Burning a specific amount of currency

[sigmike]

The custodian could also just burn some NBT he already owns. For example he posts a proposal asking for X NSR while proving he owns Y NBT. As soon as the NSR are granted he burns the NBT.

It requires trust, but the simplicity of the solution makes it possible to have a burning mechanisms in the next release.

[desrever]

To mitigate the need of trust, the custodian could be asked to park NuBits (?)

[sigmike]

There would still be no guarantee he will actually burn the coins when they are unparked.

We can make a special process that burns the parked coins when the grant passes, but then the solution is very similar to the one described here:

Someone wants to burn some NBT. He creates a transaction sending X NBT to a special output that puts them on hold with some informations like the number of shares he wants in return and the duration his proposal is valid. The shareholders can vote to allow it. If they do, the NBT are definitively lost and the NSR are created. If after the duration they haven’t approved the burning then the NBT are released.

[JordanLee]

Benjamin:
you need to issue new nsr to the custodian. The custodian then sells the nsr for nubits. And burns the nubits.

As a result of the discussion of the last couple days, I have come to believe the best solution is extremely simple: merely permit custodial grants of NSR. That’s all, on the protocol level. Currency burning is already possible via excess transaction fees or OP_RETURN.

Our network currently permits anyone to burn currency or shares if and only if they possess the private key. With this minor change, anyone can could create currency or shares if and only if approved by shareholders via custodial grant. It is elegant and very flexible, as the protocol should be.

There are quite a few scenarios where shareholders may wish to create NSR, and each requires different actions surrounding the NSR creation. I don’t have time to right now to articulate the details of different use cases, but it may be that NSR is to be given as compensation, or that NuBits need to be burned where that is our only currency product. It may be that burning is necessary because one of the many national currencies we peg to is hyperinflating and being abandoned or replaced by a different currency. We may require a trustless solution in one situation, while in another scenario extending trust makes sense.

There are many questions regarding the circumstances that will exist around the need to tap the value in the NuShare market cap, but one thing we do know is that the shareholders of the future will have much more information than we have today. So we ought to give them the most flexible tools we can and let them decide what to do.

[desrever]

There would still be no guarantee he will actually burn the coins when they are unparked.

What if the unpark address is the burn address ?

EDIT: just read your answer, I think you already replied.

[sigmike]

I have come to believe the best solution is extremely simple: merely permit custodial grants of NSR.

I agree it’s a good initial solution. But I think a solution that doesn’t require a trusted party would be better. It can come later though. Among these solutions I think the auction is the best one. It doesn’t require market tracking and it allows shareholders to burn a specific amount of currency. It would even take in consideration the fact it’s an easier way to get a lot of NSR than using exchanges, so the price may actually be lower than the market.

So for now should I just propose a motion to permit custodial grants of NSR?

Currency burning is already possible via excess transaction fees or OP_RETURN.

It’s not a protocol change but I guess we will implement an RPC to burn (otherwise one would have to generate a raw transaction). A GUI is probably not necessary. Using the transaction fee is probably the easiest solution, unless we want to easily identify burning transactions as such (an excessive fee may not be an intentional burn, even if the result is the same).

[sigmike]

I would vote for 5 , shareholders votes for a specific amount of NuBits needed to be burnt and the protocol run a NuShares auction

I’ve edited the first post to add your proposal as option #5.

[creon]

So for now should I just propose a motion to permit custodial grants of NSR?

This is a simple and consistent solution and as long as the long term vision is to decentralize this process further (e.g. through an auction system) then this might really be the best thing to do right now. [5-7] are all very interesting proposals, but require a lot of testing in order to eliminate possible attack vectors.

[desrever]

unless we want to easily identify burning transactions as such

That would be a very useful piece of information to see.

[JordanLee]

But I think a solution that doesn’t require a trusted party would be better. It can come later though.

Agreed.

I would like to point out that it is possible to burn currency without trusting the burner. When a need arises to burn currency someone could propose a motion that states they will burn x amount of currency first, to be followed by a custodial grant of NSR of equivalent value. If the motion passed, even shareholders who were opposed to the motion (which would necessarily be a minority) would vote to approve the custodial grant of NSR to preserve the credibility of the network.

NSR custodial grants have use cases outside the context of burning and are an easy way to get a burning solution implemented quickly. I agree further improvements have value.

So for now should I just propose a motion to permit custodial grants of NSR?

I am in favour of that. I think we can get this change in the 0.6 release due to the solution’s simplicity, though timing should probably be excluded from the motion.

I guess we will implement an RPC to burn (otherwise one would have to generate a raw transaction). A GUI is probably not necessary. Using the transaction fee is probably the easiest solution

I agree an RPC implementation would to make it easier to burn, and should be included in the motion. I also agree adding it into the UI is undesirable because of the risk of unskilled users burning currency unintentionally.