[Passed] Motion to permit NuShare custodians and burning transactions


The discussions about burning a specific amount of currency led to the conclusion that a very simple design to allow currency burning would be preferable at first. So here’s the proposed motion:

Nu developers will implement the following changes:

The custodian system will permit NuShare custodians. The process will be exactly the same as with NuBits, except NuShares will be granted to an NSR address.

A new "burn" RPC command will be added. It will send the given amount to an output script containing only "OP_RETURN". This output is not spendable in the current protocol and no future modification should ever change that.

When a node adds a block to its current chain, all the burned amounts will reduce the total supply of the corresponding unit.
An amount is considered burned when it is sent to the exact output script "OP_RETURN". Amounts sent to an output script with anything else after the "OP_RETURN" opcode will not be considered as burned because some special protocol rules may make them spendable (the parking process for example).

The mint reward will be adjusted according to the total number of NuShares in the network. Specifically, each time the supply of NuShares reaches 50% and 100% of its original base (1 billion), the mint reward will also increase by 50% and 100%. For example, when NSR supply reaches 1.5 billion, the reward should be 60 NSR. At 2 billion, 80 NSR, at 3 billion, 120 NSR, at 4 billion, 160 NSR, and so on.
If the total supply goes below one of these thresholds (because of burning for example) the reward will be reduced accordingly.

Burned NuShares will not be counted in dividend distribution, like any other unrecognized output.

Edit: The motion hash is bda115840291067ba0814032f0c93d4d5900a5cf

Should we put it to the vote or is there anything to change?

Asking for a low minting NuShares minimal
[Passed] Motion to end LPC operations of KTm, Jamie and NSR sales of Jordan
Stability is not the hot button issue of crypto anymore. Governance is
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DR - Distributed reserves
History of the Nu Network (Feedback Please)
How to calculate RIPEMD-160 with openssl?
DR - Distributed reserves
[Passed] Motion to provide seed funding for B&C Exchange - a decentralized exchange built on the Peershares platform
1.1 Nu client beta release

Good motion.

What are the pros and cons of sending NBT to an unspendable address vs. a script containing only OP_RETURN ?

Wouldn’t it be safer knowing that no future protocol change can ever make those NBT spendable?


The protocol cannot know an address is unspendable. So we would have to hard code a special address known to be unspendable and consider all coins sent to this address as a reduction of the supply.

There’s not much differences between the 2 solutions, but I think OP_RETURN is cleaner.

Making them spendable could only be a huge mistake.


I did not read the whole discussion undertaken before the motion, and from the text of the motion alone is not cristal clear to me which unit the new rpc will affect. Is it intended to work with all units?


Actually this was not discussed. I assumed the burning RPC will work on all units because it’s already allowed by the protocol.


The motion sounds simple and good.

I only wonder how it will be prevented selling those NSR that will not be counted in dividend distribution to enter the market. How can they be told apart from “regular” NSR?
I guess I have misunderstood a crucial part of that approach.
That may render the following thoughts useless. We’ll see…

I wonder if it can be used in it’s very simple approach for an idea I voiced in the “Possible solution to custodian loss of value due to BTC exposure” thread (for which I could only think up complex solutions):

This would be in difference to the “Finalized evolution of liquidity operations

a way to keep the value of the NBT in circulation independent from the price level of BTC, PPC, etc.
Crypto currencies that are sold for NBT by custodians (LPC) are sent (in part) to OP_RETURN.

This is only possible if they are exchanged for NBT, because only NBT can be burned.
To prevent that from affecting the liquidity, the way custodians work currently needs to be shifted slightly.
Currently NBT that are issued are put in exchange sell walls.

The future mode of operation would require to create double the NBT that are meant to be put into sell walls.
Half of the NBT would be put into NBTUSD buy walls.
BTC and PPC that are received when selling NBT are traded at BTCUSD and PPCUSD markets and the USD are sold to the NBTUSD buy walls.
Those NBT are in part sent to OP_RETURN, incorporating the value into the Nu network.
This dilutes the NSR, but as it incorporates the value of BTC and PPC into the value of the Nu network; it doesn’t sound as a bad deal, does it?

Liquidity provider and “NSR custodian” could be the same person, but not necessarily need to be.

As the NuShares that are created by that burn process

there needs to be a way to burn the NSR to NBT once the NBT are used again for filling up BTC and PPC walls. You don’t want to sell NSR that don’t receive dividends, right?
One drawback is for sure the exchange fees that need to be paid for all the steps. Exchanges might offer a special rate for that.
It looks like the need for that has already been voiced and at least one exchange (exco.in) quickly offered 0% fees!
That was for a different topic, but it seems that exchange could generally be willing to do that.

I started to confuse myself when I tried to sort it and write it down. I’m almost sure there’s a big flaw so obvious that I can’t find it although it sticks out like a sore thumb for anyone else.
Can you please help me to find it?
Until now I see this as a way to develop Nu into a “low percentage of reserve” currency that is backed almost solely by the assets of Nu, the NSR.
I’m aware that there needs to be more market volume in the NSR markets for that to work frictionless, but at least it appears to be an idea for getting in that direction.

As long as Nu prospers I estimate not only a demand for NBT (which might be a reason to turn NSR back to NBT), but a demand for NSR as well. That demand allows selling the “burn NSR” at acceptable rates.

The standard way to create liquidity (LPC) remains untouched.


Just for the sake of clarifying.
With this motion, shareholders will be able to enforce by protocol the creation of NuShares into a particular address.
Also, burning NuBits or NuShares will be easily done by sending the specific quantity of NuBits or NuShares to an output containing “OP_RETURN” only.
But we would have to trust the custodian to actually burn units.


As JordanLee pointed out in some post I cannot find right now, you can avoid this risk. The burner simply makes a proposal to burn a specific amount of NBT and when the proposal is granted he/she first burns the NBT and then receives the compensation.


The proposed text of the motion is excellent as is, in my opinion. I agree the burn RPC should work with any unit in our network.

I calculate the RIPEMD-160 hash that needs to be entered in the Nu client in the motions dialog as:


Can someone else confirm this please?




This is a very important protocol change, and the fact that both jordan and mike consider it excellent makes me feel very confident.

For the sake of clarity, could you write down a couple of concrete scenarios involving currency burning and its consequent NSR reward issuing? ELI5, just to be sure I am getting it correctly.


If this motion passes I would like to see it implemented in our next protocol change, client version 0.6.0.


Here is one scenario:

Another is the recent NSR bonuses given to new LPCs. With this change there would be no need for human intervention as there has been until now. The protocol itself would award the NSR to these LPCs upon shareholder approval.


Slightly off-topic: I hope that people asking for NSR in proposals realise that it can go up and can go down. No crying allowed when the shares are declining from an earlier peak when it takes a bit longer for your proposal to pass. Ask for NBT and you know what you get as your reward, you can always buy NuShares with them afterwards.


thanks !

So, in a step-by-step order (best-case scenario):

  1. A need to burn currency arises.
  2. One person (Mr Burn) proposes a motion specifying an amount of NuBits to burn and how many NSR he wants to receive in exchange.
  3. Shareholders vote
  4. The motion passes
  5. Mr Burn burns some NuBits using the new RPC (and proves it?)
  6. Mr Burn submit a NSR custodial grant
  7. Shareholders vote
  8. Grant passes, Mr Burn receive its shares.

What if(s) :

There are N persons submitting a proposal in step 2? I can think several different scenarios of things that can happen. I guess we just created a competition/market, where the fastest/best proposal can pass fast(er). Unless N persons get together under a single motion.

I want to invite everybody to reflect about worst-case-scenarios.


I am glad this proposal enables the scenario Jordan described to happen. Were not for this proposal I was going to make a proposal to create a custodian of NSR (from existing undistributed NSRs) just for rewarding LPCs. Without easily rewarding with NSR, LPCs are rewarded with printed nubits which is not good.


So if someone makes a motion to burn x nbts for y nsrs and passes it, and if that person actually burns the x nbts, there is no guarantee that he or she will get the y nsrs although it is highly likely that he or she will according to

The issue that i see is that once the motion is passed, the nsr custodian grant could take a long time to pass and the burner might have to wait a long time but it is probably tolerable since such a need for burning would not arise often times, only under an emergency situation.
However under an emergency situation, we need to act quick…
So perhaps we would need to amend quickly the protocol in order to make automatic the process of burning nbt for nsr by combining the motion with the custodial proposal into one step.


LPCs rewarded with printed NBT may not sound great, but they provide a service to the network. The created NBT are collective assets Jordan mentions in another thread. I also think that we should use NBT by default if we believe in our own stable coin as a token to exchange value. When we think there are too many NBT we can always burn some NBT for NSR. That is where this motion comes in in my opinion.


NBTs in circulation are liabilities, not assets. More printed NBTs just push the burning day (supposed to be emergency meansure) closer.

Paying out NSR is good in that it gives more transparent pain to shareholders. The shareholders will be more disciplined.


NBT can be used to create new value for the network. So it is a kind of potential collective asset when it is created for a purpose, but indeed a liability if it is not used as such. NSR are shares not a primary means to transfer value.

I’m with you with the transparent pain when there is no value for the network created. I don’t see a problem when there is adequate value created.