Topic: Question about moneypot - page 2. (Read 2209 times)

This makes sense to me, but that's because I've been researching the kelly for a few days now. In my opinion, the average investor would not understand that although they initially seem to be making money, when the point to stop would be. I doubt the average investor would be able to "pull their investment" at the right time. And, if the bankroll reaches zero, I can promise you that regardless of what explaining you do, people will call you a scam (also MP would lose its money).

Also, could you work out a new commissions system? Maybe a hard percentage on all winnings?

Thirdly, would you mind answering the question I posted several days ago, about how much of the bankroll MP controls?

Lastly, have you thought about a referral system for investors? Or will that just decrease the cut the each of us gets?

So what is the new maximum bet going to be?

So by investing in moneypot at a max bet of 3x, I run the risk of...

Also, why is it 3x? Is that just rounded from 3.333333333? Or is it 3?

Just a few questions from the perspective of an interested current investor:

1) Can Ryan explain the difference between EV (which I take to be expected value) and expected bankroll growth?

2) Does MoneyPot charge commissions if the gambler wins?

3)

Where is the 7% coming from?

4) Can you make a definitions page clearly outlining what each piece of jargon means? In fact, that would be very beneficial even here, as your use of the word commission changes from time to time here as well...

5) The kelly is not actually not that confusing. I think most investors would understand if you write that "based on a mathematical formula known as the kelly criterion, the most that an investor could lose on a bet with 1% house edge is 1%, the most that an investor could lose on a bet with 2% house edge is 2%, ect"

Please read the kelly, and learn the difference between expected growth and expected value.  You can (and probably are) +EV but -bankroll growth. This should be stuff you did 5 months ago.

This is the second time you've called me out on my "mistakes" which were correct. I don't mean to be so hostile, but seriously..



lol, the "one change" can break everything if done incorrectly. You can't throw in a random constant in on one line, and expect the previous safe-guards to not break very badly.



No hard feelings either. Just to be clear, I think the extra commission is entirely reasonable and important for everyone (apps, gamblers, investors) that there's a sustainable business model in place (which you seem to have). It's better for investors to have 30% of a large-number, than 10% of a small number. I get it.

You just need to communicate it clearly and make sure you're not over-exposing investors  (or at least, tell them they're no longer at a 1x kelly and at a Y).  

Yes, I'll fix up the FAQ.   Although it doesn't read as 0.2% of the house edge there.  It is referenced as 0.2% of the wagered amount which works out if the house edge is 1% but is slightly off if it isn't.  Nonetheless, I'll go ahead and change that up.  Thank you for pointing that out.

It's not a fixed commission of 50-70%.  If using the above example, the investors would be effectively paying a 0.7% commission on their profit. The commission is calculated on wagered volume.

The max bet is still set to the previous settings of the original Moneypot settings.  If the house edge is 1%, you can only win a maximum of 1% of the bankroll.  If the house edge is 5%, you can win up to 5% of the house bankroll.  

However, we're currently in the process of re-writing it to have a hard cap max bet in the very near future.  
  

This is a very reasonable business model, and I don't think there's anything wrong with it. The important part is just being honest and clear about it, so everyone knows what they're getting into. Earlier in the thread you wrote the MP commission was 0.2%, which fine, was a mistake. Then you literally said the commissions are "no where near 70%" using a contrived example of how it's 7%. Now you're being clear, and that's great.

Anyway, I'm glad we're in agreeance upon this.

70% commission of profits is better for investors than 70% of the house edge    (But worse for MP or Apps, who don't want to eat that variance)




You have still side-stepped the most relevant question for investors, what risk level is investors money being risked at? From my reading of response implies a ~3.33x (?) kelly, but I suspect that is a mistake. Could you confirm what that is really the case? I'll ask the earlier question again for clarity: if the bankroll was 100 BTC, and someone was betting on 1%-house-edge binary bet ... what would the max-profit be?

Say the site bankroll is 1000 and you own 10% of that (100 of 1000).  

They bet 100 Bitcoin at a 1% House Edge and lose.  

100 Bitcoin * .01 (house edge) * .5 = 0.5 Bitcoin to App Owner
100 Bitcoin * .01 (house edge) * .2 = 0.2 Bitcoin to Moneypot
100 - 0.5 - 0.2 = 99.3 would be credited to the bankroll

1000 (bankroll) + 99.3 (credit) = 1099.3 (new bankroll)
You'd still have 10% of this.  1099.3 * .1 (share) = 109.93 Bitcoin (new share)

I stated what is an objective fact, your amortized commissions are 70%. I didn't mean that as an attack, or that it's bad (in itself, it isn't). I meant that as a fact.  Which it is. To which you reply:


Which is both insulting, and a plain lie.  Even how you derived the 7% commission is using the same definition of commission I am, so you can't even pretend it's a terminology mistake.


That's not my intention, I just wanted straight answers.


I think when you're holding other peoples money, there's a certain duty of care which you're not showing. At least in my books, when you hold other peoples money, tell them you're risking it according to a certain schedule, and don't -- that's negligent.

I honestly don't even think 90% commissions is unreasonable, and there's many investors that would line up for that if you can give them enough turn-over and risk management.


Of course, that's why investors invest. The more bets the better.



Well obviously. That's pretty hard to mess up (although I can name two casino that did).

Huh? I have never said, or implied such a thing. If anyone told you I said that, they are lying. And if your investments were -EV, it's probably more likely that I'd start gambling on your site than saying anything.


I'm saying that if your previous answer to me is correct, you're risking >3x as much for investors as you should. When I originally wrote MP, if the bankroll was 100 BTC the max-profit on a 1% game would've been 0.5 BTC. Which is the fully kelly. You added an extra 20% commission, and are saying that max-profit is 1 BTC. When in actuality you should've decreased the max-profit to keep the bets kelly-compliant. See my earlier point about negligence.

I hate to be blunt, but that's just both disingenuous and dishonest.

Yes, in the absolute most extreme case where someone only does a single giant bet, the commissions might be 7%. In reality, even when people lose money they turn over their money several times.

So what's typical? Well, how about some maths. A gambler who's got 100 BTC to lose, will on average he'd be able to wager 10000 BTC (on the standard 1% house edge site) before running out of money. Which means investors are going to pay: 10000 * (0.5 + 0.2) in commissions, or 70 BTC. The remainder goes into the bankroll (30 BTC).

Which is exactly what I said. Investors are paying an amortized 70% commission.



*sigh*. As I suspected. You're off by over a factor of three, which means you're putting investors into negative expected bankroll growth territory.  I would've thought understanding half a page of basic casino maths would be a prerequisite to running a casino.


Although to be fair, you're not the first investment site owner to struggle with it. It's pretty sad, but I think Dooglus is the only guy running a site that really gets it.

Yes, it is 20% of the house edge.  Not 0.2%. My mistake. I meant to say to calculate it, you would take House Edge * 0.2% * wager to see the house commission.

What about Plinko bets? Max win is set to fixed  1% of bankroll?
This can not happen again https://www.moneypot.com/bets/18530298 ?

The documentation on MP needs to be fixed too then. It's not a particularly small mistake, considering it's the difference between investors paying amortized 50.02% commissions vs 70%. Also, would you be able to answer my earlier question about the max bet, which is probably the most important.

Hopefully somebody from MP can shine some light in this question...

I doubt someone that has build this kind of service/opportunity would give the full 10%.
No gain for them otherwise.

Something for Dogedigital to answer, but as I understand it, with 10% of the bankroll you will get 3% (amortized) of what people lose in total (the rest of apps and MP)

People never win in the long run, unless the site is bad.
If the share is fair, you should get 10% of whatever people lose in total.

Ugh, is it 0.2% (what the FAQ and your post says) or 20%?

--

I'm going to assume it's 20%, because 0.2% is negligible and doesn't make much sense.  Also the total amount of commissions should include what is paid to apps, no?

So someone bets 1 BTC @ 1 house edge. The apps get 0.005 BTC, MP gets 0.002 .. and investors have all the risk?

Also just to make sure it's clear for investors, let's assume the the bankroll is 100 BTC and someone wants to bet on a binary 1% house edge bet. What exactly is the max profit of that bet going to be? Because if investors are going to take 100% of the risk for 30% of the EV, it's pretty damn important they are risking under a kelly.

50% of the house edge is paid to the app owner of the corresponding bet.

Investor profit return on investment is a tricky beast.  You can't necessarily calculate it by commission.

Its success is a mixture of % of bankroll, volatility control, volume, consistency, expansion, and trustworthiness of the operators themselves.

Be forewarned that I'm heavily involved in Moneypot, but I whole heartedly believe that the Moneypot investment field is a sound one and one of the best in all of crypto currency investments. 

Wait, so let's say that the site bankroll is 1000, and I own 10%. Then when someone loses 100, how much do I get? And what if they win 100?