[Passed] Motion to end LPC operations of KTm, Jamie and NSR sales of Jordan

Motion hash to place in your Nu client:


When our network began, we had a way to increase the NuBit supply at the will of shareholders. We then decided to add a way to decrease the NuBit supply at the expense of increasing the NuShare supply (due in the 0.6.0 release). It should not be surprising then, that a mechanism for reducing the NuShare supply would also be introduced, to complete our flexible supply of both shares and currency.

Specifically, I am proposing that in most cases, instead of distributing dividends, proceeds from the sale of NuBits be used to purchase NuShares in the open market, which are then burned. This is commonly done with equities and is known as a share buyback. Due to low liquidity in the NuShare market, we can expect such activity will have a marked positive effect on the NuShare price. This high NuShare price will enhance our ability to sell NuShares later when we are in the opposite part of our economic cycle and need to support the NuBit price. Therefore, we will have two complimentary mechanisms which are the exact inverse of one another:

  1. When NuBit demand is low, NuShares will be created and sold while NuBits will be purchased with the proceeds and burned. NuShare supply increases as NuBit supply decreases. This depresses the NuShare price as it supports the NuBit price to the pegged level.
  2. When NuBit demand is high, NuBits will be created and sold while NuShares will be purchased with the proceeds and burned. NuBit supply increases as NuShare supply decreases. This inflates the NuShare price as it suppresses the NuBit price to the pegged level.

Fortunately, no protocol or even client changes are needed to do this beyond what is already approved by shareholders and scheduled for our 0.6.0 release. Whether dividends are distributed in addition to share buybacks being done will be up to shareholders to decide on an ongoing basis. Shareholders can also decide what proportion of NuBit sale proceeds go to dividends and what proportion go to share buyback by how they pass custodial grants.

In order to move to the model described above, which is decentralized and eliminates counterparty risk to NuShare and NuBit holders, the LPC operations of KTm and Jamie must be wound down. Their service was of great value at the launch of NuBits, but it is time for Nu to mature into the decentralized, counterparty risk system it was originally envisioned as. Similarly, it is important that the undistributed NuShares I possess (currently nearly 300 million) either be distributed or burned. Once these actions are taken we can say that Nu is free of any single points of failure or catastrophe: decentralized, free of counterparty risk, robust and resilient.

Ending the LPC service of KTm and Jamie is also the key to unleashing share buybacks and dividends. Right now they are holding the proceeds of their NuBit sales as reserves. Transitioning to our zero reserve model is synonymous with ending the LPC operations of KTm and Jamie. When this transition is complete, proceeds of NuBit sales will not be held at all. Rather, NuShare holders will be immediately rewarded when those proceeds are used for NuShare buyback and burn or dividend distribution. In order to unlock the full benefits of share buyback and dividends, shareholders need to make a full commitment to paying a transparent and upfront cost for liquidity from LPCs providing their own funds. As I’ve said before, this feels kind of like paying health insurance premiums, but allows you to accurately predict the costs that will be incurred. While KTm and Jamie continue operations, we only know that our cost for their service will be between their modest 2% fee and 2 million NBT, if shareholders lost control of the funds somehow. Nu cannot afford a 2 million NBT cost at this point in its development. We can and ought to eliminate the possibility of this potential catastrophe quickly by purchasing insurance, so to speak.

The following is the finalized motion intended to permit Nu to operate in the manner described above:

Motion RIPEMD160 hash: ed7b9fc65dc4e9d9acad61e528420c2690f599d2

=##=##=##=##=##=## Motion hash starts with this line ##=##=##=##=##=##=

Kiara Tamm and Jamie Miller must cease operations completely within
90 days. Within 5 days of passage of this motion, 25% of the shareholder
funds in their possession should be burned as NuBits. 33% of the
remaining funds should be burned as NuBits between 25 days and 30 days
after passage. 50% of remaining funds should be burned as NuBits between
55 days and 60 days after passage. All remaining funds should be burned
as NuBits between 85 and 90 days after passage. They should receive
their pre-determined commission on funds actually used to provide
liquidity, not their total grant amount. This motion amends or nullifies
previous agreements between shareholders and KTm and Jamie as required
to comply with this motion.

Within 60 days after the protocol is altered to permit custodial
grants of NuShares, Jordan Lee must burn all undistributed NuShares.
Within 30 days after this motion is passed Jordan Lee must burn all
NuBits held on behalf of shareholders in excess of 250,000 NuBits.

Details of burning which apply to Jamie Miller, Kiara Tamm and Jordan Lee:
Burning is to be done by publicly announcing the address that corresponds to
the spendable outputs to be burnt. Burning should be accomplished by
designating the spendable outputs as transaction fees. We have a burn
RPC scheduled for development that will make this simple. If that is not
developed by the time burning is required (a special build not yet
released could be used), one of our core developers will assist in
constructing a raw transaction to accomplish the burning. This way, the
burning can be verified by anyone at anytime who possesses the
blockchain or access to it via a block explorer.

=##=##=##=##=##=## Motion hash ends with this line ##=##=##=##=##=##=

Verify. Use everything between including the <motionhash></motionhash> tags.

Good preparations will need to be made to see the network in good health after this motion is fully executed. New LPCs will need to be funded and cultivated. The implementation of a liquidity pool is one particularly inclusive way to do this. Being an LPC requires ownership of significant liquid funds that can be put at high risk, it requires the skills and time to run NuBot, as well as a good understand of trading and the nature of Nu liquidity operations. A liquidity pool would separate these requirements: A pool operator needs the skill and time to run NuBot and the understanding of liquidity operations, but they do not need to have any funds. Individual users of the pool only need a tiny sum of liquidity they can put at high risk, because users’ funds are pooled together to create a significant quantity in aggregate. Individuals pool users don’t need any special knowledge and it won’t require any of their time on an ongoing basis. The potential profits for pool operators and individual pool users are huge at the present time. Based on recently passed LPC proposals, we can see that 10% return per month can be had. We shouldn’t wait for pools to emerge and fail to elect standard LPCs. As the Nu network matures, I expect we will see a mixture of LPC pools and LPCs providing their own funding. I would rather see the network supported by 100,000 NBT of liquidity by LPCs providing their own funds than 400,000 NBT of liquidity by LPCs using shareholder funds like KTm and Jamie.

Once the transition is complete we will have two main types of LPCs, as mentioned in the whitepaper: single side (called sell side in the whitepaper, but this is being modified to include granted NSR that is used to apply buy side pressure on NuBits) and dual side LPCs. Single side LPCs come in two sub-types: (1) those that have been granted NuBits to apply sell side pressure and NSR buyback (and burn) or dividends, and (2) those that have been granted NuShares which they can sell to apply buy side pressure and NuBit burn. Dual side LPCs are the more common type that liquidity pools will be which provide both buy and sell side liquidity in order to create a buffer zone of liquidity for the peg. The purpose of single side LPCs, on the other hand, is to balance the buffer zone created by the dual side LPCs.

Proper preparations for the burning of undistributed NuShares will be the granting of a small percentage of outstanding NuShares (perhaps two or three percent) to a multisig NuShare address. This will allow the signers to agree to sell the NSR quickly to purchase NBT to support the peg when buy side liquidity is low. The idea is to have no more NSR than could be possibly needed for sale in a two week period. If additional NuShares are needed for sale beyond a two week period, they can be created in a new NSR custodial grant. Rather than creating a large fund for future development as originally planned, development will be funded with NuBits on an ongoing basis. If the emission of these NuBits creates too much selling pressure, the selling pressure will be counteracted by an NSR grant and an NBT burn. Our development savings are held in our market cap.

Interest rates may still be used a peg support mechanism. However, it is possible that NSR grants combined with NBT burning will become the more important mechanism.

If this plan is implemented NuShares will be even more volatile than they are now. It makes sense that they would be, because we are basically diverting the volatility the market naturally wants to impose on NuBits to NuShares. NuShares will be a speculator’s delight. They should never approach zero so long as the network purpose of a pegged currency that is is used continues to be served.

I welcome your comments and suggestions for amending the motion as it is currently a draft. I will take care to use the new template for motions when this is finalized.

Discussion: Creation of the first liquidity group pool by KTm or Jamie
Ending counterparty risk now and holding an NSR auction
Block reward system
Another paid article about BitShares?
History of the Nu Network (Feedback Please)
[Passed] NSR sale and NBT burn
Current Liquidity
Undistributed NuShares
Monthly P&L of Nu
Three roles that need to be filled by shareholders
Ethereum financial statement - they should have gone NBT
Smoking Draft List - October 20, 2015
Current Liquidity
[Draft] motion to increase the percentage of reserves
(2nd Version - Expanded) My Interpretation of Jordan Lee's Liquidity Engine Model & Why its First Attempt at Pegging Failed
[Passed] Dissolution of FLOT and transfers
Lost community members
[Passed] Motion to provide seed funding for B&C Exchange - a decentralized exchange built on the Peershares platform
[Voting] Motion to express that shareholders prefer dividends instead of NSR buybacks
[Voting] Motion to express that shareholders prefer dividends instead of NSR buybacks
[Voting] Motion to express that shareholders prefer dividends instead of NSR buybacks
[Discontinued] Cybnate's Nu datafeed - BETA
[Discontinued] Cybnate's Nu datafeed - BETA
[OLD] Cryptog's datafeeds - BETA
[OLD] Cryptog's datafeeds - BETA
[Discontinued] Cybnate's Nu datafeed - BETA
[Discontinued] Cybnate's Nu datafeed - BETA
What are benefits from holding NSR?
NuShare Auction
CCEDK withdrawals impaired
Why does Nu have NSR on the balance sheet?
Bter - post hack custodial report
[Passed] NSR auction motion
When will the next dividend?

I’m slightly concerned about the timing given the limited number of LPCs, the lack of existing liquidity pools and/or the skillsets required to operate as an LPC. However I agree that the artificial LPC type KTm and Jamie have been running is also not desirable as it interferes with the market for LPCs.

It is a bit of a leap of faith, hoping that we would get more LPC to defend the peg. We should be able to do this with the burning and creating of NuBits however I have no overview of the total NuBits in the hands of users and the swings in buy and sell pressure in the last few months. It would be great to have a better view of that, so we can have an idea how much liquidity is required based on historic statistics. Practically we won’t burn and create NuBits on a daily bases so we need a liquidity pool to cover at least a few weeks of trading.

Until there is more aggregated data available on the NuBits trading in the last few months I’m on the fence regarding the timing of this proposed motion.

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the resent issues with some exchanges lately is bad for LPCs. The risk seems to be high maintening funds in exchanges!

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There is a lot to digest before I can comment properly. It looks promising. I would add a checkpoint that current liquidity operation should NOT be ceased untill a proper replacement(s) is found, funded and lined up to support NBT peg in open markets.

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I always thought it is important that the dividends are distributed using a currency which is external to the Nu network … With this motion its more that NSR and NBT have a shared/coupled market cap which gets rebalanced through motions. I just hope that the lack of liquidity in the NSR market will not call manipulators on the plan when we decide to perform such big trades.

What I am missing now is a corresponding mechanism that is complementary to parking :wink:

I posted a short code snipped in another thread how something like this could be done very easily. After giving it some more thought though, I think there are many legal issues that come into play when operating with other people’s money. So the bot operator would probably still have the full responsibility when the funds are lost. So a liquidity pool bot operator would not just need some technical skills but also some legal advice and a suitable insurance. This is already out of scope for amateurs.

NuBots must be able to cooperate! In my opinion this is the most interesting approach to get more LPCs, and to really build a decentralized way to provide liquidity. Running NuBot isn’t harder than running a miner, and many people are able to do that. Targeting many people with low to moderate funds will provide a stable liquidity floor which won’t fluctuate as much as with a few very rich custodians.


While I had made a final decision to propose this motion before the failures at Bter and Excoin, the recent events demonstrate the urgency of the matter. Honestly, the Bter failure makes me inclined to move the timelines in the motion so they occur more quickly. Our solution will still work with thin on exchange liquidity (although it increases the risk of momentary swings in the peg). However, loss of shareholder funds can be catastrophic if the amounts are great.

New LPCs may not be so excited about putting their own funds at risk in light of recent events. Its clear the best response is to do everything we can to provide liquidity without exposing the liquidity providers to exchange default risk. That means most LPC funds need to reside on tier 3, off exchange. Perhaps it is time to place tier 3 automation at the top of the NuBot roadmap. We could start with automating exchange deposits and visit the issue of automated exchange withdrawals afterwards. @desrever, @benjyz, @woolly_sammoth and @pennybreaker: what do you think of making tier 3 automation of exchange deposits the top development priority for NuBot?

Let’s examine what a 100,000 NBT Bter liquidity operation would look like by adding tier 3 automation (for exchange deposits): Perhaps 5,000 would be placed on each side (buy and sell) in tier 1. So 10,000 NBT total is on the order book and available for immediate exchange. Perhaps another 20,000 NBT is available in tier 2. As an order is filled and depletes tier 1 liquidity, it only takes several seconds to move liquidity funds from tier 2 to the order book and tier 1, as tier 2 is off order book and on exchange. As tier 2 amounts drop below 10,000 on each side, NuBot deposits funds on the exchange from connected Bitcoin and Nu daemons. In our scenario, only 30,000 NBT of value is exposed to exchange default risk, while 70,000 NBT would be safe. LPC proposals would specify how much liquidity would be provided in each tier. There is no reason an LPC proposal couldn’t be very conservative in managing exchange risk by placing 5% of funds in tier 1, 5% of funds in tier 2 and 90% of funds in the off exchange tier 3. That would still provide good liquidity. Tier 3 liquidity can be promoted to tier 2 in between 6 and 60 minutes, depending on the currency and exchange policy regarding confirmations. Occasionally losing tier 1 liquidity for a specific LPC or exchange for a matter of minutes is only a minor problem.

Most of this post may seem off topic, but it relates to the question of how we will transition to self funded LPCs. An important part of that is reducing exchange default risk.

Edit: I should clarify that while automated withdrawals can be addressed later, the initial tier 3 NuBot implementation must permit manual withdrawals. This way LPCs can manually move funds from tier 2 to tier 3 when tier 2 get too large on one side.


The timing would never be fine for something like that.
It’s a double-edged sword.

On the one hand if there’s no end of @KTm’s and @jmiller’s LPC foreseeable the need to support LPCs might just not be big enough. Having @KTm and @jmiller providing liquidity is very convenient - and risky for NuNet as we see these days.

On the other hand I agree that there are some things that need to be done until operating a NuBot is close to a no-brainer.
We need to be aware that the amount of potential LPCs is still quite limited at the moment.
Ideally each NSR holder should be willing and able to run a NuBot - the fees will reflect the recent experience with exchanges defaulting.
I’d really love to have the Peerbox equivalent for running a NuBot.
Download the image, do basic configuration tasks like choose the exchange, enter an email address that receives regular updates on the NuBot status, provide the wallet with funds and give it a go.
These are things that I’d like to see on the agenda before I could feel fine with creating pressure by a motion to end LPC operations of @KTm and @jmiller.

What if passing the open source motion makes exchanges think about providing liquidity, taking the role of an LPC?


i think exchanges can be great LPCs even without asking of any reward. just the fees would be enough :wink:
moreover exchanges can take all the risk of their businesses by balancing their tiers and using multisig as they see fit, i believe better than an external bot can ever handle!
it is pitty to see nubit system to fail due to exchanges’ incompedence!

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I would rephrase by saying: “it would be a pity” :smile:

edit: typo

I’ve read through this motion a few times and support it. Share buy-backs are a clever way to increase the market cap of NSR and consolidate voting power in the hands of those who view Nu as a long-term DAO and not a short-term speculative bet.

I hope the creation of liquidity pools emerges soon. Any prospective LPC can increase their own profit by accepting and managing smaller contributions.

For example, a current LPC proposal might look like this:

Liquidity provided: 25,000 NBT
Fee asked for: 2,500 NBT (10%)
Duration: 60 days

A prospective LPC who puts out a call for ten small contributors to join him (who are each willing to put in 2,000 NBT) can now earn this:

Individual liquidity provided: 25,000 NBT
Fee asked for: 2,500 NBT (10%)
Group liquidity provided: 20,000 NBT
Fee asked for: 2,000 NBT (10%). Of this 2,000 NBT, 600 NBT will be a management fee for the LPC.

The LPC now earns 3,100 NBT on his 25,000 NBT liquidity injection for no additional risk, just additional work making the payments to his pool members. The small contributors are able to earn a smaller but sizable return without needing to learn how to use NuBot. Everyone wins in this scenario. I expect open-source automated solutions are eventually possible for these liquidity group managers.


Well as shown in my previous post this can be automated in 50 lines of Python but as mentioned above the pool operator will be legally on very thin ice if something goes wrong. Its something else if people here on the forum coordinate to make a shared proposal, but then the shareholders don’t even need to know how exactly the funding was obtained.

I like the simplicity of the duality played by NuBit/NuShare to control the supply of NuBit.
It decreases at the same time the importance of parking, which is a bit more complicated.
In my understanding, the system envisioned here will be much more decentralized than the current state because shareholders will be able to elect NSR custodians who will be burning the shares on a multi-sig basis, whereas now shareholders’ money is held by only 3 people.
Another thing is that with the decreasing importance of dividends distribution alluded to, most of the value of NSR will be derived by their rarity, not their associated dividends, making NSR more similar to bitcoin than originaly designed, from my perspective.


I support that motion!

My position has always been that shareholders need to pay whatever price the market demands for proper LPC operations, although the quantity of liquidity can be relatively small if the price is relatively high. There have been a lot of LPCs rejected, apparently because shareholders thought what KTm and Jamie were doing was cheaper, which has now been conclusively proven false. The operations of KTm and Jamie have proven to be more expensive than any other LPC proposal that has been made. More important than the fact that their operations have been the most expensive is that the cost of their operations are completely unpredictable. The cost is anywhere between their commission of 2% (40,000 NBT) and 2 million NBT. To take a risk of incurring a 2 million NBT loss that would almost certainly break the peg is terribly irresponsible when shareholders could instead buy what is essentially an insurance product that makes the price of liquidity perfectly transparent and predictable. Therefore, while I strongly advocate for shareholders passing grant proposals of proper non-shareholder funded LPCs right now, this motion is designed to essentially force shareholders to do the fiscally responsible thing as the timeline matures and stop gambling the fate of the network on the faithfulness of KTm, Jamie and the exchanges they use. I don’t believe shareholders will choose to reject all LPCs as the liquidity offered by KTm and Jamie winds down.



I sent a PM to @assistant where the body was the motion content prepended with motion hash. I then copied and pasted the resulting reply from the assistant in to my original post. The formatting does look slightly different here than in the PM, so I think some hidden characters were lost or added in the course of that copy, paste and save edit. I checked it at http://www.online-convert.com and indeed I get a different hash. So, I am just going to calculate the hash with the website above. You can verify it using the Tor or Firefox browsers.

@tomjoad I had some difficulty getting the hash issued by the assistant to verify, so the actual hash is:


You have to click on the small “verify” link on the bottom of the reply of the assistant bot and copy the html shown there back into the OP. Hashing the part in the motionhash tags should give the right hash.

EDIT: it also enables us to easily view this html code and to verify the hash without the forum software.

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I tried that but got a hash of d79414279ae22fb217f2b654fb434ad1cf155c8b at quickhash.com instead of the expected value of ed7b9fc65dc4e9d9acad61e528420c2690f599d2. So, I’m going back to manual method and the 72f371610c7e8d3f3c34886635aac6fc1bc7a596 hash.

That is sad, I am not able to verify this hash due to the well known reasons. @woolly_sammoth implemented this unique html representation so others can verify it easily on any platform.

Are you sure that you are hashing the whole motionhash block including the opening and closing tags? Furthermore we are not able to click the verify link in the OP because it links to a private page. I had the same issue and @woolly_sammoth said that it has to be changed manually right now:

EDIT: @JordanLee Or maybe post a raw file on github or pastebin. The newlines in the text above don’t show up when quoting it, so copying it will result in many different results on different browsers and operating systems.