Introducing NBA League Transaction Credit (LTC) System

[the sea duck]

The NBA’s current trade ecosystem is constrained by limited tradable assets, primarily players, draft picks, traded player exceptions, and tightly regulated cash, which restricts flexibility, especially under the increasingly punitive luxury tax and apron rules. This leads to overreliance on second-round picks as utility trade fillers, despite their low on-court value. The proposed solution is the creation of League Transaction Credits (LTCs) - a league-backed, tradable, performance-earned currency that teams can use in trades or to facilitate roster moves without affecting salary cap or payroll. LTCs reward smart roster building, development, and restraint, while creating a fluid, scalable medium of exchange that expands transactional flexibility without undermining the collective bargaining framework.


NBA League Transaction Credit (LTC) System
A proposal for a non-monetary, performance-based currency to facilitate transactions under CBA constraints

I. Introduction & Rationale

The NBA's current asset system limits flexibility under the CBA:

Real money is capped (cash in trades, buyouts, etc.)

Players are tied to contracts and can't always be moved

Draft picks, especially 2nd-rounders, are overused as filler

Luxury tax apron rules severely limit trade and signing options

Solution: Introduce League Transaction Credits (LTCs) - a performance-based currency earned through smart roster management and player development. LTCs can be used in lieu of picks, trade exceptions, or marginal cap maneuvers without impacting payroll, violating CBA spirit, or enabling pay-to-win dynamics.

II. Key Properties of LTCs

Non-cash - Cannot be exchanged for money or cap space directly
Fully tradable - Can be traded between teams like draft picks or cash considerations
Earned, not bought - Only gained through team behavior or value trades, not purchased
Expiring - LTCs expire after 3 years if unused
League-administered - Maintained and regulated by the league office, not individual franchises

III. Earning LTCs ("Proof of Work")

Examples:
Retain a 2nd-round pick for 3 seasons - 3 LTCs per player
Promote G-League player to full-time roster - 2 LTCs up to 3x per season
Develop undrafted player to rotation role - 4 LTCs per player
Finish season under cap AND win ≥ 45 games - 5 LTCs per season
Avoid tax for 3 consecutive seasons - 3 LTCs 1x per cycle
Make playoffs without top-20 salary player - 10 LTCs per season
Win play-in or in-season tourney round - 1 LTC per win
Use all roster spots during season - 3 LTCs per season
Finish with most homegrown minutes played - 7 LTCs per season

IV. Spending LTCs

LTCs are not a cap loophole, but a tool to replace or supplement trades and player movement within rigid CBA frameworks.

Substitute for 2nd-round pick in trade - 3 LTCs 6x max per year
Substitute for trade exception < $2M - 5 LTCs 2x max per year
Sign hardship / emergency player for 10 days - 1 LTC
Use LTC as kicker in 2-for-1 or salary dump - 2-10 LTC

Trading Mechanics
LTCs can be included in any trade package, just like picks

The league tracks team balances publicly (like a draft pick ledger)

A trade might be:
→ “Player X + 6 LTCs + 2030 2nd for Player Y + 2027 top-20 protected 1st”

V. Case Study: Team Simulations

Oklahoma City Thunder
Earns LTCs via development (undrafted finds, long-term retention, youth minutes)

Uses LTCs to attach to cap-neutral deals when roster is full, avoiding pick bloat
Golden State Warriors
Earns minimal LTCs due to high payroll and lack of G-League use

Must manage core within 2nd apron constraints; could spend LTCs to sign injury fill-ins or activate two-way depth during playoff runs
Miami Heat
Excellent at UDFA development → earns steady LTC stream

Can use LTCs to maintain flexibility without giving up valuable future picks

VI. Benefits to the League

Adds depth to front office strategy without harming parity

Encourages development, roster balance, and salary discipline

Prevents excessive reliance on 2nd-rounders as trade grease

Creates meaningful reward for resourceful teams

Allows CBA to remain tight on real money while flexing in high-leverage moments

By introducing LTCs, the NBA can unlock a new layer of strategic depth that rewards innovation, enhances roster flexibility, and keeps the spirit of competitive balance intact. This system doesn’t replace the CBA. It strengthens it by creating a dynamic, earned currency that gives teams more tools without more spending. The question now is: how would your front office use LTCs to build, to trade, or to outmaneuver the competition?

[the sea duck]

if you made it through all of that and like the idea, check out another recent idea of mine to improve the regular season: https://forums.realgm.com/boards/viewtopic.php?f=6&t=2462776

[mastermixer]

This sounds a lot like my League Trade Currency System

[the sea duck]

the impetus for this idea was in my thinking about how draft picks, especially 2nd round picks that have less innate value, are often treated as a currency. that is, they are not necessarily traded for the expected value of the player they might attain, but for the utility value of merely being a tradable asset. teams are able to trade personnel (99.99% of the time it's players; occasionally a team might be compensated for a staff member), some money (with restrictions), trade exceptions, and draft picks. i am not aware of other tradable assets. certainly any others are rare. players are most often traded for their play quality and contract value factors. this means the closest asset to operate on trade utility value are draft picks, and again mostly 2nd round picks that have a higher trade utility:player value ratio. but this is also very limited. i'm thinking of solutions that might enable trades while maintaining spending restrictions. here, i introduce the concept of an nba currency that teams can earn by certain achievements (PoW) and use as an in-league value to facilitate transactions without ballooning real costs, or violating CBAs.

[azcatz11]

ETH could support this

[ForeverTFC]

Your criteria for earning LTCs are completely subjective in their utility. There is only 1 objective metric that you can peg something lie this to: wins.

[Clav]

Great work, I like the idea overall.

A couple questions etc because I cannot type out a long reply right now -- does it feel weird for teams to trade LTC(s) -- in essence their hard work and development -- to a different team ? That new team might just trade LTCs immediately if they have worth, so I just sense a lot of movement might occur if teams keep using them as ballast. We'd see big groups of LTCs getting aggregated together, I think many teams would eventually have them, so if the market is inflated with all teams having LTCs and trying to spend them, could be a little ungainly.

second Question - does having multiple years of low, or no LTCs, detract from teams' maneuverability? Does having higher aggregate of LTCs bring benefits other than trade ballast, and hardship etc signings ?

Such as, do teams that generate more LTCs gain other bonuses?

that's all for now, keep the ball rolling...

[the sea duck]

Your criteria for earning LTCs are completely subjective in their utility. There is only 1 objective metric that you can peg something lie this to: wins.

what I posted were just examples. the main idea being that the currency is something earned via achievement (PoW). i'm not as particular about which set(s) of achievement reward which amounts of credits.

[the sea duck]

ETH could support this

sorry, no staking allowed. proof of work only. LTC should be a hard currency.

[the sea duck]

Great work, I like the idea overall.

A couple questions etc because I cannot type out a long reply right now -- does it feel weird for teams to trade LTC(s) -- in essence their hard work and development -- to a different team ? That new team might just trade LTCs immediately if they have worth, so I just sense a lot of movement might occur if teams keep using them as ballast. We'd see big groups of LTCs getting aggregated together, I think many teams would eventually have them, so if the market is inflated with all teams having LTCs and trying to spend them, could be a little ungainly.

second Question - does having multiple years of low, or no LTCs, detract from teams' maneuverability? Does having higher aggregate of LTCs bring benefits other than trade ballast, and hardship etc signings ?

Such as, do teams that generate more LTCs gain other bonuses?

that's all for now, keep the ball rolling...

good questions, and i'm open to many ultimate versions.

my one answer i'll provide to your first point is that there will be a market for LTCs. if there are a ton of LTCs in circulation, their value might relatively drop compared with 2nd round picks, for example. yet, if a few teams corner the market on LTCs due to strategic retooling, the availability of LTCs league-wide might drop, increasing the per-LTC-value overall. i think the market will be cyclical and, importantly, LTCs are not the only asset used for trades. they simply allow teams to use a type of "cash considerations" that do not have real world costs to owners, or to even out trades without using 2nd round picks for merely their availability to trade. why should a draft pick be the league's currency?

[Invictus88]

I don't see the point in this exercise.

The first two items are literally by design and meant to create a cap on spending by teams. They aren't viewed as problems to be solved by NBA brass / owners. They are the goals.

So any type of mechanism meant to sidestep these items will never be allowed to be put in place.

I also am dubious that fans will enjoy yet another layer of abstraction added on top of existing tradeable resources (picks, money, contracts/players, etc). It's already confusing enough as it stands. But maybe a fan's perspective isn't the priority I guess?

The solution here isn't to invent a new currency system to compensate for the CBA. It's for GMs to alter their business practices and team-building methods to work most effectively under those rules. Some have done an incredibly bad job at this so far. And they are learning that the hard way.

No other action is required.

[Daddy 801]

Just give me a hard cap and an open market free agency for rookies. Players can plays where they want to play. GM’s have to be good at their jobs.

On top of that 50% of salary is not tied to your contract but how many minutes actually played that season. If a star is hurt he still gets paid but the young guy stepping up gets paid more than he would have. Also means players don’t want to sit out games because sitting out games means losing money. Also means tanking teams are going to have a hell of a hard time not trading away quality vets because now those vets are going to be pissed they aren’t getting their playing time and it’s impacting their pay.

Problem solved without having to create such an intricate system that quite frankly I don’t see the owners going for. But I don’t see the players or owners going for my system either so here we are.

[brackdan70]

I think more objective criteria for earning them is key. Easy to game the system given the current criteria.
I like.
Semifinal, final, winning the in season tournament.
Winning playoff games and series
Some formula based on reg season wins.
Give teams that get screwed in the Lotto a couple.

Not sure why I posted as the whole idea seems pretty extra. But if there was something like this, it needs to be objective and mostly unable to manipulate.

[Mavrelous]

III. Earning LTCs ("Proof of Work")

Examples:
Retain a 2nd-round pick for 3 seasons - 3 LTCs per player
Promote G-League player to full-time roster - 2 LTCs up to 3x per season
Develop undrafted player to rotation role - 4 LTCs per player
Finish season under cap AND win ≥ 45 games - 5 LTCs per season
Avoid tax for 3 consecutive seasons - 3 LTCs 1x per cycle
Make playoffs without top-20 salary player - 10 LTCs per season
Win play-in or in-season tourney round - 1 LTC per win
Use all roster spots during season - 3 LTCs per season
Finish with most homegrown minutes played - 7 LTCs per season

IV. Spending LTCs

LTCs are not a cap loophole, but a tool to replace or supplement trades and player movement within rigid CBA frameworks.

Substitute for 2nd-round pick in trade - 3 LTCs 6x max per year
Substitute for trade exception < $2M - 5 LTCs 2x max per year
Sign hardship / emergency player for 10 days - 1 LTC
Use LTC as kicker in 2-for-1 or salary dump - 2-10 LTC

Trading Mechanics
LTCs can be included in any trade package, just like picks

The league tracks team balances publicly (like a draft pick ledger)

A trade might be:
→ “Player X + 6 LTCs + 2030 2nd for Player Y + 2027 top-20 protected 1st”

V. Case Study: Team Simulations

Oklahoma City Thunder
Earns LTCs via development (undrafted finds, long-term retention, youth minutes)

Uses LTCs to attach to cap-neutral deals when roster is full, avoiding pick bloat
Golden State Warriors
Earns minimal LTCs due to high payroll and lack of G-League use

Must manage core within 2nd apron constraints; could spend LTCs to sign injury fill-ins or activate two-way depth during playoff runs
Miami Heat
Excellent at UDFA development → earns steady LTC stream

Can use LTCs to maintain flexibility without giving up valuable future picks

VI. Benefits to the League

Adds depth to front office strategy without harming parity

Encourages development, roster balance, and salary discipline

Prevents excessive reliance on 2nd-rounders as trade grease

Creates meaningful reward for resourceful teams

Allows CBA to remain tight on real money while flexing in high-leverage moments

By introducing LTCs, the NBA can unlock a new layer of strategic depth that rewards innovation, enhances roster flexibility, and keeps the spirit of competitive balance intact. This system doesn’t replace the CBA. It strengthens it by creating a dynamic, earned currency that gives teams more tools without more spending. The question now is: how would your front office use LTCs to build, to trade, or to outmaneuver the competition?

I love the idea!
League office and NBPA have proven to be very good at altering and amending trade rules, I think introduction of such system can help a lot and will evolve according to need in future CBAs.

[the sea duck]

I think more objective criteria for earning them is key. Easy to game the system given the current criteria.
I like.
Semifinal, final, winning the in season tournament.
Winning playoff games and series
Some formula based on reg season wins.
Give teams that get screwed in the Lotto a couple.

Not sure why I posted as the whole idea seems pretty extra. But if there was something like this, it needs to be objective and mostly unable to manipulate.

Completely agree that the execution of the idea is much more critical than the general proposal.

[the sea duck]

I don't see the point in this exercise.

The first two items are literally by design and meant to create a cap on spending by teams. They aren't viewed as problems to be solved by NBA brass / owners. They are the goals.

So any type of mechanism meant to sidestep these items will never be allowed to be put in place.

I also am dubious that fans will enjoy yet another layer of abstraction added on top of existing tradeable resources (picks, money, contracts/players, etc). It's already confusing enough as it stands. But maybe a fan's perspective isn't the priority I guess?

The solution here isn't to invent a new currency system to compensate for the CBA. It's for GMs to alter their business practices and team-building methods to work most effectively under those rules. Some have done an incredibly bad job at this so far. And they are learning that the hard way.

No other action is required.

Absolutely! The apron penalties are by design. This idea is meant to be a little more "carrot" than "stick" for those parameters. It's a shift in both perception and utility that I believe would benefit the league. And I believe, despite the intentionality of the current dilemma, there's an appetite for an improved version/some regret even on the part of the owners.

I'll also add that you are correct. This idea is not primarily for fans (though the hardcore fans will engage). It's meant to be a trade currency intra-league because the league does not have one. It uses its real assets as tradable currency. This makes sense, but why? The major reason is that its all they have. What if it was not all they have? What if there was a currency that can be used to grease trades instead of trying to figure out how many 2nd round picks make up for some trade imbalance? In the real world we don't throw in extra chickens to buy a cow and a flashlight. We have units of representative value that can be more precise. LTCs can add that precision and allow chickens to be chickens.

[Invictus88]

I don't see the point in this exercise.

The first two items are literally by design and meant to create a cap on spending by teams. They aren't viewed as problems to be solved by NBA brass / owners. They are the goals.

So any type of mechanism meant to sidestep these items will never be allowed to be put in place.

I also am dubious that fans will enjoy yet another layer of abstraction added on top of existing tradeable resources (picks, money, contracts/players, etc). It's already confusing enough as it stands. But maybe a fan's perspective isn't the priority I guess?

The solution here isn't to invent a new currency system to compensate for the CBA. It's for GMs to alter their business practices and team-building methods to work most effectively under those rules. Some have done an incredibly bad job at this so far. And they are learning that the hard way.

No other action is required.

Absolutely! The apron penalties are by design. This idea is meant to be a little more "carrot" than "stick" for those parameters. It's a shift in both perception and utility that I believe would benefit the league. And I believe, despite the intentionality of the current dilemma, there's an appetite for an improved version/some regret even on the part of the owners.

I'll also add that you are correct. This idea is not primarily for fans (though the hardcore fans will engage). It's meant to be a trade currency intra-league because the league does not have one. It uses its real assets as tradable currency. This makes sense, but why? The major reason is that its all they have. What if it was not all they have? What if there was a currency that can be used to grease trades instead of trying to figure out how many 2nd round picks make up for some trade imbalance? In the real world we don't throw in extra chickens to buy a cow and a flashlight. We have units of representative value that can be more precise. LTCs can add that precision and allow chickens to be chickens.

I think it's overkill if the primary reason for doing this is to avoid liberal use of 2nd rounders as collateral. I make that inference only because you've mentioned that aspect repeatedly in justifications.

The lack of a more granular medium besides 2nd rounders isn't such an impediment or a primary reason why deals stall. It's that the parties involved are so far apart otherwise in terms of expectations / the difference between some players actual value and compensation is so big that those gaps can't be bridged. A more granular currency being available doesn't solve that.

The new CBA basically requires that GMs can no longer suck at being financially responsible in order to be successful as a team. This is surprisingly / sadly a new concept for some of the more... fortunate.. organizations / owners. That's it.

Edit: Also, folks have the ability to add straight cash to transactions that is completely independent of salary cap restrictions (check me on this though). If that's the case then there is technically already an alternative medium that is established and exists. It's just not used that often.

[magee]

I had proposed something in the same area of this a couple of years ago.

viewtopic.php?f=6&t=2278237&hilit=algorithm

[the sea duck]

I don't see the point in this exercise.

The first two items are literally by design and meant to create a cap on spending by teams. They aren't viewed as problems to be solved by NBA brass / owners. They are the goals.

So any type of mechanism meant to sidestep these items will never be allowed to be put in place.

I also am dubious that fans will enjoy yet another layer of abstraction added on top of existing tradeable resources (picks, money, contracts/players, etc). It's already confusing enough as it stands. But maybe a fan's perspective isn't the priority I guess?

The solution here isn't to invent a new currency system to compensate for the CBA. It's for GMs to alter their business practices and team-building methods to work most effectively under those rules. Some have done an incredibly bad job at this so far. And they are learning that the hard way.

No other action is required.

Absolutely! The apron penalties are by design. This idea is meant to be a little more "carrot" than "stick" for those parameters. It's a shift in both perception and utility that I believe would benefit the league. And I believe, despite the intentionality of the current dilemma, there's an appetite for an improved version/some regret even on the part of the owners.

I'll also add that you are correct. This idea is not primarily for fans (though the hardcore fans will engage). It's meant to be a trade currency intra-league because the league does not have one. It uses its real assets as tradable currency. This makes sense, but why? The major reason is that its all they have. What if it was not all they have? What if there was a currency that can be used to grease trades instead of trying to figure out how many 2nd round picks make up for some trade imbalance? In the real world we don't throw in extra chickens to buy a cow and a flashlight. We have units of representative value that can be more precise. LTCs can add that precision and allow chickens to be chickens.

I think it's overkill if the primary reason for doing this is to avoid liberal use of 2nd rounders as collateral. I make that inference only because you've mentioned that aspect repeatedly in justifications.

The lack of a more granular medium besides 2nd rounders isn't such an impediment or a primary reason why deals stall. It's that the parties involved are so far apart otherwise in terms of expectations / the difference between some players actual value and compensation is so big that those gaps can't be bridged. A more granular currency being available doesn't solve that.

The new CBA basically requires that GMs can no longer suck at being financially responsible in order to be successful as a team. This is surprisingly / sadly a new concept for some of the more... fortunate.. organizations / owners. That's it.

Edit: Also, folks have the ability to add straight cash to transactions that is completely independent of salary cap restrictions (check me on this though). If that's the case then there is technically already an alternative medium that is established and exists. It's just not used that often.

for sure, i've emphasized the 2nd rounders because they are the asset that is most often acquired primarily for their tradability (or highest ratio of currency-utility-to-roster-value). but in reality all assets serve as proxies for what would be a currency, if one existed.

your point about granularity is taken, but i believe that is somewhat of a separate issue. some deals will never be perceived as equal to both sides, otherwise the league would constantly be trading and never have set rosters. this isn't about finding out how to make all trades doable. this is about having a marketplace with a sufficient currency to allow it to function better. there's a bias that deals don't happen because the value can't be made to match. certainly sometimes. but sometimes deals explicitly do not happen because the units available to trade are limited. this happens all the time when teams try to acquire an extra pick here and there or try to involve an extra team (this sometimes results in wildly overvalued picks, which is unfortunate. a deal between real players can effect the entire market for draft picks). this happens because the value cannot be equaled with the existing units of value. two teams clearly interested in the headline of a trade, but need a little extra to sell it to their owners and fans, maybe themselves-- quite common. not every failed deal is for lack of granularity, but many are. and it's a shame it is only because there is a structural deficiency.

i'd like to add that i agree that any system should require GMs to be good at their jobs. LTCs can encourage that both by how they are awarded and in how they force team executives to navigate a marketplace with both hard assets and a more fluid currency.

to your point about cash considerations: i included cash as one type of asset. but 1) they have severe limitations and 2) LTCs are considerate to the poor owners by adding a currency that does not cost them any additional real world money directly. this is inline with their CBA goals.

[Daddy 801]

Since teams can trade cash already I dont see the value trickling down to where owners would need or want this. The impact of these units being traded will ultimately be compared to dollars just like bitcoin and other digital currency is. So in the end it’s all about dollars anyways so why not just deal in dollars?

Not trying to sh*t on your idea and work. It’s impressive. I just don’t see it doing ultimately what the goal of digital currency is. Bitcoin was invented because the FED sucks and prints money and we lose value. It’s to ultimately to fight inflation, not to allow easier transactions (yes digital current is good at fast and secret transactions…which the league isn’t in need of). If our federal government and FED wasn’t inept and destroyed the value of our currency Bitcoin would not be what it is.

This idea doesn’t fight against the dollar losing value in anyway because the units will be compared to dollars anyways. And because cash can be traded there isn’t a reason for an easier trade transaction process.

The answer for more competition and a better product is rookies being able to choose their team and teams having a hard cap. Teams with superstars would not be able to dump the LeBrons, Steph’s, etc of the world to sign the next Wemby or Flagg. So the rookies would have to choose between teams with the largest amount of cap space. Which would result in parity. If a player wanted to give up millions and millions to go to LA or whatever they could voluntarily choose that. Maybe we would see a few cases of that with guys choosing their home town team. But in general Wemby isn’t going to sign with LA or NY if those teams already have their superstars and the team can’t offer them the most money.

Allowing players to choose where they play also gets rid of the argument of exploiting labor or players being like “slaves”. While the rational person can see through calling someone making millions to play a kids game a slave, it can’t hurt to allow players more freedom where they play. Let’s say Flagg had to choose between Char, Utah, and Memphis because those teams had the most cap. Once he chooses if he started complaining for a trade fan sympathy would be basically zero because he was able to choose his destination.

And on top of that we should be paying some percentage to guaranteed contracts as a percentage of the cap and another percentage to actual time played on the court. This solves sitting players, injured players getting paid when they aren’t performing, getting young guys who step up more money for their hard work, vets wanting to stay on rebuilding teams, etc. Most jobs are paid on not only past performance but current as well. While it’s reasonable to have a portion of the salary go to a guarantee a large percentage should be based on current performance as well.

That’s my 2 cents.