in. Unfortunately we all have limits to what we can play with. I once broke mine and I paid the consequences and learned why I have a budget so now stick to it.
Slow and steady wins the race.
Quarterly seems reasonable if you really must, but I'd say fuck 'em. Excuse my French..
Don't really know why you would want to sell now, unless you got into some really unexpected financial trouble. But whatever the case is you could always just sell on the market. I'll be happy to pick some up cheap and I imagine many others with me.
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