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I would like to make the three on-screen buttons pitch black, their appearance is redundant anyway. Is there a way to do that on a Nexus 4 running Lollipop?
Changing soft keys will require root access on Lollipop (or any other version). You can root your Nexus 4 using Chainfire's steps. An app called SoftKeyZ will allow you modify soft keys on your phone.