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

[Sentinelrv]

I just wanted to say that this thread is a testament to Jordan’s design of Nu. It just amazes me that we can have intense discussions like these and arrive at a conclusion and move forward through voting. I feel as if over the last couple months, shareholders are starting to become more engaged in the process and take responsibility for the future of the network. These are exciting times indeed!

[cryptog]

As I tried to express here, I think the main issue with the liquidity provision activity is to make it predictably profitable.
Right now, even with pools (nupool, nulagoon), it seems that not so many people are willing to participate.
Of course nupool is capped but nulagoon is not.
I believe the main reason for that is because right now providing liquidity is not profitable.
Yes you get a reward from the pool, but whether or not you would end up in the black, depends on the volatility of btc/usd and that is a complete unknown.

If we are able to make liquidity provision a predictably profitable business, then there is no doubt that this market will get very big, providing nu with a huge liquidity (on both sides).

The question here is whether or not B&C would help substantially Nu make liquidity provision a predictably profitable business.
I am not sure about the answer.
It seems that Jordan Lee focuses on the fact that this exchange would reduce the costs of liquidity provision from Nu’s perspective but this not really the point.
The point, imho, is to make it a profitable business from lpc’s perspective.
So I would argue that decreasing the rewards (making it less costly from Nu’s perspective) to lpcs would attract even less liquidity…

Which makes me want to suggest that the the trade fees should go to the lpcs, not Nu shareholders.
That way, there might be a way to attract plenty of liquidity.

Decentralization would make the exchange much more robust to thefts. In this regard, lpcs would be much more willing to deposit money than with centralized exchange but decentralization in itself would not make liquidity provision a profitable business.

What do you think?

I am personally concerned.

[tomjoad]

Which makes me want to suggest that the the trade fees should go to the lpcs, not Nu shareholders.That way, there might be a way to attract plenty of liquidity.

Doing so would make BlockShares worth much less though, as there would be no future revenue for its shareholders. You could accomplish the same functional result by allowing LPCs to have a small spread on trades to generate a profit.

[cryptog]

Doing so would make BlockShares worth much less though, as there would be no future revenue for its shareholders

Right. I forgot about that. What about keeping only half of the trade frees then?

You could accomplish the same functional result by allowing LPCs to have a small spread on trades to generate a profit.

I would like to do so but so far no lpcs are doing so (as far as I know) since pools are limiting tightly the extent of the spread. As for lpcs that do not use a pool, what is the situation? What don’t we encourage them to increase the spread for still a decent grant (but lower than if the spread was at a minimum)?

[crypto_coiner]

I feel NuBits is the answer to the fiat problem decex (and unregulated exchanges) will face

That suggests BlockShareholders could have an incentive to see Nu succeed.

and becoming the market choice for a base pair in crypto trading will propel us to mainstream real world adoption.

That suggests NuShareholders could have an incentive to see BCex succeed.

If we were asking about how valuable B&C will be to Nu, I feel the amount is staggering

How staggering is this amount? I think nushareholders deserve some figures

[crypto_coiner]

@GreatScott mentioned Mercury - Thanks for mentioning it.
This is a (the 1st?) decentralized cryptocurrency exchange.
Let’s use it as a benchmark to compare it with BCex.

---

Description:

Trades happen entirely on the blockchain, with no risk of the exchange getting hacked or greedy exchange operators running off with your money. Your private keys are only stored on your computer.
Atomic Swap Protocol:
Mercury uses the cross-chain atomic swap protocol to facilitate fully trustless peer-to-peer trading, no trusted third party required.

But:

When making trades, your wallet will use the Mercury Order Book service to find bid or ask offers opened by other traders. This service is centralized, but it is never involved in the actual transfer of funds so it doesn’t require any trust.

---

How is BCex fundamentally different? (in terms of security & scalability for example)

[mhps]

Nu suffers from not having a good nbt/USD pair to support. Doesn’t B&C solve that problem? Isn’t that good for Nu long term?

I would love for this to be the case. What I can’t yet figure out is how a fiat gateway could be integrated without jumping through a large number of technical and regulatory hoops.

Although @GreatScott and @creon have mentioned this, I want to hammer the idea in once more: creating interface wrappers to the top three payment processors according to Method 3 described here would allow most USD liquidity created by payment processors
to be accessible to Nubits traders.

[lg15x]

Thank you.

[mhps]

For those who worry about losing control of B&C eventually by Nu shareholders, think about it this way: what if the project being proposed does not use blockchain, so there is ZERO possibility of using Nushare blockchain to control the operation of the business directly. All else being the same, are you going to fret about not being able to control with Nu blockchain?

[Joe]

Yes, because it just makes sense to build it into Nu. Nu will eventually have many currencies and these currencies will always need a safe place to trade. Building the exchange directly into Nu provides a permanent home for trading and a permanent revenue stream for shareholders. These are benefits that cannot be done any other way.

The stronger Nushares are the easier it will be to enforce the peg (or many pegs). Building the exchange directly into Nu will add tremendous value and that will translate into a stronger and healthier Nushares marketcap.

[cryptog]

I think the potential benefits that B&C could bring to Nu shareholders outweigh the drawbacks, even under the financial conditions proposed.

Potential benefits:

• making liquidity provision a profitable activity
• increasing liquidity drastically
• bringing a source of revenues for nu shareholders

B&C is likely to stay owned by Nu for a large part for a long time, I feel.
Also, I feel using a separate blockchain is simple and makes sense.

Drawbacks:

• dilution of 12.5%
• 100 m NSR possibly given to second waves investors at a similar price as early investors (although it is possible that the auction avg price goes beyond say 0.3 a share because the auctions sells two ownership at the same time, which could cause some overexcitement)
• putting pressure on the buy side of Nu later on this year, since those 200k raised would be converted to NuBits, and later on converted back possibly to BTCs by contractors.

Overall, I feel that a stable crypto-currency depends on its liquidity provision.
Liquidity provision depends on whether or not LPCs think such an activity is profitable 1) and if they are fine with depositing money into exchanges 2).
Decentralized exchanges are intended to be much more secure 2) than centralized exchanges.
So we can expect much more depositors.
Also, decentralized exchanges are intended to be very cheap to maintain (they live on a blockchain, except for the Web interface that is served by a centralized server). Therefore, LPCs would be able to set a decent spread that goes beyond the exchange fees so that they can profit a bit from each trade while at the same time keeping the spread cheap enough so that traders are happy trading their liquidity.

Therefore, I will be voting for this motion very soon if nothing changes my mind in between.

This is only my opinion.

Tks for reading.

[MaVo]

B&C is likely to stay owned by Nu for a large part for a long time, I feel.Also, I feel using a separate blockchain is simple and makes sense.

I totally agree. The scenario that the current holders of Nushares (which will still be at least 87.5% after the dilution) are going to sell major parts of their Nushares anytime soon is highly unlikely to me. As I really see a lot of potential in the idea of the DecEx, I will definitely not sell for quite some time.
If the exchange becomes a success and Nushares increases significantly in price as well, I will for sure consider very well whether to sell my Nushares or not because I would be afraid to not get a chance to buy back cheap enough at a later point in time.

As for the drawbacks you mentioned: dilution is a term that is understood as something negative per se. I am not sure whether the common characteristics of dilution really equally apply here. We are still in a very new and exciting field and we are talking a lot about attracting new people to cryptocurrency and giving them a reasonable chance to enter promising projects like this. On the one hand, we all want to protect our investments. On the other hand, we all have to think one step further and maybe dismiss ideas that we might intuitively come up with. Giving other people a chance to join our baby and thereby increase competition for the auctioned shares might be something we don’t like. But the opposite should be the case. Every new member joining the community will give the network value. That is why I actually don’t like that there is a maximum of 30 million per bid. It should be less in my opinion unless certain circumstances are given.
We should definitely put some effort into marketing the auction (in case the motion goes through) to the public as good as possible. If we can help increase competition significantly, those people who won’t be successful during the auction might still try to get shares on the market.

Not sure if that is possible but what about locking a percentage of B&C shares for some time until they can be sold (12 month or so) in order to keep the majority during the most important early phase of the exchange? If after that the majority is still desperately trying to get rid of all their shares, then there is probably a reason for that anyway…

[crypto_coiner]

That is why I actually don’t like that there is a maximum of 30 million per bid.

I tend to agree.
Btw, how does the team come to this 30m figure?

[Nagalim]

30mil is only 3% of the total coinage. Maybe 1% would be better, but I’m not super worried about this personally. I would vote for a 10 mil cap amendment, but I wouldn’t particularly rally behind it.

[tomjoad]

We’ve had some new questions asked on page 2 of the pre-announcement thread on Bitcointalk: https://bitcointalk.org/index.php?topic=1033773.20 .

If you can, please help us keep this thread bumped if you have questions that can be asked there. Bitcointalk has a large audience that will be interested in the project if we can generate enough awareness.

[JordanLee]

• putting pressure on the buy side of Nu later on this year, since those 200k raised would be converted to NuBits, and later on converted back possibly to BTCs by contractors.

As development funds are converted to NuBits this will place liquidity on the buy side. It will be placed in tier 4 as needed to balance the liquidity walls. Later, it will be moved up to tier 1 as needed as NuBits are paid to contractors.

[JordanLee]

how does the team come to this 30m figure?

I agree that all other things being equal, more distributed ownership is better. The issue is that the lower the limit is, the less money the auction will yield. Perhaps an amendment to this motion could be advanced that says something like:

If a bid size limit of a does not reduce the money raised by more than b, it shall be imposed.

Several such conditional limitations like this could be associated with different maximum bid sizes, such as 20 million, 10 million and 5 million. The question is, how much money should we leave on the table in exchange for a better distribution?

[creon]

What if we fund the first part of the development (until blockchain launch) using an NSR grant and the second part using a BKS grant?

If really all BKS shareholders are the same people as the NSR shareholders after the BKS launch, then it won’t be any different.

NuBits are paid to contractors

This is a very important detail. So its not sure that the 35-50k per month will be required on the buy side?

I’d still like to see B&C partly to be funded through a BKS grant. I still would be in favor to burn your proposed amount of NSR, but then to use the additional development capacity for Nu related development efforts.

[Cybnate]

After having absorbed and thought about all the discussion and arguments I’ve decided to add this motion to my datafeed.
I’ve enjoyed the discussion and I had to adjust my opinion a number of times in some areas.

My conclusion:
As said earlier I’m in the camp who would have liked to see a single set of Shares for both Nu and B&C. I think it is not a great thing when you weigh up:

• the dilution of attention across inevitably two different communities,
• the dilution of NuShares and
• the risk that B&C might distance itself from Nu in the mid to long term and with that removing an excellent opportunity for another stream of income.

On the other hand:

• I see an opportunity and a vision which is to good to let go as I haven’t seen any concrete alternatives for potential investments to improve the Nu business model (in this case lowering the costs) besides the one I’ve issued myself (Android wallet). At the end of the day the others had to do with maintaining the peg for liquidity or assuring listing on exchanges. My apologies if I missed a motion worth pursuing for the Shareholders.
• A chance to have a stake in an exciting an innovative development which I think is crucial for the robustness of the crypto ecosystem
• Continuation of a good and proven development/test team with Jordan in the lead and with that a better chance of further developments on NuNet then when the team would fall apart or focus on unrelated activities.
• Improving the time and reducing the risk to deliver by forking Nu

So in the balance I have come to the conclusion that it is worth voting for.

BTW I would back a motion to reduce the maximum from 30 million to 15 million with terms as Jordan raised in his post to improve decentralisation of ownership, but won’t be leading it.

@Creon, with the strong focus on the Bitcoin community there will be new investors who don’t own Nu. Given the difficulties with the previous auction I wouldn’t be so sure that we would be able to raise this amount within our own community

[mhps]

Building the exchange directly into Nu provides a permanent home for trading and a permanent revenue stream for shareholders.

You seem to assume Nu is safer than B&C, and current shareholders will own Nu forever. Neither is necessarily true. If BTC has an epic crash, to save the peg Nushare owner could be forced to print hundreds millions NSR to pay high fees for the loss of NBT/BTC LPCs. The NSR ownership will be full of new members, mostly speculators. There are ways to change the peg operations to avoid this scenario but generally, as long as new Nushares will be created to sell on the market, there is no guarantee that the current Nushares owners will be among majority even for Nu.