[Withdrawn] Think big, act small and establish revenue stream

NuShares Motions
#63

The last thing I heard was that @Cybnate wanted to get a statement by @sigmike regarding feasibility and development effort. I personally don’t see why it should not be feasible and also consider the development effort as small (depending on the details like shareholder set parameters etc), but of course a statement from the lead dev would be invaluable.

@Cybnate, even if we need to give sigmike some more time to think it through, don’t you think that you can put it up for voting already? If sigmike says that this is a terrible or unachievable idea then you can still withdraw it. In the end this motion only serves as indicator that shareholders want it, the actual decision will be made by the hard fork consensus.

4 Likes
#64

Seeing that like … what’s actually your statement about feasibility and quality of the plan, @CoinGame ? You are at least as deep into the codebase as sigmike I guess, if not even more familiar with Nu in particular.

#65

Well since i’m telling everyone how I really feel lately I guess there’s no reason to stop now. I think of all the plans out there this is probably the most sensible. Though it has too many moving parts and requires too many things to go right wherein I think ultimately it won’t be completed. I think the network should focus less on recovering the existing operations at this point and focus more on pivoting. Why we would try to go back to a system which had excessive overhead, provided little value to consumers compared to competing services (and I’m not just talking about crypto-competitiors), and provided very little incentive to investors is a real odd thing to focus on. I think there are unique properties to NuNet that it could make a successful/profitable pivot but people are a little too wrapped up in the old way of things. Nu needs to do something new.

My like was more targeted to just voting on the idea now as a way of gauging investors sentiments and if needed another motion with details can be worked out.

3 Likes
#66

Could you give a small example (doesn’t need to be perfect) of what you mean with pivoting? Do you mean that the stable currency product itself is not ideal, or that we are not exploring the possibilities of it as we should?

#67

The stable currency product has a lot of overhead. It requires people to be responsive, trustworthy, ongoing development for the client and NuBot among other layers. Nor does it generate any significant profit. Mind you I believe a 100% reserve system is the only trustworthy model. Anything else is dangerous at best. That’s a debate in itself but the only successful competitors are 100% reserve (Tether). Even BitShares is playing a dangerous game that I don’t think is entirely honest to the users. Therefor in the sense of the network in which i’m talking about I would define profit as network asset value (of assets we pair to NBT) > liabilities (Every NBT in existance). All of those layers of people and development need money to lubricate the process. If the network had a means of earning some profit then the stable currency concept would be extremely viable and scale.

As of now the network doesn’t generate any profit and so every layer required for operations to run smooth in maintaining the peg experiences enormous friction. People want to be paid for running bots, managing reserves, developing the client, developing NuBot, voting and staying active (Some may argue that people shouldn’t be paid for voting and staying active. I say this is a very narrow and idealistic point of view. It is a very time consuming process to participate in a DAO and time is money. We say people should participate to increase the value of their investment but to realize the value of that investment you have to cash out which reduces the incentive for participating. Without dividends simply holding the asset is not an attractive position to encourage the time requirements for the DAO investors to participate effectively or stay incentivized.) All that is required just to maintain the peg.

We think we can rely on NuShares value as a backing for failed NuBits policy but this has proven unreliable as well. What gives NuShares value? The utility of NuBits peg (being that it’s the only current product of the network) as @Phoenix has pointed out. Though if the peg fails what does that say about the value of NuShares? The only thing keeping NuShares afloat is hope. That’s literally what the network is running off of at this point. Hope. Which doesn’t pay the bills, and I’ve seen no initiatives that I believe will resuscitate the network from it’s current hope addiction into earning an income to pay for all those layers that’s its hoping to get back into supporting. Also not having an effective tier to combat peg maintenance prior to NuShares selling will destroy any confidence in NuShares investment because of its ever increasing supply. It’s a dangerously unattractive solution. As we already know peg maintenance is a costly enterprise, so having a profits as a buffer tier to supporting the maintenance assures a much higher level of investor confidence.

So… what the network knows now is that it’s entirely possible to produce this stable coin, but that it requires significant lubrication. I don’t believe any of the nonsense @Phoenix is peddling right now and at very best there’s significant manipulation associated with anything near that camp. We have @Cybnate’s proposal here, while closer based to reality requires a lot of the existing layers that the network cannot afford at this point. It’s a Bush era stimulus check rather than a long term solution.

I have been talking about the proof-of-park and proof-of-burn concepts as part of a cost API ad nauseam for almost a year now. and @woolly_sammoth has actually taken the first steps of cracking open the realization of it. The NuNetwork is unique in that we can create blockchain assets at will, and provably destroy them just as easily. By figuring out areas where that could be utlizied as a service every NuBits created, sold, and destroyed ends up as 100% profit for the network. Is it perfect? No, but I think it’s the best bet in generating a service more valuable than what Nu has offered thus far and what all the current propositions are trying to get back to.

It would be a unique blockchain based service, and potentially offer real value in being a programmable value gateway by proving value has been expended to access a resource. The biggest advantage would be to services who want to require a paywall for a resource but don’t want to deal with value transmission themselves. The stability of NuBits is ideal for such a crypto paywall. Use cases would need to be heavily explored and this has been the biggest criticism of the idea, but the the advantages of finding out how to make this work are a better use of the networks energy for the following reasons.

  • It doesn’t require any further development of the client or NuBot. Only sell walls would be required in the early stages to assure NuBits are purchased as $1. The software that manages the API needs to be developed and since it’s open source anyone could start using burning in whatever capacity suits them, or utilize a network supported API.
  • The funds generated selling NBT (and subsequently destroyed to utilize the API service) can be used to buy existing NBT off the open market until a healthy reserve to liability ratio has been attained (ideally being 100%). If a flow of NBT is being burned at some point the network will generate assets in excess of its liabilities (profit, in my model).
  • Once the network has a continuous stream of NBT being sold and destroyed utilizing the API service at some point the excess profit can be regularly distributed as dividends. Excess profit being any value leftover after paying for network costs, whatever those may be. At this point we’re still not worried about 100% reserve because the focus isn’t on offering a pegged asset in the sense that you can buy/sell at 1$. Only assuring that they’re sold at $1. I’m guessing once a significant portion of the excess supply of NBT has been bought back we’ll start to build towards a reserve. Now NuShares will have real value outside of hope and the existence of a tight peg. It’s an asset that you can hold which lets you vote and earn a passive income without having to sell that asset. That is extremely attractive to investors, and so we’ll surely see an increase in NSR value. Real investor interest. I’ve rarely seen anyone ask about NuShares because they wanted to vote, but many people have asked about when dividends will payout.
  • NuShares now having a very healthy value outside of the NBT peg means it can be reliable used to back a pegged asset. We can start to diversify the services the network offers to once again return to providing a 100% reserve pegged asset. The new NBT burning profits also acts as a new tier before NuShares dilution to replenish the reserve.

Continued growth of the burn API would provide profit to pay for all of the layers of overhead in offering that asset. The network would be offering a unique blockchain based service that isn’t trying to compete with existing financial platforms (which still far outperform blockchain based solutions). At least I don’t think VISA offers credit burning.

Taking the network focus to realizing this path would be a true pivot for the network. Instead of trying to fix a flat tire by pumping more air into it. It would also allow us to expand backward to pegged assets in a healthier, sustainable model. I think one issue with this is that people would probably buy the currently cheap supply of NuBits to utilize whatever services would enforce using the burning API. So the API for a while would need to use some pricing oracle to get an accurate stable burn value until the liabilities have been cleaned up.

This is kinda rambly but i’m just jotting this stuff down as I go. I’m sure i’m missing some stuff here. It’s not a perfect solution but I think it offers a path that is less risky in regards to the investment required to build out a working concept. If it works it would require less maintenance than @Cybnate’s proposal and less hand waving than @Phoenix’s proposal. it offers a better long term solution than both as well if people find value in using it. I haven’t followed many other proposals in depth so apologies if there’s anything better out there. I know this is kind of hijacking the thread as well so I can move it if need be, that’s those are my current feelings on what the network should do.

6 Likes
#68

That’s interesting to hear from you as developer. I thought in its simplest form it wouldn’t be much more than this:

Can you elaborate why it requires to change many layers of the implementation?

Now to this burn API: I think I don’t understand the concept … why should I use it? If I am a content creator and want to implement a paywall, then for the reason the get the money and not to burn it. You can use it as anti DDOS method like Wikipedia does it to some extend, is that what this is about? I guess I misunderstood the whole roadmap, because I thought this github @woolly_sammoth is working on should become a “fiat” or “digital money” to NBT gateway to allow for better ways to peg directly to USD and to provide easier access to NBT, which sounds like an incredibly valuable project.

Anyways, we basically agree on all points you made, especially the one that you cannot back with NSR if there are no dividends. Having the value of burned NBT flowing back to NSR holders would be exactly that feedback loop that was originally thought to keep this whole thing running, it was just that dividends were directly related to sold NBT and not to burned NBT. But honestly, I think a much larger amount of NBT can get burned or at least frozen over the next months with @Cybnates proposal than by potential users of this burn API, if I correctly understand its use cases.

2 Likes
#69

It’s not just that code change. The whole point of the proposal is to reboot existing (costly) operations and if people are now going to know that they will be heavily taxed when they want to move stored value then it makes the asset less attractive. This code change is a reactionary solution that punishes people who had nothing to do with the crisis and makes utilization of the product less attractive all in one swoop. It also doesn’t solve the overall architectural problems I pointed out. It is a punishment, not a service that provides value to the consumer. So it will only worsen the situation.The original NuBits design was thrown out the door very fast. While it wouldn’t have been as exciting it would have been more manageable. We’re well beyond that point though.

The use cases for the burns definitely need to be thought out further. I approached the concept first from the angle of “if we can make this work, we can solve a lot of problems”, but more thought needs to be put into the implementation and use cases. The target is probably closer to regulating flow more so than accessing content.

Some considerations for the idea though that make it interesting.

  • Utilizing burning as a paywall may bypass some financial regulations since you are provably exhausting value rather than transferring it. That might be attractive in some way.

  • microwalls become feasible. You can’t use PayPal/Visa to limit access to a resource at .01 or .02 cents and doing so programmatically as needed is impossible. Other decentralized applications may find use in this.

  • you can abstract the cost of a digital good from the cost of access priority in a single transacrion. I believe in many countries there are regulations regarding the costs of digital goods. The API wouldn’t require all funds be burnt. Someone could say “send X to N address” where X is a specific value but anything above that value is burned. Think of instances where a digital asset is known to be released ahead of time. Say a band is going to release a highly anticipated CD. They can’t charge different prices for that digital content on release in many places. Though that can provide a better service to those who expend more value (allowing them priority download) while still only accepting the value they’re legally entitled to. That’s probably not a practical example but it’s possible.

  • they are a replacement for time based rate limits. There’s a lot of places where companies put annoying time based limits where someone might be happy to destroy some value to bypass the nusance. I don’t think it would be practical for a company like Reddit to keep track of all the financials of people sending 10 cents here and there for people who don’t want to wait 10 minutes to write a comment. They could simply request an address and ask the user to send .10 NBT to this QR code to have the comment processed within a few seconds or wait the 10 minutes to comment. Could be utilized on forums other other places in place of time based limits.

Maybe these aren’t the best. I just threw these together off the top of my head, and maybe there’s some more in the daology article. There could be some significantly more compelling use cases or ideas where burned NuBits can provide value if we get more people thinking in that direction. All I see right now though is people trying to pump air into a flat tire and I’m not convinced that’s going to achieve different results in the long term than what we’ve seen already.

4 Likes
#70

@CoinGame very good long post!

I have been suggesting profit model from Sep 2014, and my idea of stable currency is summarized here, please comment,

  1. use spread pegging to fuel the engine, customers should pay for a stable crypto. In real world, if you buy some gold and return it to the same organization, they charge you fee, isn’t it?

We can “officially” build buy/sell wall with 5% spread on NBT/BTC pair, and leave some room for free market, some self funded people may provide 3% spread pegging for profitability. Two merits: official fund protected by enough spread, free market provide better peg for free.
BTC’s hardcore function(mining) is automatically operated by free market for their self interest, so will Nu’s hardcore function(LP).

  1. Provide liquidity to BKC, because B&C will have a stable revenue: exchange business.

All your issues can be solved, we don’t even modify any Nu’ source code.

3 Likes
#71

excellent comment!

#72

https://bitcointalk.org/index.php?topic=1513978.0

Assume you are going to issue a cryptocurrency named “Hayek Coin”, acronym HYK, accompany by “Hayek share”. The first step is to find a decent profit model, in cryptocurrency world, the exchange business is a good selection, and online content production/consumption is the next big potential business. For instance, many customers dislike to pay apple music monthly for 10$/month, they want to pay each song they listen, when they don’t listen, should be no fee at all. Many customers have to deposit s small amount of money via Paypal on various website to download articles, attachment, etc, this is really tedious. In fact every click of your mouse on webpage can be charged fee if necessary. Every information exchange, can be a money transaction. In this way, advertisements can be removed from websites and customers directly pay for the service. e.g. You pay 0.1$ to watch a video on youtube, and the author gets the 80% money while 20% belongs to website.Cryptocurrency wallet can be a browser plugin, a integrated wallet on chrome/firefox(open sourced), a customer deposits a small amount of cryptos(e.g 50$), and when browsing on internet, when clicking mouse, posting thread, downloading files, even viewing article, the payment is automatically finished within several seconds. The traditional payment such as VISA/MASTER (5000-50000 tx/s) cannot handle such micropayment volume all over the world. Business model of existing millions of websites can be completely changed by eliminating the agent/advertisement between customers and websites by blockchain technology!

There are also other income source such as lottery service, you just need to remember that if you cannot find a decent profit model, don’t start your business, and if your business scale is small, the currency quantity issued should also be small, this is determined by free market, so don’t dream you can issue a huge number of currency with small revenue/business. That’s a natural and fair rule. Customers’ confidence comes from the business profitability not from any other reasons such as your promise, or advanced concept. There should be a Maximum pay back period, it tells how long will a DAO pay off all its debts (HYK in circulation outside of DAO’s control)with predictable profit. I guess the pay back period should be within one year.

1 Like
#73

You are right that there are more obstacles to take than the hard fork itself, in particular informing the users that they have to park their NBT in order to avoid to get taxed and the reaction of exchanges is a real issue with this proposal. We apparently disagree on the rest - I think the usage of liquid NBT as a stable crypto currency should be compensated with a fee.

Your use cases of the burn rate are very interesting and definitely exist. There is surely a way to make profit from them. I just don’t see it as being enough to escape this and / or future black swan events or even to compensate LPCs.

Well, maybe let’s just put it up for voting now and let those staking NSR decide if this proposed critical change in the model is what Nu should do right now or not.

3 Likes
#74

I’ve been thinking about this idea, and I think I finally rationalized a way to be in support of it.

I realize a lot of this is a restatement of the original post, but I honestly didn’t understand the power of the idea originally.

Having large sums of NBT or NSR in an exchange is a liability for the cryptocurrency and for the user. Best practice is to keep assets safely in one’s own custody.

The twist of this: Maybe we make this a stated policy of the Nu network: “use it, park it, or lose it” – that unparked Nubits will be subject to debasement to compensate for network risk, and as a cost on bad behavior. (Maybe this applies to NSR as well … “get out the vote”)

Or as another analogy – the “service fee” on gift cards and stored value cards.

Perhaps the debasement could be implemented as an increasing transaction fee based on coin age. Even if there are tx in the blockchain, untransacted, they eventually become worthless. (Admittedly, “NBT outstanding” becomes much more complicated to calculate)

Parking at 0%, while not profitable, would then be the proper method to “save”. And perhaps we can make the parking transaction a no-cost transaction, subject to sensible limitations like a minimum value of $10 NBT, so people don’t feel like we’re constantly coin-shaving them.

5 Likes
#75

I understand proof-of-burn as an anti-spam measure. but anti-spam doesn’t require a pegged cryptocurrency. Any cryptocoin, proof-of-work, e-money will do to some extend.

proof-of-burn as payment is only effective if the receiving party is the Nu network, or somehow Nu network has to transfer the value to the payment receiver, defeating the advantage of burning. This limits the use cases.

proof-of-park and proof-of-burn, if not signed by the person who is supposed to park or burn, can be transfered/sold/purchased, hence are just another form of digital assets, and will be regulated if broadly used. If they are signed, proof-of-park can be substituted by signing a message with the private key of an address that an explorer can show to have fund in it (ref the flat screen TV example on Daology). As for proof-of-burn, I still need to have the previous non-NUnet use case given to me.

#76

Sorry guys for letting you wait. I really didn’t want to put up a proposal which doesn’t have some kind of an assessment that it is actually feasible and within reach of our means. Sigmike has been very kind to provide me with the details I asked for, which can form the base for a contract with him.

Highlights are:

  • A soft fork is possible, so older clients would accept the chain, but can’t create new transactions.
  • We would use the stable 2.0x client. The v2.1 requires an unknown amount of work.
  • Depending on options we include or not is the cost between US$2,000 and US$5,000 for the client update.
    For 5k we can vote for coin age fee rate which I think we should implement right from the start.
  • Duration of the work will be 2-3 weeks depending on Sigmike’s availability.

Some testing is also required. Details will need to be determined in contract with Sigmike. We may need e.g. Coingame or another trusted developer/tester to do some unit and functional tests.

The biggest challenge is the switch as we need a high percentage of people switching. We might hit the same issues as we hit with B&C switching protocol. Reducing to e.g. 55% for the protocol switch is possible but comes with risks of competing forks. We only need to make these decisions after the proposal passes. The proposal really need to pass with 60%+ or higher as it would set the level we would need to switch the protocol.

Will add the above to the proposal and do another read of all the feedback and update the proposal. If not tomorrow which might be too tight for me, then the day thereafter. I don’t want to rush this through. It will set a potentially profitable future of Nu.

4 Likes
#77

sounds good – how can we fund this?

#78

We will have to fund this from the current BTC reserve, which we should top up further with selling NSR until the reserves are strong enough to hold the $1 peg. Clearly it doesn’t make sense to submit an NBT grant at this stage. So I will include this in the motion.

#79

Updated the motion which I believe is now ready for voting:

Main updates:

  • Included cost and key risk in summary
  • Included costs for required Nu client updates
  • Included custodial fee for managing the contract and releasing the client.
  • Updated section protocol configuration, no parameters written in stone.
  • Added motion end header.
  • Optional/supporting motions, not being part of the motion are now in italics.
  • Updated pro and cons and added reference to fiat gateway development

Will submit it for voting in the next few hours.
The hash is not yet final as I’m still tidying up things.

4 Likes
#80

OP updated and motion hashed. Will add it to my datafeed in next 24h.

Hash: 31c1190217cd7a764879675ceeb8321c3da0ecf3

2 Likes
#81

It appears that the voting for this proposal is not very popular. I’m struggling with people believing that the ‘liquidity engine’ will save us all and that the belief is all in one person without any reputation and therefore nothing to lose. The only reason for this is that a majority of shareholders actually know Phoenix and vice versa and the track record he has. This would have allowed him to interactively pitch his proposal and thoughts something which can’t be done properly in the forum.

I still believe that the network needs a source of income. The events in the last 2 months are not only the result of people not following NuLaw. They are also the result of the reserves slowly and surely been eaten away by the high costs of liquidity provisioning.

Reducing these immediate costs as Phoenix proposes would probably buy us more time assuming they are successful and assuming Phoenix continues to be available being a single point of failure.

As others already said the high maintenance costs of the liquidity provision needs to be addressed. This can be done by centralising as Phoenix proposes or by embedding ways of profit in the blockchain / protocol itself as the proposal in the OP intends to do. Other options are building more advance bots with smart contracts which are able to create tiny margins out of high velocity trading.

I really hope that Shareholders can find something better than the proposal in the OP which actually does create a source of income and a price for liquidity. For what it is worth, I would be the first one to support any better alternatives.

I will keep myself available to provide some services like PyBot gateways and ALP for a few months as I have a decent infrastructure to do so. This comes at a cost, so when not utilised I will have to start using it for other ventures outside Nu. I will continue to provide services according to existing contracts (e.g NuDroid) as good as I can given the challenging environment.

3 Likes
#82

Creating businesses around Nu is crucial if we want to make NuBits an Internet currency.
Creating revenues models inside Nu (ex: tx fees) is also crucial.
The automatic burning based on coinage wants to be such a revenue model, I understand.
However, I still think it would be controversial for holders to lose nubits if they do not park, depending on the burning rate.
Any idea on the rate itself?
And in terms of implementation, what does @sigmike think?