Three roles that need to be filled by shareholders

I think a white paper would serve multiple purposes. It will document lessons learned, where we are now, where we plan to go, and provide a historic position that is accurate for future changes and growth.

Hey @KSylvan,

welcome aboard.

Would you mind introducing yourself here?

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Other shareholders should speak up if they have preferences, otherwise I will hash my proposed seven members above. This is not an issue we can afford to be apathetic on.

Before you hash, a couple of questions about group 1)'s duties that you are envisioning, if possible,

  • Would it be possible to only take care of Tier 6 liquidity ? (already asked)
  • What does it require to be a member of a multi-sig group ? (saving a private key only would be enough)
  • What would be the duration of such a duty that comes with being a member of such a group? (I am willing to do it for free for say a 1 month or 2 but maybe not 6 months.)


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Right. Many questions depending on the details which few seem to care about. I asked questions in the #2 post

There even isn’t a sketchy answer before the shareholders are asked to cast votes?


I think your questions need to be answered first.

And I think we can learn from @JordanLee here.
He provided the NSR holders with an incentive to fill this role by requesting a compensation for that.
I consider this very fair. It’s a responsibility and might afford some effort to fulfill this role.

If the scope of the role isn’t even clear, I need to provide an incentive to make this role more clear by adjusting my (potential) commitment.

I’m willing to fulfill the role of being a member in the buy side custodian group for 100,000 NSR per month if

  • no additional information that define the role of a buy side custodian and
  • a “how to fulfill the role” as well as
  • a tool set to transfer funds from the multi signature address to a destination address conveniently and reliably

is included in the motion on which the buy-side custodianship will be based on.

This value is intentionally high, because it should serve as incentive to work on such a motion and define the role.

Comparing it with @JordanLee’s offer for the first month of his custodianship in case no buy side custodians replace his/her role:

As the buy-side custodians would not only be responsible for the $80,000 in tier 4, but for up to 40M NSR as well (tier 6), this makes a total amount of give or take $150,000 (depending on the NSR amount and value).

0.5% of $80,000 equals to $400.
If the 0.5% apply to the tier 6 as well, this is another $350, totaling to $750.

So in the first month (November) it would be even more expensive to transfer the control to 7 buy side custodians if each of them charged 100,000 NSR (approx. $200).
In the second month this model could already be cheaper than @JordanLee’s offer (if the 0.5% apply to tier 6 as well…).

It doesn’t need to be that expensive!
But for that some rules need to be defined.
In addition to what @mhps already requested, I’d like to know whether it’s possible to define a destination address to send the funds to in advance - in order to prepare a script for the multi signature transaction.

I’m not always close to a computer to do that from there.
I might need to remote login to one of my machines to do my part of a multi signature transaction (btw. - something I’ve never done before!). I wouldn’t like to anything but execute a prepared a script in that case.

The custodians might be in different time zones. How time critical is transferring value from a multi signature address? Is it possible that the first people start with their part and some others do their part hours later?
Can it even work this way?

I’d like to put a test in which a test transfer of a small amount to verify the process is working on the list of things that need to be done.

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Tier 4 itself is somewhat easy at this moment because, in a sense, the tricky part would be tier 3. Tier 3 liquidity is still pretty much centrally managed off-exchange liquidity, so you can definitely know addresses beforehand.

Thus in terms of liquidity, this multisig management of tier 4 funds is something like this: we watch tier 3 funds (off-exchange liquidity) and decide whether to add . Tier 4
This liquidity can be provided by custodians not dedicated to liquidity operations. A present example are the proceeds of NuShare sales. They are intended for operational and development expenses, but can be used to support the critical function of liquidity provision as needed. When these funds are used for liquidity, they are exchanged from one type of asset to another, but are still available for their original purpose, such as development. These funds can be promoted to tier 3 in hours and the cost is exchange rate risk.

So Jordan intends that tier 4 funds are some form of operating budget for running the network. For liquidity all we need to do is (1) watch liquidity across tiers 1-3 (2) inject tier 4 funds to tier 3 as needed. Tier 3 is already some kind of buffer, so we don’t need very swift action - 12 hours might already be feasible to rotate through multiple timezones. There are many issues in coordination here, so I expect it to be a lot of work - especially if we want to move further into decentralized management of tier 3 funds, but all that can be more thoroughly discussed and implemented by the selected team.

I think it’s more.
What about the handling of the NBT that are received for the BTC that buy side custodians promote to tier 3?
Do they just end up at the sell side custodians?
Up to what threshold?
Will the NBT be burned and will NSR be granted to sell them for BTC and fill tier 4?
How will they be sold for BTC?

From a process point of view, it would be the most sophisticated approach to effectively use the tiered liquidity model like a waterfall model (except I’d like to ignore tier 5 for the time being):

If tier 1 funds are below a certain threshold
fill tier 1 with funds from tier 2

If tier 2 funds are below a certain threshold
fill tier 2 with funds from tier 3

If tier 3 funds are below a certain threshold
fill tier 3 with funds from tier 4

If tier 4 funds are below a certain threshold
fill tier 4 with funds from tier 6

If tier 6 funds are below a certain threshold
fill tier 6 with grants

This works for both sides (buy/sell; NBT/NSR).

One of the most sophisticated ways to use tier 6 for filling tier 4 might be seeded auctions, which I never get tired to advertise until somebody comes up with a better idea.

The exact management of liquidity funds are not the direct responsibility of the signers. That said I didn’t think this through - basically the only tier 3 we have is given by NuLagoon (and perhaps also Jordan?).

So currently it’s just a matter of depositing to NuLagoon, and there’s no way around it yet; we still need people dedicated to moving funds around the top 3 tiers. If we want to decentralize tier 3 and above, we probably need to wait for BCE. I think that’s why Jordan can only give up tier 4 to us - it’s more ripe for decentralization.

In my opinion, the top priority is to be able to actually form a group, make some multisig addresses for the funds, and making sure nobody can steal money. All the remaining terms shall be discussed by the group under higher engagement that we’re seeing now, and the group should aim to expand their operations beyond just depositing to NuLagoon.

I’m not sure of @tomjoad’s approach of posting one motion to select the entire team. In my experience lumping several things in a motion is not very good for consensus. However, very few people seem interested in my own motion either. That’s fine, but I hope somebody (like you) would try the same as I did.


Why wait for that? What does BCE offer which Nu can’t resemble?

Funds at BCE are always held in multi signature addresses of foreign blockchains. With BCE there might come a future in which the difference between tier 2 (on exchange, but off order book) and tier 3 (off exchange, off order book) ceases to be. OP_CHECKLOCKTIMEVERIFY might make it attractive to keep funds in BCE multi signature addresses if the funds are a certain time automatically transferred to a deposit address.
No need for tier 3 any more!

Over tiers 1-3 Nu only has indirect control.
Tier 5 and tier 6 are obviously already fully controlled by NSR holders (not true for FSRT, though).

Tier 4 is the only tier that is directly controlled by Nu which isn’t under direct control of NSR holders.


I agree that from a democratic perspective a slate of candidates is less desirable than voting for each candidate individually, and I’m glad you submitted your name individually to see shareholder reaction.

The difficulty in this context though comes from the requirement to establish signing parameters and governance without a centralized authority. We are not electing politicians to Congress where established rules and procedures are in place. For instance, how would shareholders know how many signers to vote for? What proportion of signers will be required to confirm a transaction (4-of-7, 5-of-7, 6-of-9, etc.)? What happens if one signer is elected for 1 NBT/month compensation, but then threatens to abandon his duties if another signer is elected for 100 NBT/month?

In my mind it seems simpler to initially elect a group of qualified shareholders who can then discuss the many different operational issues that will need to be decided, rather than requiring each signer to answer questions in advance about how they intend on acting in the position. We may risk decision paralysis if we require shareholders to decide those variables on the fly. Once those rules and procedures are established though, I think it will be easier to elect individual signers.

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Not 100% true. For example I have some funds held in my wallet and I’m willing to put them in an ALP when liquidity is low on Nu walls. That fund is tier 3 although no one knows about it and the amount could change. My point is that it exist. And with fixed cost pools, the reward is high when liquidity is low, more of such fund will be incentivised to jump in when needed.

I appreciate your taking the initiative. It’s just that I think it’s without basis to evaluate and vote without knowing the signers’ duty.

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I’d rather think Tier 3 is something shareholders believe they can somewhat formally rely on. I can’t say I vouch for NuLagoon (no offense - just by the principle of decentralization) being a formal outlet but it’s so far the most reputable destination for Tier 3.

Nonetheless I guess a lot of people would be willing to jump into NuLagoon when buy-side or sell-side is low (and interests are set high enough), so my consideration sending funds to NuLagoon is probably somewhat redundant. There might be better ways managing the flow from tier 4 to tier 3 instead of directly injecting funds.

It’s just that I think it’s without basis to evaluate and vote without knowing the signers’ duty.

I’m not mainly complaining about support, but a lack of discussion about the general theme, over there or over here. How much work do we want from maintainers of tier 4 (not just signers) to justify any sort of payment? You are right that the exact duties are not clear; but I say it’s even worse, even the most essential components aren’t established (no GUI for multisig, need some scripting to make it work with RPC, need to make the script work for dummies), there’s a demand of effort even before day 0. How much work is needed to establish the most basic workflow, and how much do shareholders think it’s worth?

Most people in the community are too hesitant to even talk about a price - what they are willing to pay, in what circumstances, or even whether they are indeed willing to pay. And I don’t like a motion for free signers to start hashing without a good attempt to answer this 0 as given the current situation, it might just pass.

Me too. My phone can only be relied on to browse web pages without fancy javascript.

If the reaction time is 48 hours (“N” in my post above is 48) then things is much easier for me.

In my mind it seems simpler to initially elect a group of qualified shareholders who can then discuss the many different operational issues that will need to be decided, rather than requiring each signer to answer questions in advance about how they intend on acting in the position.

With some thought this sounds fair, but I think in practice you would be putting up a motion draft that needs to be changed all the time, or stalls while people don’t want to point out on the forums which candidates they don’t like.

This issue has starved for some time. While many raise concerns about defining the duties of a signer, it’s probably a chicken-and-egg problem that the role is shaped so slowly because we don’t have enough dedicated minds on the issue (and Jordan didn’t explain what exactly he has done with Tier 4 so we can copy).

There are two things that should exist before any tier 4 group can start functioning beyond forum discussions.

  1. A workflow to enable the action of initiating and signing multisig transactions. @masterofdisaster outlined some practical issues on coordination that we should pay attention to. A basic forum-post-based workflow can be hacked together with a few scripts and the multisig documentation, but in the long term some more dedicated effort and infrastructure are needed.

  2. A single, stable example of using Tier 4 funds to supplement liquidity. Like injecting funds to NuLagoon. Or putting money into some kind of community-owned exchange account, if such thing can be maintained securely. Or supplying urgent grants to ALPs that can’t be covered by custodian grants in a timely manner. Or seeding automated NSR/NBT auctions.

I think this can define a baseline on how an early multisig group can be formed.

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This doesn’t have to be defined before the group is formed. Actually it will take a very long time and iterations before the strategy can be worked out. I think the urgency is in getting a group of interested and committed community members together in case things happen and we don’t even have the mechanism ready.

Reasonable. I guess for the time being tier 4 is going to be a piggy bank that’s just used when called upon, and has a somewhat lower threshold of approval than custodian grants.

My feeling is that tier 4 hasn’t been used in the last year (right?) so Nu will likely have many months before it is used. We need to setup the nuts and bolts of the tier 4 fund movng mechanism (specify the group’s action manual, select the group, get them trained …) and dscuss the fund use strategy llike any of the topics.

isnt tier 4 being used right now for buybacks?

Yeah that is exactly because there hasn’t been any activity with tier 4 before.