And my last question: how does B&C exchange make money for Nu?
NSR holders who received block shares would earn dividends from the trading commissions collected by the exchange.
Indirectly, any significant increase in “safer” liquidity available to the Nu network will allow expansion and potential profits for NSR holders in ways that may be less likely if it didn’t exist. (speculative)
Considering it from another angle:
B&C can also be thought of as a diversification of investment. The success of B&C and the profits it represents to blockshare holders is related to, but not dependent on, the success of the Nu network.
Personally, I’m still not sure where I stand on the matter of whether this proposal will be profitable to current NSR holders or not. I’d like to see more public discussion on the technical design of B&C and if it will even work in an optimum scenario. Until that can be determined any discussions about profits are premature.
I was the one raising that accountability question. I noticed Jordan preferred to answer later questions first. I hope we will get an answer about possible follow-up financing (possible relative thresholds to the initial amount raised) and what will happen if the realization of the project fails.
Nevertheless, I am aware of the fact that we have to find a consensus between transparency on the one hand and a certain degree of freedom for our developers on the other hand so that both sides are willing to take the risk. Though, we have to take into account that we investors are asked to transfer quite some money to some online pseudonyms in exchange for their promises. I don’t doubt that you are planning to deliver, but control measures will help to minimize incentives that might lead to some problems well known from the field of economics: moral hazard and alike.
This is a really well thought out idea and creative use of Nu. I’ve said before that I think becoming a popular base currency in crypto trading will be the first step towards mainstream adoption of NuBits, and this appears to place us in a position to force that issue, if successful. I am really conservative about dilution and do not like using NSR in this fashion. I’ve also said I’d rather only use it in emergencies to defend the peg, but perhaps leaving a little bit of wiggle room, and I still feel this way.
But NuBits and decentralized exchanges just seem to be made for each other, and I would probably invest if a standalone project just like it came along. I can’t really do anything but what I think is a good idea and support it, though my instinct and gut tells me to be concerned. I think it is also worth mentioning that any major access of tier 6 liquidity (NSR sales) between this funding round and the launch of the B&C blockchain may end in bad PR as far as any new members of the community goes.
Reading the design document in greater details reveals more questions from my side:
The “Distribution to Bitcoin holders” section is missing any constraint on how long the BTC have to exist on this particular address, so the same BTC can be reused to get more BKS.
The signer selection method does not take the signer’s stake into account. This is fine, as long as shareholders are fully aware of that and don’t just pick signers based on reputation. Otherwise we will soon have 8 reputed signers who are the same person. I think the signer’s stake in BKS should always be visible in the client and serve as one of the most important reasons to select a signer or not.
From the design doc:
When a reputed signer posts such a message, he is promising to keep the addresses listed in a
wallet connected to the blockchain client referenced, which can in turn be contacted by his B&C
Exchange client at all times in the future, except if he transfers the keys to another reputed
signer as described in the Signer Incentives section."
Question: Why would he? Is there any incentive to transfer the keys to another signer? Is there a method in place which detects offline signers and automatically transfers the addresses to another signer?
How can new signers gain reputation if only the most reputed signers are selected? It will require the demand to rise above the expected value by the shareholders such that the reputed signers won’t have a free address slot anymore, correct?
The requirement to lock a certain amount of coins as a signer could tackle both issues.
Last but not least: Reputation voting and scoring
absolute value of the number beside the share addresses indicate how likely (relatively) each is
for inclusion in the block
This is very much the frequency based voting also proposed here in Nu. Is it planned to extend the whole voting mechanism (motions/grants) to this frequency based model? Or is there a reason why Nu motions and grants use a much simpler and less effective voting structure?
I don’t see any reason that the pools would have problems integrating with B&C. Like any exchange, new wrappers would need to be written, but absent of unexpected technical challenges due to the exotic architecture of B&C, this should be straight forward.
That I can only decide if B & C works and is ready.
The devil is in the details.
With all the money you could also buy bter.com (pay their debts) and immediately earn money.
Why not buy a company that already makes profits now?
We could also make something like the Altcoin Gemz http://getgems.org/. (Money through advertising) Maybe they want to work with nubits. We could swap the Gemz by Nubits.
If B & C exists, we should buy it. But not before.
If you can suggest a way to mitigate that concern, I’m sure it would be considered. There’s no way that I can think of to prevent it from happening if people leave their NSR in an exchange’s address before the snapshot. To the protocol an address is an address.
We can look for inspiration in how the BitShares community has handled snapshots of the blockchain in the past with regards to making sure that individuals received their proper asset if they had funds stored on exchanges.
Sorry if this point wasn’t included in the design doc (I thought it was). In any case, it has been discussed and finalized in my own mind that the Bitcoin blockchain would be examined as of a certain block height, resolving the concern raised here.
I will add that shareholders will prefer signers that have pledged a security deposit (in Blockshares), which is discussed in the design doc.
It is expected that the security deposit reputed signers put up will not be released until the keys are verified to have been transferred.
The consumption of a signer’s public keys available as components of multisig deposit address does not occur until they are a top rated signer. They become top rated not by signing but rather by making a public appeal for upvoting. They have to make a convincing case that they should be trusted first.
I hope this answers your question but I am not entirely sure I understand it.
The difference between voting in Nu for custodial grants and motions and voting for reputation in B&C is that it is presumed Nu shareholders can vote for all the grants and motions they want to support in every block. In contrast, it assumed that B&C shareholders will wish to upvote and downvote more addresses than can be practically referenced in each block. The mechanism for selecting reputation votes for inclusion is designed to use minimal blockchain space while still including the complete set of information over a series of minted blocks.
Thanks for answering the questions, this all makes a lot of sense.
But there must be some kind of fallback solution, right? I mean we cannot rule out dramatic circumstances which won’t allow the signer to pass over the key, for instance due to a hardware failure or the complete disappearance of the signer for whatever reason (including jail or even death). So will those accounts never be passed to another signer in those cases?
Regarding the security deposit, I agree that this would be a nice solution. With CHECKLOCKTIMEVERIFY this could even be done in a trustless way. Actually I would probably even be fine with signatures, since it is only about verifying that its most likely not the same person. A deposit however clearly creates an incentive for the signer to be honest which goes beyond the signing reward, so its certainly better.
The signer selection could also be modeled as staking process to completely remove the shareholder interaction but this is probably a bit too experimental.
Of course there is a chance that funds will be exhausted and the project will not be finished. If that occurs, investors will have to decide whether to provide additional funding or drop the project. I don’t think either of those outcomes are likely, however. My design document is very complete and no one has even raised a concern or flaw in the design (yet) that wasn’t already considered and addressed. Soon someone will, but we will just adapt the design. I understand you would like me to guarantee it will be delivered on time and on budget, but that just isn’t possible. Anyone who makes such a promise for a project of this kind is dishonest.
Developing a reliable decentralized exchange is a groundbreaking technical feat. So there is risk. However, I regard Nu as a comparable groundbreaking technical accomplishment which was completed 50% under budget in USD terms and delivered in a reasonable amount of time. I am the ideal architect to deliver this novel solution and the Nu development team is best qualified to implement it given our past accomplishments.
Thanks for your answers. Keep in mind that transparent financial reporting with regards to the management’s compensation is very often a core element of decent corporate governance and that counts for managers who are not anonymous. I doubt it’s the opposite for anonymous managers
I am as much for transparency as possible. The reason for that is that we as the NU network could build a community that is willing to fund project over project more than any other crypto community out there in the future and add significant value to it. The problem is not a follow-up financing for the decentralized exchange, it is rather the feeling whether such a request is justified or not. At least that counts for me. If we are stuck with development at some point and there is also a lack of transparency, such a situation can snowball really hard and hit the whole NU community in an irreversible bad manner.
Last but not least I have to say that although you are anonymous, I am aware of the fact that the pseudonym Jordan Lee is worth something in the crypto environment and that you have quite some incentive to give your name another boost. I am happy to help with that by providing some money as long as you keep us posted in a reasonable manner.
I still need to find the time to read all of this, but I have a couple more questions.
Since B&C will be using the Peershares platform, will Peershares need to be updated first to include features from Nu like motion voting, data feeds and share creation and burning, or is this not necessary? Previously Teehe was going to do this for us, but it was never fully funded, so it never happened.
Since the blockshares will go to everyone who owns NuShares, the Nu shareholders will basically own B&C and decide its future. Since B&C will introduce profit into our network, do you believe that profit would be enough to sustain Nu’s contractors permanently? I’m imagining Nu/B&C shareholders passing a motion where a certain percentage of the profit is distributed to shareholders, but the majority of profit is saved and reinvested in B&C and Nu. If the profit was great enough, it could possibly cover the monthly fees of our contractors without us needing to sell more NuShares in order to afford their services. What are your thoughts on this?
B&C will use a fork of the Nu repository, not the Peershares repository. That way all of the voting mechanics and two token functionality is already in place. It will still need extensive customization but it’s a better starting point than from scratch.
Edit: Here’s the comment from the white paper:
In addition to the B&C Exchange solution being a fork of the NuBit code repository, the Nu production blockchain will also be forked.