[Havelock] Bitcoin Difficulty Derivative (BDD)

[junkonator]

Following

[twentyseventy]

A user was just double-issued 5 SELL shares; I'm unable to buy-back these shares at the moment, so I've held this user's 5 MINE shares and have sent him/her an email.

If you're this user; please send me the 5 SELL shares on Havelock (bitcoinderiv@gmail.com) and I'll release the 5 MINE shares to you. Normally, I'd be able to buy back the shares, but there is a bug in the Havelock system which is disallowing me to do so.

EDIT: Resolved with the user very quickly. I can't transfer any funds to SELL to do the buy-back from myself (for 0) until tomorrow, so until then there will be 5 more SELL units issued than MINE, in case anyone notices.

[Rannasha]

BDD End-Game via Decrease
The second possibility is that Difficulty stagnates or decreases and the fund Reserve is deficient (no longer holds 200 days of dividends at current Difficulty). In this scenario, BDD.MINE (and BDD.EXCHANGE) will continue to receive daily dividends until the fund’s capital is exhausted. BDD.SELL would receive no further dividends and all shares would be bought back (forced) for no value (as all funds would have been paid out to BDD.MINE and BDD.EXCHANGE).

This section is should be clarified. I assume that it means that when the difficulty stagnates or decreases, MINE will continue to receive dividends and SELL will not, until the fund runs out of coins and closes. However, it could also be interpreted as: when the difficulty decreases (even just once), all SELL are bought back at 0 price and MINE continues to receive dividends (and live happily ever after).

Also, when I compute the daily dividends for MINE using the info from the Bitcoin wiki, I obtain a value that is 2 satoshis per day per share higher than what has been paid out to MINE. This discrepancy could be a rounding error, but those typically shouldn't exceed 1 unit at the smallest denomination. Could you specify which equation you use to compute MINE dividends?

[eltopo]

Also, when I compute the daily dividends for MINE using the info from the Bitcoin wiki, I obtain a value that is 2 satoshis per day per share higher than what has been paid out to MINE. This discrepancy could be a rounding error, but those typically shouldn't exceed 1 unit at the smallest denomination. Could you specify which equation you use to compute MINE dividends?

I got the same div as twentyseventy with the formula from the OP:

5000000000 * 25 * 86400 * (65535/2^48) / 2,193,847,870 = 0.00114617

Which formula do you use?

[Rannasha]

Also, when I compute the daily dividends for MINE using the info from the Bitcoin wiki, I obtain a value that is 2 satoshis per day per share higher than what has been paid out to MINE. This discrepancy could be a rounding error, but those typically shouldn't exceed 1 unit at the smallest denomination. Could you specify which equation you use to compute MINE dividends?

I got the same div as twentyseventy with the formula from the OP:

5000000000 * 25 * 86400 * (65535/2^48) / 2,193,847,870 = 0.00114617

Which formula do you use?

Ah, I used:

Code:

time = difficulty * 2**32 / hashrate

from the Bitcoin-wiki, which is apparently a slight approximation. That explains the discrepancy.

[twentyseventy]

BDD End-Game via Decrease
The second possibility is that Difficulty stagnates or decreases and the fund Reserve is deficient (no longer holds 200 days of dividends at current Difficulty). In this scenario, BDD.MINE (and BDD.EXCHANGE) will continue to receive daily dividends until the fund’s capital is exhausted. BDD.SELL would receive no further dividends and all shares would be bought back (forced) for no value (as all funds would have been paid out to BDD.MINE and BDD.EXCHANGE).

This section is should be clarified. I assume that it means that when the difficulty stagnates or decreases, MINE will continue to receive dividends and SELL will not, until the fund runs out of coins and closes. However, it could also be interpreted as: when the difficulty decreases (even just once), all SELL are bought back at 0 price and MINE continues to receive dividends (and live happily ever after).

Also, when I compute the daily dividends for MINE using the info from the Bitcoin wiki, I obtain a value that is 2 satoshis per day per share higher than what has been paid out to MINE. This discrepancy could be a rounding error, but those typically shouldn't exceed 1 unit at the smallest denomination. Could you specify which equation you use to compute MINE dividends?

Regarding the dividend calculations, yes, you do have to use the formula provided in the Contract.

Sorry for the lack of clarity on that point. Your initial interpretation is correct; if difficulty decreases or stagnates, which leads to a Reserve/Unit greater than the NAV/U, then MINE will continue to receive daily dividends until the fund's capital is exhausted. SELL would not receive any further dividends in this case and would be bought back at 0 once the capital is exhausted and paid out to MINE holders.

Hope that clears up any confusion; I will edit the Contract to show this as well.

[twentyseventy]

Dividends will be paid a bit late today, probably at 1PM ET (unless we get a few confirms in the next 15 minutes).

The deposit is pending from EXCH; I've had to do an on-chain withdrawal from EXCH to MINE, in the future I'll be able to request that Havelock does this on their end to eliminate any issues with BTC addresses, etc. They already have to approve withdrawals in any case.

I've also transferred over a larger portion of BTC this time so that I can schedule dividends in advance to be paid at Noon each day.

EDIT: Huzzah for some quick confirmations. Dividends will be paid at 12PM; again, this shouldn't be an issue in the future.

[ypschr]

Can you help me with one thing I didn't understand so far.

The B.EXCH costs 210 Days of dividents +1%.
What happens with the extra 10 dividents? When will they be payed out?
Is the security now 210 dividents big, or do they exist as seperate entity?

And another question:
Will the price of the B.EXCH change with every difficulty change?

[Rannasha]

The B.EXCH costs 210 Days of dividents +1%.
What happens with the extra 10 dividents? When will they be payed out?
Is the security now 210 dividents big, or do they exist as seperate entity?

The extra 10 days of MINE-dividends serve as a bit of padding in case the difficulty would go down in the first time period (it isn't, it turns out). They are being paid out to holders of SELL and EXCH at the next difficulty-jump, when the size of the fund is reduced back down to 200 days of dividends.

And another question:
Will the price of the B.EXCH change with every difficulty change?

Yes, the price will be set at 202 times the daily MINE dividend after the change. That covers 200 days of dividend at current rates and the 1% fee.

[twentyseventy]

The B.EXCH costs 210 Days of dividents +1%.
What happens with the extra 10 dividents? When will they be payed out?
Is the security now 210 dividents big, or do they exist as seperate entity?

The extra 10 days of MINE-dividends serve as a bit of padding in case the difficulty would go down in the first time period (it isn't, it turns out). They are being paid out to holders of SELL and EXCH at the next difficulty-jump, when the size of the fund is reduced back down to 200 days of dividends.

And another question:
Will the price of the B.EXCH change with every difficulty change?

Yes, the price will be set at 202 times the daily MINE dividend after the change. That covers 200 days of dividend at current rates and the 1% fee.

Thanks for answering, Rannasha. Yes, buyers of EXCH at this time DO need to take into account that that 'buffer' of 10 days of dividends will be paid out to SELL holders, unless there's a massive difficulty drop in the next day or so.

[ypschr]

Thanks for the quick reply.
And holy shit, you are really quick with the B.EXCH to B.MINE and B.SELL conversion.
I bought on three different times, and you changed them in minutes. Or does it work automatically?

[twentyseventy]

Thanks for the quick reply.
And holy shit, you are really quick with the B.EXCH to B.MINE and B.SELL conversion.
I bought on three different times, and you changed them in minutes. Or does it work automatically?

Haha nope, at the moment it is manual. I'm online for most of the day and a lot of the evening as well and I'm constantly watching for new sales so that I can push them out to users. I'm normally sleeping between 12AM and 7AM Eastern Time, so you can reasonably expect that I won't be doing transfers during that time (unless it's the weekend, perhaps).

Hopefully sometime in the near future Havelock will be able to auto-exchange EXCH to a BDD Pair when someone purchases it. Until then, it's just me 

[Lohoris]

Once BDD.EXCHANGE is purchased by a user, the Issuer will buy back the EXCH share(s)
[...]
Users may also decide to hold the BDD.EXCHANGE share

How?
Either you automatically exchange them via buyback, or you allow users to hold it... I'm not sure how it would be possible to do both...

Normally, the exchange will normally be processed much quicker than 24 hours.

Small typo.

[drason]

Is it possible to publish following stats on a daily basis.

• NAV/U
• number of units (BDD.MINE/BDD.SELL, BDD.EXCHANGE)

This helps to make the investment more transparent for investors. Thanks!

[Rannasha]

Is it possible to publish following stats on a daily basis.

• NAV/U
• number of units (BDD.MINE/BDD.SELL, BDD.EXCHANGE)

This helps to make the investment more transparent for investors. Thanks!

The # of outstanding units can be found on the Havelock fund-overview:
https://www.havelockinvestments.com/funds.php

[twentyseventy]

Once BDD.EXCHANGE is purchased by a user, the Issuer will buy back the EXCH share(s)
[...]
Users may also decide to hold the BDD.EXCHANGE share

How?
Either you automatically exchange them via buyback, or you allow users to hold it... I'm not sure how it would be possible to do both...

Normally, the exchange will normally be processed much quicker than 24 hours.

Small typo.

You're correct on the first count; it is no longer possible to simply hold EXCH shares. This determination was made due to Havelock's system; I'll be updating the contract this morning with this change and Rannasha's from yesterday.

Is it possible to publish following stats on a daily basis.

• NAV/U
• number of units (BDD.MINE/BDD.SELL, BDD.EXCHANGE)

This helps to make the investment more transparent for investors. Thanks!

I've been trying to shy away from doing a daily report in the case that I'm away from my computer at the time that dividends need to be paid (can still do it on my cell phone). But I am willing to post the number of outstanding units and NAV/U each day since that's easily calculable for me. Normally this should come around the time that dividends are paid, but if I'm not able to do that for some reason I will post it later that evening.

A full report will also be provided at the beginning of each Period (after each Difficulty change); I definitely want users to be able to have as much information as they need to make an informed decision.

Also, as Rannasha said, you can see the total number of outstanding units on either the SELL or MINE description page. If there outstanding units of EXCH, those count towards the total as well, I just haven't exchanged them for a BDD pair yet.

EDIT: Contract has been updated here in the OP. I'll be going over the entire contract again tonight, post any updates here, and will post a revised version on Havelock's reports page. I'm only editing for clarity due to the changes with not being able to hold EXCH.

[twentyseventy]

Period 1, Day 5 Report

Total Units: 617

Balance Post Divs: 146.98800326

NAV/U: 0.23823015


In the future, I will be taking down the ask for B.EXCH around 11:45 - this prevents any new EXCH being purchased in the few minutes before divs are issued. I did have a user purchase one the minute before Dividends went out, which I'm sorting out now.

It looks as if the Difficulty will change sometime this evening, so SELL should be due for its first dividend tomorrow!

[redmetal]

Hey Hey, a nice 19.49% difficulty rise should make a dividend for sell of around 0.02

[jimmothy]

Hey Hey, a nice 19.49% difficulty rise should make a dividend for sell of around 0.02

I calculated 0.0436

[redmetal]

Hey Hey, a nice 19.49% difficulty rise should make a dividend for sell of around 0.02

I calculated 0.0436

You need to remove the % in fees that twentyseventy is taking & daily divs already paid

0.00114617 *200 = 0.229234
new rate is
0.0009592 *200 = 0.19184

Remaining is 0.0305 minus already paid divs gives 0.0248 ish