NuShares (NSR) are the shares of the Nu system, mined through Proof-of-Stake (PoS) mechanism to maintain the Nu network. Through voting by NuShares shareholders, the issuance of Nubits, custodians, interest rates in the Nubits system, and other motions are determined. Voting with NuShares is achieved through mining, where each person who mines a block writes their vote information into that block. Profits from the Nu system are distributed to holders of NuShares within the Nu system in the form of PPC.

Project Highlights

Within the Nu ecosystem, NuShares holders manage the supply of the currency, NuBits, without relying on any mechanisms outside the blockchain. If a majority of shareholders vote in favor, new NuBits can be created, held by elected custodians. There can be multiple custodians, and shareholders can decide to replace them. Custodians can choose whether or not to remain anonymous; because they are anonymous, numerous, and subject to arbitrary removal by shareholders, third-party organizations cannot control the Nu network by threatening custodians. Custodians do not control the network but have authority over part of the systems revenue. The creation and sale of NuBits is income for the entire ecosystem, which custodians can use to maintain the Nu system and distribute dividends. Dividends can only be paid out in PPC, meaning custodians must buy PPC before distributing dividends. Thus, demand for PPC will grow proportionally with the amount of dividends distributed by the Nu system. 

In turn, the Nu system can also reduce the supply of the currency, NuBits, through another mechanism known as parking. Holders can remove their NuBits from circulation for a period of time to earn interest, akin to borrowing at a certain interest rate. NuShares holders can dynamically adjust interest rates through votes when mining, according to the yield curve they believe is appropriate. Once market demand for NuBits decreases, NuShares holders can increase parking rates to reduce the circulating supply of NuBits. Entities uninterested in NuBits may purchase them solely for interest, preventing a decline in demand. When market demand for NuBits increases again, parking rates can be lowered to return demand to peak levels until interest rates reach zero. 

Custodians maintain large sell walls to keep the price of NuBits at $1. When the market signals reduced demand for NuBits, shareholders provide interest for parked NuBits to generate demand to support the one-dollar price. In the early stages of Nu system operation, instant demand for NuBits might suddenly drop, causing the price to temporarily fall below one dollar. Shareholders would then raise interest rates quickly to bring the price back near the custodians buy wall. This penalizes those selling below one dollar and benefits those buying below one dollar. It becomes clear that buying below one dollar always leads to losses, while buying below one dollar always yields profits, preventing price declines. A special type of custodian can provide liquidity depth to those selling at one dollar, preventing price drops due to sudden demand decreases before interest rates can be raised. 

Voting

NuShares holders have the right to vote when they mine a PoS block. Nus client and user interface allow shareholders to manually configure their votes. Since voting data can change rapidly, shareholders can pre-set an automatic data source (previously selected by shareholders votes). Multiple entities providing data sources will emerge, offering diversity and free competition. When they mine a block, their vote (manual or from a data source) will be placed in the blockchains interest coin transaction. Each of the three types of votes should be manually or automatically configured by the user. For example, a user can choose an automatic data source for interest rate voting while manually configuring votes. Votes are weighted by the age of shares consumed during mining (in PPC, its coin age). To pass motions and elect custodians, 5,001 votes must be obtained in 10,000 consecutive blocks. Interest rates and custodian authorization are detailed below. 

Shareholders can cast three types of votes: 

1. Granting NuBits to a custodian: Shareholders need only set the currency type (currently only NuBits, but we may add currencies pegged to euros, pounds, etc.), public address, and authorization amount in their client. A shareholder can vote to grant one million NuBits to a custodian (promising dividends) and simultaneously vote to grant 200,000 NuBits to another custodian (a core development team member). The sole identifier for a custodian is their public key address. When a NuShares holder mines a PoS block, their vote is packaged into the PoS interest coin transaction as a transaction, containing information about the currency type, RIPEMD-160 value (a 20-byte long public address), and a uint64 value indicating the number of satoshis authorized. If multi-signature transactions are used, a pay-to-script-hash address appears under the RIPEMD-160 type data. 
2. Parking NuBits interest rate curve: NuShares holders set different interest rates for different parking periods of NuBits. Parking periods start at the length of one block and double incrementally: two blocks, four blocks, eight blocks, etc. In the system, block time lengths for parking periods are represented by a uint8 number: 0 for one block, 1 for two blocks, 2 for four blocks, 3 for eight blocks, etc. The parking interest rate is represented by a uint32 number, indicating how many satoshis should be paid in interest per parked NuBit. Interest rate votes included in interest coin transactions come from a two-dimensional matrix. The first dimension includes unit8 and unit32 numbers. NuShares holders can efficiently set minimum and maximum parking interval cycles to exclude others. 
3. Motions: Because motions can take any form, they cannot be automatically executed by the protocol; we do not intend to do so. Of course, the protocol can only store votes on motions and check them to confirm if a specific motion has been passed. Shareholders ensure the implementation of passed motions. Anyone can propose a motion. Although motions are generally in text form, they can actually use any electronic format or file. Using a RIPEMD-160 hash (40 hexadecimal characters long) to encrypt the motion and distribute it along with the motion. When voting on a motion, enter the corresponding 40 hexadecimal characters in the user interface or obtain them from a data source, occupying 20 bytes of space when writing to the blockchain in an interest coin transaction. 

A motion that receives 5,001 votes in any 10,000 consecutive blocks and obtains the majority of share age (coin age) in these 10,000 consecutive blocks is considered passed. A block explorer will discover and display links to the passed motions. This block explorer will receive funding for development before the projects release. 

The length of the interest coin transaction in PoS will be limited by the protocol to 1,000 bytes, although it is usually around 150 bytes. In addition to votes and interest coins, it includes the actual interest rate used to park transactions on the block (outside of miners votes).

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