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Author Topic: Just-Dice.com : Invest in 1% House Edge Dice Game  (Read 434306 times)
Lohoris
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July 19, 2013, 07:50:11 PM
 #981

Makes sense Lohoris. I can't debunk your argument.

I'm sorry, I made false conclusions about you.

I should have read the posts better before responding.
I'm sorry if I sounded arrogant.
I mean, I'm sorry if I was arrogant Wink

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RationalSpeculator
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July 19, 2013, 07:58:09 PM
 #982

...  Watching the whale destroy the site profits has been very upsetting to me, and I find it hard to remember "variance is a bitch".  I need to keep telling myself that.

On the other hand there are risks.  In my country Just-Dice is illegal, this is why I never would try this myself.  The Just-Dice personal can make mistakes, this is the biggest risk.  Dooglus's reasoned arguments about gambling through the years and his brilliant design of Just-Dice is what has caused me to take this risk.

So I am betting several hundred bitcoins on Dooglus's ability to execute Just-Dice honestly and without error.  The post I quote shows that Dooglus has at times less risk tolerance than me.  But then his is risking his labor which so far has not had a good return.

BigDom

Indeed, dooglus is taking a lot more risk than investors already by building and operating the site and returns have been zero.

I can imagine this is very frustrating.

I think the model that he only earns when investors earn is a very attractive one but the 5% would be way too low for my taste.

Hedge funds take 2% of managed funds per year + 20% of the profits.

I have never encountered a single hedge fund that runs on only 20% from the profits because they have bills to pay, even when they don't make a profit for the investors.

Agreed that hedge funds are too pricey, but what dooglus does is giving way too much to others at the expense of himself.


Just doing a quick calculation, let's say just-dice succeeds in doubling the invested capital. That's 25k profit x 5% = 1250 btc, or around $2 million profit for investors earning him around $100k.

Is that well earned? It's not bad but will this make him rich? Nope. Is he making others rich: yes.  
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July 19, 2013, 07:59:42 PM
 #983

[...]
In short, changes shouldn't be rejected out of hand - but it's the responsibility of whoever suggests them to demonstrate the change is likely to result in increased EV.   That's because any change which is negative to bettors is almost certain to reduce betting volume (unless very cunningly disguised).
Good points.

My theory is

assuming that:
1. the only competitor accepting large bets is satoshi dice
2.1. satoshi dice is experiencing turmoils, and getting out of flavour for various reasons
2.2. anyway, their rake is 1.9%, so if we raised to 1.6% we would still be well below them
3. whales will likely want to play somewhere

the consequence would be:
A. whales have nowhere else to go, and will keep playing here even if we raise the rake a bit

I think the only "dubious" point of this theory is (3), but I don't think it's weak enough not to be worth trying anyway.

So, if someone fears that increasing the rake would make the whales choose not to play anymore, fine.
Other than that, I see no other reason to refute this theory.

(that said, I think I won't press the issue any further)


3. is the main issue.  And it's not black and white.

A.  Some whales WILL still play, some WON'T.  It's the ratio of those two that matter - not trying to determine some universal truth that applies to all of them.
B.  The change also impacts people who aren't whales (to what extent depend where the bar is set).  It impacts people running martingales where their top bet runs over the limit (even if, in practice, some of them bottle out before it gets there).  It also impacts small bets made to win large sums at high odds.

And beyond that it's a mistake to assume current competition is all that will ever exist.  Raising the cut opens the door for other sites to increase their max-bet whilst maintaining 1% edge and opens a door for new competition where J-D then gives them a great marketting opportunity to claim they're fair to those risking larger sums.

I also dislike in principle trying to charge your best customers more than the rest - real casinos work the other way round giving an effective discount to those wagering large sums.

It all just seems like trying to solve a non-existent problem (there's no shortage of investment/backing) at the risk of adding in real problems.
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July 19, 2013, 08:05:13 PM
 #984

As the parameters currently are are set down (1% edge, 1% max profit per bet), investing in J-D is not investing in any sense - it should be called passive gambling.  You have a 51% chance to win per bet, but the gamblers control when they stop.  The smart ones walk away when ahead.  

Or there is the way Dooglas "invests" in the site (and probably others), he invests and as soon as a whale shows up and wins a little he quickly divests locking in profit.  The problem with that is:
1. You need to be on all the time on whale watch
2. It increases the risks to the "passive" investors who do not use this strategy since the risk is not shared when a whale comes in.  When others divest, the exposure of those remaining is increased

The fact is we will lose nothing as long as we stay competitive with the competition.  If we increase the house rake incrementally with bet size (over the max of the competitiona and always below 1.9% used by SD), then the whales have nowhere else to go.  

Another idea, would be to keep everything the same but allow investors to opt out of bets over a certain amount. For example 20 BTC.  So someone bets 5 BTC it is against the entire pool, someone bets 30 BTC, it is against only the pool which has not opted out of that betting range.  This way it sort of imitates Dooglas' strategy with more reliability for all investors - not just those who can stay by the computer all day long on whale watch.

As things are setup here, you have to be a little bit crazy to passively invest.  Now I personally am a little bit crazy, but honestly we should not call this investing.  Just passive gambling.  
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July 19, 2013, 08:05:59 PM
 #985

...  Watching the whale destroy the site profits has been very upsetting to me, and I find it hard to remember "variance is a bitch".  I need to keep telling myself that.

On the other hand there are risks.  In my country Just-Dice is illegal, this is why I never would try this myself.  The Just-Dice personal can make mistakes, this is the biggest risk.  Dooglus's reasoned arguments about gambling through the years and his brilliant design of Just-Dice is what has caused me to take this risk.

So I am betting several hundred bitcoins on Dooglus's ability to execute Just-Dice honestly and without error.  The post I quote shows that Dooglus has at times less risk tolerance than me.  But then his is risking his labor which so far has not had a good return.

BigDom

Indeed, dooglus is taking a lot more risk than investors already by building and operating the site and returns have been zero.

I can imagine this is very frustrating.

I think the model that he only earns when investors earn is a very attractive one but the 5% would be way too low for my taste.

Hedge funds take 2% of managed funds + 20% of profits.

Not a single hedge fund runs on only 20% from the profits because they have bills to pay, even when they don't make a profit for the investors.

Agreed that hedge funds are too pricey, but what dooglus does is giving way too much to others at the expense of himself.

I think dooglus played it all wrong with the commission structure.

You should always start off charging too much then reduce your cut when you're sure you can afford to.  You end up in the same place but with much happier investors.

If he tried raising to 10% now there'd be significant whining.  If he'd started off at 20% and offered to reduce to 10% now he'd get heaped in praise.  Even though both scenarios end in the same place.  

That's not a proposal to raise to 10% BTW - I'm not arguing (here) over whether he's taking too much or too little (if you look way back in the thread you'll find I was one of the keenest advocates of a raise in his commission).  Just that it would have been better to start with a higher commission and then lower it than start with a low one and have to raise it.  A lot of (irrational) people here worry more about whether something's an improvement or not rather than whether the end result makes sense and is sustainable (which is what REALLY matters).
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July 19, 2013, 08:11:36 PM
 #986

I think 5% commission is fine if there is profits. Honestly, raising commissiom will not do him any good and not worth even discussing until the site is even profitable and there is commission worth collecting. Whether Dooglas takes 5% or 20% of my "profits" is the least of my concerns with a triple digit loss on my J-D investment portfolio
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July 19, 2013, 08:19:16 PM
 #987

Another idea, would be to keep everything the same but allow investors to opt out of bets over a certain amount. For example 20 BTC.  So someone bets 5 BTC it is against the entire pool, someone bets 30 BTC, it is against only the pool which has not opted out of that betting range.  This way it sort of imitates Dooglas' strategy with more reliability for all investors - not just those who can stay by the computer all day long on whale watch.

Downside for that is that it allows investors to accept low-action whilst at the same time dodging high-action.  You'd likely end up with a lower max-bet but more money invested.  That's bad on a few scores:

1.  It increases CP risk for everyone without any increase in total profit to investors.
2.  It allows people to accept only low-variance action without penalty.  The price of getting the low-variance action IS accepting the high-variance action.  
3.  Dooglus' expected profit is based on turnover - actively making it easy for investors to reduce that isn't good for him.  A large portion of expected profits comes from Whales.
4.  Dooglus doesn't need backing to cover low bets anyway.  If he went this route and a large number of people only invested in the low-risk then he'd be best off scrapping the invetsment totally, getting a few private investors and running with a lower max-bet.

The root of the problem is the same as ever.  You seem to believe you have some entitlement to only accept low-risk bets which dooglus doesn't even need your (or anyone's) cash to cover anyway.  Covering the big bets is why investment is allowed in the first place.  Allowing investors to dodge that removes the whole incentive for him taking investments in the first place.  Cutting his own throat just so you can sleep more comfortably makes no sense whatsoever.

RationalSpeculator
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July 19, 2013, 08:20:17 PM
 #988

Makes sense Lohoris. I can't debunk your argument.

I'm sorry, I made false conclusions about you.

I should have read the posts better before responding.
I'm sorry if I sounded arrogant.
I mean, I'm sorry if I was arrogant Wink


lol Smiley I appreciate that very much. Me too I'm sorry that I was spelling you a lesson that was even false to begin with.   Undecided
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July 19, 2013, 08:21:02 PM
 #989

I really don't see an issue with having a commision of 10% or even 20%

Remember the more money Dooglus makes the more chance the site will get better technically and Dooglus will spend time working with the site.

Of course any talk of taking a % of "managed funds" regardless of profit similar to a hedge fund is a complete scam. A analysis found the majority of hedge funds never make their clients back the 2% and are actually scam investments, except the client agreed to the theft in the first place.

Taking a bigger cut from profits is totally cool, any talk about a cut from our money is not cool.

Hedge funds take 2% of managed funds per year + 20% of the profits.

Dooglus, my advice; increase commision now to between 10% and 20%. Give certain large investors who have lost hundreds of Bitcoin to Celeste a 5% commision for a long time to recover their loss whilst supporting your site. Apart from the investors that have taken huge losses anyone in the positive now or soon should become cool with a larger rake.

When Dooglus offers different tiers of investment, the riskier ones will have to have a much smaller commission, perhaps 5% because the risk is unacceptable for a large commision. This all depends on how Dooglus sets up the different investment vehicles on the site.
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July 19, 2013, 08:51:07 PM
 #990

On investors side, it all comes down to risk aversion: Every investor is risk averse; question is, how much risk he is willing to take to have the chance to yield n%.

Risk in this case means variance (you know, the bitch) and max. drawdown you are able to handle as an investor. Most investors are down about 5% - max. 20%, that is nothing compared to RL investors in the finacne crisis. And we're in Bitcoin cuntry (sic!), risk is much higher in every way. So don't argue about variance and drawdown...

IMHO Dooglus over estimates his own ability to take the risk of owning the site AND invest large amounts of his coins. It is in every way comprehensible that he deinvests (partly) if he cannot stand the risk that occurs especially with a whale betting....
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July 19, 2013, 09:06:04 PM
 #991

If Jobs taught us anything, its that Simple is best for the consumer experience.

Changing things in an emotionally reactive way is bad. Changing things confuses people, makes the future harder to judge. Adding complexity is bad. The site is in its infancy. Just observe it over a long enough timeframe to understand what it is, before trying to turn it into something else.
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July 19, 2013, 09:10:58 PM
 #992

On investors side, it all comes down to risk aversion: Every investor is risk averse; question is, how much risk he is willing to take to have the chance to yield n%.

Risk in this case means variance (you know, the bitch) and max. drawdown you are able to handle as an investor. Most investors are down about 5% - max. 20%, that is nothing compared to RL investors in the finacne crisis. And we're in Bitcoin cuntry (sic!), risk is much higher in every way. So don't argue about variance and drawdown...

IMHO Dooglus over estimates his own ability to take the risk of owning the site AND invest large amounts of his coins. It is in every way comprehensible that he deinvests (partly) if he cannot stand the risk that occurs especially with a whale betting....

Dooglus divesting is far more rational than other investors divesting.  If the whale loses big he does well anyway without the same risk.  If the whale wins big he loses on commission (or increased time to commission) as well as on his investment.  So staying invested with a whale around has a LOT more variance for him than for everyone else.

And that's after all why he has investors anyway - to take the risk of big down-swings caused by whales.  By avoiding that action himself his down-side in the event of heavy losses is just the operating costs whilst he still keeps a nice upside if the whale loses big.

It's nothing to do with being a pussy - just avoiding double exposure to the same risk factor.

EDIT:  To be clear I'm agreeing with eltopo and expanding on what he said - not disagreeing with him at all.
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July 19, 2013, 09:17:55 PM
 #993

Changing things in an emotionally reactive way is bad. Changing things confuses people, makes the future harder to judge. Adding complexity is bad. The site is in its infancy. Just observe it over a long enough timeframe to understand what it is, before trying to turn it into something else.

Yes, no reason to be changing the rules based on the variance of the last few days.  If the variance was going in favor of the investors, then they wouldn't be complaining.  IMHO the only adjustment that should be considered is allowing investors to determine which bets they want action on.  For those investors that can't handle the wild swings, it would be nice if they could automatically avoid exposure to the whales' action without having to divest.

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning."   - Henry Ford
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July 19, 2013, 09:41:07 PM
 #994

Changing things in an emotionally reactive way is bad. Changing things confuses people, makes the future harder to judge. Adding complexity is bad. The site is in its infancy. Just observe it over a long enough timeframe to understand what it is, before trying to turn it into something else.

Yes, no reason to be changing the rules based on the variance of the last few days.  If the variance was going in favor of the investors, then they wouldn't be complaining.  IMHO the only adjustment that should be considered is allowing investors to determine which bets they want action on.  For those investors that can't handle the wild swings, it would be nice if they could automatically avoid exposure to the whales' action without having to divest.

That suggestion is logically unsound.  Remember the purpose of the site having investment is because it needs it.

Consider a simple implementation where there were two pools:

Pool 1 only took action on bets under 20 BTC
Pool 2 took all action

If pool 2 had less than 2k BTC in it then max bet would have dropped to 20 BTC - obviously bad for the site.

If pool 2 had more than 2K BTC in it then max bet would be 1% of pool 2.

Why is pool 1 now needed?  Pool 2 can cover ALL bets without pool 1.  And by getting rid of pool 1 you may get some of that money back into pool 2 - increasing max bet and hence the site's expected profits.

The existence of the 2 pools has precisely three effects:

1.  It lowers the house's expected profits (reducing max bet)
2.  It lowers profit for those in pool 2 - as they unnecessarily share profits with those in pool 1.
3.  It gives low risk investment opportunity  - encouraging people to invest in it rather than pool 2.

But pool 2 is what dooglus needs - so why should he want pool 1 to exist?  It doesn't add to max bet.  It increases CP risk which may reduce capital in pool 2.  Some of the investment there would be in pool 2 if pool 1 didn't exist.

It's a concept that essentially asks dooglus and those willing to back vs big bets to charitably give some profit to people offering UNNEEDED investment - in the process reducing the high-risk cover.  I'm just not seeing why people believe they have an entitlement to low-risk profit where their investment provides no benefit to anyone other than themselves.  The low-risk action can be covered just by people who are also willing to take on the high-risk action - so WHY do dooglus or those willing to take on the risk want to give profit to those who just want a safe steady cash-stream?

You (and plenty of others) fundamentally fail to understand why investment of this scale is needed in the first place.  It's NOT to cover the 0.1 BTC bets.  It's to cover the 200 BTC bets.  And the low-variance action is the reward for accepting the high-variance action.
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July 19, 2013, 09:48:30 PM
 #995

Changing things in an emotionally reactive way is bad. Changing things confuses people, makes the future harder to judge. Adding complexity is bad. The site is in its infancy. Just observe it over a long enough timeframe to understand what it is, before trying to turn it into something else.

Yes, no reason to be changing the rules based on the variance of the last few days.  If the variance was going in favor of the investors, then they wouldn't be complaining.  IMHO the only adjustment that should be considered is allowing investors to determine which bets they want action on.  For those investors that can't handle the wild swings, it would be nice if they could automatically avoid exposure to the whales' action without having to divest.

That suggestion is logically unsound.  Remember the purpose of the site having investment is because it needs it.

Consider a simple implementation where there were two pools:

Pool 1 only took action on bets under 20 BTC
Pool 2 took all action

If pool 2 had less than 2k BTC in it then max bet would have dropped to 20 BTC - obviously bad for the site.

If pool 2 had more than 2K BTC in it then max bet would be 1% of pool 2.

Why is pool 1 now needed?  Pool 2 can cover ALL bets without pool 1.  And by getting rid of pool 1 you may get some of that money back into pool 2 - increasing max bet and hence the site's expected profits.

The existence of the 2 pools has precisely three effects:

1.  It lowers the house's expected profits (reducing max bet)
2.  It lowers profit for those in pool 2 - as they unnecessarily share profits with those in pool 1.
3.  It gives low risk investment opportunity  - encouraging people to invest in it rather than pool 2.

But pool 2 is what dooglus needs - so why should he want pool 1 to exist?  It doesn't add to max bet.  It increases CP risk which may reduce capital in pool 2.  Some of the investment there would be in pool 2 if pool 1 didn't exist.

It's a concept that essentially asks dooglus and those willing to back vs big bets to charitably give some profit to people offering UNNEEDED investment - in the process reducing the high-risk cover.  I'm just not seeing why people believe they have an entitlement to low-risk profit where their investment provides no benefit to anyone other than themselves.  The low-risk action can be covered just by people who are also willing to take on the high-risk action - so WHY do dooglus or those willing to take on the risk want to give profit to those who just want a safe steady cash-stream?

You (and plenty of others) fundamentally fail to understand why investment of this scale is needed in the first place.  It's NOT to cover the 0.1 BTC bets.  It's to cover the 200 BTC bets.  And the low-variance action is the reward for accepting the high-variance action.
I see your logic and agree with it, I was just brainstorming out loud.  I still think the best strategy is to have the house edge increase above 1% for whale size bets while still staying significantly lower tha J-D competitors.
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July 19, 2013, 10:08:25 PM
 #996

Another key issue that I think some people may not yet appreciate is the expected distribution of outcomes during a martingale, which is a popular system bettors use on the site.

It looks like this :


Most of the time, investors will be depressed as the big bettors suck coins out of the site seemingly every session.  But there will be sessions where catastrophic failure occurs.  The investors that hold fast until those sessions will reap large rewards.

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July 19, 2013, 10:15:40 PM
 #997

what's the tail on the left?
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July 19, 2013, 10:16:04 PM
 #998

I really don't see an issue with having a commision of 10% or even 20%

Remember the more money Dooglus makes the more chance the site will get better technically and Dooglus will spend time working with the site.

Of course any talk of taking a % of "managed funds" regardless of profit similar to a hedge fund is a complete scam. A analysis found the majority of hedge funds never make their clients back the 2% and are actually scam investments, except the client agreed to the theft in the first place.

Taking a bigger cut from profits is totally cool, any talk about a cut from our money is not cool.

Hedge funds take 2% of managed funds per year + 20% of the profits.

Dooglus, my advice; increase commision now to between 10% and 20%. Give certain large investors who have lost hundreds of Bitcoin to Celeste a 5% commision for a long time to recover their loss whilst supporting your site. Apart from the investors that have taken huge losses anyone in the positive now or soon should become cool with a larger rake.

When Dooglus offers different tiers of investment, the riskier ones will have to have a much smaller commission, perhaps 5% because the risk is unacceptable for a large commision. This all depends on how Dooglus sets up the different investment vehicles on the site.

I agree that percentage on the funds under management sucks for the investor but as dooglus said in some other thread 20% of nothing is nothing.

I think there is a good reason why there are no money management companies that charge only a percentage of the profits. If it would work we would long have seen it.

You can't run a business with months or years of no income and stay motivated. It might also push you to take unnecessary risk with the capital.


Let's not forget that dooglus his most important job is as a custodian. He needs to safeguard the money on a daily basis. Not losing that comes before making a profit.  

A custodian is payed with a percentage of what he safeguards.


I think therefore that a percentage on funds under management should come first and foremost. And indeed he should get a bigger stake of the profit so that he becomes also rich if he makes the investors rich.


I'm thinking out loud here but if he were to charge say 2% per year on the funds under management, charged daily, and raise commission to 10% of profits.

That would give him an income immediately of 25k x 2% / 365 days (= 0.005% per day) = 1.4 bitcoin per day. It's not a lot but it pays some bills at least.

And if he succeeds to double the money that would be 25k btc profit ($2 million) x 10% = 2500 btc ($200k) making him rich - if - he does that many times over and continues to make profits in BTC. (In contrast to Mr Voorhees!)


I also don't like to see fixed management costs being added but right now I get the impression this is not working for him nor will it make him rich, even if he succeeds.
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July 19, 2013, 10:24:18 PM
 #999

Thanks to Emily Spaven at CoinDesk for a great article on Just-Dice!

http://www.coindesk.com/bitcoin-gambler-cheats-satoshidice-competitor-just-dice-out-of-1300-btc/

And in other news, the whale is back!

Nice to see the whale is back Smiley and great article!

Thanks a lot for the appreciation of our contributions in there dooglus Smiley
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July 19, 2013, 10:26:26 PM
 #1000

I really don't see an issue with having a commision of 10% or even 20%

Remember the more money Dooglus makes the more chance the site will get better technically and Dooglus will spend time working with the site.

Of course any talk of taking a % of "managed funds" regardless of profit similar to a hedge fund is a complete scam. A analysis found the majority of hedge funds never make their clients back the 2% and are actually scam investments, except the client agreed to the theft in the first place.

Taking a bigger cut from profits is totally cool, any talk about a cut from our money is not cool.

Hedge funds take 2% of managed funds per year + 20% of the profits.

Dooglus, my advice; increase commision now to between 10% and 20%. Give certain large investors who have lost hundreds of Bitcoin to Celeste a 5% commision for a long time to recover their loss whilst supporting your site. Apart from the investors that have taken huge losses anyone in the positive now or soon should become cool with a larger rake.

When Dooglus offers different tiers of investment, the riskier ones will have to have a much smaller commission, perhaps 5% because the risk is unacceptable for a large commision. This all depends on how Dooglus sets up the different investment vehicles on the site.

I agree that percentage on the funds under management sucks for the investor but as dooglus said in some other thread 20% of nothing is nothing.

I think there is a good reason why there are no money management companies that charge only a percentage of the profits. If it would work we would long have seen it.

You can't run a business with months or years of no income and stay motivated. It might also push you to take unnecessary risk with the capital.


Let's not forget that dooglus his most important job is as a custodian. He needs to safeguard the money on a daily basis. Not losing that comes before making a profit.  

A custodian is payed with a percentage of what he safeguards.


I think therefore that a percentage on funds under management should come first and foremost. And indeed he should get a bigger stake of the profit so that he becomes also rich if he makes the investors rich.


I'm thinking out loud here but if he were to charge say 2% per year on the funds under management, charged daily, and raise commission to 10% of profits.

That would give him an income immediately of 25k x 2% / 365 days (= 0.005% per day) = 1.4 bitcoin per day. It's not a lot but it pays some bills at least.

And if he succeeds to double the money that would be 25k btc profit ($2 million) x 10% = 2500 btc ($200k) making him rich - if - he does that many times over and continues to make profits in BTC. (In contrast to Mr Voorhees!)


I also don't like to see fixed management costs being added but right now I get the impression this is not working for him nor will it make him rich, even if he succeeds.

Wagered in the first month is 500,000BTC.  Assuming that holds steady, EV of doog's fee is 500,000*12*.01*.05 = 3000BTC / yr.  Or about as much as a lower midlevel Goldman Sachs manager, or a 3rd year associate at Wachtell, without having student debt, having to bill 2800 hrs/yr or pay rent on that midtown pied-à-terre.
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