[GLBSE] (discontinued) Anti-Pirate: Bonds for negative BTCST investments

[Meni Rosenfeld]

Current automated market makers over binary events suffer from two problems that make them impractical. First, they are unable to adapt to liquidity, so trades cause prices to move the same amount in both thick and thin markets. Sec- ond, under normal circumstances, the market maker runs at a deficit.

Wow. Completely useless algorithms then.


On the other hand, it looks like one of Nefario's goals is similar to one use case I have for prediction markets.

[1715048792]

1715048792

[1715048792]

1715048792

[1715048792]

1715048792

[stochastic]

Current automated market makers over binary events suffer from two problems that make them impractical. First, they are unable to adapt to liquidity, so trades cause prices to move the same amount in both thick and thin markets. Sec- ond, under normal circumstances, the market maker runs at a deficit.

Wow. Completely useless algorithms then.


On the other hand, it looks like one of Nefario's goals is similar to one use case I have for prediction markets.

Here is a link to a quick and easy synopsis to the automated market maker paper that I linked to earlier.

http://www.bayesianinvestor.com/blog/index.php/2010/06/21/an-improved-automated-market-maker/

It starts out by providing a small amount of liquidity, and increases the amount of liquidity it provides as it profits from providing liquidity. This allows markets to initially make large moves in response to a small amount of trading volume, and then as a trading range develops that reflects agreement among traders, it takes increasingly large amounts of money to move the price.

I was really sad to see that GLBSE put in a pre-made prediction market from some 3rd party.  Not only is it not viable but make some modifications to their code could potentially create vulnerabilities in the system to hacking.  Hopefully something better will come out of this as it is only a test.

[Nefario]

stochastic, using Inkling (who I've known since they launched) was a very efficient use of my time, I'm still hacking away on the next update to GLBSE, but this gets the ball rolling for working out what will and won't work and what is useful.

[Meni Rosenfeld]

A week has passed since the IPO, and not a single bond was sold, officially making this a spectacular failure.

Judging by the demand so far, handling the bond will not be worth the trouble, and hence I have retracted the ask orders and discontinued the offering indefinitely.

If anyone wishes me to reinstate this offering or a similar one, they are welcome to contact me.

[Sukrim]

I didn't buy in because I rather have some more calculable risk with fewer income % (mining bonds and shares for example) than betting on something where I have barely insight in how this stuff is run (pirateat40 owns GPUMAX and his "trust" - whatever it's called now). While quite a few things seem to indicate that it is a Ponzi scheme, it could also be that he's just laundering money big time for silkroad and these people are willing to pay these premiums? To make sure I gain something from buying anti-pirate bonds, I'd need to investigate and potentially give an anonymous tip to the police in whatever country he's living in within a few weeks... or he needs to default quickly (unlikely, considering the 2k BTC he gets at least per week from the PPT.X bonds alone).

All this to earn ~50 USD worth of "internet funny money"? Nah...

Hope it's clearer now on why at least I didn't invest as a consideration for people that want to give out similar bonds in the future.

[highlevelminer]

Yes I would have a difficult time investing in a mining operation based on the upkeep alone.

With the costs of individual mining so high its almost hard to understand how popular mining is as it is.

[ineededausername]

Oh look, nobody really wants to short pirate at all

Where are you, terrytibbs/popescu?

[terrytibbs]

Where are you, terrytibbs/popescu?

I believe there is still enough momentum to keep the scheme up for a while.

[brendio]

When I first invested in pirate, I figured that I'd get my principal back in interest in just over three months, so anything after that is then risk-free profit.

That dynamic makes pirate hard to short. You may be right about him defaulting, but if you are out with your timing, you could still lose--unless you keep doubling-down as time goes by--but the Ponzi may last longer than you stay solvent.

Thus, the most rational thing to do for someone who thinks Pirate's a scam is to just watch from the sidelines.

[Meni Rosenfeld]

A perfect Bayesian agent would have a probability distribution over the time of default. For mere humans this information can be approximately condensed into a single "typical time of default" value.

For a person who believes the typical default time is 9 months (and is ok with supporting whatever Pirate is doing), the expected payout from investing in Pirate outweighs all other factors, and so he should invest at least some amount.

For a person who believes the typical default time is 1 months, the expected payout from investing in Anti-Pirate outweighs all other factors, and so he should invest at least some amount.

For a person who believes the typical default time is 3 months, the expected payout from investing in Pirate is close to zero, and is outweighted on one hand by the variance in investing in Pirate, and by the variance, fee, collateral, and counterparty risk with myself in investing in Anti-Pirate, and so he shouldn't invest in either.

I think the conclusion is there aren't people who have sufficient confidence there will be a default in the 1-2 months timeframe.

Yes I would have a difficult time investing in a mining operation based on the upkeep alone.

With the costs of individual mining so high its almost hard to understand how popular mining is as it is.

I'm not sure what this is a reply to.

[ineededausername]

watching

It's discontinued...

[rjk]

https://bitcointalk.org/index.php?topic=76594.msg855299#msg855299

And you can tell the sockpuppet above that provided he manages to get an OTC rating of any weight or otherwise makes a deposit he can easily borrow MPOE shares to sell short on MPEx.

I have finally figured out what PR stands for.  It is "Pretty Rude".  Am I correct?

I suspect it stands for Sock Puppet, only in Romanian.

Both Mircea and MPOE-PR share the same gentle, diplomatic
and thoughtful style when they communicate.

Dude, you are like 2 weeks late to the party. Fortunately, MPOE-PR seems to have dried up and blown away for the most part.

[Meni Rosenfeld]

watching

It's discontinued...

Doesn't mean there can't still be interesting discussion of it. Or a future reinstatement announcement.

Fortunately, MPOE-PR seems to have dried up and blown away for the most part.

I think they are simply honoring my request not to further comment on this.

[organofcorti]

I think there's enough interest in this now to reinstate the bond if you've a mind to, Meni.

[Meni Rosenfeld]

I would certainly be interested in reinstating this, but I'm just too busy at this particular point in time, and anyway I wanted to design the model more than I wanted to be publicly associated with these affairs. If someone else wants to offer his own bonds after this model I don't mind. If there's demand (which I'm not really sure) maybe I'll do this too.

One thing that could make the bond more attractive is, instead of taking a fee and keeping the raised funds as reserve for bids, keep only a partial on-call reserve, invest the rest in some safe program, and offer the bonds at exactly face value.