Paying Developers in BlockShares in Case we Can't Raise the Remaining Amount Would Allow us to Lock in the Funds Currently Raised & Start Development of B&C Immediately

Edit: The plan has slightly changed. Instead of NuShares going to the devs, BlockShares would. Check this post for a clear understanding of how it would work.

Original Post: I have an alternative solution for raising the rest of the funds necessary to build B&C Exchange. It would allow development to start immediately and it removes the risk of our current pledgers walking away due to a lengthy fundraising process. Please read the whole thing…

So far we’ve raised about half of the needed funds. In my plan, @JordanLee would immediately allow the people that have currently pledged around $100k to send their money in. The $100k raised would then be converted to NuBits. This would allow development on B&C Exchange to begin immediately. This amount of funding should allow development to go on for maybe 3 months. The BlockShare sale and goal to reach $200k would continue to go on as development on B&C starts. Within 1 month, the initial BlockShares will be created and distributed to those who have already made their purchases. This act of distribution will most likely raise confidence in the project in the eyes of interested people, allowing for an easier fundraising and more BlockShare sales, getting us to $200k quicker (The 30 day waiting period to receive shares may have a lot of people hesitant about purchasing them. They would rather receive shares immediately after purchase). The open nature of B&C development with progress reports should further increase confidence and sales. Advertising on Coinmarketcap and Reddit like stated in this thread should also be conducted to expose more people to the sale. I believe @tomjoad can handle this…

After the 30 day waiting period for BlockShare distribution, if no additional funds have been raised we should have enough funds left to develop B&C for another 2 months. If more funds have been raised in addition to the initial $100k, we should have even more development time than this. In the best case scenario, these additional months to fundraise will have netted us the remaining $100k we need to reach $200k and finish development. If however in these 3 months or longer we have not raised enough funding to reach $200k and we end up running out of money, the developers would need to agree to accept the remaining payment in NuShares. So for example the following 2 scenarios could happen…

Scenario 1: Jordan accepts the $100k raised so far and starts development of B&C immediately. Over the next 3 months of development, an additional $100k worth of BlockShares are sold completing the minimum fundraising goal. B&C is finished on schedule with no problems.

Scenario 2: Jordan accepts the $100k raised so far and starts development of B&C immediately. Over the next 3 months of development, $75k worth of BlockShares are sold. The remaining $25,000 would be paid to developers in the form of NuShares to finish development of the exchange.

I believe scenario 1 is more likely to occur. 3 months is a long time to raise additional funds, coupled with advertising of the sale on popular websites, boosted confidence from BlockShare distribution and allowing the public to watch as development moves along. I think this would be enough to net us the additional $100k.

On the chance that an additional $100k is not raised in spite of these things, developers of B&C would need to agree to receive the remaining payment in the form of NuShares. I would rather not hold an auction, due to several factors…

1. It could interfere with NuShare auctions for the purpose of peg maintenance.

2. There is no guarantee that we could sell enough NuShares to finish B&C. If development is 3 months in and it’s looking like we won’t raise enough through BlockShare sales to finish the exchange, a failed NuShare auction could halt B&C development in its tracks. There is also the concern that those who would have bought NuShares in the original auction are now using that same money to purchase BlockShares directly (This is my case), thus they would have no money left over to purchase NuShares in an additional auction. To be fair to the investors who have already pledged $100k, we need to be able to guarantee that the $200k development fee can be fully paid for. A hypothetical auction in the next 2-3 months is not a guarantee, but the development team’s willingness to receive NuShares in the result of a fundraising shortfall is a guarantee.

If it was necessary to pay the development team the remainder in NuShares (which I doubt would happen), then NuShareholders would need to be compensated with a higher percentage of BlockShares, since they would be diluting themselves to make up the fundraising shortfall.

And if it isn’t clear already, this plan would only be possible if the developers of B&C agreed to accept the remainder in NuShares if for some reason the remaining $100k couldn’t fully be raised within the next 3 months or longer. @JordanLee would need to talk to his team to see if they would all accept this deal. As I said, I think it’s highly possible we will surpass our fundraising target within this amount of time, thus the developers of B&C would NOT need to be paid in NuShares. In this case they would be fully paid with the NuBits that have been raised through BlockShare sales. This plan has the benefit of allowing development to start immediately and removes the risk of our current pledgers from walking away with their money due to a lengthy fundraising process. As said in my other thread, these pledgers aren’t going to wait around forever. What do you all think?


This proposal introduces some uncertainty and it could be that some of those who already registered for buying BKS won’t accept this deal.
Doing business sometimes can be risky.
The whole B&C Exchange is no safe bet and I bet most of those who want to invest in BKS are aware of that and take that risk.
I like the hybrid version of this proposal that allows to be adaptable to market conditions - try to sell BKS and if that isn’t possible to a sufficient level, pay the rest with NSR.
Whether that would be direct payment of the developers (in case they accept that, but how to determine the price per NSR?) with the NSR or selling the NSR to pay for the rest of the development is another topic.
As far as I understand, Nu will be released in version 2.0 before B&C Exchange gets forked. By that time NSR grants will be available.

Having spoken with the devs, there is a willingness for about $5,000 per month to be paid in shares, although BlockShares have been discussed, not NuShares. The result is exactly the same as if a dev bought BlockShares with NuBits upfront and were paid in NuBits for work later.

Our expected monthly burn rate is $35,000, so @Sentinelrv’s calculations of three months funding from $100,000 is about right (this is reduced to a $30,000 per month burn rate when the $5,000 worth of BlockShares are subtracted).

The only practical way to use NuShares to fund B&C development is to sell them rather than giving them to developers. While it might work, it is very risky to commit to future NSR auctions to fund B&C development. We don’t know what NuShare demand will look like in several months, but we do know that $137,000 were pledged for NuShares a couple weeks ago, and that most of those funds are currently pledged for BlockShares.

So, it would require $75,000 in NSR sales to meet our funding goal. NuShare holders could be given extra B&C equity for that, but there is a real risk such a course of action will dramatically lower the NSR market cap due to outpacing NuShare demand with NuShare supply. I’m hesitant to recommend that course of action, although I could see it being done for a much smaller amount to get us over the top.

@Sentinel is certainly right that time is against us in the sense that some of those who have pledged to buy BlockShares will move on in the coming weeks and months if the deal is not finalized. Additionally, odds of selected developers being available to start the project later degrades with time. On the other hand, time gives us more opportunity to bring attention to the project and find new investors.


@JordanLee, I think you’re right about the concerns with paying with NuShares. We don’t know what the NuShares price will be within the next several months. This is a risk for pledgers that I had not thought about, and it might be too risky for them, leaving us with less than $100k pledged.

Your talk with the devs about paying with BlockShares is a good alternative though and it wouldn’t require an auction as you already have set prices for Blockshares. As I’ve said, the primary benefit of this is allowing us to collect the $100k payment and start work immediately. That leaves us with 3 months to raise an additional $100k. We just need to do some of the things I’ve listed to encourage sales and confidence in the project…

1. Put up advertisements directing people to the sales thread.
2. Distribute BlockShares to purchasers after 30 days.
3. Make B&C development an open process with progress reports so potential buyers can see what is going on.

I believe 3 months worth of that will gain us an additional $100k, completing our minimum fundraising goal. If it’s not fully funded by that time, I believe it will be close. At the point we run out of funds, you can then start to pay developers in BlockShares until the project is finished. I don’t believe that will be necessary though. 3 months to fundraise is a long time.

I don’t think any development should begin until $200,000 is raised, or until developers agree to accept a certain amount of that figure in shares. We risk not being able to uphold our commitments and wasting investor funds by beginning prematurely. B&C Exchange should only be developed if Jordan Lee and team believe they are in a financial position to deliver the product without additional fundraising.

@tomjoad, of course. I completely agree with you. Sorry if I didn’t make that clear. We have around $100k pledged right now. Let me break down how it would work…

1. Jordan would need to talk to the team and ask if they would be willing to receive the other $100k in BlockShares in case we couldn’t raise the rest.

2. If the team members agree to this, then that means we have the necessary funds for developers to start working on B&C.

3. Just because the team members agree to the possibility of receiving $100k worth in BlockShares doesn’t mean that they are going to receive the full amount in shares. This is because we would continue to sell BlockShares while development is going on for the next 3 months.

4. Developers would work on B&C for the next 3 months consuming the original $100k that was pledged while we continue to fundraise.

5. If by the point the original $100k has been burned through (after 3 months) we haven’t sold anymore BlockShares, then the developers would be paid the next $100k in BlockShares as they’ve already agreed with Jordan to receive them. They would then finish the exchange receiving BlockShares as payment.

6. If however over the first 3 months of development we sell enough BlockShares to raise an additional $100k, then developers would receive no BlockShares as payment. They would instead receive the full $200k in NuBits.

7. As a 3rd scenario, if after the first 3 months of development we’ve been able to sell a partial amount of BlockShares such as another $60k worth, but not the full $100k needed, the developers would get an additional 2 months worth of work done before having to resort to being paid the rest in BlockShares.

So the fundraiser would go on and the developers would receive NuBits as payment until we ran out of them. We already have $100k pledged. The developers would need to agree to the possibility of receiving the other $100k in BlockShares. If they agree to this, then we can start. If not, then we need to find other ways to raise $200k. If they agree to this, then we need to advertise the sale on some popular websites so that we can try to raise another $100k before the end of the first 3 months of development. If we achieve that, then we won’t need to pay the devs any BlockShares and only NuBits. If we can’t raise enough, then the devs would have already agreed to receive the rest in BlockShares, so we’d go with that plan at the end of the 3 months instead. I’m betting we can sell enough though. Does this make sense? Either way, we’ll be able to uphold our commitments.

I agree.
Wouldn’t one solution (for having an assured funding) be to vote for an NBT grant of the required amount?

But instead of paying with the granted NBT¹, the NBT would be converted to NSR tranche by tranche, e.g. on a monthly basis (at current prices) and those NSR would be sold or auctioned.
This way the total amount of funding (in NBT or USD, respectively) would be guaranteed.

This would pose an incalculable risk for the NSR holders, because the amount of dilution would be based on the conversion rate of NBT->NSR.
Another problem is that there is not automatic conversion available.
Each iteration of creating NSR from the NBT would effectively be a NBT burn and NSR grant.
So the idea of granting NBT to finally sell them as NSR would be a kind of framework to bypass the lack of an automatic NBT->NSR conversion.

This creates complexity.

I’m not sure whether this can be a desired way to go.
But as we a re looking for ways how to bring B&C Exchange to life I wanted to share this idea.

¹ using the NBT to pay for development would be creating pressure on the peg, which would then need to be solved by issuing NSR, selling them for NBT to burn them; my proposed solution tries to shortcut that

The reason why I haven’t supported @tomjoad’s NuShares auction idea is because I think it’s too risky of a move to make at this time with our market cap so low, even though the auction would be spread out over 4 months. Look at what @JordanLee stated about the idea just a couple posts above…

I agree with Jordan here that it is too risky. I have a couple reasons…

1. The NuShares market cap is low right now. We should only be holding auctions in order to perform peg maintenance like NuShares for NuBits burning. Holding a NuShares auction for B&C at this time could potentially put us in a dangerous situation with the peg in case another auction is needed in order to burn NuBits.

2. Holding a NuShares auction right now to raise the additional $100k may potentially backfire. For one, current pledgers for BlockShares may find the NuShares auction more desireable and drop out to place bids for NuShares instead. It seems most of these people that originally placed a NuShares bid in the original auction just switched to buying BlockShares. Another auction could just cause them to switch back to NuShares again. This may not help raise any additional money. I personally had a certain amount of money to buy NuShares in the original auction. After it failed, I switched to purchasing BlockShares directly. If a new NuShares auction popped up, I wouldn’t have any extra money to put into that. It’s possible we might raise some additional funds, but I don’t think the demand is going to be there to raise an additional $100k and worse case it may cause our current pledged amount of $96k to drop as people switch to purchase NuShares instead.

The last point is some speculation on my part based on our fundraising progress so far. I personally feel the first point above is more important. I find it a lot less risky to use BlockShares instead of NuShares. I feel the main motivation for wanting to auction off NuShares is so NuShareholders can get more equity in B&C. I don’t think the risks are worth it. Also, if the you think about, it could even be the case that possibly 50% of the current BlockShare pledgers are already NuShareholders, thus Nu will most likely own a lot more than 50% of B&C even without a NuShares auction. If BlockShares need to be paid to developers to finish funding exchange development, then an even higher percentage of NuShareholders will own B&C. I think it’s a definite that NuShareholders will own more than 50% in B&C. The only question is how much more than 50% will we own.

@tomjoad said this in my other thread…

That means it could take an entire month before we see any banners up advertising the B&C sale. In my opinion, we simply don’t have that amount of time to be fooling around. A decision needs to be made soon or else our current investors are going to go somewhere else. There are lots of investment opportunities in the crypto market right now. They don’t need B&C and we shouldn’t assume that they do. I don’t believe our current investors are going to sit on their money for an entire month and wait for us to make advertisements banners that probably should have been ready and utilized the moment the original auction went live.

We’re stuck in between a rock and a hard place right now. I think the solution I’ve laid out here is a totally sane way to go about funding B&C in full if we can’t raise anymore money, as long as the developers agree to it

Since logo creation and banner advertisements may take an entire month to finish, what my proposal does is buy us time, something we currently don’t have. It locks in the current amount pledged to B&C development and it allows us around 3 months to get our ads ready and raise the additional $100k. I can’t imagine that with 3 extra months we can’t raise the rest, but as a precautionary measure, the developers would have already agreed to receive the remaining payment in BlockShares in case we fall short.

The only negative I see about this proposal is that if we weren’t able to raise an additional $100k within the allotted 3 months, the payment in BlockShares would reduce B&C’s level of decentralization by a small amount, but at least these shares would be in the hands of the development team that created the exchange and not people who may dump them on the market. I have yet to hear a single criticism about this plan other than what I just brought up here. If you can think of something, please tell me what I’m missing.

As soon as Bitcointalk comes back online, I want to advertise B&C to other crypto communities as suggested in the main thread before the forum went down, but I would like this proposal to be discussed in case that doesn’t get us any closer to our goal. If it doesn’t, then I feel we should make a move on this before our current investors get antsy. And of course, this could only be done as long as the developers agree to it.