Direct shareholder control of reserves and automated NuShare sales

jooize 2016-09-21 23:06:32 UTC #1

Is it theoretically possible to have shareholders in control of funds (BTC, US‑NBT, …) such as those that currently need to be under the control of trusted groups or individuals?

If Nu can hold and manage funds by blockchain consensus and directly control the reserve level by vote with automated NuShare sales, it’d be an even more impressive DAO and further empower shareholders.

Assume unlimited development resources. I want to know if it’s logically possible, even if it requires trusting say the B&C signers.

If Nu were to be done again? A better system?

Sabreiib 2016-09-22 00:10:31 UTC #2

Yes, we can.

Each shareholder can park some NSR and borrow some NBT, the pledge ratio is voted by shareholders in a median style(alike B&C signers vote).

Then these shareholders are decentralized liquidity providers, each controls own money, don’t need to trust anyone else. They may choose any NBT pair they like, on any platform which supports NBT, and set any spread level they like. They make living by spread trading and compete each other with better service, better pegging quality.

The pledge is short-term , such as one week, or one fortnight, when peg in danger, shareholders just vote a new ratio to close the valve or even competely shut off. So we don’t need to sell NSR at all.

Ths approach is advocated by Hayek in 1976 when discussed about how to issue a stable private currency, another approach is directly sell/buy currency on market, use the revenue/profit to buy back currency, obviously we can combine this into NBT’s official (phoenix)liquidity providing.

To sum up, we should use NSR Cap to back the NBT: park NSR get NBT, control the NBT supple by this kind of short-term lending. Let many NSR holders become decentralized LP, and if we get real revenue in future, we can buy back some NBTs and destroy them.

I believe the Nobel Prize Winner is smarter than us. Hayek’s method is much more elegent and effective.

Phoenix 2016-09-22 00:22:01 UTC #3

It is an intriguing question, and it would be wonderful if we could do it.

A couple of approaches come to mind, but have major unresolved issues.

If you think of reserves being held on B&C Exchange, then the reputed signers actually have the keys to the funds. To control them, the BlockCredit keys would be used (which can be multisig). You can’t have a blockchain or automated publicly available process handling keys though. They have to be safe guarded, like by a reputed signer does. Private keys have to be private. This model requires NuShare holders to appoint a BlockCredit multisig group, while the handling of the actual assets would be outsourced to the B&C reputed signers. That isn’t direct shareholder control, unfortunately.

Another approach would be to try to have the B&C client periodically examining the Nu blockchain to see if NuShare holders have left any instructions about how funds are to be used. Some reputed signers will be signers for Nu assets, so they will have direct RPC access to a Nu client. That is probably the best way to get that info: a signed broadcast in the B&C network coming from the various Nu asset reputed signers. A fundamental requirement of reputed signers must remain that all their work is automated, so the messages would need to be structured in an unambiguous way so any action that needed to be taken could be taken automatically by the B&C client. It should be possible to have NuShare holders specify a few pieces of data such as B&C defined asset type, a B&C account (aka BlockCredit address), a transfer to address and a transfer amount. In essence, NuShare holders could essentially say “Transfer 20 BTC in this certain B&C account (BKC address) to this particular BTC destination address”. We would need to ensure NuShare holders could only transfer funds that belong to NuShare holders, not just any funds at B&C. This implies that certain B&C accounts would need to be registered as Nu reserve accounts within B&C Exchange. It may also be possible to use a similar approach to allow shareholders to directly issue an instruction to sell reserve NSR on B&C Exchange, although this is far more complicated and difficult than just transferring funds. It would require allowing reputed signers to construct valid order messages on behalf of the Nu reserve accounts. In other words, we would need to make an exemption to the signing requirement. This is much more complicated and may introduce security problems. I wouldn’t suggest trying to let NuShare holders sell NSR on B&C any time soon.

Thank you @jooize for this suggestion. The second approach I described may prove to be feasible at reasonable cost. We ought to think more about it. With every minute I think about this, the more appealing it is.

Sabreiib 2016-09-22 00:30:39 UTC #4

In this way, the B&C also can be finished. The B&C exchange’s goal is exchange platform, if B&C can automatically move the fund as per customer’s requirement, done.

Phoenix 2016-09-22 00:58:16 UTC #5

Phoenix:

Another approach would be to try to have the B&C client periodically examining the Nu blockchain to see if NuShare holders have left any instructions about how funds are to be used. Some reputed signers will be signers for Nu assets, so they will have direct RPC access to a Nu client. That is probably the best way to get that info: a signed broadcast in the B&C network coming from the various Nu asset reputed signers. A fundamental requirement of reputed signers must remain that all their work is automated, so the messages would need to be structured in an unambiguous way so any action that needed to be taken could be taken automatically by the B&C client. It should be possible to have NuShare holders specify a few pieces of data such as B&C defined asset type, a B&C account (aka BlockCredit address), a transfer to address and a transfer amount. In essence, NuShare holders could essentially say “Transfer 20 BTC in this certain B&C account (BKC address) to this particular BTC destination address”. We would need to ensure NuShare holders could only transfer funds that belong to NuShare holders, not just any funds at B&C. This implies that certain B&C accounts would need to be registered as Nu reserve accounts within B&C Exchange.

@sigmike, I am really curious to have your opinion on the feasibility of what I have described. Did I overlook any important problems?

Sabreiib 2016-09-22 00:58:51 UTC #6

Why not B&C signers directly control the NSR granted by Nushareholders?

Phoenix 2016-09-22 01:08:27 UTC #7

This could be accomplished with the quoted approach above and having NuShare holders issue a custodial grant to a B&C NuShare deposit address. Remember, there can be no manual reputed signer processes, so we need to also implement an automated way for those funds to be transferred from reputed signer control. That is exactly what the quoted text above is where I describe how to permit decentralized and various NuShare holders to directly issue a single, unambiguous message to reputed signers, which they can process as a standard automated transfer of any type of asset B&C Exchange supports.

Phoenix 2016-09-26 20:50:57 UTC #8

Although this is no longer being actively discussed, I would like to make clear I support the implementation as I described here:

Another approach would be to try to have the B&C client periodically
examining the Nu blockchain to see if NuShare holders have left any
instructions about how funds are to be used. Some reputed signers will
be signers for Nu assets, so they will have direct RPC access to a Nu
client. That is probably the best way to get that info: a signed
broadcast in the B&C network coming from the various Nu asset
reputed signers. A fundamental requirement of reputed signers must
remain that all their work is automated, so the messages would need to
be structured in an unambiguous way so any action that needed to be
taken could be taken automatically by the B&C client. It should be
possible to have NuShare holders specify a few pieces of data such as
B&C defined asset type, a B&C account (aka BlockCredit address),
a transfer to address and a transfer amount. In essence, NuShare
holders could essentially say “Transfer 20 BTC in this certain B&C
account (BKC address) to this particular BTC destination address”. We
would need to ensure NuShare holders could only transfer funds that
belong to NuShare holders, not just any funds at B&C. This implies
that certain B&C accounts would need to be registered as Nu reserve
accounts within B&C Exchange.

This will do much to secure our Nu reserves. However, before we can do it, we have to finish B&C Exchange. Once that is done, I plan to push this initiative forward to implementation, subject to all the proper approvals, of course.

Is it fair to say the B&C Exchange project is officially dead?

cryptog 2016-10-01 14:16:12 UTC #9

I think the next natural step will be an automatic nushares sale/purchase for nubits liquidity maintenance.
I hope we ll see that day soon in the future with a fair distribution of nushares.

sigmike 2016-10-09 09:18:30 UTC #10

I assume the shareholders would also want to issue trading orders. If not the solution could be simpler but shareholders could only move funds in the same currency which is not a big improvement over grants.

To enable that we need to change the B&C protocol to allow a special accounts which represents the current reputed signers.

When the reputed signers that monitor the Nu blockchain would see an order from the shareholders they would sign and broadcast an exchange message (request deposit address, add order, etc.) from this special account, and all the network could verify it like any other message. This special account would need the signature from N reputed signers. It can’t be all the signers because they may not all monitor Nu. This N would have to be decided somehow.

We could also just enable multisignature B&C accounts. It would have almost the same effect except the signer group would not change when the reputed signers change, which may or may not be a good thing. Shareholder could select only the reputed signers that actually monitors Nu, and could also include non-reputed signers into the account, and have multiple accounts with different signers and different m-of-n.

Or we could just allow script accounts, which could allow all the above (if we add a new opcode to handle the “current reputed signers”).

All these solutions would also need a way for signers to share partially signed exchange messages. We can add support in the protocol for that. For example the nodes could accept partially signed messages in their mempool, merge other partially signed messages and accept them in a block only when they are fully signed.