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

As most shareholders have likely noticed by now, centralized exchanges add considerable risk to trustless payment platforms. It is an especially limiting factor for projects like NuBits that have relied on centralized exchanges for providing liquidity. The Nu network saw 99% of its trading volume disappear within a couple weeks in February 2015 after several high-profile exchange defaults. While our 1.00 USD peg has performed admirably, our trading volume has not yet rebounded in the current bear market affecting all cryptocurrencies.

The arrival of a decentralized exchange has been eagerly anticipated within the cryptoasset community. ​In response to this unfulfilled market need, I am proposing that NuShareholders fund the development of a reputation-based decentralized exchange called Blocks & Chains Decentralized Exchange, or B&C Exchange for short. The protocol development that has occurred on NuBits and NuShares code can be extended in novel ways with B&C Exchange, giving us a considerable competitive advantage over outside projects that would attempt a similar design.

Full proposed design details for B&C Exchange are available in this bitcointalk thread, including a 20 page design document This motion and surrounding discussion will focus on the implications of the proposed funding model as they relate to NuShareholder interests.

B&C Exchange will be a powerful tool for significantly lowering NuBit liquidity costs because the risk of exchange default and theft will be much lower than it is with centralized exchanges. For an exchange to be a success, it also needs liquidity. NuShare holders will have a powerful interest in providing a great deal of NuBit liquidity on B&C because of its low cost and the broad overlap in ownership between the two networks. There will be a powerful synergy between the Nu network and B&C Exchange, with Nu bringing liquidity to B&C and B&C lowering costs for Nu.

I am proposing that development of B&C Exchange be funded from the auction of 100,000,000 undistributed NuShares. In contrast to our recent auction to fund peg protection and Nu protocol development, stricter controls would be put in place for this auction, including a reserve price and minimum total amount of funding required for the auction to successfully conclude. I estimate the cost of development for B&C Exchange at 200,000 USD, which corresponds with the proposed 0.0020 USD reserve price for 100,000,000 NSR in the relevant bitcointalk thread.

Shareholders should observe that the bitcointalk pre-announcement thread is largely hypothetical at this point and is fully contingent on NuShareholders passing this motion. If the motion is not passed, other options to fund B&C Exchange that do not include NuShareholders will need to be explored.

​It is very important to point out that my initial promise to shareholders was that no more than 1,000,000,000 NuShares would be sold from the initial undistributed NuShares. A subsequent motion passed by shareholders requires me to burn all remaining undistributed NuShares (of which there are currently approximately​ 187,000,000) within 60 days of the protocol allowing NSR custodial grants, a function which has not yet been implemented. So, this proposal to auction 100,000,000 of those 187,000,000 undistributed NuShares to fund development of B&C Exchange is still well within the authorization provided by shareholders.

I encourage every shareholder to read the B&C Exchange pre-announcement thread and design document to understand the profitability model of the design. B&C Exchange equity holders who own “BlockShares” will be eligible to receive Bitcoin dividends from profits realized during exchange operations. It is a much simpler design than Nu in regards to custodians and dividends because no liquidity support is required to maintain a certain asset price level. It is even simple enough that weekly dividends could very much be a possibility without requiring the complex accounting problems that @KTm and @Jmiller have dealt with admirably. As well, liquidity for NBT/BTC trading pairs could be provided at much cheaper rates than currently offered on expensive centralized exchanges due to the potential reduction in trading fees paid; a potential direct benefit for all NuShareholders.

Auctioning the full 100,000,000 NSR would represent an equity dilution of 12.5% for current NuShareholders. This “funding round” approach to raising capital is common in entrepreneurial ventures in the private sector. While future performance is always uncertain and no promises can be made, my personal opinion is that it is quite possible that the future value of B&C Exchange operations - and by extension BlockShares - would exceed the $200,000 dilution required from NuShareholders to fund development. B&C Exchange directly solves a challenging problem faced by all cryptocurrency users, including the large Bitcoin community.

The following is a draft motion intended to permit myself (Jordan Lee) to operate in the manner described above:

Motion RIPEMD160 hash: 20e1ec16c5527c3873699e702c96a980c22faed9

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

Shareholders authorize Jordan Lee or a selected representative to
auction up to 100,000,000 NuShares from the undistributed NuShares
currently held in Jordan Lee’s possession. The shares will be sold for
the purpose of funding development of a new decentralized exchange
called B&C Exchange, as well as Nu network development if necessary.

​The auction must follow rules as specified in the bitcointalk thread:

Auction goal: 200,000 USD worth of value in the form of various cryptoassetsA maximum of 100 million total NuShares will be auctioned. This
equates to a maximum of 100 million BlockShares once that production
blockchain is launched. Bid deadline will be set for a date two weeks after the motion
passes and the title of the bitcointalk post is updated to [ANN]. No
extensions will take place. Maximum bid size is 30 million NSR to ensure sufficient decentralization.Minimum (reserve) price per share will be 0.0020 USD.Minimum total bid is 1000 USD.Multiple bids from a single user will not be accepted.Bidders will not see other bids.

Should the auction funding target of 200,000 USD not be reached by
the deadline date, no NuShares will be sold under any circumstances.
Those NuShares will remain undistributed to await burning as specified
in prior motion ed7b9fc65dc4e9d9acad61e528420c2690f599d2.

In compensation for funding development through the sale of these
undistributed NuShares, all NuShareholders will be entitled to
automatically receive one (1) BlockShare for every one (1) NuShare held
in their possession at the time the BlockShares production chain is

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

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

Given that this is a non-trivial financial request from shareholders, I encourage any concerns surrounding the language of the proposed B&C Exchange design and funding model to be shared here as soon as possible. If no critical objections are raised I will be advancing this motion for voting within the next two days. It is important that the B&C Exchange design is shared publicly so that NuShareholders can properly assess its potential profitability before voting on this motion. However, now that the design is publicly known, it is important that we begin raising funds soon if we are to succeed in launching our B&C Exchange before a competitor does.

If you have comments, suggestions or questions regarding the motion content or about how this affects Nu or NuShare holders, this thread is the best place to voice those. However, I would like to aggregate the discussion about B&C Exchange in the bitcointalk.org thread. I encourage everyone in this community to join the discussion there.


Does this motion provision the automatic grant of BlockShares to current NuShareholders, whether that they purchase expansionary NuShares or not?

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

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

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

  • 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?

EDIT: Wouldn’t it make sense to buy as many NSR as possible one day before the blockshares blockchain launches and to dump them afterwards while keeping the BKS?

Absolutely. The B&C Exchange blockchain will come into existence as a fork of the Nu blockchain, so share ownership will be exactly duplicated at that point in time. Protocol will prohibit the transfer of NuBits on the B&C Exchange, however.


So you’d be buying the auctioned NSR? Well great, please do! What you do with them later is your perogative, but once the money for BKS is raised I think you’ll want to hold onto them.

I’m more concerned about benefiting btc miners with the distributions. Why not ppc? Great opportunity to get that commodity more dispersed and directly into wallets where it will mint.

The design document states that it is likely that the value of NSR will decline when the blockchains are separated. However, the market cap of NSR should still have been strengthened because B&C Exchange offers the Nu network extremely cheap liquidity. This should make the Nu network more valuable as a result.

That’s the point: I won’t. The auction, and the corresponding pressure on the NSR price, will happen now. The blockchain launch, and therefore the compensation for NuShare holders by providing them with BKS will happen much later.

The 1st round of funding of Nu (1st round of offering of undistributed Nushares) back in sep 2014 was set at 0.0018NBT.

This round of expansionary seed funding of NuShares ownership constitutes, from the point of view of entrepreneurial ventures, a second round of funding.

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.

I believe the Minimum price per share should be first consensually decided.

1 Like

The Bitcoin community is many times larger than all other communities combined. We would be wise to target their existing user-base; the value of a network is directly proportional to the number of users using it (Metcalfe’s Law). That is my understanding of why Bitcoin dividends and a small Bitcoin-redemption fund for BlockShares exists. It’s important to note that BlockShare holders can always raise a motion to introduce Peercoin or any other cryptoasset for dividend distributions if they think it is necessary.


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

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.

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.

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.


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.

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


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.

1 Like

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).

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

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.

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

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.

1 Like

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.

I answered this question here: