[BTC-TC] Deprived Mining Speculation (DMS)

[FloatesMcgoates]

Honestly I would rather provide more BTC to coinlenders rather than deal with providing secured loans directly.

[elefter]

 I'd be more open to LTC-ATF.B2 if there was more than 50BTC opportunity to invest in it.

yeah I like LTC-ATF.B2  too but it would be a bit silly for DMS to absorb most of LTC-ATF.B2

[Deprived]

Namworld's BTC-Bond on BTC-TC.  That only pays 0.03% per day (.21% per week, not much over 10% per year) - so I've been reluctant to propose it as it's so low and I can't anywhere find details of what assets currently back it.

That does seem kind of low, especially if there's no backing information. I'd be more open to LTC-ATF.B2 if there was more than 50BTC opportunity to invest in it.

I would like for DMS.SELLING to invest a bit more, either in J-D, CL, or another avenue - I like the idea of secured loans as long as they're not too much trouble for you to set up and maintain.

I'm not comfortable going over 20% with ANY single investment - so whilst I fully intend to put more in CL it won't go over that.

Issue with J-D is that it can lose as well as win - though the likelihood of significant losses for us is pretty minimal (someone would have to hit a bunch of very unlikely wins or risk a lot of BTC repeatedly).  Occasionally our investment there is going to take a 1-2% loss but I don't see any real risk of large losses in any short period.  At present we're up about 7% on our investment there - statistically we should only be up about 3-4%.  If there's significant interest then I'm fine with putting up a vote to increase our investment there to 20% (it's currently under 10% but would be adjusted up to around 10% after next difficulty change).

[Lohoris]

Other option is doing secured loans ourself (this was mentioned in the contract and would be fine).  Basic terms would be:

We'd only do secured loans.
Loans would have to be secured by providing collateral to us - in the form of solid securities - with a value significantly in excess of the loan value.
We'd charge a pretty low rate - reflecting the very low level of risk to us.  Something like a 1% setup fee then .1% per day.
Loans would be small ones (10-100 BTC).  Micro loans (under 10 BTC) aren't worth the hassle and we don't have the capital to do medium (100s) or large (1000s) ones.

I'm fine with doing that - but do SELLING holders want me to?  Feed-back welcome - don't worry about the details just whether you'd like it done in principle.  Before any loans would be made a contract for borrowers would need to be approved by SELLING (and so would the securities we'd accept as collateral).

I don't see how could we enforce such a loan, in case the borrower defaults.

On Coinlenders TradeFortress covers the defaults himself, and due to the high volume the change that a substantial amount of loans will default at once is very small.

Hence, for this to be interesting, we would need to ask for a very high interest rate, better than what we would earn depositing at Coinlenders.
I have no idea how much Coinlenders asks his borrowers, so making comparisons isn't quite easy.

[Deprived]

Honestly I would rather provide more BTC to coinlenders rather than deal with providing secured loans directly.

Returns wouldn't be much more from private loans anyway.  But I'm totally averse to us exposing a large part of capital to any single counter-party.  I have no reason to distrust TF (if I did then we wouldn't be invested there at all) but at same time I can never have absolute certainty about anyone else's reliability.  And the fund CAN'T expose too much to one party because we then run into the situation where a default becomes likely to impact MINING - who have no vote and, generally, gain no benefit when everything gos well.  So even with very low-risk investments we MUST maintain diversity in any exposure other than to myself/burnside (which MINING holders explicitly accepted by buying into DMS in the first place).

So nope - maximum investment target for any single CP remains 20%.

I will, however, take out a new CD after difficulty rise assuming there's sufficient capital to do so.

[Deprived]

Other option is doing secured loans ourself (this was mentioned in the contract and would be fine).  Basic terms would be:

We'd only do secured loans.
Loans would have to be secured by providing collateral to us - in the form of solid securities - with a value significantly in excess of the loan value.
We'd charge a pretty low rate - reflecting the very low level of risk to us.  Something like a 1% setup fee then .1% per day.
Loans would be small ones (10-100 BTC).  Micro loans (under 10 BTC) aren't worth the hassle and we don't have the capital to do medium (100s) or large (1000s) ones.

I'm fine with doing that - but do SELLING holders want me to?  Feed-back welcome - don't worry about the details just whether you'd like it done in principle.  Before any loans would be made a contract for borrowers would need to be approved by SELLING (and so would the securities we'd accept as collateral).

I don't see how could we enforce such a loan, in case the borrower defaults.

Think you're misunderstanding what I mean by secured loans.

You want to borrow 100 BTC?
You transfer to me 150 BTC worth of securities first.
If you default or their value drops below 110 BTC then I sell them and get our money back.

That's what happens with most of Coinlender's loans now - collateral is required.

[Lohoris]

Think you're misunderstanding what I mean by secured loans.

You want to borrow 100 BTC?
You transfer to me 150 BTC worth of securities first.
If you default or their value drops below 110 BTC then I sell them and get our money back.

That's what happens with most of Coinlender's loans now - collateral is required.

Ooh ok, that makes sense, then, thanks again for the explanation.

[Mabsark]

You seriously need to implement some automation. While you think the load may not necessitate it, it sucks waiting hours for shares to be transferred back and watching the opportunity to profit pass by before your eyes.

And on that note, do your transfers, man! 

[🏰 TradeFortress 🏰]

You seriously need to implement some automation. While you think the load may not necessitate it, it sucks waiting hours for shares to be transferred back and watching the opportunity to profit pass by before your eyes.

And on that note, do your transfers, man! 

It shouldn't be too hard to use the API and build an auto transfer bot.

[Keven]

Other option is doing secured loans ourself (this was mentioned in the contract and would be fine).  Basic terms would be:

We'd only do secured loans.
Loans would have to be secured by providing collateral to us - in the form of solid securities - with a value significantly in excess of the loan value.
We'd charge a pretty low rate - reflecting the very low level of risk to us.  Something like a 1% setup fee then .1% per day.
Loans would be small ones (10-100 BTC).  Micro loans (under 10 BTC) aren't worth the hassle and we don't have the capital to do medium (100s) or large (1000s) ones.

I'm fine with doing that - but do SELLING holders want me to?  Feed-back welcome - don't worry about the details just whether you'd like it done in principle.  Before any loans would be made a contract for borrowers would need to be approved by SELLING (and so would the securities we'd accept as collateral).

I don't see how could we enforce such a loan, in case the borrower defaults.

Think you're misunderstanding what I mean by secured loans.

You want to borrow 100 BTC?
You transfer to me 150 BTC worth of securities first.
If you default or their value drops below 110 BTC then I sell them and get our money back.

That's what happens with most of Coinlender's loans now - collateral is required.

Thank you for the explanation!  Now I know how Coinlenders works.
I learn someting from you everyday in the forum.Thank you again, Deprived.

[Deprived]

Sold   1279
Swapped   0
Total   1279
Price   0.048994
Total   62.663326
Less Fee   62.53799935
Man Fee   1.87613998

BTC Balance (BTC-TC)   1253.41577
12600 LTC-ATF.B1    126.00000000
Coinlenders CD    201.24372250
Just-Dice Balance    106.95438926
TOTAL ASSETS    1,687.61388221
   
Outstanding MINING   35437
Outstanding SELLING   35437
Outstanding PURCHASE   637
Effective Units   36074
   
Block reward   25
Difficulty   21,335,329
Hashes per MINING   5000000
   
Daily Dividend    0.00011786
50 days (Min Liquid)    0.00589288
100 days (Forced Close)    0.01178577
365 days (Buyback)    0.04301806
405 days (IPO)    0.04773236
400 days (Post SELLING div)    0.04714308
410 days (Pre SELLING div)    0.04832165
   
NAV Post MINING Div    1,683.36228392
NAV/U Post MINING Div    0.04666414
Days Dividend Post Div   395.94
SELLING Dividend    -         
NAV Post SELLING Div    1,683.36228392
NAV/U Post Selling Div    0.04666414
PURCHASE selling price    0.04899735
PURCHASE buy-back price    0.04573086

Thanks to high profits on Just-Dice, sale of 500 more LTC-ATF.B1 at a profit and high sales of PURCHASE we actually grew in NAV/U today (albeit by a tiny amount) even after paying the MINING dividend.

[eltopo]

Do you cash out just-dice profits in a specific interval or is this unrealised profit?

[Deprived]

Do you cash out just-dice profits in a specific interval or is this unrealised profit?

Everything we have is unrealised all the time it's sitting in someone else's wallet.

[eltopo]

But if you would cash out the profit, it adds to our balance (and that's your wallet not someone else's).

[FloatesMcgoates]

But if you would cash out the profit, it adds to our balance (and that's your wallet not someone else's).

Pretty sure the profit is already factored in, which explains why the just-dice and coinlenders numbers have grown from their respective 100 and 200 BTC numbers.

[eltopo]

Thats obvious. Question is, if we made a profit at just-dice, should we pay it out to ourselfes at some specific point? (Not the whole investment, only the profit)

Won't the profit be included in the coming SELLING dividend?

[Deprived]

But if you would cash out the profit, it adds to our balance (and that's your wallet not someone else's).

Pretty sure the profit is already factored in, which explains why the just-dice and coinlenders numbers have grown from their respective 100 and 200 BTC numbers.

Right - there's no such thing as unrealised profits with Just-Dice (in any meaningful sense).

Our balance there gos up when the house wins (and down when it loses) - profit isn't stored or treated any differently than your initial investment (minor exception in how its treated for dooglus taking own cut but I move our profits out and back in to remove that effect which is theoretically slightly -EV for us but makes the accounts more accurate).

Unrealised profits doesn't refer to a changing cash balance - but to an asset which has a higher value than you bought it for, but where there's no guarantee of that higher price remaining available if you don't sell.  That's not the case here OR with Coinlenders.

Consider we have a balance of 107 BTC at J-D - of which 100 is our initial deposit and 7 is profit.
If we withdrew that 7 profit to our wallet then redeposited it in J-D as fresh investment what would have changed?  Absolutely nothing - as there's no process of 'realisation' associated with the balance that makes the profit element any less (or more) secure than the capital element.

The same's true with Coinlenders - our CD is displayed with a value which is our initial capital + interest due to date.  NONE of that can be withdrawn (until the end date of the CD - at which point ALL of it can be taken out).  All of it is equally at risk (CP exposure) but none of it is unrealised (as there's no action I can take to 'realise' or 'unrealise' the profit).

If, for example, I could sell LTC-ATF.B1 on the market for 10% over face value then that 10% profit WOULD be unrealised profit - as we have no entitlement to it just an opportunity to realise that profit if we choose.  Nothing DMS holds is valued including unrealised profit of that nature.  I don't even mark holdings of LTC-ATF up for unrealised profit other than on pass-throughs (where I need to reflect market prices in my spread-sheet for management of the pass-throughs themselves) and VERY rarely (once or twice in 9+ months of operation) for holdings that are explicitly disclosed as being long-term in nature.

With J-D you could correctly argue that the profits are exposed to risk beyond just C-P risk (they can be lost if the house loses),  However that is NOT because they're unrealised - but because we've chosen to continue to expose them to the same risk (and potential gain) as our initial deposit there.

[twentyseventy]

But if you would cash out the profit, it adds to our balance (and that's your wallet not someone else's).

No matter if they're in the BTC-TC balance or not, the NAV/U is calculated using Total Assets across all invesements/BTC balances.

[Deprived]

Thats obvious. Question is, if we made a profit at just-dice, should we pay it out to ourselfes at some specific point? (Not the whole investment, only the profit)

Won't the profit be included in the coming SELLING dividend?

Yes - all profits from investments are included in NAV and add to the next SELLING dividend.  When we made 3 BTC on J-D yesterday that added 3 BTC to the total amount of dividend SELLING will receive in a few days (it looks safe to assume SELLING will get a dividend).

You can see how this has effected things from the daily reports.

After last SELLING dividend NAV was exactly (to a few decimal palces anyway) 400 days of MINING dividends.
There have been 9 days of MINING dividends since then.
But NAV/U at present is still 395.94 days of MINING dividends - its only fallen by 4.06 days not by the 9 it would have fallen by were it not for our investments (and the profit from selling new PURCHASE).

That means that the next dividend per share for SELLING will be 4.94 MINING dividends larger than it would have been if it wasn't for the various profits.  That's 0.0005822284 SELLING will get in its dividend that it wouldn't get without investments/markup on PURCHASE.  Or an extra 20.6 BTC in total that will get paid out.  I can't give the exact breakdown easily, but I'd say just over half of that is from investments and the rest from the markup on PURCHASE.

[eltopo]

Understood! 

Thanks for explaining.