Nu and BCExchange hybrid

First, a rhetorical question…
Would it be morally wrong to crossbreed Nu and BCExchange since it could be seen as incest?

if part of the cryptocurrency protocol is to query major btc/usd exchanges to see the price of 1 btc, proof of burn can be used on btc to issue new pseudo-dollars. those pseudo-dollars can later be used to pass motions on the block chain and choose the reference btc/usd exchanges. if there are pseudo-dollar buy requests sitting on its block chain, current holders of those pseudo-dollars can fill the buy requests by providing their btc receiving address. the buy request will be filled if the buyer has sent the btc to the provided address similarly to proof-of-burn, except pseudo-dollars will be taken away from the seller and sent to the buyer.

now the question is whether the buy requests can be made with any btc/usd price or only with the fixed price taken from the centralized exchanges. fixing the price would just create a second market if there are no buy requests sitting on the chain.

the good thing of such an approach would probably be the fact that a nubot analogy is never needed to hold the peg. this would be kind of hybrid between nu and bcexchange.

the shareholders could vote for the btc price of their pseudo-dollars similarly to how nushareholders vote for park rates. each shareholder could be the liquidity provider on their own by making buy-requests. this would be even more decentralized liquidity providing than what nu currently has.

the reward for providing liquidity could also be built into the block chain. since the liquidity provider is also a shareholder, they will naturally mint blocks anyway. block minting requires stake (the kind of stake PPC gives you for coin age). However, in this system stake would be generated for providing liquidity AND FOR coin age of the shares.

If the shareholders have voted for having 100k $ buy side liquidity, then all block minters receive their stake proportionally to the liquidity they are currently providing and proportionally to the shares they have unlocked for minting. For example, if a shareholder holds 1% of currently minting shares then the optimal amount of liquidity they should provide would be 1% from 100k, which is 1k. Any liquidity exceeding the 1k threshold would not be rewarded for with stake (unless some other minter provided less liquidity than it is required). If the shareholders provides only 500$ of liquidity then the group of all other minters can provide this missing 500$ and be rewarded for it as a bonus.

I know this is long story, it might contain logic errors and be otherwise hard to understand but perhaps it would still ignite a philosophical discussion. I would be interested to know if it would make sense for Nu to transform into this hybrid.

This idea is in some aspect similar to what I had in mind to structure liquidity provision network close to how a POS network works – each liquidity provider is a “miner” competing with all other LPs for fees. I didn’t go as far as putting the entire ops on the blockchain, as you suggest.

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You mentioned sabotage. The blockstream dudes are using encryption to prevent transaction discrimination by miners. Would it help in any way in our situation too?

The transaction creator cyphers the TX script and signs it with their private key. After it has been confirmed the transaction creator broadcasts the encryption key so that nodes could see what was actually transacted.

The sabotage I was talking about was more like DDOSing other LPs or insiders job from the pool operator. Making the liquid provision system to work like a POS network would force sabtageurs to attack the entire network, which is difficult, rather than a pool, which is easier.