Topic: [BTC-TC] ET.DIFF: Future to speculate on next difficulty change - page 3. (Read 19091 times)

I'm not sure how flexible Burnsides account-locking-features are, but for this asset to function properly, you have to be able to transfer units (the FUTURE -> LONG + SHORT transfer), so the account should not be locked out of this. But if the account can transfer units out, there is still the possibility for malicious transfers (i.e. transfer 10000 units to a secondary account, sell everything on the open market and withdraw the funds), so a simple withdrawal-lock isn't enough to completely remove the counterparty risk.

I make no claims about whether eltopo is trustworthy or not, simply that the proposed mechanism of an account lock is insufficient to make the question of his trustworthiness moot.

Then again, many securities/funds/whatevers on BTC-TC offer at best relatively minimal guarantees to the trustworthiness of the issuer, so this security is not any different in that regard.

I don't think woodtech knows what this security even is,

Is clearly an incorrect assessment.

See changes to my earlier post in case you're mid reply!

I thought about changing the factor depending on how much the difficulty changes in a period. But I wasn't sure if investors would accept a formula and contract that change every now and then. So I sticked to the 2x factor.

But it would be no problem to change it to a more "appealing" formula for the next time as difficulty isn't likely to fall.

Are there any other opinions on how this should be handled?

Hi,

I'm a BTC TC moderator (username "woodtech"), but given the difficulties using the comments there to discuss a security felt it better to come to the thread.

Trust

First, Can you provide us with some assurance of your personal integrity? I do not wish to offend, but you are asking people to hand over large sums of cash and there is little evidence of who you are or your credentials. You have no trust rating on this forum and been a member for barely three months. There is no LinkedIn profile link on the securities nor any other indication of your real identity.

You said it yourself:


Why should we trust you? You are asking for 1000000 x 0.0204 BTC = 20,400 = $2.5m. That is a massive IPO for someone virtually unknown and hiding behind a virtual identity. I'm perhaps being a little mean but have made it my mission to raise the bar in terms of BTC TC and LTC Global securities. If I can be satisfied I will happily change my vote.

Balancing the equation


Where is this net yield coming from? Surely the three securities should be net zero change in terms of their internal balance sheets, so there is no room for paying out net dividends?

I may have misunderstood here though; is the 0.02 transferred in from ET.DIFF.FUTURE, and if so how often does that happen?

Fees

$50k as a management fee each is a little debatable, however it is a one off which I'm less comfortable with. How do you get remunerated going forwards for running this security?

I'd be a lot happier if you were taking a smaller slice of the total invested at each difficulty change. Place a rough value on your time and estimate how long it will take you to do the administration. I'd suggest that your original 2% spread over a year (ie. 0.065% per 12 day window) indefinitely would be much better.

Also, I liked Deprived's suggestion of some tables. Would help clarify things.

Kate.

Security seems fine - though only responsive in the range -50% to +50% per change.

The upper end isn't an issue but the lower end is.

I don't think anyone expects difficulty to FALL in the coming months, so allowing for it to in the payouts is inefficient.

The formula for payout on LONG is :

0.01 + ((current difficulty - last difficulty) / last difficulty) / 100 * 2

That means a payment of 0.01 if difficulty doesn't change at all - and more if it rises.  That seems wasteful in an environment where a fall just isn't likely - it means half of all capital invested is paying fees without ever being exposed to any useful risk.  In effect the shares are half the price and an additional extra amount is being tied up, shuffled around and having fees paid on it when everyone knows it'll just go back to LONG at the end.

I think if you remove the "0.01 +" and change the 2 to a 4 you'd have an instrument which sold at the same price but where the range for LONG/SHORT was twice as wide.  As you're (sensibly) allowed to change the formula between iterations you could change it back when difficulty rises reduce a bit.

Your goal should be that .02 range represents all difficulty-change possibilities which there's a non-trivial chance of happening and ONLY those.

I'd also suggest a table showing sample settlement values for LONG/SHORT for some difficulty changes - such as 0%, 10%, 20%, 30%, 40%, 50%.

And maybe add extra brackets into the formula to make it perfectly clear that "/100*2" does NOT mean "/(100*2)".

Thanks, it's corrected now.

It's only the difficulty that matters. With each difficulty-adjustment, dividends are paid out according to the formula posted (basically: the higher the difficulty increase the higher the dividend for ET.DIFF.LONG and the lower the dividend for ET.DIFF.SHORT) and all shares are removed. At this point, the thing starts from scratch again, and people can trade to predict the next difficulty increase.

Great so will it only cover the next difficulty or will it include some other factors?

Great, it will be nice to have more future-like securities to speculate with

I did notice a minor typo in your contract:
You have 1 opening bracket and 2 closing brackets.

The securities are now unlocked on BTC-TC and waiting for approval by LTC-GLOBAL voters.

My own 

Which one do you use?

It seems there are no further questions about the asset or contract, so I will register it on BTC-TC tomorrow.

The transfer bot is tested right now and works as intended so far.

I'm on it, at least as I don't wanna do every transfer by hand 

Excellent idea, my only request is that please for the love of god use an automated transfer bot. I remember the days before Deprived started using the bot you had to sit and hope that he got online or whatever before a profit opportunity slipped.

That would be ok with me. I'll contact him about it.

I like it! Great idea, eltopo!

Maybe you could ask burnside to disable bitcoin withdrawals from the ETOPS account (you could only withdraw with burnside's asistence). I think he has offered something similar before.