NuBits History – What the heck has happened?

Thanks @Sabreiib for that thoughtful and insightful post. I agree with almost everything you have said, and I think what you are saying is important.

There are just a couple clarifications I would like to make:

I am sorry if my previous communication lead to misunderstanding. I am not suggesting holding decentralization as a value is incompetent. Rather, I am observing many key forum posters that have expressed decentralization as something they value highly have actually effectively opposed decentralization with their actions.

Decentralization has many characteristics. Some are good. Some are bad. Whether particular characteristics are good or bad may depend on the context a great deal. Consider the present context of Nu: our blockchain protocol to control creation of assets and authorize blockchain transactions is indisputably purely peer to peer, with control shared by all NuShare holders with at least $25 of NuShares (at today’s price), in proportion to the size of their NuShare holding. The protocol can’t be decentralized further, without doing something that would remove Nu from the realm of proof of stake. I haven’t heard anyone suggest our protocol needs to be decentralized. That is really important not to lose sight of. When I became Chief of Liquidity Operations and created a hierarchically organized group to provide liquidity, I didn’t change the decentralized blockchain protocol in any way. In fact, I presided over a radical dilution of NuShare holders by more than tripling the number of NuShares circulating in 2016 by offering them for sale in completely public venues, accessible to all. The current degree of decentralization of NuShare ownership could only be limited by the number of people interested in putting up $2 or more for a stake.

So when we talk about the lack of decentralization at Nu, we are talking about what is going in one department that decentralized shareholders have consistently supported though our decentralized blockchain protocol. Now back to the notion there are some costs and problems with decentralization. One of those is expense that comes from redundancy that is inherent in decentralization. A second is that participants tend to be less informed and have less expert knowledge as decentralization matures. Thirdly, participants in decentralized systems tend to have less at stake than in centralized systems. These three drawbacks are key to understanding why liquidity operations needed to be centralized in recent times.

Every liquidity provider and multisig signer must be paid one way or another. With robust decentralization, that can be really expensive. Nu was spending a large share of its operation costs on this two years ago. Despite the high expense, compensation to each participant was quite insufficient. We didn’t pay enough to get reliable, professional people with the kind of economic knowledge they need to make decisions about how to operate in NuBit markets. It surprised me, but it appeared no one involved had an understanding of how the market would react to various market interventions. I understood those dynamics due to my professional background, but failed to comprehend how specialized this knowledge is. We discovered monetary policy, even something as simple as maintaining a peg, requires expert guidance. Paying even a few people with this expertise is completely unaffordable at this time. Even I am part time. Esko and I have a great deal at stake. How about failed signers like @woodstockmerkle and @masterOfDisaster? We don’t know that they had anything at stake. That was a mistake. We allowed the founding principle of the network, proof of stake, to be violated.

So, decentralization adds certain types of strength and reliability. But it is also presents a host of risks and costs that have to be managed. It may be that the costs of properly mitigating those risks is greater than the benefits of decentralization in liquidity operations in some contexts. That doesn’t mean it will always be that way. It depends on a variety of factors, perhaps the most important of which is the quantity of resources that can be brought to bear.

The decentralization of handling shareholder funds is at hand: I aim to have multisig signers who prove a stake in NuShares, are dependent on Nu for their livelihood at the present time, have a proven history of responsible and compliant actions, have clear and well thought out contracts with shareholders, will subordinate to expert decisions, demonstrate a commitment to contract law, have a human relationship with one another, among other things. It is a demanding list. It is a complicated undertaking that takes time. I understand that delaying an implementation brings large risks, as does a poor (and rushed) implementation.

Recently, things like reviving B&C Exchange and hiring new people to work on Nu’s problems has been a higher priority to me. Everything takes longer than anyone would like, including me. To all of you who care, please consider creating solutions rather than complaining about some problem we haven’t solved yet. Remember, our decentralized governance model will empower and compensate anyone who can convince shareholders they are bringing value to the network.

I suspect you are being a bit too impatient. I think there is a lot of support and interest. It is a big undertaking, among other big undertakings that are splitting our attention. I can tell you Esko and I have had detailed discussions about Hayek money and our options for implementation of one, in just the last week.

I don’t recall you presenting a design with enough specificity to be suitable for implementation. If I missed it, please link to it.

It is a medium term objective of mine to release a currency on the Nu blockchain that is both more stable, and maintains it’s value better than USD or CNY (and USNBT and CNNBT). There are many details to attend to. I wish I could get it done faster, too.


@Phoenix, remember when you gave away hundreds of millions of NSR to people, some who did nothing more than support you verbally here on the forum? You are the last person here that is qualified to speak on decentralization of share ownership. That is a big part of Nu’s history that I’m sure you are not proud of and didn’t mention in this public interview.

This statement is partly greatly exaggerated, and partly simply incorrect. If you would review the facts available to the public on this forum, you will find that there were I believe 2 people (maybe 3) who were rewarded for their helpful contributions on the forum. I’m pretty certain the aggregate reward for those individuals was less than $1000 USD in NuShares, and less than 2 million NuShares. Therefore, while you claim it was “hundreds of million of NSR”, it was, in fact, hundreds of thousands of NSR, and for a different reason than you have claimed.

Why are you so determined to so grossly twist the facts against me and the integrity of the project?

1 Like

Because I do not feel this project has had the level of integrity you claim, with your own twisting of the facts. It happened, as you have admitted, which is something that should be written forever into Nu’s history.

Feelings are not very helpful in bringing us to understand the truth. Many people are angry some things didn’t go as expected. You might be feeling that. I have certainly felt that. It is common to blame the most prominent target, though a more thorough investigation would show that I am solving the serious problems created by multisig signer misconduct in 2016. It is a process, but there has been great success, with the NSR market cap and NuBit supply both recently reaching new all time highs.

It is time to stop being angry. NSR is up 1600% this year. Normally, that is considered a phenomenal performance. Surely that should dispel some anger, or does it need to be 16000% annual return before you will be satisfied with progress?

Looks healthy, thanks Phoenix

phenomenal in your terms, disastrous in grounded peoples’ terms. I am too lazy to look it up, but @Phoenix himself non-stop repeated how important NSR liquidity is for the whole liquidity system. Then let’s measure his performance in the terms he himself defined.

1 Like

I am not sure whether we are climbing the ranking up or down with you (@Phoenix) in full charge. Let’s assume we are climbing up: you are so phenomenal that we could even soon overtake FuckToken. Congratulations. For those who are confused by the weird ranking (Fucktoken vs Applecoin) - they first rank according to market cap and then after Applecoin there is a cut. That’s where the absolute shitcoins start with public interest approaching zero, which is represented by the literally non-existent volume. We are proud of you @Phoenix, without you all this would not have been possible.
@coinforward as you are an outstanding journalist, please draw a complete picture and let your followers know that this coin is literally dead. If you like how @Phoenix talks, you could use one of his favorite sayings, which goes like this: “The market has spoken”. I would be willing to pay you the same amount of money that @Phoenix paid you to write the article.

@MaVo you know the volume figure you pictured has no relevance. Neither is it accurate. Why did you decide to use it? Which of our competitors is paying you to do this?

I am self-employed, mentally healthy and morally consistent. Who pays you? I can tell you who did: I did. $20,000 for BKS that you put straight into your pocket.
And you know what? Come on, let’s argue about the volume figure. Tell me, what is the volume, the most important aspect for the liquidity engine to work. How much is it? I would use a percentage figure if I was Phoenix to let everyone know, because it sounds more impressive (although it is misleading of course). Let’s take $3,000 as an example because of the buybacks. I said it’s roughly $50. Jesus, that is 6000% of what I actually said! Ok, Nu is good to go. In best shape ever!

Edit: but you must still admit that we still can’t compete with AppleCoin.

The truth is not available to us, so we can only rely on feelings and gut instincts. This is how you have structured Nu. If you don’t like people assuming things about you, then do something to change it instead of consistently making the governance problems worse.


This link has most my design for Hayek model.

Hayek model solves two big problems of liquidity engine.

  1. No need to pay decentralized LP, let them earn their own living, e.g low cost.

  2. No need to dilute (early) shareholders. We must make the share price higher and higher, otherwise the early shareholders may rebel, this is dangerous for a child company.

In 2015, I invested 130 BTC into B&C, if BKS price is as good as BTC (more than 20X higher), I may consider retiring and put all my energy into B&C. See, we must make early participants rich, this will help our project just as BTC did.

In 1976, F. A. Hayek designed an excellent mechanism to issue private & stable currency, we just need to “port” it into cryptoworld. His thought is way better than BTC’s fixed supply.

1 Like

Here is a link for people researching Nu and it’s history: [Passed] Performance Bonuses for Peg Restoration


Interesting thread, thank you!

@jooize @ConfusedObserver
Any comment is welcomed, any comment is better than no comment.


@Phoenix I want to know your opinion about my model(modified Hayek’s), is it possible to try this way on BKC? We apply “liquid engine” on Nu and Hayek’s on B&C respectively, either of them succeeds, we succeed.

1 Like

That really helps. When a contract is due, the LP needs to return BKC to receive BKS. Which scenarios can occur that affect this dynamic?

BKC is created from pledged BKS according to pledge ratio. What do you mean by 100% reserve when short-term contract is due?

If an LP doesn’t return the same amount of BKC, the pledged BKS are claimed by BCE itself (B&C Exchange shareholders) and can be sold to resolve the inconsistency (buy back BKC).

A short-term contract may be as long as the market can be reasonably predicted within the pledge ratio?

LPs can abandon their responsibility. What happens then? BCE would begin printing and selling BKS to buy BKC just like Nu? If LPs don’t reacquire BKC for their loans, they can buy new BKS to pledge for BKC to pay back the previous loan.

I like this.

1 Like

According to historical data from 2014 to 2016, NSR cap is around 2-4 times of NBT’s. So if shareholders vote for 3:1 ratio.(3$ value of share vs 1$ value of coins), no need to worry the insufficient share cap. to support coins. Of course, not all shareholders will pledge their shares.

If coins demand is high in market, the need for LP and share will also increase.

For some reasons, share price plumbs to much lower level so that LPs choose to give up their pledged shares and to run away with coins or convert coins to BTC/USD. We start the “liquidity engine” like today. In most time, our short-term loan will work fine, when the contract is due, it’s indeed 300% reserve because LP will pay nearly 300% price to buy back their BKC otherwise 300% value of shares will be confiscated.

In my opinion, “liquidity engine” is an emergency resort(once per several years?), should not be a daily operation because it dilutes shareholders and depresses share price as @phoenix said “painful”.

So short-termed loan mechanism inspired by F.A.Hayek is not complete substitution for “liquidity engine”, it’s an firewall for “liquidity engine”.If Hayek model works fine daily, we don’t need to start debt-equity swap(liquidity engine),

A short-term contract may be as long as the market can be reasonably predicted within the pledge ratio?

Unless share price is very violent, shareholders don’t need to frequently adjust the pledge ratio. When share price goes up, we don’t worry about the LP’s responsibility abandon at all because pledged shares are more valuable. We only need to be alert for the quickly plumbing of shares into 1/3 price. But that would unlikely to happen without enough reasons, at least, our shareholder won’t suicide in this way if our business is smooth.

LPs can abandon their responsibility. What happens then? BCE would begin printing and selling BKS to buy BKC just like Nu? If LPs don’t reacquire BKC for their loans, they can buy new BKS to pledge for BKC to pay back the previous loan.

When an LP gives up pledged BKS due to BKS price collapse, his BKS is claimed by B&C protocol and for auction sell. This may not completely compensate the system loss because pledged BKS value is lower than borrowed BKC value which is the reason LP abandon responsibility. Extra BKS is issued just like Nu does today. Fortunately loan contract is short term, so when LPs want to sign new loan contracts they will find that the quantity BKC to be borrowed is smaller than previous contract due to BKS price drop.

So shareholders should vote for a safe pledge ratio with enough margin, so that even BKS price halves within short-term, LPs still find their pledged BKS is more expensive than their borrowed BKC. They will execute the contract.

A shareholder can select automatic data source, after his online wallet receiving BKS price info from some big exchanges, e.g $4 per BKS, combined with preset 3$:1$ pledge ratio(set by individual shareholder), his wallet will compute the final pledge number ratio 1.33:1.

That is he votes for “pledge 1 BKS to borrow 1.33 BKC”, this is mediant vote and his wallet shows real time voting result just like B&C now voting “reward” and “number of signers”.

Hayek’s model is very effective in shrinking coins supply, if shareholders want to make coins circulation into ZERO, they just vote ZERO ratio, then after a short-term all coins will flow back into protocol without issuing extra shares. If some BKC customers refuses to sell their BKC to LPs, LPs will have to pay 200-300% to buy back BKC to avoid their BKS loss, e.g. BKC pegging failed due to very high price promotion. I don’t think we need to vote for Zero pledge ratio, such a violent decision.