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

[crypto_coiner]

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.

Absolutely

[JordanLee]

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.

[JordanLee]

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

72f371610c7e8d3f3c34886635aac6fc1bc7a596

[creon]

I then copied and pasted the resulting reply from the assistant in to my original post.

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.

[JordanLee]

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.

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.

[creon]

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:

Proposal: Small dual-side liquidity for currently uncovered pair

that worked. I have seen an issue in the verify link though. it is trying to point to the raw version of your private message instead of the first post here. I’ll have to think about how best to display that . It worked in my testing as I was logged in as me and could view my own private messages (funny that) for now. the verifcation link should link to https://discuss.nubits.com/raw/1268

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.

[JordanLee]

Sorry for all the hassle and back and forth. I had mistakenly read “Use everything between including the tags.” as “Use everything between the tags.”

So, now it is working as @woolly_sammoth intended. Thanks. ed7b9fc65dc4e9d9acad61e528420c2690f599d2 is my final answer.

[creon]

Thanks, the only remaining problem is that the verify link is not accessible to us. I don’t know how to create a raw page here in the forum and to make it publicly available. @woolly_sammoth did it for me in my case.

So right now we still cannot verify the hash but I am sure everything is fine and that the “verify” link will be updated soon.

[cryptog]

I d like to know about the ratio of liquidity provided by non-shareholder funded LPCs 1) over liquidity provided by shareholder funded LPCs 2) currently, before voting.
2) would be gradually fading away so it would give shareholders some time margin to increase 1) after pasage but I just want to make sure that we would have enough margin.
For example, if the ratio is too small, we should first increase 1) before passing the motion, I think.

[woolly_sammoth]

Morning. Sorry for the confusion. I have edited the ‘verify’ link in the OP to point to the actual raw text so verification can take place.
I still need to come up with an elegant way around this issue. As you can imagine it has slipped down the list of priorities somewhat I recent days.

[cryptog]

Hash verified. [ed7b9fc65dc4e9d9acad61e528420c2690f599d2]

EDIT: added actual hash.

[creon]

hash ed7b9fc65dc4e9d9acad61e528420c2690f599d2 verified.

[masterOfDisaster]

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.

Maybe it’s just because I got the flu and have some temperature, but I stumbled upon a question I couldn’t find an answer myself:
if NuNet goes zero reserve and KTm and Jamie end their operations how exactly are new NBT brought into circulation?
I mean, as the LPC provide liquidity with their own funds and need to buy NBT in the first instance in order to place NBT sell orders, where do they buy them?
Who sells them?
As zero reserve is the goal, NuNet can’t take compensation for handing out the NBT.
How to bring new NBT into circulation?
Sell them for USD, buy NSR with the USD and burn them?
I think I need to delete this post at some later point when the fever has gone.
But for now I have to ask this nonsense; pardon my (hopefully only temporarily experienced) ignorance.

[tomjoad]

if NuNet goes zero reserve and KTm and Jamie end their operations how exactly are new NBT brought into circulation?

Remember there is a difference between Liquidity Provider Custodians and Sell Side Custodians as defined by the white paper.

LPCs are compensated for allowing greater demand variability in NuBits. If aggregate demand for NuBits is 100 NBT per day, variability might mean some days have 97 NBT of demand, and others have 103 NBT. Shareholders compensate LPCs for providing that 3 NBT in demand variability insurance. In this simplified example, LPCs would ideally be providing 5-6 NBT of insurance in that case so that a spike in demand wouldn’t break the peg. Relevant:

The trading bot should automatically and immediately place these 1,000,000 NBT for sale at a price of 1.002 USD (one USD + a 0.2% transaction fee). If this order fills, then the bot should use the USD proceeds to immediately place a buy order for NBT at 0.998 USD. All funds should be continually on order and the LP custodian’s funds should not be depleted by transaction fees.

Sell side custodians sell new NuBits above LPC prices. Relevant:

Using our formula above, the trading bot would place a sell order for 10,000,000 NBT at a price of 1.0021. The reason it should be 1.0021 instead of 1.002 is that we want dual side sell orders to be executed first, so their funds can be returned to providing buy side liquidity.

The profits from the sale of those NuBits can be used for any purpose shareholders see fit - dividends, share buybacks, or development work.

[masterOfDisaster]

Thank you for patiently explaining what I wasn’t able to understand.
I digged in the whitepaper, but stopped a chapter too early as it seems.
Although I made a fool of myself I won’t delete my post for it may serve people who are new to NuNet.
And now I’m really off to bed, trying to get rid of the fever.

[tomjoad]

I think it’s very likely a common question, thank you for bringing it up! Feel better.

[jmiller]

Jordan,

This is a very good plan. Thank you for taking the time to put this together.

Jamie

[JordanLee]

With discussion about @KTm and @jmiller starting liquidity pools, I thought I should clarify that this motion only regards their use of shareholder funds received via custodial grant. It is not intended to prohibit operation of liquidity pools using private funds. I would like this motion to be passed and see @KTm and @jmiller run liquidity pools after its implementation using private funds.

[cryptog]

I still have a couple of questions to be answered before voting for this motion:

Within 60 days after the protocol is altered to permit custodial grants of NuShares

Compared to the expected time of this motion’s passage, when the protocol is expected to be altered?
Before or after this motion’s passage?

---

Jordan Lee must burn all undistributed NuShares.

That means that if the nsr’s auction is performed and successful, 200m nsr would remain and intended to be burnt. What is the purpose of this burning? To increase the unit price of NSR?

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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.

How many NBTs are held currently by Jordan Lee?

Overall, my understanding is that all the shareholders’ money held by KT and JM, whether it is NBT or BTC/PPC will be burnt.
However, after their operations cease, would some shareholder’s fund (non NBT) in custody of Jordan Lee remain (I suppose at Tier4) that could be used to help maintain the peg just in case or this motion’s passage would also imply the end of any use of Tier4 to maintain the peg as it is written below:

Finalized evolution of liquidity operations

Tier 4This liquidity can be provided by custodians not dedicated to liquidity operations. A present example are the proceeds of NuShare sales. They are intended for operational and development expenses, but can be used to support the critical function of liquidity provision as needed. When these funds are used for liquidity, they are exchanged from one type of asset to another, but are still available for their original purpose, such as development. These funds can be promoted to tier 3 in hours and the cost is exchange rate risk.

[crypto_coiner]

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.

Verified and voted