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.
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.
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.
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.
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.
- 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.
sounds good – how can we fund this?
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.
Updated the motion which I believe is now ready for voting:
- 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.
OP updated and motion hashed. Will add it to my datafeed in next 24h.
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.
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?
I’ve more or less responded here:
The rate will depend on the shareprice/sales and the time we want the peg established. The lower the rate and the lower the shareprice, the longer it takes to establish the peg with adequate reserves. In my proposal set at 50% together with the revenues plan to provide the confidence required to sustain the peg.
Re sigmike thoughts, I asked the same when asking for the details:
Basically his thoughts are also reflected in this earlier post: [Withdrawn] Think big, act small and establish revenue stream Leave it to him to respond in more detail, but from my conversations I understand the following: As most real world people operating within businesses, he believes in a model that can create revenue.
The trouble is that we have to sort out the debts first which is unpopular. It is certainly not only NBT holders paying with my proposal. The continuing auctions dilute the shareholders significantly, not even talking about the shareprice.
Going forward only NBT holders trading and using the liquidity will pay for that, generating revenues. Holders and quick transactions in- and out won’t be punished other than normal transaction fees.
Yes it would have required basically unanimous support by non JL shares in order to even have a slight chance to pass. Good that you made this motion before even more work was put into this.
I read some posts that brought up the idea to make a new genesis block and to find a way to properly distribute the initial shares among actually interested and participating previous NSR holders. Looking at the correlation of opinions here on the forum and the voting in generated blocks, I think we can also keep the forum, and @phoenix can post his motions somewhere else - it doesn’t matter anyway if he posts them, since he can just create and add the hash to his client to make it pass.
Let me know if this idea of a new distribution takes any shape. I am almost certain that exchanges will be on our side.
Why are you certain? Doesn’t the fork tax traders more? Does the new coin bring more profit to exchanges (more volume)?
Together with the newly printed 20M NSR (+ future grants to himself), Jordan has around 60% to 70% of the staking weights. If a transaction is considered to be confirmed after 10 blocks, this means that a double spend attack both for NSR and NBT succeeds with a probability between ~0.5% and ~2.5%. Poloniex is registered in the USA, and if they suffer a loss due to a double spend then they need to reimburse their users and won’t get away with some BTER shit.
If Poloniex somehow gets informed about whats going on here with the Nu blockchain, then they will drop the daemon like a hot potato, or at least freeze trading, since its their own money which is at stake here.
I’m not certain either; I’m less worried about exchanges at the moment than a solid community, a leader who doesn’t abscond, and a business model that includes revenue.
Also it is becoming more apparent that the distribution of Nu shares may not have been done fairly – that the end state was a potential majority of voting shares being held or under the control or influence of one person. While technically it is a distributed autonomous org, I don’t think it is in the spirit that many of us had hoped.
A fork would accomplish these. (Ugh, not feeling good to say that). I would not call it Nu.
Logistically it would be possible to do a distribution as follows:
- all Share addresses showing a vote for this (or some other) motion would be accepted into the new chain.
- for those that have minimal shares, we may need to leave the voting period up for an extended time – like a month – so statistically there is a chance to vote.
- We may need to have a threshold of 80% of the funds on those addresses have to vote (and have to stay there)
- new coin, new rules: we could eliminate all addresses used to vote for Phoenix’s candidacy for Chief of Liquidity ops
- It’d be a chance to fix the “decimal place issue”
As far as goals or roadmap, in addition to all the above:
- Maybe the new coin, exchange support, and pegged but profitable liquidity can all be in place before Nu burns down again.
- Maybe we pivot hard and support a different currency out of the gate (i.e.: CNY)
- Maybe we offer to buy USNBT at some fraction of NBT so people can bail, and we can sell them at parity to JordanLee on the 3rd attempt to re-establish the peg
It’s not that unthinkable to have a fork. I used to think how to find the best parameter set (POS reward, transaction fee, not-voting=not-ageeing, how many days after moving before a share is able to mint … ). I thought if there is a grid of forks of Nu with different parameters/policies and people can move fund from one chain to another freely, then maybe the best parameter set can be found out. I guess @Sabreiib has something on competing currencies here.
Unfortunately that’s not so easy because JL can easily move or mix the coins, or obfuscate their trace by sending them to an exchange and back to new addresses. The initial distribution of PoS coins is an unsolved problem and the approach taken in Nu now proves that it requires a lot of care and transparency to somehow ensure proper decentralization.
And even with a good initial state the system can diverge quickly if shares can be traded on exchanges and the price drops. As mentioned numerous times on this forum, by many different people, the best way would be to make shares non transferable (i.e. they cannot be sold) but only to allow to burn shares for NBT (and vice versa), such that the DAO can protect itself in a bad market situation by adapting the share / token price on-chain.
Can we poison-pill the motion? “If this motion passes, the Chief of Liquidity Ops role is hereby eliminated”
Fully understand that it is not ideal. But what is the best way to capture the representation of those who see a different direction?
One of the criticism of the dividends was that it could be sending value to addresses that were lost or no longer active. I think with a modified dividend system, where they are distributed only to shares that were seen voting in the last N days/weeks/months.
It would definitely change the construct of share ownership as voting rights, not a hot stock to flip. Though without a doubt some market would emerge for the shares.