The leverage system was great to give people the option of only putting a small amount of Bitcoin on the site and so not need to trust me with all their coins but no one used it for that, they want the largest share of bankroll so put all their money on 10x anyway!
I used it for exactly that reason and the same with justdice to diversify my total investment in bitcoins, But I might be a outlier.
It's a shame other investors need to be nannied and ruin it for the rest of us.
It's a tough call how much to allow investors to control their own risk factor.
Sensible investors like you (and I) will invest a little and set the multiplier high to limit our counterparty risk. But the majority of investors will invest their whole bankroll and set the multiplier high just to maximize their expected return, even though it is very risky. It's still safer than betting it on dice as a player where the expectation is negative.
Suppose there are two investors and a maximum leverage multiplier of 100x:
* A (that's you) has 100 BTC, and decides to invest just 1 BTC at 100x, so it's like he's investing his whole bankroll, but with just 1% of the counterparty risk.
* B (a gamber) has 100 BTC, and decided to invest the whole 100 BTC at 100x, to get as much profit as possible, screw the risk.
A ends up with just 1% of the house profit (after commissions). B gets the other 99%. By taking advantage of the massive leverage B has effectively taken all of A's profits away.
So instead suppose the house decides to limit the maximum multiplier to 4x:
Now when A invests 25 BTC at 4x and B invests 100 BTC at 4x, A still ends up with 20% of the house profits after commissions. B is still able to take part of A's share of the profits, but nowhere near as bad as when 100x leverage is allowed.
As this example shows, it actually works out in A's favor when the house cuts the maximum leverage multiplier. It stops the crazy gamble-investors from ending up with almost all the profits.
