hey guys,
what is the difference between for example investing 10m redd with 1x kelly VS 1m redd with 10x kelly? are they the same?
Obviously the biggest difference is that if the site runs off with your coins then in one case you lose 10 times as much as in the other case. By depositing 10 times less, and setting the 'kelly' 10 times higher you are reducing your counter-party risk.
If you invest 10m with 1x kelly, you're risking 1% of 10m per roll, or 100k
If you invest 1m with 10x kelly, you're risking 10% of 1m per roll, or 100k
So the first roll is the same in both cases.
But suppose you win 100k from that first roll.
Now the 10m/1x investment has grown to 10.1m, risks 1% of that on the next roll, or 101k
and the 1m/10x investment has grown to 1.1m, risks 10% of that on the next roll, or 110k
Alternatively, suppose you lost 100k from that first roll.
Now the 10m/1x investment has shrunk to 9.9m, risks 1% of that on the next roll, or 99k
and the 1m/10x investment has shrunk to 0.9m, risks 10% of that on the next roll, or 90k
So although they start out risking the same per roll they quickly diverge due to the effect of compounding.