[BTC-TC] BTC Growth: Capital Growth via Hedge Fund-Style Investing

[Peter Lambert]

Ukyo.Loan
Given the absence of any cap on the unit price created by the threat of a forced buyback at face value, those who are willing to hold Ukyo.Loan at a price of .01 BTC per share for .05% daily yield relative to face value should, other things being equal, be willing to hold it at twice that price in return for twice the yield -- a price of .02 BTC per share for .1% daily yield relative to face value.

Have to say I disagree with this part of your analysis, largely because all other things are NOT equal.

The first point to consider is that, if the price were to rise to somewhere near .02, then it's highly unlikely Ukyo has liquid assets to perform a buy-back based on that price.  If he HAD liquid assets able to pay out over twice the face value of the loans then it's unlikely he'd have needed the loan in the first place.

The second point to consider is that if he needs to do a buy-back then the first stage before that would be the shrinking of dividends to their guaranteed minimum which would, in any event, cause the price to fall back to current levels anyway.  It's not hard for an asset issuer to cause a price drop by releasing bad news.

The third point is that he is entirely capable of flooding the market in new bonds which, especially if couple with news that the dividend would likely only be the minimum going forward could guarantee the price collapsing back to near IPO.

The fourth point is that if the price inflates then you immediately lose guaranteed liquidity at or near that price.

And the fifth point (and the kicker) is the consideration of why would you pay .02 for something with liquidity only guaranteed (with a delay) at .01 when you could obtain higher expected returns (albeit with much higher variance) investing in J-D where the capital backing is obvious and liquidity at full price 'paid' is guaranteed.

At .01 or slightly over Ukyo.loan is a good investment so long as you believe Ukyo has sufficient assets/is trustworthy (and most of us already use bitfunder so are fine with that).  At .02 it would be absolutely horrible in both return and (especially) liquidity compared to alternatives.

I agree with Deprived.

The reason the price did not go up much when Ukyo was paying the higher dividend is that nobody knows when the dividend will change. There is no way to predict the future dividend amount, so people buy assuming that the dividend will usually be at the lowest possible value.

[1715089142]

1715089142

[1715089142]

1715089142

[DrGregMulhauser]

Have to say I disagree with this part of your analysis, largely because all other things are NOT equal.

Obviously: other things are not equal. That's why it was phrased as a conditional: if...then.  

For everything that follows, I cannot escape the feeling that you're looking for an argument and have chosen to argue with a whole slew of suppositions that are not my own and which have little if anything to do with what I have actually written.

Is it possible that you simply read 110% as 200% all the way through? I say that because all throughout what follows, you seem to be magnetically attracted to .02 (i.e., 200%), while I am discussing 110% (i.e., .011)...

The first point to consider is that, if the price were to rise to somewhere near .02, then it's highly unlikely Ukyo has liquid assets to perform a buy-back based on that price.

I have no idea whether Ukyo has sufficient liquid assets to buy back at twice face value, but I think you're missing the entire point that when other things are equal, this is how real bonds trade out there in the real world: bond price goes up to bring yield down to an appropriately risk adjusted level.

By citing risk as a factor which is not equal, you're not somehow backing up your disagreement with my conclusion, you're merely ignoring the remainder of the analysis.

The second point to consider is that if he needs to do a buy-back then the first stage before that would be the shrinking of dividends to their guaranteed minimum which would, in any event, cause the price to fall back to current levels anyway.  It's not hard for an asset issuer to cause a price drop by releasing bad news.

(I'm assuming that Ukyo is rational and that no rational market participant would issue inflated dividends right before buying back a loan at 110% of face value; I didn't think that needed pointing out.)

However, the logic of your argument is spurious, because it assumes the consequent in the conditional: if he needs...back to current levels. What is at issue here is exactly what would make for a rational current level; if you already assume that the current level is rational, then there's no need to make an argument to that effect.

The third point is that he is entirely capable of flooding the market in new bonds which, especially if couple with news that the dividend would likely only be the minimum going forward could guarantee the price collapsing back to near IPO.

Suppose the price collapsed back to near IPO. Then forcibly buying back shares would occur at 110%.

Remember what I actually said, as distinct from what you seem to be incredibly keen to argue about (and I get that as a bond issuer yourself, you have a strong vested interest in this matter):

...those willing to hold the Ukyo.Loan (and not looking for a quick exit via sale to another party) appear to be essentially guaranteed to break even or make a profit when buying at any price below 110% of face value...

You get that, right? We're not arguing about whether anybody should actually buy Ukyo.Loan at twice face value -- or, at least, I'm not. (Maybe you are?) The relevant number here is 110%, not 200%.

The fourth point is that if the price inflates then you immediately lose guaranteed liquidity at or near that price.

Remember what I actually said:

...those willing to hold the Ukyo.Loan (and not looking for a quick exit via sale to another party) appear to be essentially guaranteed to break even or make a profit when buying at any price below 110% of face value...

You get that, right? 110% of face value, not 200% of face value? And we're not talking about liquidity at 200% of face value...

And the fifth point (and the kicker) is the consideration of why would you pay .02 for something with liquidity only guaranteed (with a delay) at .01 when you could obtain higher expected returns (albeit with much higher variance) investing in J-D where the capital backing is obvious and liquidity at full price 'paid' is guaranteed.

Wow, now we're really moving far beyond the other things being equal proviso. If you're keen to argue about something I was not saying, why not just compare it to investing in all other possible investments, rather than merely J-D?

At .01 or slightly over Ukyo.loan is a good investment so long as you believe Ukyo has sufficient assets/is trustworthy (and most of us already use bitfunder so are fine with that).  At .02 it would be absolutely horrible in both return and (especially) liquidity compared to alternatives.

Here again, I can't avoid the feeling that you're taking advantage of the opportunity to create an argument with someone else's views than my own.

[DrGregMulhauser]

The reason the price did not go up much when Ukyo was paying the higher dividend is that nobody knows when the dividend will change. There is no way to predict the future dividend amount, so people buy assuming that the dividend will usually be at the lowest possible value.

Yes, your suggestion that "people buy assuming that the dividend will usually be at the lowest possible value" falls under the very first candidate explanation I suggested:

• Potential holders believe BitFunder is doomed, and therefore future returns from the loan will not benefit significantly from its success.

In other words, when people assume the dividend will be at the lowest possible value, they are assigning a very high discount rate to future returns that are specifically due to BitFunder's success. Of course they should assign a discount rate of some kind, because future returns due to BitFunder's success are entirely unknown. My point is that the discount rate which has been implicitly assigned -- if this putative explanation in terms of people's assumptions about the dividend is correct -- is, in my view, higher than it ought to be, given publicly available information.

[ThickAsThieves]

*popcorn time*

[Deprived]

Have to say I disagree with this part of your analysis, largely because all other things are NOT equal.

Obviously: other things are not equal. That's why it was phrased as a conditional: if...then.  

For everything that follows, I cannot escape the feeling that you're looking for an argument and have chosen to argue with a whole slew of suppositions that are not my own and which have little if anything to do with what I have actually written.

Is it possible that you simply read 110% as 200% all the way through? I say that because all throughout what follows, you seem to be magnetically attracted to .02 (i.e., 200%), while I am discussing 110% (i.e., .011)...

The first point to consider is that, if the price were to rise to somewhere near .02, then it's highly unlikely Ukyo has liquid assets to perform a buy-back based on that price.

I have no idea whether Ukyo has sufficient liquid assets to buy back at twice face value, but I think you're missing the entire point that when other things are equal, this is how real bonds trade out there in the real world: bond price goes up to bring yield down to an appropriately risk adjusted level.

By citing risk as a factor which is not equal, you're not somehow backing up your disagreement with my conclusion, you're merely ignoring the remainder of the analysis.

The second point to consider is that if he needs to do a buy-back then the first stage before that would be the shrinking of dividends to their guaranteed minimum which would, in any event, cause the price to fall back to current levels anyway.  It's not hard for an asset issuer to cause a price drop by releasing bad news.

(I'm assuming that Ukyo is rational and that no rational market participant would issue inflated dividends right before buying back a loan at 110% of face value; I didn't think that needed pointing out.)

However, the logic of your argument is spurious, because it assumes the consequent in the conditional: if he needs...back to current levels. What is at issue here is exactly what would make for a rational current level; if you already assume that the current level is rational, then there's no need to make an argument to that effect.

The third point is that he is entirely capable of flooding the market in new bonds which, especially if couple with news that the dividend would likely only be the minimum going forward could guarantee the price collapsing back to near IPO.

Suppose the price collapsed back to near IPO. Then forcibly buying back shares would occur at 110%.

Remember what I actually said, as distinct from what you seem to be incredibly keen to argue about (and I get that as a bond issuer yourself, you have a strong vested interest in this matter):

...those willing to hold the Ukyo.Loan (and not looking for a quick exit via sale to another party) appear to be essentially guaranteed to break even or make a profit when buying at any price below 110% of face value...

You get that, right? We're not arguing about whether anybody should actually buy Ukyo.Loan at twice face value -- or, at least, I'm not. (Maybe you are?) The relevant number here is 110%, not 200%.

The fourth point is that if the price inflates then you immediately lose guaranteed liquidity at or near that price.

Remember what I actually said:

...those willing to hold the Ukyo.Loan (and not looking for a quick exit via sale to another party) appear to be essentially guaranteed to break even or make a profit when buying at any price below 110% of face value...

You get that, right? 110% of face value, not 200% of face value? And we're not talking about liquidity at 200% of face value...

And the fifth point (and the kicker) is the consideration of why would you pay .02 for something with liquidity only guaranteed (with a delay) at .01 when you could obtain higher expected returns (albeit with much higher variance) investing in J-D where the capital backing is obvious and liquidity at full price 'paid' is guaranteed.

Wow, now we're really moving far beyond the other things being equal proviso. If you're keen to argue about something I was not saying, why not just compare it to investing in all other possible investments, rather than merely J-D?

At .01 or slightly over Ukyo.loan is a good investment so long as you believe Ukyo has sufficient assets/is trustworthy (and most of us already use bitfunder so are fine with that).  At .02 it would be absolutely horrible in both return and (especially) liquidity compared to alternatives.

Here again, I can't avoid the feeling that you're taking advantage of the opportunity to create an argument with someone else's views than my own.

Seems to be some misunderstanding here.

You said :

Given the absence of any cap on the unit price created by the threat of a forced buyback at face value, those who are willing to hold Ukyo.Loan at a price of .01 BTC per share for .05% daily yield relative to face value should, other things being equal, be willing to hold it at twice that price in return for twice the yield -- a price of .02 BTC per share for .1% daily yield relative to face value.

My point was simply that all other things are NOT equal - i.e. there's a big difference between it trading at double face value with .01% daily yields and it trading at face value with .05% yields (the most obvious such difference being the price at which guaranteed liquidity is provided relative to the market price).

I was not trying to argue that the bonds are currently overvalued (I don't believe they are) nor was I disputing that the difference in buyback terms makes them better value than alternative bonds (it definitely adds value).

I was pointing out that any analysis/comment based on "all other things being equal" where, rather obviously, all other things are NOT equal is a waste of virtual ink.  Further, it could be read as an attempt to persuade others to drive the price up given that you didn't then go on to explain how the logic doesn't actually apply in practice.

Saying "If X is true then Y" isn't a lot of use unless you also comment on whether X is true.  In the absence of any such comments the obvious conclusion is that you believe (or want readers to believe) X to be true.

[DrGregMulhauser]

My point was simply that all other things are NOT equal - i.e. there's a big difference between it trading at double face value with .01% [GM edit: you meant .1%] daily yields and it trading at face value with .05% yields (the most obvious such difference being the price at which guaranteed liquidity is provided relative to the market price).

Of course other things are not equal, and nowhere in the rest of the analysis do I make any suggestion whatsoever that they are equal, that they should be equal, that I wish they were equal, or that I would like other people to believe that they are equal. Nowhere in the rest of the analysis do I even return to the 200% idea.

I was simply illustrating what it means for bond prices to specify the market's risk adjusted perception of returns. I could have used a factor of 1000% instead of a factor of 200% to make exactly the same point, and it would make no difference whatsoever to the rest of the analysis.

Why would I want to make the point at all? Because the Bitcoin community has a whole bunch of things floating around called 'bonds', and most of them have very little to do with how real bonds operate. (By analogy, the Bitcoin community also has a whole bunch of things floating around called 'futures', and most of them have very little to do with how real futures operate.)

For folks who already understand exactly how bonds normally trade, they can skip over my sentence about price versus yield entirely and move on to the actual point of the analysis -- which is the suggestion that trading at anything less than 110% appears to be guaranteed safe due to the structure of the offering. Or, just for kicks, they could choose to nitpick that sentence, steadfastly refuse to engage with the actual substance of the analysis, and engage in a little ad hominem insinuation.

I was pointing out that any analysis/comment based on "all other things being equal" where, rather obviously, all other things are NOT equal is a waste of virtual ink.  Further, it could be read as an attempt to persuade others to drive the price up given that you didn't then go on to explain how the logic doesn't actually apply in practice.

There was no logic, and there was no analysis or comment that was in any way "based on 'all other things being equal'". There was an illustration of how real bonds trade, nothing more and nothing less.

Can you understand how it might strike some folks as being just a teensy bit disingenuous for you to argue as if to suggest that I am simply ignorant of the fact that other things are not equal -- all while tenaciously ignoring the central point of the entire analysis, which is the 110% argument?

Saying "If X is true then Y" isn't a lot of use unless you also comment on whether X is true.  In the absence of any such comments the obvious conclusion is that you believe (or want readers to believe) X to be true.

OK, more than a teensy bit disingenuous.

If you read as far as the four candidate explanations I offered as to why market participants might apply such extreme discounting of future yields, you will find that I am assuming that other things are not equal and questioning the degree to which extreme discounting might be justified by those candidate explanations. As I mentioned in my reply to Peter Lambert, obviously market participants will assign a discount rate to future returns from the loan. I am not suggesting that market participants should not apply any discount rate at all, I am suggesting that the discount rate which is implicit in the loan's pricing is higher than ought to be inferred from publicly available information.

[DrGregMulhauser]

I have now edited the report to include the following explicit addendum:

(ADDENDUM TO THE ORIGINAL: For anyone who either accidentally or intentionally would like to interpret the previous sentence as implying or suggesting, in any way, shape or form, that I somehow believe that other things are equal, I am making no such suggestion. I am, on the contrary, illustrating how normal bonds trade in the real world. And in the real world, we can assume that other things are not equal when yields change; that is why bond prices change so as to bring the risk adjusted return of a bond in line with the risk adjusted returns of other comparable assets. That is also why higher yields typically correlate with lower quality offerings: issuers of lower quality, higher risk paper must pay higher yields in order to counterbalance their higher risk.)

Hopefully that will remove any room for misinterpretation. 

[Peter Lambert]

The reason the price did not go up much when Ukyo was paying the higher dividend is that nobody knows when the dividend will change. There is no way to predict the future dividend amount, so people buy assuming that the dividend will usually be at the lowest possible value.

Yes, your suggestion that "people buy assuming that the dividend will usually be at the lowest possible value" falls under the very first candidate explanation I suggested:

• Potential holders believe BitFunder is doomed, and therefore future returns from the loan will not benefit significantly from its success.

In other words, when people assume the dividend will be at the lowest possible value, they are assigning a very high discount rate to future returns that are specifically due to BitFunder's success. Of course they should assign a discount rate of some kind, because future returns due to BitFunder's success are entirely unknown. My point is that the discount rate which has been implicitly assigned -- if this putative explanation in terms of people's assumptions about the dividend is correct -- is, in my view, higher than it ought to be, given publicly available information.

BitFunder being doomed to failure is not the same as expecting dividends to generally remain low, since there is not a direct correlation between Ukyo.Loan and the success of BitFunder. If BitFunder does poorly, then Ukyo.Loan will pay the minimum dividend. If BitFunder does well Ukyo.Loan may pay a higher dividend, but there is no guarantee.

[DrGregMulhauser]

BitFunder being doomed to failure is not the same as expecting dividends to generally remain low, since there is not a direct correlation between Ukyo.Loan and the success of BitFunder. If BitFunder does poorly, then Ukyo.Loan will pay the minimum dividend. If BitFunder does well Ukyo.Loan may pay a higher dividend, but there is no guarantee.

I'm guessing we're probably using the word 'correlation' in different ways... To my mind, correlation does not need to be 100% in order to be correlation (even "direct" correlation).

But semantics aside, the underlying principal is the same: I am merely suggesting that if this has anything at all to do with the market's pricing of Ukyo.Loan (and in fact I suspect it has little to do with it -- see below), then the market is discounting the potential future returns at a higher rate than seems to me to be justified by publicly available evidence. The publicly available evidence suggests that Ukyo.Loan has, more often than not, paid out at above the guaranteed rate; the publicly available evidence suggests that BitFunder itself continues to generate significant trading volume and significant commissions; the publicly available evidence suggests that the sentence "Additional dividends provided when the site does well" has accurately reflected Ukyo's intentions and behaviour.

As to why I suspect this all has little to do with the market's pricing of Ukyo.Loan, my interpretation of others' comments on the loan suggests to me that market participants are far more concerned about the 'get out free' clause of the contract -- i.e., redemption at face value -- than about the buyback provision which ensures they will not be bought out at less than 110% of face value. My sense is that many market participants are much more keen to chase yield via the latest promiseware companies than to accept a lower potential return in exchange for a lower probability of losing large amounts of cash; those yield-sensitive participants are likely under-represented in the shareholder base of Ukyo.Loan, which is likely more populated with safety-minded participants entirely disinclined to chase yield.

[xchrisxsays]

*popcorn time*

BATTLE OF THE MENTAL GIANTS

[vandinn]

Selling so low below NAV/U... that's a new one around here...

[Deprived]

As to why I suspect this all has little to do with the market's pricing of Ukyo.Loan, my interpretation of others' comments on the loan suggests to me that market participants are far more concerned about the 'get out free' clause of the contract -- i.e., redemption at face value -- than about the buyback provision which ensures they will not be bought out at less than 110% of face value. My sense is that many market participants are much more keen to chase yield via the latest promiseware companies than to accept a lower potential return in exchange for a lower probability of losing large amounts of cash; those yield-sensitive participants are likely under-represented in the shareholder base of Ukyo.Loan, which is likely more populated with safety-minded participants entirely disinclined to chase yield.

I'd certainly agree that a large portion of market participants chase promiseware/vaporware taking on massive risk in return for speculative profits.  But don't assume everyone interested in redemption falls into that boat.  I'm very interested in redemption values but stay well clear of all the wannabe ASIC-manufacturers/massive mining companies (with no hardware yet).  That's because the yield on bonds such as Ukyo (or all the others - including my own) don't appeal to me as a long-term prospect, only as a short to medium-term resting place whilst waiting for much more profitable opportunities.  Those opportunities are rare - but not SO rare that I'm willing to take a large hit whenever one arises.  If the redemption was immediately available via the market then I may be more interested - but with Ukyo frequently not around for a few days the potential hit taken when wanting cash out fast becomes even more significant.  Were J-D (with near immediate cash-out and visible capital backing) not available then I'd also tend to value bonds such this higher.

I'm pretty confident a significant portion of holders of Ukyo.loan are relatively safety-minded AND have a strong interest in having access to redemption at near the price they paid.  Those two factors are actually complementary not opposed to one another - being able to get your cash back out quickly without major loss is a big factor when assessing safety in the BTC environment (though the promise of it doesn't, historically, mean the facility will actually exist if things go wrong).  And as such participants will always sell to the market when they want cash back (if market is above face value + site fees) and won't buy significantly above face value it acts to ensure the bid side won't accumulate significant volume much above face value.

Part of the problem is that the way these 'bonds' are structured (and I include my own in this, obviously) makes valuation much harder than with traditionally structured bonds (where there's an exact value for them defined at a predetermined date).  Variable dividends and a buyback price based on a low-liquidity market make this one even harder to value than others.

[DrGregMulhauser]

I'd certainly agree that a large portion of market participants chase promiseware/vaporware taking on massive risk in return for speculative profits.  But don't assume everyone interested in redemption falls into that boat...

...a significant portion of holders of Ukyo.loan are relatively safety-minded AND have a strong interest in having access to redemption at near the price they paid.  Those two factors are actually complementary not opposed to one another - being able to get your cash back out quickly without major loss is a big factor when assessing safety in the BTC environment...

Um...yes... We're saying the same thing, except that you're suggesting I'm assuming something I am not, and you're suggesting I am seeing an opposition where I am not. (Why would I think, let alone assume, that those interested in redemption are interested in chasing yield? Why would I think being safety-minded is in any way opposed to wanting easy redemption? I'm not following...) Compare:

...those yield-sensitive participants are likely under-represented in the shareholder base of Ukyo.Loan, which is likely more populated with safety-minded participants entirely disinclined to chase yield.

In other words, I'm suggesting the primary shareholder base of Ukyo.Loan is disinclined to chase yield (i.e., not ones for "taking on massive risk in return for speculative profits" in your words); those safety-minded participants are more concerned about redemption at face value (i.e., "have a strong interest in having access to redemption" in your words).

So again, there's no "assumption" here, and there's no being "opposed to one another" rather than being "actually complementary". On the contrary, you've nicely restated my own words...

Part of the problem is that the way these 'bonds' are structured (and I include my own in this, obviously) makes valuation much harder than with traditionally structured bonds (where there's an exact value for them defined at a predetermined date).  Variable dividends and a buyback price based on a low-liquidity market make this one even harder to value than others.

Just so. Moreover, many are presented, either explicitly or implicitly, as perpetual loans, as if the intention is only to service the debt but never actually to repay it. Folks can get all hung up on interest rates without paying nearly as much attention to the eventual return of principal.

[Deprived]

Just so. Moreover, many are presented, either explicitly or implicitly, as perpetual loans, as if the intention is only to service the debt but never actually to repay it. Folks can get all hung up on interest rates without paying nearly as much attention to the eventual return of principal.

I'm one of those offering something meeting your description - where there's no apparent intent or deadline for repayment.  I can't speak for others offering similar things but in my case the issue was more a practical thing than related to my intent.

I'd FAR prefer to have the bonds issued with fixed maturity dates - as that would allow me to reduce as well as increase debt (and, more usefully, reduce the rate paid).  But I ended up issuing perpetual paper because of a combination of the following:

1.  There was no way provided on the exchanges to do a partial buyback (rightly so) so to avoid having to buyback everything at once I'd need to issue a bunch of different bonds with different maturity dates.  The listing fee (5 BTC per listing) compared to the total amount of debt issued makes this unfeasible.
2.  There was no simple way for participants to rollover from one issue to another (assuming I was renewing a batch of debt) without either them having to temporarily tie up double the capital they intend to OR me having to refund all even when I know the new issue will be fully subscribed.

In fact, for future debt (if/when I look to take on more) I intend to move to a more traditional bond structure with fixed maturity dates as I believe those likely to deliver better value for me and more transparency/clearer valuations for investors.  But the solution I've arrived at wasn't available to me back when I initially issued bonds (or even when I more recently sold LTC-ATF.B2) but does solve the especially problematic point 2 above (avoiding either party having to needlessly make liquid and briefly tie up cash where both parties intend to renew the debt).

As an issuer I disliked 'perpetual' bonds - not because I don't have to buyback, but because I can't (at face value) when I want to.

Getting back to your report I'd like to comment on this:

For the avoidance of doubt, I have no intention of turning the routine maintenance of a wider and less favourable spread into an ongoing profit engine for the fund. The reality is that although wide spread market making by funds' own managers can create the appearance of a performance boost that may appeal to the casual onlooker, in fact it represents an indirect trading tax on fund participants, a tax taken directly out of participants' pockets when buying, when selling, or both. This practice is designed to subsidise early and ongoing shareholders' returns on paper by taxing newer shareholders' and departing shareholders' trading activity. It has nothing at all to do with real fund performance. After all, a trained monkey can generate 12% 'gains' per year simply by skewering participants with a 5% bid/ask trading tax on a monthly churn of only 20% of a fund's total capitalisation; double the spread or the monthly churn, and presto, easy 24% annual 'gains'. It's remarkable that this practice survives at all in a community which is otherwise justifiably hypervigilant about schemes designed to pay early investors using money extracted from later ones.

I'm quoting it not because I disagree with it but because I believe it bears repeating.  A fund such as this (where there's no practical limit on units issued) should absolutely trade very close to NAV/U.  About the only practice worse than redemption at a lot below NAV/U (and selling at a lot above it) is the opposite which some funds have in the past indulged in - placing bids on their own units at ABOVE NAV/U to try to force the market up and/or selling below NAV/U to increase capital (some funds have managed to do both).

It's refreshing to see someone trying to grow NAV/U by trading/investment rather than by gouging new/departing investors.

Do you actually have specific percentages (relative to NAV/U) at which you intend to buy/sell (after publication of reports)?

[DrGregMulhauser]

I'm one of those offering something meeting your description - where there's no apparent intent or deadline for repayment.  I can't speak for others offering similar things but in my case the issue was more a practical thing than related to my intent.

I'd FAR prefer to have the bonds issued with fixed maturity dates - as that would allow me to reduce as well as increase debt (and, more usefully, reduce the rate paid).  But I ended up issuing perpetual paper because...

Yep, I hear you -- in this particular context it makes much more sense than in some other contexts, where the rationale which you've set out doesn't fly quite so well.

...The listing fee (5 BTC per listing) compared to the total amount of debt issued makes this unfeasible.

Yep, I hear you there too; I wonder whether any or all of the exchanges have considered lower listing fees for this sort of thing? That could benefit everyone by enabling new listings from established issuers to appear (along with trading volume) that would otherwise not be cost effective and which would thus not generate listing fees anyway.

...placing bids on their own units at ABOVE NAV/U to try to force the market up and/or selling below NAV/U to increase capital (some funds have managed to do both).

A great recipe for implosion...

Do you actually have specific percentages (relative to NAV/U) at which you intend to buy/sell (after publication of reports)?

I'm still getting a sense of how the market behaves, and experience from observing one listed asset doesn't seem to yield much of anything that can be applied to others. Some have ludicrous spreads, some are quite tight; and in at least one case I observed directly, individuals have been so keen to take new positions that they'd rather buy at market than buy a mispriced call and immediately exercise it for a lower total cost -- go figure. I wouldn't have expected this fund to trade at a 7% premium immediately after launch, but nor would I expect it currently to be trading at a 1% discount to NAV. Hopefully as things settle down, as participants have a moment to digest things, and as participants' expectations converge with what can be realistically achieved for a reasonable level of risk, we can get a better sense of when it makes sense to soak up excess shares or provide new ones.

[ThickAsThieves]

Yep, I hear you there too; I wonder whether any or all of the exchanges have considered lower listing fees for this sort of thing? That could benefit everyone by enabling new listings from established issuers to appear (along with trading volume) that would otherwise not be cost effective and which would thus not generate listing fees anyway.

I've suggested special fee structures for different types of securities to Havelock. They seem somewhat open to the logic of it, but some convincing may still be required...

[Deprived]

...The listing fee (5 BTC per listing) compared to the total amount of debt issued makes this unfeasible.

Yep, I hear you there too; I wonder whether any or all of the exchanges have considered lower listing fees for this sort of thing? That could benefit everyone by enabling new listings from established issuers to appear (along with trading volume) that would otherwise not be cost effective and which would thus not generate listing fees anyway.

BTC-TC has already done this.  If a business has traded profitably for 6 months+ (note to all the vapourware companies - trading profitably isn't same thing as pumping your market price) then they can make additional listings for free.  As my fund has traded for a nearly year and paid back 300% of initial price in dividends (and has a NAV/U that's 600%+ of initial price) I no longer have to pay for new listings (if they're owned by the fund - for ones where I'm personally the issuer, such as DMS, full listing price has to be paid).

That solves my issue #1 going forward - the solution to my issue #2 (allowing rollovers without anyone stumping up cash temporarily) is solvable with the automated transfer bot I use and a little bit of planning (it could be done manually but that's a prohibitive amount of work).

On the listing without fees on BTC-TC the waiver of fee also applies to businesses that have traded profitably for 6 months without being listed anywhere - they just need to prove they've been making a profit (which is maybe not as easy as it sounds, in fairness).  What's not clear is whether a BTC-denominated business that made a profit in USD but not in BTC is considered profitable (which is where the better mining companies fall).  I (and I'd expect you) would say no - if it's listed as BTC-denominated then it has to make a BTC-denominated profit to be considered profitable.

[DrGregMulhauser]

I've suggested special fee structures for different types of securities to Havelock. They seem somewhat open to the logic of it, but some convincing may still be required...

Yes, breaking it down by security type could be another useful approach -- where debt issuance, for example, might incur a lower fee than equity. What I was envisioning in the back of my mind was more along the lines of lower fees associated with assets somehow associated with the same entity -- for example, different debt series, or different PTs.

In your case, for example, I've had the sense that you might be considering moving into an underwriting type of role; if that were to happen, then I could imagine an exchange offering you a reduced-cost way of bringing new listings to market, some of which might otherwise not have happened at all.

As my fund has traded for a nearly year and paid back 300% of initial price in dividends (and has a NAV/U that's 600%+ of initial price) I no longer have to pay for new listings...

In some cases, this type of 'grandfathering' in based upon past performance could have unintended and negative side effects on quality as the effects of past accidents dissipate into mediocrity and reversion to the mean.

For a real world example, one of my own decently performing investments in the fiat world has delivered around 14,000%, and just a single quarterly dividend payment is now nearly enough to return the whole initial cost. But such numbers are entirely irrelevant to the question of whether that investment is still a good investment, right now or whether it's now just going to muddle along. What really matters is what is happening with the current value of that investment over relevant timescales -- and not merely whether some past event led it to grow in a way which has not been repeated. Were my portfolio made entirely of investments which have done well in the past, its current performance would be substantially worse than it is now.

My point is just that incentivising issuance on the basis of performance over a single window of time might not necessarily be in the interests of the exchanges.

On the listing without fees on BTC-TC the waiver of fee also applies to businesses that have traded profitably for 6 months without being listed anywhere - they just need to prove they've been making a profit...

I imagine this will cut out a huge swath of the types of not yet profitable startup businesses which might be of greatest interest to market participants attracted to Bitcoin-denominated exchanges in the first place, not to mention those at a stage of development where they're most likely to want to tap the capital markets in the first place. But it's a start!

[Ytterbium]

Subsequent to this report, the fund may make additional shares available for a time somewhat above NAV.

Aaaaand ponzi.

[Progressive]

Subsequent to this report, the fund may make additional shares available for a time somewhat above NAV.

Aaaaand ponzi.

This is a common and expected practice. Look at BTC-INVEST, BTC-EQTY, LTC.ATF, DMS.PURCHASE or other funds.
Would you suggest selling additional shares below NAV/U instead?