[GLBSE] FOO.PPPPT - Perpetual Pure Pirate Pass-Through Bonds - 7% weekly

[bitfoo]

If you find TYGRR.P bonds for sale cheaper than some bids on FOO.PPPPT, you can buy some TYGRR.P, sell FOO.PPPPT, and pocket the difference, assuming that the two bonds are fungible. Or if you have direct access to a pirate account, you can sell FOO.PPPPT and deposit with pirate directly. Until GLBSE allows short-selling, it won't be possible to do this unless you are already holding some FOO.PPPPT, but that's the general idea.

Exactly what I am wondering, do you just trade the bonds OTC with someone else?

Not necessary. If you value TYGRR.P and FOO.PPPPT equally (or adjust their values for interest rates like in my earlier post), but find that TYGRR.P is cheaper than FOO.PPPPT on the open market, you can buy TYGRR and sell FOO directly on GLBSE. Your inventory will now contain more TYGGR than FOO, but the overall number of bonds is the same, and you have gained some BTC in the process. This relies on the fact that you don't care whether you hold TYGRR or FOO, as long as you have some total number of pirate bonds from whatever vendor.

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[MrTeal]

This is essentially how I will address any additional demand. I do not intend to issue mass amounts of shares on a weekly basis like Goat. That is more risk than I would want to take on, eg, in the event that I have to buy back all the bonds at some point. I also don't want to send too many coins to pirate because I fear there is a risk of reduced interest rates if we keep doing that.

What I will do instead is arbitrage the bid side from time to time, if there is pent-up demand, and if it is worth doing so. This will not be at pre-announced times, or even guaranteed to happen. This isn't a share of a company where issuing more bonds dilutes the value of existing shares - each bond here is actually backed by 1 BTC in my BTCST account. The floor price can be expected to follow market rates of other pirate bonds. For example, Goat promises to sell his bonds at 1.02 for returns of 0.068 BTC a week. That translates into a clean price of 1.05 BTC for the FOO.PPPPT bond. (Dirty price on any given day will usually be the clean price + accrued interest). Of course, other market participants are welcome to do their own arbitrage as well. I expect the prices of the bonds to follow each other fairly well. As long as others keep issuing more pirate bonds, please do not expect much up-side to this bond either. If pirate stops accepting deposits, that would be a different story altogether.

What criteria do you use when deciding to inject new bonds into the market? Having the issuer randomly inject new bonds into the system and unknown times is fairly disruptive to trading.

[bitfoo]

What criteria do you use when deciding to inject new bonds into the market? Having the issuer randomly inject new bonds into the system and unknown times is fairly disruptive to trading.

The same criteria that any arbitrageur would use -- "is this trade profitable for me", and there may be many factors going into that decision. I know there are others who have a BTCST account and still hold some of my bonds, for the same purpose of arbitrage and market making. The total number of bonds in circulation doesn't actually affect each individual bond-holder.

I could alternately sell the bonds that I personally hold, put the BTC into the account, and then *not* issue extra bonds to account for it, for the same effect. But this was never intended to be a "limited-issue" bond, and I would like the number of bonds to exactly reflect the value of the BTC in the account. Or would you like me to never sell my share of the bonds at all?

I'm open to discussion about this. But I believe issuing bonds when needed is a way to keep the price of the bonds in check, without having pre-announced bond sales every week.

[streblo]

Perhaps specifying that you, bitfoo, will issue an N-day notice (say, 7 days) before issuing any shares, which includes the number of shares and other details, would satisfy both your needs to issue bonds and others' desire for less uncertainty with regard to bond issues?

[bitfoo]

Perhaps specifying that you, bitfoo, will issue an N-day notice (say, 7 days) before issuing any shares, which includes the number of shares and other details, would satisfy both your needs to issue bonds and others' desire for less uncertainty with regard to bond issues?

That's essentially the model that TYGRR.BOND-P follows: scheduled release of bonds every week at a certain price. If this is preferable for most people than me issuing and selling shares on demand, I can switch to that model. Let me know what you think. I probably cannot issue more than 500 bonds in one go, because I always run the risk of pirate returning the newly deposited coins. For this reason, I even prefer sending smaller amounts at a time, because then I'll know when to stop.

This, however, would essentially mean that I can no longer sell my own shares on the market when I wish. If I do, it just goes back to being the same as what I was already doing. (I could sell now, and then issue more to myself later as part of the weekly issue). Part of the motivation for me to run this asset was so that my deposit with pirate gets additional liquidity as well - that I can "withdraw" when needed by transferring the space to someone else instead of bugging pirate for a real withdrawal.

I believe the only people that are affected by my current method are those that expected to gain from a scarcity in this asset, or those that sniped the IPO and expected to flip the bonds for a profit. My point of view is that people are placing bids at whatever price they value this asset at, and I (or anyone else) would fill them if and when possible. Let's face it: until pirate stops accepting new deposits, this asset isn't really scarce. There are others like it that perform essentially the same function.

OK, I need to stop rambling. Share your thoughts. Convince me why what I'm doing is a bad idea, and I'll gladly correct it.

[bitfoo]

I think I've come to my senses on this one now. What was I thinking?

Bond issuance rules: (please see OP for up to date information on this)

Up to 100 bonds will be issued per day at a pre-determined price. These will be in the form of an ask wall on GLBSE. The price starts at 1.05 BTC immediately after dividend payment, and goes up by 0.01 BTC every day according to the following schedule:

Code:

GLBSETime 02:00 Tuesday   - 1.06 BTC
GLBSETime 02:00 Wednesday - 1.07 BTC
GLBSETime 02:00 Thursday  - 1.08 BTC
GLBSETime 02:00 Friday    - 1.09 BTC
GLBSETime 02:00 Saturday  - 1.10 BTC
GLBSETime 02:00 Sunday    - 1.11 BTC
GLBSETime 02:00 Monday    - 1.12 BTC (before dividend payment)
GLBSETime xx:xx Monday    - 1.05 BTC (after dividend payment)

The premium reflects my perceived risk of pirate sending back newly deposited funds, which would then force my coins out of the fund. At the moment, the price is roughly on par with TYGGR.BOND-P. The price and quantity on offer is subject to change. The remaining 400 bonds that I hold may also be listed for sale at any time, but probably at higher prices. Bond sales may be suspended at any time if I expect to be unavailable to transfer funds to pirate quickly enough.

I'm working on a bot to maintain the asks automatically. Until then, the process is manual and the listed times will only be approximate.

[bitfoo]

Up to 100 bonds will be issued per day at a pre-determined price. These will be in the form of an ask wall on GLBSE. The price starts at 1.05 BTC immediately after dividend payment, and goes up by 0.01 BTC every day according to the following schedule:

One more tweak to this: the 100 bonds for sale will be per "cycle", not per day. A "cycle" will involve the sale of these bonds, deposit with pirate, and confirmation that he has accepted the coins. Upon acceptance, I can re-list the new bonds for sale. There may be multiple cycles per day depending on availability (all steps are currently manual).

[tosku]

If you are issuing the bonds at 1.05 and paying out a dividend of 0.07, isn't the interest rate really 6.67%?

[MrTeal]

If you are issuing the bonds at 1.05 and paying out a dividend of 0.07, isn't the interest rate really 6.67%?

Yes. The title should probably be changed to 0.07BTC weekly.

[jarsumarsu]

Nice dividend payments today, thanks 

[bitfoo]

Nice dividend payments today, thanks 

Haha, you were faster than me at announcing this. Happy Monday! All thanks go to Pirate, I'm simply passing on his payouts.

If you are issuing the bonds at 1.05 and paying out a dividend of 0.07, isn't the interest rate really 6.67%?

Yes, although the percentage is really on the face value, not sale price. But I will update the title / OP accordingly and clarify this. The 0-fee rate was valid mainly for the IPO. In future, if Pirate ever raises the interest rate tiers and we need to catch up, I will sell at a 0-fee rate again. Until then, I will price these at market rates, because demand is still quite high.

[nimda]

Sub.
Just got some for 1.05 each, very nice. Seems waiting until the first dividend was the right thing to do - bonds were cheaper (at one point they were 1.27 BTC -- that's 3 weeks interest +1BTC!) and I'm more confident in them.

Now we wait, and hope Pirate doesn't default...

[tosku]

Will you be issuing new bonds every day?

[bitfoo]

Will you be issuing new bonds every day?

Yes. They will be priced according to the schedule a few posts above (or in the OP). I'm only selling 100 at a time though, then I send the coins to pirate and wait for their acceptance into the account before issuing more and listing them for sale again. The process may be slow, depending on mine and pirate's availability. I intend to automate at least my side of the process.

[tosku]

Code:

GLBSETime 02:00 Tuesday   - 1.06 BTC
GLBSETime 02:00 Wednesday - 1.07 BTC
GLBSETime 02:00 Thursday  - 1.08 BTC
GLBSETime 02:00 Friday    - 1.09 BTC
GLBSETime 02:00 Saturday  - 1.10 BTC
GLBSETime 02:00 Sunday    - 1.11 BTC
GLBSETime 02:00 Monday    - 1.12 BTC (before dividend payment)
GLBSETime xx:xx Monday    - 1.05 BTC (after dividend payment)

Those times are PM, right?

[bitfoo]

Those times are PM, right?

The times are AM. GLBSETime = EDT. I tried to use the same format as the time display on the GLBSE website - I guess that's a little confusing. OP has been updated.

[bitfoo]

Dividends just went out. 272.79 BTC paid out to 3897 outstanding shares = 0.07 BTC per share.

Bonds are up for sale at 1.05 again.

[MrTeal]

Well that's disappointing. I saw the sales at 1.055, and looked at the dividends and there was nothing. Refreshed a couple times and still only the one dividend from the 4th listed, so I bought a share at 13:23 to test it out. Still no dividend listed as being paid, but eventually at 13:25 the dividend at 13:20 was finally updated on the page. I guess it takes the dividends awhile to work through the system and get update on each security's page.

[bitfoo]

Well that's disappointing. I saw the sales at 1.055, and looked at the dividends and there was nothing. Refreshed a couple times and still only the one dividend from the 4th listed, so I bought a share at 13:23 to test it out. Still no dividend listed as being paid, but eventually at 13:25 the dividend at 13:20 was finally updated on the page. I guess it takes the dividends awhile to work through the system and get update on each security's page.

That's right, the security page seems to get updated a little bit later. But dividends get paid to each asset holder as soon as I pay them - I verify this by having a couple of bonds in my personal account, and I can see the credit come in instantly.

[brendio]

Well that's disappointing. I saw the sales at 1.055, and looked at the dividends and there was nothing. Refreshed a couple times and still only the one dividend from the 4th listed, so I bought a share at 13:23 to test it out. Still no dividend listed as being paid, but eventually at 13:25 the dividend at 13:20 was finally updated on the page. I guess it takes the dividends awhile to work through the system and get update on each security's page.

That's right, the security page seems to get updated a little bit later. But dividends get paid to each asset holder as soon as I pay them - I verify this by having a couple of bonds in my personal account, and I can see the credit come in instantly.

I've noticed this behaviour too. It's a bit disconcerting for the issuer, wondering if the payment has worked or not.