[Passed] Motion to provide seed funding for B&C Exchange - a decentralized exchange built on the Peershares platform

[JordanLee]

• Will the Blockshare and Nushare supply always be tied to each other?

No. Once the fork occurs, they will forever be independent of one another. Transfers and custodial grants will only effect one network.

• (related) Have you considered auctioning block shares (without selling NSR) as additional funding source?

Yes. One issue with this is that we wouldn’t be able to give any blockchain assets at the conclusion of the auction until B&C is complete. It is also possible to fork the Nu chain now to create a B&C chain, but then we would have to do all our development on a live production chain. That would require more resources and place the production system at unnecessary risk.

• Any particular reason why BTC was chosen as dividend currency? Couldn’t we even use NBT in this case?

Using NBT as a dividend currency is practical from a technical standpoint and I agree there are advantages to using a stable currency for dividends. However, the success of cryptoassets has much to do with the number of people using the network. The selection of Bitcoins as the dividend medium is the optimal choice for encouraging broad network participation.

• What are the technical limitations of this decentralized exchange model? How fast is it? If I understand correctly, each trade depends on several signatures of a blockshare owner. So is the 1 minute blocktime (i guess) the absolute lower bound for a trade to execute?

How many confirmations an order must have is a network wide variable configurable through shareholder voting. 3 confirmations (typically less than three minutes) will be a likely shareholder choice.

Trades do depend on reputed signers signing multisig transfers to settle. This will take seconds. Reputed signers are not necessarily shareholders, although they will likely place a security deposit of BlockShares.

[tomjoad]

Price per share at this second round of offering should be well above the price of the first, or at a price that satisfies first round shareholders.

The primary difference is that in the 2014 distribution a set (fixed) price was determined; in this proposal, only a minimum (reserve) price is suggested to ensure NuShares aren’t sold for well below their market value.

Shareholders should not be looking at the reserve price as a heuristic for the value of the project. Rather, they should be asking themselves if the required NSR supply adjustment (roughly 12.5% for adding 100,000,000 NSR into circulation) will be worth more or less than the future value of the BlockShares network. As long as a belief exists that the BlockShares network will be worth more than that, it makes business sense to vote for this proposal.

@Sentinelrv made a post the other day suggesting that the Nu network needs to eventually determine ways of monetizing its design, and in my opinion the design of B&C Exchange is a clever re-purposing of the variable-supply design of Nu.

[desrever]

I will be supporting the motion with all of the minting power I can find

[tomjoad]

It would be great if our community takes the time to post on the bitcointalk announcement too.

The BitShares community has found the announcement, and while I hope they are constructive in their comments, history tells us that we may be a target for them.

[creon]

BlockCredits (BKC) are the transactional tokens used on B&C Exchange to pay for trades. It is expected they will be sold for 1.00 USD per BKC by elected custodians.

So if I want to trade on the exchange, I first need to buy BKC which I then can consume in my trades, correct?

Now the other side: Someone applies for a custodianship on the exchange. BKS shareholder approve the proposal and grant the custodian 1000 BKC. The custodian now sells those BKC (in a centralized way?) externally to the exchange and passes the revenues back to the shareholders in form of BTC. Correct?

Is there an incentive to act as a signer? Will they get compensated (through a part of the tx fee in BKC) for their availability and reputation?

I can also continue posting on BCT if you think that it is better there. (Cross-posted there).

[crypto_coiner]

Again, If this motion passes and sells additional 100NSR at say, 0.002NBT each, I am afraid that could be a fraud against common venture capital investment rules.

Also, let us remind ourselves the rules regarding the use and sale of undistributed NuShares (sep’14).
In particular:

The first 700 million undistributed NuShares will be sold for a total of not more than 1.5 million NBT. This includes seed funding received last January.

The last 300 million undistributed NuShares (plus a small amount that were minted during network bootstrapping) will be sold for a total of not more than 5 million NBT.

Which suggests/rules that rounds above the 1st round should be priced at: 0.0166NBT (which is 8.33 times pricier than the current loose minimum non fixed reserve price

Source: Undistributed NuShares

[Ben]

Which suggests/rules that rounds above the 1st round should be priced at: 0.0166NBT (which is 8.33 times pricier than the current loose minimum non fixed reserve price

Where do you derive that price point from? I see the stipulation “no more than”, but do not see a requirement to sell for “no less than” in the text of your citation.

[Yurizhai]

What a wonderful post to wake up to. Can’t wait to see this in action!

[Chronos]

Jordan, what are your thoughts for a potential “long con” attack of the B&C network, where a single entity controls multiple signers that are well-behaved until a critical trust is reached? See http://en.wikipedia.org/wiki/Confidence_trick.

[cryptog]

As an early shareholder of Nu and a business partner of Nu, I welcome such a proposal.
Decentralized crypto exchange is a natural step towards complete decentralization of the financial world.
I have yet to read the full proposal on bitcointalk and to evaluate to which extent it would contribute substantially to the strengthening of Nu but I have immediately 2 questions:

• To which extent such a proposal could constitute a second round of funding of Nu? In others, at that stage, more than 6 months later after the release of Nu, would such dilution increase the valuation of Nu (I hope so!) while at the same time giving already some returns to round 1 investors ( the investors that invested back in September/October 2014 in Nu)?

• To which extent such a proposal would help the development of Nu itself directly? Please see my earlier post entitle “a question about the future of Nu development from the end of next month”.
  I understand that the creation of cheap liquidity is key to Nu, which is what is intended with that proposal but for example, would the proceeds of that auction be used for paying the development of NuBot or the marketing activity of Nu, which could appear at first glance not linked directly to B&C Exchange.? Would the official team behind B&C exchange be the same team behind Nu Team ?

• Would the new shareholders of those 100m NSRs be subject to the same background check that the early investors? We must be very careful about that. I would not want those 100m NSR be in the hands of speculators…

Thank you.

EDIT: typo.

[JordanLee]

Jordan, what are your thoughts for a potential “long con” attack of the B&C network, where a single entity controls multiple signers that are well-behaved until a critical trust is reached? See http://en.wikipedia.org/wiki/Confidence_trick.

I answered this question here:
https://bitcointalk.org/index.php?topic=1033773.msg11156623#msg11156623

[Cybnate]

I’m welcoming this proposal mainly for the reason that we need to solve one of the last remaining central components of the crypto economy. Being able to exchange freely will remove a lot of barriers and risk for the ‘consurmers’ and with that a major step towards further adoption.

My main non-technical concern is the choice for BTC over NBT for dividends. As a NuShareholders this choice begs the question why our own stable currency is not good enough. The explanation that we need to attract BTC holders is an understandable one, but doesn’t remove all the concerns. When even the network designers/developers of NBT don’t choose for NuBits as a currency who would? It is like Microsoft launching a new product and giving away Apple Mac computers to their employees to please Apple buyers and hope they buy the Microsoft product.

Removing the dividends from the NBT economy doesn’t help to improve its liquidity and with that the success of the network in the long term. I hope that the choice for BTC will attract a lot of new B&C shareholders in compensation, but it feels still unsettling to me as a NuShareholder.

[cryptog]

I understand that you can exchange your nsr for b & c exchange shares at parity but could you exchange b & c exchange shares for nsr?
A similar question would be: what kind of voting rights would b& c exchange share ownership give? Could you vote for parking rates with b & c exchange share for example?
Thank you.

[Chronos]

I understand that you can exchange your nsr for b & c exchange shares at parity

That’s actually not quite true. Instead, under this proposal, all holders of NSR will receive free B&C shares at parity, while keeping their NSR.

[tomjoad]

@Chronos beat me to your first question.

A similar question would be: what kind of voting rights would b& c exchange share ownership give? Could you vote for parking rates with b & c exchange share for example?

The “Summary of Architecture” section gives a detailed view, but here’s a relevant quote from it:

The B&C Exchange code base will be a fork of the Nu 2.0 code base. The only features of Nu that will be disabled completely are park rate voting and parking.

As a fork of the Nu network, nothing that occurs on the BlockShares network will impact the Nu network. They are completely independent once forked.

[Ben]

I understand that you can exchange your nsr for b & c exchange shares at parity but could you exchange b & c exchange shares for nsr?

You aren’t exchanging your NSR for BKS, you are being given BKS in the same proportion out of the whole as the NSR that you hold at the time of that the blockchain snapshot is taken.

Presumably there could be some market that develops on the exchange in the future that would allow an BKS/NSR pair, just like any other crypto/NSR pair.

A similar question would be: what kind of voting rights would b& c exchange share ownership give? Could you vote for parking rates with b & c exchange share for example?

BKS shareholders would vote on different motions, contribute to the upvote/downvote for a signing node’s reputation, or cast votes for BKC grants to be returned to shareholders as dividends.

The B&C exchange will have no concept of parking, so park rates won’t be voted for.

[JordanLee]

As an early shareholder of Nu and a business partner of Nu, I welcome such a proposal.
Decentralized crypto exchange is a natural step towards complete decentralization of the financial world.
I have yet to read the full proposal on bitcointalk and to evaluate to which extent it would contribute substantially to the strengthening of Nu but I have immediately 2 questions:

• To which extent such a proposal could constitute a second round of funding of Nu? In others, at that sage, more than 6 months later after the release of Nu, would such dilution increase the valuation of Nu (I hope so!) while at the same time giving already some returns to round 1 investors ( the investors that invested back in September/October 2014 in Nu)?

• To which extent such a proposal would help the development of Nu itself directly? Please see my earlier post entitle “a question about the future of Nu development from the end of next month”.
  I understand that the creation of cheap liquidity is key to Nu, which is what is intended with that proposal but for example, would the proceeds of that auction be used for paying the development of NuBot or the marketing activity of Nu, which could appear at first glance not linked directly to B&C Exchange. Would the official team behind B&C exchange be the same team behind Nu Team ?

• Would the new shareholders of those 100m NSRs be subject to the same background check that the early investors? We must be very careful about that. I would not want those 100m NSR be in the hands of speculators…

Thank you.

This was answered here:
https://bitcointalk.org/index.php?topic=1033773.msg11157022#msg11157022

[crypto_coiner]

Quotient 5/300.

[Joe]

I’m a little confused why the decentralized exchange can’t be added on top of the NuShares blockchain. Parking could be redefined to funds for use as liquidity. The blockchain itself could buy coins on the exchange and automatically distribute them to shareholder with no need to trust a 3rd party. The possibilities are far greater imo.

[Sentinelrv]

I’ve been at work all day and haven’t had a chance to read any of this, but I just wanted to post that I think we should give Jordan the nickname “The Machine” because I’ve never seen somebody that works and gets as much accomplished as him.