NAV/U at end of (my) trading today is 10.1112 LTC.
LTC/BTC Exchange rate is 0.00357
A small quantity of Asks will be left up overnight at 10.25 LTC and a small bid-wall at 9.7 LTC. I do NOT recoomend buying into (or out of) the fund at those prices - but the option's there if you're desperate. The reason why these values are significantly either side of NAV/U is so as to protect existing investors in case of a minor swing in the LTC/BTC exchange rate. Whilst I'm online I regularly adjust the asks/bids - I cant do that whilst I'm asleep.
Exception to the above would be if the LTC/BTC exchange rate DOES move significantly - in which case buying or selling could make sense (which makes sense depends on which way the exchange-rate has moved).
30.75% of the fund is in LTC (or LTC-denominated securities), the other 69.25% in BTC (or BTC-denominated securities). With those percentages and the NAV/U a bit of basic math will allow you to work out the current NAV/U at any exchange rate that transpires.
Throughout the day (when I'm online) I update asks/bids every hour or so - typically the Ask will be about 0.5-1% over NAV/U and the Bid 1-5% below NAV/U. These spreads represent the costs involved in processing each type of action - and ensure existing investors dont lose any value when someone new invests or an existing investor divests themselves of their holding.
The small premium on asks reflects that there's a 0.2% fee to the fund for the sale plus a small cost in transferring the bulk of the funds across to BTC. There's also a hidden cost to existing investors - that earnings on their working funds are being shared with the new investors whose capital is not yet in play.
The larger premium on bids reflects the fact that if a signficiant number of units are sold back then holdings may have to be liquidated to get the reserve 5% LTC back in place.
The degree of the spread is also determined by the current situation of the fund: if I have an immediate use for capital then the ask will tend to be lower and the bid significantly lower. Conversely, if I have surplus liquid capital then the ask will be raised and bids made more attractive. The spread will also tend to widen when the LTC/BTC exchange-rate looks volatile and tighten when there's significant walls on both sides of the current value.
On a final note (for today) if anyone at any point knows in advance that they will need to sell back their units at a particular time then feel free to let me know - and I can ensure I have funds available (even if it's over the 5% I'm committed to). It makes my life easier - and in return I'd be able to buy back at 99% of NAV/U rather than anywhere in the 95-99% range you'd get trying to sell back to me through the exchange.
Topic: [LTC-GLOBAL] LTC-ATF - page 14. (Read 25461 times)
FUND VALUATION
The contract for this fund does not spell out any details of how the fund will be valued. This is intentional - I did not want to commit to a specific means for valuing securities only to then be compelled to use it in circumstances where it would be irrational to do so. Here, however, are the guidelines I will be following when valuing the fund:
LTC/BTC exchange rate : This will be the mid-point between bids/asks on BTC-E. I toyed with the idea of just using the rate quoted at the top of LTC-GLOBAL, but unfortunately that's just the price at which the last trade completed.
Securities : The first rule with these is simple:
The valuation must always lie in the range (Highest Bid - Lowest Ask). This seems obvious - yet I see funds trading where they religiously use 5-day average even when that value now lies outside the range at which the security trades.
Bearing the above in mind, the means by which a security is valued is determined based on whether the security is one I'm trading or one I am investing in (i.e. intend to hold for more than a day or two).
Investments: Securities I purchase with the intent to hold will be valued at the 5-day average (GLBSE) or 7-day average (LTC GLOBAL) adjusted where necessary to fall within the bid-ask range.
Traded Assets: Securities I purchase with the intent to sell back in the short-term will be valued at the price they were bought for (adjusted if necessary to fall within the bid-ask range). There will be no optimistic valuations based upon the price I expect to be able to sell them for.
The regular reports for the fund will NOT include details of which securities are currently held for trading (long-term investments WILL be shown) - those lines of the spreadsheet will be hidden when the screenshot is posted. I AM willing to provide the full spreadsheet to any investor holding 10% or more of authorised issued units (currently 2500 units are authorised for sale): if you hold 10% or more of units (250 until more are authorised for release) then email me (at the email address listed for this asset) from the email address associated with your LTC-GLOBAL account. When I produce the weekly report (1st one will be this weekend) then I will email you the full spreadsheet showing all securities held, their valuations etc (after verifying that you indeed hold the required number of units).
The contract for this fund does not spell out any details of how the fund will be valued. This is intentional - I did not want to commit to a specific means for valuing securities only to then be compelled to use it in circumstances where it would be irrational to do so. Here, however, are the guidelines I will be following when valuing the fund:
LTC/BTC exchange rate : This will be the mid-point between bids/asks on BTC-E. I toyed with the idea of just using the rate quoted at the top of LTC-GLOBAL, but unfortunately that's just the price at which the last trade completed.
Securities : The first rule with these is simple:
The valuation must always lie in the range (Highest Bid - Lowest Ask). This seems obvious - yet I see funds trading where they religiously use 5-day average even when that value now lies outside the range at which the security trades.
Bearing the above in mind, the means by which a security is valued is determined based on whether the security is one I'm trading or one I am investing in (i.e. intend to hold for more than a day or two).
Investments: Securities I purchase with the intent to hold will be valued at the 5-day average (GLBSE) or 7-day average (LTC GLOBAL) adjusted where necessary to fall within the bid-ask range.
Traded Assets: Securities I purchase with the intent to sell back in the short-term will be valued at the price they were bought for (adjusted if necessary to fall within the bid-ask range). There will be no optimistic valuations based upon the price I expect to be able to sell them for.
The regular reports for the fund will NOT include details of which securities are currently held for trading (long-term investments WILL be shown) - those lines of the spreadsheet will be hidden when the screenshot is posted. I AM willing to provide the full spreadsheet to any investor holding 10% or more of authorised issued units (currently 2500 units are authorised for sale): if you hold 10% or more of units (250 until more are authorised for release) then email me (at the email address listed for this asset) from the email address associated with your LTC-GLOBAL account. When I produce the weekly report (1st one will be this weekend) then I will email you the full spreadsheet showing all securities held, their valuations etc (after verifying that you indeed hold the required number of units).
Asset is now live.
LTC was trading at 0.00356 vs BTC when first units were placed on the market at 10.0. Price of units for sale (and the buy-back bid) will be adjusted appropriately if that exchange rate significantly varies: from now on all bids/asks I make will be based on actual NAV/U of the units.
LTC was trading at 0.00356 vs BTC when first units were placed on the market at 10.0. Price of units for sale (and the buy-back bid) will be adjusted appropriately if that exchange rate significantly varies: from now on all bids/asks I make will be based on actual NAV/U of the units.
...just in case you don't want to day trade your own funds/value. 
[[Contract for asset on LTC-GLOBAL
UPDATED 23rd November 2012 in accordance with a motion passed by investors
UPDATED 16th January 2013 in accordance with a motion passed by investors
UPDATED 5th May 2013 in accordance with a motion passed by investors
]]
----- CONTRACT BELOW THIS LINE -----
DEFINITIONS
(The) Issuer / (The) Fund Manager : The individual controlling the user account with the name "Deprived" on The bitcointalk forums.
The Fund : The Litecoin Actively Traded fund (Ticker : LTC-ATF).
Unit : The smallest portion of the fund which may be traded.
NAV : NAV (Net Asset Value) refers to the total value of all assets held by the fund.
NAV/U : Net Asset Value per Unit. This refers to the NAV of the fund divided by the number of outstanding units.
HWM : High Water Mark. This is the previous highest NAV/U at which units have been valued.
OVERVIEW
The fund exists to trade share, bonds and other securities denominate in Litecoins (LTC), Bitcoins (BTC) and other crypto-currencies. The fund is itself denominated in LTC and has the long-term objective of primarily trading in LTC-denominated assets. Due to the current paucity of such assets initial trading will be largely in BTC-denominated securities.
The majority of the fund's capital will be used for short-term investment (sometimes referred to as "day trading") rather than for long-term investment. Long-term investments will, however, be made where the fund manager believes it to be sound.
Initially trading will only be made on the BTC-based exchange known as GLBSE and the LTC-based exchange known as LTC-GLOBAL.
The fund is a growth fund - no dividends will be paid and profits (or losses) can only be realised by selling back units to the fund.
UNITS
Equity in the fund is distributed and measured in units. Each unit represents ownership of 1/(Units outsatnding) of the total value of the fund's assets.
100,000 units have been originally created. A portion of these units (2500) will be initially authorised for issuance. At various times in the future additional units may be authorised for issuance. The manager is entitled to authorise for issue whichever is the larger of 2500 units or 25% of current outstanding units each week.
Other than as detailed below under "MANAGEMENT FEES" the manager is only entitled to sell issued units on the LTC-GLOBAL exchange. Such sales may only be made at or above the current NAV/U (to avoid dilution of existing investors' holdings).
The manager is entitled (and expected) to buy back units. This may only be done on the LTC-GLOBAL exchange at prices below the current NAV/U.
The current value of a unit will be regularly calculated and posted in the forum thread listed above.
Units have no voting rights. The manager may, on occasion, issue votes to obtain feedback from investors. Such votes are purely for information purposes and are in no way binding on the manager.
MANAGEMENT FEES
At least once per fortnight (with the goal being to do it weekly) a report will be prepared and posted in the forum thread linked above. This will include a current valuation of the NAV and NAV/U for the fund. This valuation will be in LTC (a BTC valuation will also be posted).
When that valuation is above the current HWM then the excess is considered to be profit. The manager is entitled to receive 10% of that profit as a management fee, paid in LTC-ATF units at the calculated adjusted NAV/U.
INVESTMENT METHODS
The following are intended as an overview of the TYPE of strategies the manager will be using. The following is not exhaustive, definitive or restrictive - the manager is entitled to invest as he sees fit within the constrainst described elsewhere in this document.
Long-term investment: A minority of the fund (no more than 25%) will be allocated to long-term investments.
Spread/margin trading: Securities will be bought with bids and sold with asks to make a profit.
Bot-exploitation: Some securities on GLBSE have bots trading on the spread/volatility. At least some of these bots are exploitable due to their having very naive interpretations of market depth.
Panic-trading/Liquidity crises: A lot of trading on GLBSE is from investors who need to raise cpaital quickly. As there is very little liquidity for most securities on GLBSE this forces them to sell at way below a fair price. This can be doubly taken advantage of - first by collecting their initial sales, secondly by buying during the temporary price-slump that often then follows.
IPO trading: Often when a new security is issued, some portion of securities are offered at a discount. Profit can be made by buying then reselling.
LIQUIDITY & FUND CLOSURE
The fund does not pay dividends - so the only way for investors to realise profits (or losses) is to sell their units. The fund shall attempt at all times hold at least 5% of fund value in LTC for the purpose of buying back units. When the manager is online (and has an accurate current valuation of the fund) this shall be done by bid-walls placed on LTC-GLOBAL at between 95% and 99% of NAV/U (the precise value within that range may be set by the manager - based, primarily, on volatility of the LTC/BTC exchange rate).
If significant bids already exist at above 99% of NAV then the manager is released from the obligation to place bid-walls - but not from the obligation to hold sufficient liquid LTC to place such walls if the need arises.
If circumstances arise such that the manager is no longer able to continue operating the fund then the manager shall dispose of all assets held by the fund and distribute the proceeds to unit holders. Such process shall be conducted in as timely a fashion as is possible without incurring major loss by selling into under-priced bids.
DIVIDENDS
It is not LTC-ATF's policy to pay regular dividends - in general profits are retained increasing the value of units.
On occasion the fund may grow to a point where it is the manager's view that there is excess unused LTC-denominated capital which should be returned to investors. In those circumstances the manager is entitled to pay a dividend provided ALL of the following points are met:
1. The dividend shall be paid immediately after a weekly report (and the payment of any management fee units plus adjustment of the HWM if required).
2. The dividend may not be so large that, after its payment, the ratio of LTC-ATF.B1 debt to fund NAV exceeds 100%.
3. The HWM will be reduced by the amount dividended per unit.
4. If any market Bids are up that would be above the new NAV/U post-dividend then manager will briefly suspend trading and clear orders so noone is sold to at a markup to NAV/U higher than they intended when they placed their Bids.
5. No management fee may be taken on the dividend - though the manager WILL receive dividends on any units he holds the same as any other investor.
DISTRIBUTION OF HOLDINGS
The manager should always aim to hold at least 5% of fund NAV as liquid LTC on LTC-GLOBAL (obviously this will not be the case immediately after someone has sold back units into a bidwall).
Target initial distribution of funds is:
5-10% uncommitted LTC on LTC-GLOBAL
10-20% LTC-denominated securities or bids on the same.
The rest BTC-denominated securities or bids on the same.
It is hoped that over time the proprotion allocated to LTC-denominated investments will rise - but that depends almost entirely upon suitable such securities being able. The above distribution is a guideline only - and not a strict target which has to be achieved.
BOND ISSUING
The fund manager is authorised to issue interest-paying bonds with a face value denominated in BTC. These bonds may be issued on ones or more trading platforms of Manager's choice. Costs associated with creating these bonds will be charged to the fund and treated as an non-realisable asset depreciated to zero over a period not exceeding 20 weeks. No additional management fee may be taken for
administering these bonds and the manager's fee must be taken on profits AFTER payment of interest due on the bonds. For accounting purposes bonds are treated as a liability at their face value. Although face value must be in BTC, the bonds may be transacted (and dividends paid) in any currency of manager's choosing.
The following restrictions are placed in respect of these bonds:
Bonds may not be issued with a total value greater than 1.5 times the NAV of the fund. If, through exchange-rate movement or trading loss, NAV falls below this requirement then either more units must be sold or bonds redeemed.
The fund must maintain BTC-denominated assets such that outstanding bonds amount to a liability of no more than 90% of such assets. When this ratio is not met (such as after issue of new bonds transacted in a currency other than BTC or after significant BTC-denominated trading losses) it must be promptly restored.
The interest offered on new bonds issued may not exceed 1/3 of the estimated average trading profit (excluding exchange-rate caused elements) of the fund for the previous 26 weeks (or since the start of the fund if it hasn't been running for 26 weeks).
No risks associated with normal trading may be passed on to the bonds - all loss from trading is applied against the value of fund units. The risk of trading-platform failure may, at manager's discretion, be fully or partially shared with the bonds.
Manager has authority to define the detail of how bonds will be managed as he sees fit within the above parameters.
PASS-THROUGH OPERATION
The fund manager is authorised to run pass-throughs on LTC-GLOBAL to securities
issued on exchanges other than LTC-GLOBAL.
Costs associated with creating these pass-throughs will be charged to the fund
and treated as an non-realisable asset depreciated to zero over a period not
exceeding 20 weeks. No additional management fee may be taken for administering
these pass-throughs (any profit from them would be treated as normal LTC-ATF
profit and management fee applied as usual).
The following restrictions are placed in respect of these pass-throughs:
1. With a single exception LTC-ATF must always hold at least as many units of a
security to which a pass-through operates as (units outstanding + units for sale).
a) The exception is that this may briefly be theoretically broken whilst buying
back pass-through units from an investor.
2. No pass-through may offer any guarantees in respect of the performance of
the underlieing asset. Specifically, no guarantees may be offered by the
manager in respect of either future prices or dividends of any security to which
a pass-through is operated.
3. Risk of failure of any asset to which a pass-through is operated, along with
risk of failure/default of any platform on which those assets are held or
transacted MUST be passed on to purchasers of units of the pass-through.
Manager has authority to define the detail of how pass-throughs will be managed
as he sees fit within the above parameters.
CAVEATS
The performance of the fund (expressed in LTC) is strongly dependent on the exchange-rate of LTC/BTC. It would not be wise to invest with the expectancy of making an (LTC-denominated) profit if you believe LTC is likely to significantly appreciate vs BTC in the short to medium term.
For the purpose of this offering, BTC and LTC are considered virtual currencies with no intrinsic value (akin to currencies in online games). This fund is being run for the entertainment of the manager and investors with no expectation of financial gain or loss for either party.
----- CONTRACT ENDS HERE -----
----- OLD POST BELOW THIS LINE -----
STARTING PROCESS
Though not part of the contract I believe it would be useful to explain how the startup phase of the fund will occur (assuming the asset is approved by LTC-GLOBAL). After approval I will do the following:
1. Place a sell order for 500 units at 10 LTC each (or sell into existing orders if such exist).
2. Calculate NAV based on my own current holdings on LTC-GLOBAl, GLBSE and BTC-E at the exchange-rate at that time.
3. Assign to myself (a seperate LTC-GLOBAL account) units equal to NAV/10.1 (by contract I am obligated to buy shares either through the market or at NAV + 1% if I just transfer them). Doing it this way saved myself the fees of converting BTC to LTC and saves the fund the cost of then converting those LTC back to BTC to invest.
The only shares I currently hold and will transfer are a few BTC-worth of ASICMINER. These are one of the most liquid securities on GLBSE with a steady trading range (0.11 - 0.2 typically). There will be no ponzi assets or unsellable fixed-rate mining bonds transferred from me (it is unlikely I'd ever even day-trade in such offerings).
Thereafter those LTC-GLOBAL and GLBSE accounts will only be used for this fund. I already have a second LTC-GLOBAL account to hold my own units in - and will make a second GLBSE one if I ever see a need for it. The BTC-E account may be used to do trades unrelated to this fund.
I will be using units gradually (up to the authorised 2500), rather than all at once for a few reasons:
1. To get the best price possible,
2. Most of the funds will need to be exchanged to BTC - I don't want to impact the exchange rate if possible.
3. It takes a bit of time to get funds into play - I do noone any good by taking funds faster than I can actually usefully apply them.
UPDATED 23rd November 2012 in accordance with a motion passed by investors
UPDATED 16th January 2013 in accordance with a motion passed by investors
UPDATED 5th May 2013 in accordance with a motion passed by investors
]]
----- CONTRACT BELOW THIS LINE -----
DEFINITIONS
(The) Issuer / (The) Fund Manager : The individual controlling the user account with the name "Deprived" on The bitcointalk forums.
The Fund : The Litecoin Actively Traded fund (Ticker : LTC-ATF).
Unit : The smallest portion of the fund which may be traded.
NAV : NAV (Net Asset Value) refers to the total value of all assets held by the fund.
NAV/U : Net Asset Value per Unit. This refers to the NAV of the fund divided by the number of outstanding units.
HWM : High Water Mark. This is the previous highest NAV/U at which units have been valued.
OVERVIEW
The fund exists to trade share, bonds and other securities denominate in Litecoins (LTC), Bitcoins (BTC) and other crypto-currencies. The fund is itself denominated in LTC and has the long-term objective of primarily trading in LTC-denominated assets. Due to the current paucity of such assets initial trading will be largely in BTC-denominated securities.
The majority of the fund's capital will be used for short-term investment (sometimes referred to as "day trading") rather than for long-term investment. Long-term investments will, however, be made where the fund manager believes it to be sound.
Initially trading will only be made on the BTC-based exchange known as GLBSE and the LTC-based exchange known as LTC-GLOBAL.
The fund is a growth fund - no dividends will be paid and profits (or losses) can only be realised by selling back units to the fund.
UNITS
Equity in the fund is distributed and measured in units. Each unit represents ownership of 1/(Units outsatnding) of the total value of the fund's assets.
100,000 units have been originally created. A portion of these units (2500) will be initially authorised for issuance. At various times in the future additional units may be authorised for issuance. The manager is entitled to authorise for issue whichever is the larger of 2500 units or 25% of current outstanding units each week.
Other than as detailed below under "MANAGEMENT FEES" the manager is only entitled to sell issued units on the LTC-GLOBAL exchange. Such sales may only be made at or above the current NAV/U (to avoid dilution of existing investors' holdings).
The manager is entitled (and expected) to buy back units. This may only be done on the LTC-GLOBAL exchange at prices below the current NAV/U.
The current value of a unit will be regularly calculated and posted in the forum thread listed above.
Units have no voting rights. The manager may, on occasion, issue votes to obtain feedback from investors. Such votes are purely for information purposes and are in no way binding on the manager.
MANAGEMENT FEES
At least once per fortnight (with the goal being to do it weekly) a report will be prepared and posted in the forum thread linked above. This will include a current valuation of the NAV and NAV/U for the fund. This valuation will be in LTC (a BTC valuation will also be posted).
When that valuation is above the current HWM then the excess is considered to be profit. The manager is entitled to receive 10% of that profit as a management fee, paid in LTC-ATF units at the calculated adjusted NAV/U.
INVESTMENT METHODS
The following are intended as an overview of the TYPE of strategies the manager will be using. The following is not exhaustive, definitive or restrictive - the manager is entitled to invest as he sees fit within the constrainst described elsewhere in this document.
Long-term investment: A minority of the fund (no more than 25%) will be allocated to long-term investments.
Spread/margin trading: Securities will be bought with bids and sold with asks to make a profit.
Bot-exploitation: Some securities on GLBSE have bots trading on the spread/volatility. At least some of these bots are exploitable due to their having very naive interpretations of market depth.
Panic-trading/Liquidity crises: A lot of trading on GLBSE is from investors who need to raise cpaital quickly. As there is very little liquidity for most securities on GLBSE this forces them to sell at way below a fair price. This can be doubly taken advantage of - first by collecting their initial sales, secondly by buying during the temporary price-slump that often then follows.
IPO trading: Often when a new security is issued, some portion of securities are offered at a discount. Profit can be made by buying then reselling.
LIQUIDITY & FUND CLOSURE
The fund does not pay dividends - so the only way for investors to realise profits (or losses) is to sell their units. The fund shall attempt at all times hold at least 5% of fund value in LTC for the purpose of buying back units. When the manager is online (and has an accurate current valuation of the fund) this shall be done by bid-walls placed on LTC-GLOBAL at between 95% and 99% of NAV/U (the precise value within that range may be set by the manager - based, primarily, on volatility of the LTC/BTC exchange rate).
If significant bids already exist at above 99% of NAV then the manager is released from the obligation to place bid-walls - but not from the obligation to hold sufficient liquid LTC to place such walls if the need arises.
If circumstances arise such that the manager is no longer able to continue operating the fund then the manager shall dispose of all assets held by the fund and distribute the proceeds to unit holders. Such process shall be conducted in as timely a fashion as is possible without incurring major loss by selling into under-priced bids.
DIVIDENDS
It is not LTC-ATF's policy to pay regular dividends - in general profits are retained increasing the value of units.
On occasion the fund may grow to a point where it is the manager's view that there is excess unused LTC-denominated capital which should be returned to investors. In those circumstances the manager is entitled to pay a dividend provided ALL of the following points are met:
1. The dividend shall be paid immediately after a weekly report (and the payment of any management fee units plus adjustment of the HWM if required).
2. The dividend may not be so large that, after its payment, the ratio of LTC-ATF.B1 debt to fund NAV exceeds 100%.
3. The HWM will be reduced by the amount dividended per unit.
4. If any market Bids are up that would be above the new NAV/U post-dividend then manager will briefly suspend trading and clear orders so noone is sold to at a markup to NAV/U higher than they intended when they placed their Bids.
5. No management fee may be taken on the dividend - though the manager WILL receive dividends on any units he holds the same as any other investor.
DISTRIBUTION OF HOLDINGS
The manager should always aim to hold at least 5% of fund NAV as liquid LTC on LTC-GLOBAL (obviously this will not be the case immediately after someone has sold back units into a bidwall).
Target initial distribution of funds is:
5-10% uncommitted LTC on LTC-GLOBAL
10-20% LTC-denominated securities or bids on the same.
The rest BTC-denominated securities or bids on the same.
It is hoped that over time the proprotion allocated to LTC-denominated investments will rise - but that depends almost entirely upon suitable such securities being able. The above distribution is a guideline only - and not a strict target which has to be achieved.
BOND ISSUING
The fund manager is authorised to issue interest-paying bonds with a face value denominated in BTC. These bonds may be issued on ones or more trading platforms of Manager's choice. Costs associated with creating these bonds will be charged to the fund and treated as an non-realisable asset depreciated to zero over a period not exceeding 20 weeks. No additional management fee may be taken for
administering these bonds and the manager's fee must be taken on profits AFTER payment of interest due on the bonds. For accounting purposes bonds are treated as a liability at their face value. Although face value must be in BTC, the bonds may be transacted (and dividends paid) in any currency of manager's choosing.
The following restrictions are placed in respect of these bonds:
Bonds may not be issued with a total value greater than 1.5 times the NAV of the fund. If, through exchange-rate movement or trading loss, NAV falls below this requirement then either more units must be sold or bonds redeemed.
The fund must maintain BTC-denominated assets such that outstanding bonds amount to a liability of no more than 90% of such assets. When this ratio is not met (such as after issue of new bonds transacted in a currency other than BTC or after significant BTC-denominated trading losses) it must be promptly restored.
The interest offered on new bonds issued may not exceed 1/3 of the estimated average trading profit (excluding exchange-rate caused elements) of the fund for the previous 26 weeks (or since the start of the fund if it hasn't been running for 26 weeks).
No risks associated with normal trading may be passed on to the bonds - all loss from trading is applied against the value of fund units. The risk of trading-platform failure may, at manager's discretion, be fully or partially shared with the bonds.
Manager has authority to define the detail of how bonds will be managed as he sees fit within the above parameters.
PASS-THROUGH OPERATION
The fund manager is authorised to run pass-throughs on LTC-GLOBAL to securities
issued on exchanges other than LTC-GLOBAL.
Costs associated with creating these pass-throughs will be charged to the fund
and treated as an non-realisable asset depreciated to zero over a period not
exceeding 20 weeks. No additional management fee may be taken for administering
these pass-throughs (any profit from them would be treated as normal LTC-ATF
profit and management fee applied as usual).
The following restrictions are placed in respect of these pass-throughs:
1. With a single exception LTC-ATF must always hold at least as many units of a
security to which a pass-through operates as (units outstanding + units for sale).
a) The exception is that this may briefly be theoretically broken whilst buying
back pass-through units from an investor.
2. No pass-through may offer any guarantees in respect of the performance of
the underlieing asset. Specifically, no guarantees may be offered by the
manager in respect of either future prices or dividends of any security to which
a pass-through is operated.
3. Risk of failure of any asset to which a pass-through is operated, along with
risk of failure/default of any platform on which those assets are held or
transacted MUST be passed on to purchasers of units of the pass-through.
Manager has authority to define the detail of how pass-throughs will be managed
as he sees fit within the above parameters.
CAVEATS
The performance of the fund (expressed in LTC) is strongly dependent on the exchange-rate of LTC/BTC. It would not be wise to invest with the expectancy of making an (LTC-denominated) profit if you believe LTC is likely to significantly appreciate vs BTC in the short to medium term.
For the purpose of this offering, BTC and LTC are considered virtual currencies with no intrinsic value (akin to currencies in online games). This fund is being run for the entertainment of the manager and investors with no expectation of financial gain or loss for either party.
----- CONTRACT ENDS HERE -----
----- OLD POST BELOW THIS LINE -----
STARTING PROCESS
Though not part of the contract I believe it would be useful to explain how the startup phase of the fund will occur (assuming the asset is approved by LTC-GLOBAL). After approval I will do the following:
1. Place a sell order for 500 units at 10 LTC each (or sell into existing orders if such exist).
2. Calculate NAV based on my own current holdings on LTC-GLOBAl, GLBSE and BTC-E at the exchange-rate at that time.
3. Assign to myself (a seperate LTC-GLOBAL account) units equal to NAV/10.1 (by contract I am obligated to buy shares either through the market or at NAV + 1% if I just transfer them). Doing it this way saved myself the fees of converting BTC to LTC and saves the fund the cost of then converting those LTC back to BTC to invest.
The only shares I currently hold and will transfer are a few BTC-worth of ASICMINER. These are one of the most liquid securities on GLBSE with a steady trading range (0.11 - 0.2 typically). There will be no ponzi assets or unsellable fixed-rate mining bonds transferred from me (it is unlikely I'd ever even day-trade in such offerings).
Thereafter those LTC-GLOBAL and GLBSE accounts will only be used for this fund. I already have a second LTC-GLOBAL account to hold my own units in - and will make a second GLBSE one if I ever see a need for it. The BTC-E account may be used to do trades unrelated to this fund.
I will be using units gradually (up to the authorised 2500), rather than all at once for a few reasons:
1. To get the best price possible,
2. Most of the funds will need to be exchanged to BTC - I don't want to impact the exchange rate if possible.
3. It takes a bit of time to get funds into play - I do noone any good by taking funds faster than I can actually usefully apply them.
WHAT IS LTC-ATF AND WHY DOES IT EVEN EXIST?
LTC-ATF is a small fund established to trade in securities denominated in crypto-currencies. The fund's focus is very much on trading rather than investment - it doesn't sit on investments waiting for them to (hopefully) make a profit, rather it strives to buy and sell making profit in a much shorter time-scale. As part of its strategy LTC-ATF now operates pass-throughs to securities which have a significant barrier to entry that would otherwise prevent smaller investors buying them.
The obvious question to ask is "Why bother setting up a fund with such a small amount of capital - couldn't you just use your own funds to trade?". There are a range of reasons why the fund exists - hopefully the give some insight into
the rationale behind the fund and why it operates the way it does. In no particular order :
Funding : Of course I have sufficient funds to use my own capital for an operation this size. But if market conditions (range of securities and volume traded) change such that a much larger operation is desirable then without a track-record it would be hard to raise the funds to take advantage of that.
Fairness : I'm by no means shy about expressing criticism of other virtual securities. It's therefore only fair that I run one myself and give opportunity for those I criticise to reply in like manner. It's my hope (and expectation) that my performance, fairness to investors, reporting standards and transparency will make plain that - whatever else my faults may be - I'm no hypocrite when I complain about others' lack of those same qualities.
Fun : It's far more enjoyable running the fund in public than it was when I just invested my own funds in private.
Motivation : Having a responsibility to my investors causes me to put more effort into my endeavours than I otherwise likely would. If I become lazy, lax or careless then it will become a matter of public record - a great incentive to do none of those.
Start Small : It's painful watching people attempt to create new companies in areas they have no proven expertise in and trying to raise thousand or tens of thousands of BTC right from the start. I'm doing it (what I believe to be) the right way - start small, prove you can do well whilst small then (and ONLY then) expand.
WHAT SECURITIES DOES LTC-ATF OFFER?
At present LTC-ATF offers four securities on LTC Global:
LTC-ATF - This is the parent fund. Investors in this purchase units of the fund representing a portion of the assets owned by the fund. This fund does not pay dividends - all profits (or losses) are reflected in a regularly updated and published fund valuation. Liquidity is provided via a constantly maintained bid-wall just below NAV/U. Units of LTC-ATF are valued and transacted in LTC.
LTC-ATF.B1 - This is a bond issued by LTC-ATF. The bond's purpose is two-fold - to retain as much of profit as possible for LTC-ATF investors and to allow trading in BTC-denominated securities with greatly reduced exposure to fund value changes casued by exchange-rate movement. This bond has a face value (and pays dividends) denominated in BTC but transacted in LTC. Dividends are paid weekly at a fixed rate which can be raised by the fund manager at will (but never lowered again whilst there are bonds outstanding). Liquidity is provided via buying back through the market at just below face value and by facilitating sell-back of larger quantities of bonds through direct transfer.
At present 25000 LTC-ATF.B1 bonds have been sold. These have a face value of 0.01 BTC each and pay a dividend of 0.6% of face value each week.
S.BBET-PT - This is a pass-through to the BitBet security listed on MPEx.
S.DICE-PT - This is a pass-through to the Satoshi Dice security listed on MPEx.
PLATFORMS TRADED ON AND DISTRIBUTION OF FUNDS
I list below the exchanges/platforms our funds are used on - along with an estimate of the percentage of funds deployed at each location. Some of these ranges are pretty wide - actual funds on each platform varies as profit/loss occurs and needs change. I don't intend to update the percentages too often - they're only there to give a general idea of how funds are distributed. I WILL, however, update the list promptly if we add an extra platform to which we have exposure.
LTC Global : 25%-45%. Majority of funds will usually be here - as we can't use LTC denominated capital anywhere else (there's no meaningful LTC activity on Crypto). This percentage will drop as activity on BTC.CO/BitFunder picks up and we issue new bonds to take advantage of it.
BTC-E : 10%-20%. We hold reserves here (for faster movement between LTC/BTC, to exchange to maintain ratios and to ensure we can maintain bidwalls in the event lots of our Bids get filled).
BTC.CO : 10-30%
BitFunder : 15-35%
Cryptostocks : Currently no funds here.
CoinBR/MPEx : 5-25% CoinBR is a brokerage through which we trade on MPEx (the 30 BTC MPEx registration fee to trade cirectly on there is beyond the fund's budget at present).
WeExchange : 0% Have to pass through this site to deposit/withdraw from BitFunder. No funds are left here for any period of time.
BitFinex : 0%-10% Used to arbitrage LTC/BTC, as an alternative to BTC-E for exchanging.
SUMMARY OF RESULTS TO DATE
The table below shows the overall performance of the fund to date.
There's a column for each of LTC and BTC showing how the fund has performed measured in that currency. From top to bottom the rows are:
Fund Start : Shows the date on which the funded and the initial NAV/U.
Last Report : Shows the date at which the latest report was produced and the NAV/U at that date (that's the NAV/U after deduction of any management fee) plus the total of all dividends paid to date.
NAV/U Change : The change (growth) of the NAV/U from the fund's start until when the latest report was produced.
Growth (%) : The percentage the NAV/U of one unit has grown since the fund's start.
Days Elapsed : How long the fund had been running for when the last report was produced.
Daily Multiplier : What the starting NAV/U would have to multipled by every day (compounded) to reach the current NAV/U.
Daily Growth : The daily multipler shown as a percentage.
Weekly Growth : How much on average the fund has grown in a 7-day period.
Annual (APR) : What the annual growth would be if the current growth were maintained over a period of 365.25 days.
Whilst these figures DO represent the actual performance of the fund to date they should NOT be taken as any sort of sensible prediction of future behaviour. A lot of the growth to date has been achieved with a much smaller amount of capital AND a much lower-valued LTC : both factors which allowed growth of a scale it is unlikely can be sustained.
No promises or predictions are made, intended or implied as to future profitability.
DETAILED HISTORICAL RESULTS
The spreadsheet below shows the performance of the fund since its inception. Do note that the ending NAV/U reported for each week is BEFORE management fees - the starting NAV/U for the following week represents the actual NAV/U units were worth to their holders.
Here's an explanation of the various columns (from left to right) :
Date : With the exception of the first row (which records the start of the fund) this is the date at which a report was produced. This is typically done each weekend - however it can be done more of less frequently. Shorter periods between reports will only occur if either the fund is in significant profit AND is selling new units (where the ask price gets artificially inflated by unclaimed management fee otherwise) or if a very significant event occurs (such as the closing of GLBSE). For the remainder of this post I refer to each of these periods as "a week" - this should be read as an abbreviation for "accounting period (typically a week)".
Exchange-Rate : The LTC/BTC exchange-rate at the time at which the report was generated.
Start of Week NAV/U : This is the NAV/U of the fund at the start of the week. If the previous week was profitable then this will be lower than the ending value listed for the previous week (due to the reported value at the end of a week being before deduction of management fee).
End of Week Actual NAV/U : The NAV/U of the fund at the end of the week. This is the value before deduction of management fees, but after servicing any outstanding bonds or other commitments.
End of Week Actual Profit : This is the trading profit made by the fund expressed as a percentage. Again, this is before deduction of management fees, but after servicing any outstanding bonds or other commitments.
%LTC : The percentage of the fund's net assets which are denominated in LTC.
%BTC : The percentage of the fund's net assets which are denominated in BTC. Net assets refers to gross assets less liabilities. Bonds are a liability at their face value. So if the fund had BTC denominated assets (cash+securities) worth 30 BTC but had 20 BTC worth (at face value) of outstanding bonds then the fund's net BTC-denominated assets would only be 10 BTC and this percentage calculated accordingly.
Recalced minus E/R NAV/U : This is a (fairly crude) estimate of what the NAV/U would be were any exchange-rate movement ignored. It is the average of (the average fund-split between currencies at the old exchange-rate) and (the average fund-split between currencies at the new exchange-rate). i.e. the calculation assumes that the exchange-rate change happened steadily throughout the week and any change in the split between currencies also happened steadily through the week. Sometimes one (or both) of those assumptions will be wrong. This is just an approximation designed to give a crude view of what part of profit/loss was actually from trading rather than from exchange-rate movement.
Recalced minus E/R Profit : This is the profit that the fund would have made (expressed as a percentage) were the NAV/U at end of week the one recalculated in the previous column.
These last two columns are important - as the maximum rate that LTC-ATF is able to offer on bonds is one third of the average weekly profit adjusted to remove exchange-rate fluctuations. This value needs to be defined ignoring exchange-rate impact as funds raised by issuing BTC-denominated bonds are immune to exchange-rate changes. Below the main table are listed the average gross profit per week (i.e. before management fee) and the maximum rate LTC-ATF is allowed to offer on bonds. Both of those are AFTER adjustment for exchange-rate fluctuations.
At the time of writing this, that figure sits at 3.2%. There is no way a rate THAT high will ever be offered as I believe our results so far are above expectation and we shouldn't need to offer that high to sell bonds anyway (and why pay more than we have to?).
LTC-ATF is a small fund established to trade in securities denominated in crypto-currencies. The fund's focus is very much on trading rather than investment - it doesn't sit on investments waiting for them to (hopefully) make a profit, rather it strives to buy and sell making profit in a much shorter time-scale. As part of its strategy LTC-ATF now operates pass-throughs to securities which have a significant barrier to entry that would otherwise prevent smaller investors buying them.
The obvious question to ask is "Why bother setting up a fund with such a small amount of capital - couldn't you just use your own funds to trade?". There are a range of reasons why the fund exists - hopefully the give some insight into
the rationale behind the fund and why it operates the way it does. In no particular order :
Funding : Of course I have sufficient funds to use my own capital for an operation this size. But if market conditions (range of securities and volume traded) change such that a much larger operation is desirable then without a track-record it would be hard to raise the funds to take advantage of that.
Fairness : I'm by no means shy about expressing criticism of other virtual securities. It's therefore only fair that I run one myself and give opportunity for those I criticise to reply in like manner. It's my hope (and expectation) that my performance, fairness to investors, reporting standards and transparency will make plain that - whatever else my faults may be - I'm no hypocrite when I complain about others' lack of those same qualities.
Fun : It's far more enjoyable running the fund in public than it was when I just invested my own funds in private.
Motivation : Having a responsibility to my investors causes me to put more effort into my endeavours than I otherwise likely would. If I become lazy, lax or careless then it will become a matter of public record - a great incentive to do none of those.
Start Small : It's painful watching people attempt to create new companies in areas they have no proven expertise in and trying to raise thousand or tens of thousands of BTC right from the start. I'm doing it (what I believe to be) the right way - start small, prove you can do well whilst small then (and ONLY then) expand.
WHAT SECURITIES DOES LTC-ATF OFFER?
At present LTC-ATF offers four securities on LTC Global:
LTC-ATF - This is the parent fund. Investors in this purchase units of the fund representing a portion of the assets owned by the fund. This fund does not pay dividends - all profits (or losses) are reflected in a regularly updated and published fund valuation. Liquidity is provided via a constantly maintained bid-wall just below NAV/U. Units of LTC-ATF are valued and transacted in LTC.
LTC-ATF.B1 - This is a bond issued by LTC-ATF. The bond's purpose is two-fold - to retain as much of profit as possible for LTC-ATF investors and to allow trading in BTC-denominated securities with greatly reduced exposure to fund value changes casued by exchange-rate movement. This bond has a face value (and pays dividends) denominated in BTC but transacted in LTC. Dividends are paid weekly at a fixed rate which can be raised by the fund manager at will (but never lowered again whilst there are bonds outstanding). Liquidity is provided via buying back through the market at just below face value and by facilitating sell-back of larger quantities of bonds through direct transfer.
At present 25000 LTC-ATF.B1 bonds have been sold. These have a face value of 0.01 BTC each and pay a dividend of 0.6% of face value each week.
S.BBET-PT - This is a pass-through to the BitBet security listed on MPEx.
S.DICE-PT - This is a pass-through to the Satoshi Dice security listed on MPEx.
PLATFORMS TRADED ON AND DISTRIBUTION OF FUNDS
I list below the exchanges/platforms our funds are used on - along with an estimate of the percentage of funds deployed at each location. Some of these ranges are pretty wide - actual funds on each platform varies as profit/loss occurs and needs change. I don't intend to update the percentages too often - they're only there to give a general idea of how funds are distributed. I WILL, however, update the list promptly if we add an extra platform to which we have exposure.
LTC Global : 25%-45%. Majority of funds will usually be here - as we can't use LTC denominated capital anywhere else (there's no meaningful LTC activity on Crypto). This percentage will drop as activity on BTC.CO/BitFunder picks up and we issue new bonds to take advantage of it.
BTC-E : 10%-20%. We hold reserves here (for faster movement between LTC/BTC, to exchange to maintain ratios and to ensure we can maintain bidwalls in the event lots of our Bids get filled).
BTC.CO : 10-30%
BitFunder : 15-35%
Cryptostocks : Currently no funds here.
CoinBR/MPEx : 5-25% CoinBR is a brokerage through which we trade on MPEx (the 30 BTC MPEx registration fee to trade cirectly on there is beyond the fund's budget at present).
WeExchange : 0% Have to pass through this site to deposit/withdraw from BitFunder. No funds are left here for any period of time.
BitFinex : 0%-10% Used to arbitrage LTC/BTC, as an alternative to BTC-E for exchanging.
SUMMARY OF RESULTS TO DATE
The table below shows the overall performance of the fund to date.
There's a column for each of LTC and BTC showing how the fund has performed measured in that currency. From top to bottom the rows are:
Fund Start : Shows the date on which the funded and the initial NAV/U.
Last Report : Shows the date at which the latest report was produced and the NAV/U at that date (that's the NAV/U after deduction of any management fee) plus the total of all dividends paid to date.
NAV/U Change : The change (growth) of the NAV/U from the fund's start until when the latest report was produced.
Growth (%) : The percentage the NAV/U of one unit has grown since the fund's start.
Days Elapsed : How long the fund had been running for when the last report was produced.
Daily Multiplier : What the starting NAV/U would have to multipled by every day (compounded) to reach the current NAV/U.
Daily Growth : The daily multipler shown as a percentage.
Weekly Growth : How much on average the fund has grown in a 7-day period.
Annual (APR) : What the annual growth would be if the current growth were maintained over a period of 365.25 days.
Whilst these figures DO represent the actual performance of the fund to date they should NOT be taken as any sort of sensible prediction of future behaviour. A lot of the growth to date has been achieved with a much smaller amount of capital AND a much lower-valued LTC : both factors which allowed growth of a scale it is unlikely can be sustained.
No promises or predictions are made, intended or implied as to future profitability.
DETAILED HISTORICAL RESULTS
The spreadsheet below shows the performance of the fund since its inception. Do note that the ending NAV/U reported for each week is BEFORE management fees - the starting NAV/U for the following week represents the actual NAV/U units were worth to their holders.
Here's an explanation of the various columns (from left to right) :
Date : With the exception of the first row (which records the start of the fund) this is the date at which a report was produced. This is typically done each weekend - however it can be done more of less frequently. Shorter periods between reports will only occur if either the fund is in significant profit AND is selling new units (where the ask price gets artificially inflated by unclaimed management fee otherwise) or if a very significant event occurs (such as the closing of GLBSE). For the remainder of this post I refer to each of these periods as "a week" - this should be read as an abbreviation for "accounting period (typically a week)".
Exchange-Rate : The LTC/BTC exchange-rate at the time at which the report was generated.
Start of Week NAV/U : This is the NAV/U of the fund at the start of the week. If the previous week was profitable then this will be lower than the ending value listed for the previous week (due to the reported value at the end of a week being before deduction of management fee).
End of Week Actual NAV/U : The NAV/U of the fund at the end of the week. This is the value before deduction of management fees, but after servicing any outstanding bonds or other commitments.
End of Week Actual Profit : This is the trading profit made by the fund expressed as a percentage. Again, this is before deduction of management fees, but after servicing any outstanding bonds or other commitments.
%LTC : The percentage of the fund's net assets which are denominated in LTC.
%BTC : The percentage of the fund's net assets which are denominated in BTC. Net assets refers to gross assets less liabilities. Bonds are a liability at their face value. So if the fund had BTC denominated assets (cash+securities) worth 30 BTC but had 20 BTC worth (at face value) of outstanding bonds then the fund's net BTC-denominated assets would only be 10 BTC and this percentage calculated accordingly.
Recalced minus E/R NAV/U : This is a (fairly crude) estimate of what the NAV/U would be were any exchange-rate movement ignored. It is the average of (the average fund-split between currencies at the old exchange-rate) and (the average fund-split between currencies at the new exchange-rate). i.e. the calculation assumes that the exchange-rate change happened steadily throughout the week and any change in the split between currencies also happened steadily through the week. Sometimes one (or both) of those assumptions will be wrong. This is just an approximation designed to give a crude view of what part of profit/loss was actually from trading rather than from exchange-rate movement.
Recalced minus E/R Profit : This is the profit that the fund would have made (expressed as a percentage) were the NAV/U at end of week the one recalculated in the previous column.
These last two columns are important - as the maximum rate that LTC-ATF is able to offer on bonds is one third of the average weekly profit adjusted to remove exchange-rate fluctuations. This value needs to be defined ignoring exchange-rate impact as funds raised by issuing BTC-denominated bonds are immune to exchange-rate changes. Below the main table are listed the average gross profit per week (i.e. before management fee) and the maximum rate LTC-ATF is allowed to offer on bonds. Both of those are AFTER adjustment for exchange-rate fluctuations.
At the time of writing this, that figure sits at 3.2%. There is no way a rate THAT high will ever be offered as I believe our results so far are above expectation and we shouldn't need to offer that high to sell bonds anyway (and why pay more than we have to?).
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