About a token that generates revenue for the issuing corporation

What I’m going to propose is neither new, nor revolutionary.
As it might serve a need of customers, there’s possible business to be made with it.

The proposal doesn’t deal with a token that’s pegged to a currency.
As all major international currencies are issued by central banks, they are not reliable.
They serve as unit of account and for cash purchases.
They fail to be used for holding reserves for future payments and for deferred payments.
They fail because of the unreliable, uncalculable inflation rate.

Good money could be used for all those uses equally good

  • unit of account
  • cash
  • reserve for future payments
  • deferred payments

To make a token good as reserve for future payments or for deferred payments, you need to base the value of the tokens on commodities, raw materials, food, industrial products (finished and unfinished) and alike; things you or others want to buy with the tokens - now or in the future.
If the tokens keep the value stable measured in that basket of commodities and goods, they are stable and not prone to effects of inflation caused by central banks.
If the token transactions are processed on a blockchain they can have the benefits of crypto currencies while being more treasured than fiat money.
Some might perceive it as drawback that these tokens aren’t stable in relation to USD. For others the reason for that is the reason to prefer them to USD.

At traditional exchanges there’s a lot of trading regarding commodities, raw materials, food, industrial products including derivatives. It’s easy to find a price index. It would be easy to base a token on a combined index. The USD price of that token would be floating. The composition in terms of commodities, raw materials, food, industrial products would change together with the change of the individual relative value.
But the token would at each time allow you to cash out the value of a% of commodityThis, b% of commodityThat, c% of raw materialWhatever, d% of… etc. (keep in mind that a, b, c, etc, can change over time!).

How does the issuer make money, if the tokens are meant to be stable in relation to the index?
The issuer requests an offset when selling the tokens of quite a few percent. 10% or more doesn’t look unrealistic, especially not if you account for the real inflation rate of e.g. USD. I’m aware that the Fed proclaims a low inflation rate, but depending on what you look at, USD had a considerable inflation rate during the last 8 years. You save the customers creating a basket of all that commodities and goods, provide them with a token that’s fungible and can be transferred in small units, save them from the exchange fees they have to pay when buying e.g. exchange traded funds (ETF) and offer a token that represents all those commodities and goods.
I’m favoring ETF, because that would save from some trouble dealing with way too many individual products/index funds.
From that offset the operational costs are paid and on top of that revenue can be made.

The devil is in the details.
As the tokens represent a basket of commodities, you need to buy those ETFs when a customer buys tokens. After all you need to back (ideally 100%) of the tokens by that basket to make the token a reliable and trustworthy product.
That creates two problems:

  • you have to pay the exchange fees when buying the ETF
  • you need to keep the ETF

The first problem costs money and might require minimum purchase/sell amounts of tokens (not very convenient).
The second problem can lead to confiscated ETFs in case a government might not want such a business.

A solution that is less than ideal, but maybe a step into the right direction is right in the field where this token shall be placed: crypto currencies.
Instead of ETFs that stand for commodities, goods, food you make a kind of crypto index. You issue tokens that represent onwership of (just as an example) a% BTC, b% LTC, c% ETH, d% XMR, etc. - you create a crypto coin index.
The tokens in the index need to support multisignature transactions and most have a high trading volume at a tight spread.
If a customer buys a token, the proceeds are invested in the crypto coins listed in the index.
The crypto coins are being bought at an exchange and deposited in publicly known multisignature addresses. The sale offset is accounted separately and operational costs are being paid from it. If there’s money in excess, the revenue can be invested in development or distributed as dividend, e.g. as tokens (after the index crypto coins have been bough, of course)
That way customers can always verify that the tokens are backed by the crypto coins they represent.
Just as with creating a basket of commodities/goods, it saves the customers from putting all together on their own.

I’m writing this here, because Nu has the features, that are required for this:

  • a split between shares and tokens
  • a network that’s run by PoS, which isn’t expensive
  • a bot software that can be used to trade at exchanges
  • a community with experience in coding and running software
  • experience with an organization like FLOT that handles multisignature addresses

If Nu wants to issue that type of token, it can make it a source of revenue and provide customers with a token that is less volatile than a single crypto currency, that doesn’t put all eggs in one basket, that’s out of reach of governments and not prone to inflation created by central banks.
I’m seriously trying to help Nu, whatever some might say.
There are a lot of things that need to be figured out. This proposal is by no means complete. But it might spark a discussion.
If Nu doesn’t want to create that token, others will sooner or later.


You could do it with automatic token redemption, so one can burn shares to immediately get the backing currencies. The redemption would be (funds controlled by multisig)*(shares burnt)/(total share supply). Then just impose a minimum redemption amount. Share issuance can be done using auctions to increase the multisig funds, or just do it on exchange the way joozie is now with nsr.

The product is the shares themselves as a type of index fund. The difficulty (other than the multisig stuff) is weighing costs like dev work against increasing the reserves. There is no need for a dividend mechanism.

Yes that is the problem with a crypto pegged to a commodity ETF. I has been discussed before.

This index fund of a basket of cryptos needs a clear mission to sell. For example … make one that preserves a investor’s purchase power of cryptocurrencies by adjusting composition according to trade-volume periodically (which can be automated). So e.g. if BTC dies due to POW a bunch of strong POS coins can be redeemed.

BTC, LTC, ETH are they good commodities? No.

In 1976, F. A. Hayek raised a theory of private currency which pegged to a basket of commodities to keep buying power relative stable. From 2014, I have been arguing for Hayek Coin, but only several members on this forum are inetersted in it.

FIAT is bad money, BTC is even not a money, the only good money is Hayek type money.

If Nu doesn’t want to create Hayek money, others will sooner or later.


I completely agree, but I fear that I have no clue how to make a Hayek type of money that isn’t prone to government regulation.
Without ETF you have little chance. But ETF don’t exist on blockchains.

Using an index of crypto currencies is the closest to such an ETF I can think of.
I hope that others have better ideas.

Do you mean pegging to a basket of commodities? Such as crude oil, gold, power, wheat?

USD is the most widely used money and almost each commodity has its USD price, so we can simply peg to USD, ie indirectly pegged to those commodities.

For Nu/B&C architecture, very easy to peoduce Hayek money by slowly lifting the peg USD price. The key is revenue, but revenue is there(spread trade), and will be there(micropayment fee).

For me, launching a Hayek money project is very practical, if I was a C++ coder or millionaire, tomorrow I would declare a Hayek project, HYK. The most innovation after BTC in 2009, the Nobel Prize Winner(Hayek)'s theory is my experiment’s foundation.

That would be great, but isn’t possible in a decentralized manner with reasonable costs.

I beg to differ. USD is only loosely tied to those commodities. The Fed can (and does!) issue as many USD as it pleases - this is what inflation means: the USD gets devalued, because there’s more and more USD in circulation without demand for it.

USD get issued to provide cheap money.
The effects of the crisis that became apparent in 2008 shall be postponed by it. I say they became apparent instead of the crisis started, because the crisis was ‘prepared’ by providing the markey with cheap money.
So no, I don’t see any peg to a currency issued by a central bank as solution.

A basket of crypto currencies is the best replacement of a basket of commodities/goods I can think of.
Not exactly Hayek style, but as good as it can be made in a way that can’t be regulated by governments.

That still leads to a tie to the Fed and requires an adjustment of the NBT/USD rate.
How will you accomplish that? In an ideal world, the free market would determine that rate. I don’t see how that can be done.
Trying to make adjustments of NBT/USD by policy to create ‘good’ money will fail. That rate needs to be determined by the market.
NBT is too isolated/small to have the NBT/USD rate steered by the market without being prone to manipulation.

So I perefer a basket of crypto coins/assets/commodities.
This approach has real and imagined drawbacks (no ‘USD stability’), but I feel the benefits predominate (no unplanned inflation, stable in terms of that crypto index).

That is no easy feat. If the annual inflation rate is m%, the money you talk about has to destroy ~m% of money supply every year. If you use tx fee to destroy, people will hoard and not spend. If you use coin-age to destroy from the blockchain, look at how the demurage coins such as freicoin are doing.

Good money mustn’t have inflation nor deflation.
Freicoins suffers from being no good money.

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Do you believe our business profit rate is outpaced by API which is around 3%-4% per year? Well, if so, we can also issue Hayek money: assume our share market cap remain same, our revenue is zero, shareholders pledge shares to borrow some coins from protocol, this year we issue 100K coins, next year we issue 97K coins by “closing the valve” a little, i.e. we decrease the pledge ratio, if we vote for zero ratio, no one can borrow coins from protocol and coin supple will become zero within short period. This is the method advocated by F.A. Hayek.

We continuously vote an inflation rate on which our peg price is continuously adjusted, e.g. 3% per year, so our protocol can adjust the guide peg price every day, lift 0.0082% per day. The smoother adjustment, the better. If FED controls API at same level, our shareholders even can leave the old vote for 1-2 years.

Shareholders are the sensors which perceive the real world change, they are the bridge of blockchain and real world.

When FED issues more USD, the free market will and does react. that’s why commodities price is high than when we were children, or 5 years ago.

Dynamics pegging to USD, which is the bridge between Hayek money and a basket of commodities, in this way, Hayek money holders can buy the same basket commodities at any time.

We can even peg to basket of cryptos(BTC, LTC,ETH,etc), via dynamics pegging to USD. USD is just a tool, an intermedium signal.

Regarding of hoarding or spending of money. FIAT is too extremely to be encouraged to spend, and BTC is too extremely encouraged to hoard. This is from their inflation/deflation DNA, while good money(Hayek coin) is neutral in that. If you hoard Hayek, you actually get nothing and loss nothing because you always buy same amount of commodites(roughly).

We pay nothing to decentralized liquidity providers, they make their living by spread trade, just like foreign exchange dealers/ticket scalpers in real world. They are like virus, even cannot eliminate them, LOL. Very strong vitality!

You can’t back the token I proposed in that way. The issuing corporation needs to hold the reserves.
This can’t be solved by decentralized liquidity provision.

This is an intriguing idea. I encourage the community to continue exploring the idea, with a focus on the challenges such an asset would create. The most important barrier I see will be ensuring funds remain under the control of shareholders. NuShare holders haven’t had control over their reserves for months now. This would have the same vulnerability: all the funds could be lost or stolen, just as our reserve does not move according to shareholder directives. It is a hard problem we need to solve for NuBits and possibly this new token.

Outsourcing handling of asset keys to B&C Exchange would be a likely outcome once the exchange is implemented. Essentially, all fund assets would be held in one or more exchange accounts. The multisig keys to the B&C account would still need to be managed, but that is a lot easier than a set of multisig keys for each asset. The reputed signers would have the actual asset keys.

BTW, bitcoin can never become store of value,never become a good unit of account, and many cryptos such as LTC usually fluctuate with BTC. In the end, you peg your token roughly to BTC itself.

Then, what’s the point of your token? We launched a stable currency in order to overcome the volatility of BTC price, now we peg our token to the most volatile cryptos?

And don’t forget USD liquidity is almost infinite compared to BTC and our token in foresee future, if 15 year later, our business grows up and becomes huge like MS, Google, perhaps we may complain the USD liquidity, but now, isn’t this question too early?

Let each shareholder control his/her own fund, the only money you cannot steal is your own money!

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You may want supply to be negative sometimes. How are you going to do that?

Wrong. If you hoard you gain preserved value in real asset terms. Example: Singapore decides to put 100 billion USD worth of asset in your coin. Singapore doesn’t spend the fund after buying it in a year, and wants to redeem all to USD after a year. The inflation rate is say 3% pa in USD terms. Where do you come up with the 3 b USD extra value in your money system? By tx fee of rest of the coin holders? What if all coin they have is $3 m USD and fee burned is 3000?

Assume NSR market cap is 2 millions USD, and 1 million USD value NSR are parked by the owners to retrieve 0.5million NBT (2:1 pledge ratio), the lending period is 14 days, after 14 days, borrowers must return their NBT, otherwise they lose their more valueable NSR. This is automatically executed by network protocol.

If nushareholders vote for 2:0 ratio today, which means Nu stops lending business right now, One simple question, how long will NBT supply become zero? Zero NBT in circulation.

The answer is within 14 days.

That’s the beauty of Hayek’s solution.

Now that is Interesting.

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