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Author Topic: [GLBSE] OZCOIN Miner Variance Protection available now.  (Read 986 times)
organofcorti
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July 10, 2012, 10:19:43 AM
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tl;dr:
Although miners using a DGM payment on Ozcoin have lower variance than for some payment methods, they are still affected by the pool's luck. By purchasing insurance, you will be paid an amount solely based on the number of shares submitted to the pool in a given period of time. MEI.OZCOIN will always have a lower fee than the PPS option miners at Ozcoin already have.


MEI.OZCOIN is available now for 0.102 btc / bond for an expected value of 0.100 - an effective fee of approximately 2%. My asks will be removed at block height 189503, after which we will start paying coupons. The bonds will be valid for 200 Ozcoin rounds, and pay coupons every 20 Ozcoin rounds.

If you wish to purchase any bonds after activation you will need to place a bid. If anyone wants to find out what I will accept for a bid at any point, please PM me.

GLBSE link: https://glbse.com/asset/view/MEI.OZCOIN.B

100 bonds will insure approximately 1.317 Mhps in a 1:1 ratio (this may change depending on the Difficulty).


General information
Ticker: MEI.OZCOIN.B

Company name: Miner Earnings Insurance

Short description: A bond insuring against miner earnings shortfalls on  Ozcoin. The holder of this bond will be paid 10 coupons at regular intervals for the lifetime of the bond.

Quantity to issue: 1000

Operation:
Insurance will be provided in the form of a bond. Coupons for the bond will be paid ten times in approximately a two week period, starting immediately after a difficulty retarget, ending at a predetermined number of rounds.

A best effort will be made to ensure coupons will be paid at 12:00 UTC on the completion of every 10th percentile of the round lifetime, so coupons will be received every one to three days depending on pool hashrate changes.

Each coupon will pay an amount calculated as follows:

Code:
Payment = Total block shares submitted since last coupon / Difficulty at which block shares were submitted / 10 * 0.1

Expiration:
The number of rounds for which a bond will be active is based on a pool's previous week's average hashrate to provide an estimated two weeks of operation before expiry, as follows:

Code:
Rounds for bond = trunc(7 day average hashrate / 2^32 * 3600*24*14 / 10) * 10

Depending on how close Ozcoin's actual hashrate is to the estimated hashrate, the coupon may expire sooner or later than the fourteen day estimate. This does not affect the value of each coupon or the total coupon amount over the life of the bond.

Expected value:
The expected value of each coupon is 0.01 btc, for a total expected payment of 0.1
The difference between the lifetime expected value of the bond and the bond IPO price reflects the risks to the insurer. Coupon payments are, in effect, a type of Pay-Per-Share payment, offsetting any bad luck a miner may encounter due to larger than expected rounds.

The probabilities of various coupon payments and lifetime bond values are given below, related to Ozcoin's average hashrate. The results are identical to PPS payouts based on the same pool round lengths.  

Probability of expected lifetime value of bond exceeding a particular % return, for various possible pool hashrates:




Coupons:
Coupons will be paid ten times during the lifetime of the bond, after Ozcoin completes a number of rounds ie. the nth coupon will paid after Ozcoin completes n/10 * lifetime rounds. Again, the results below are identical to a PPS payout based on Ozcoin's round lengths.

Probability of expected value of each coupon exceeding a particular % return, for various possible pool hashrates:



Calling:
This bond is callable, in which case I will pay:
Code:
Expected remaining value of the bond * IPO price / 0.1

The remaining value of the bond when called before a particular coupon is as follows:

         Remaining value
Called before:     of the bond            
1st coupon          0.10
2nd coupon          0.09
3rd coupon          0.08
4th coupon          0.07
5th coupon          0.06
6th coupon          0.05
7th coupon          0.04
8th coupon          0.03
9th coupon          0.02
10th coupon         0.01


Please note that this is not approved by or executed in conjunction with Ozcoin, and data for calculating the coupon amount is obtained from publicly available information only.

I welcome any comments, suggestions or requests.

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organofcorti
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July 14, 2012, 10:42:03 AM
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MEI.OZCOIN is available now for 0.102 btc / bond for an expected value of 0.100 - an effective fee of approximately 2%. It will be removed from sale at block height 189503, after which we will start paying coupons. The bonds will be valid for 200 Ozcoin rounds, and pay coupons every 20 Ozcoin rounds.

100 bonds will insure approximately 1.317 Mhps in a 1:1 ratio (this may change depending on the Difficulty).

Bitcoin network and pool analysis 12QxPHEuxDrs7mCyGSx1iVSozTwtquDB3r
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July 15, 2012, 11:52:26 PM
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MEI.OZCOIN.B will activate in about 36 hours, and after this point no more insurance will be sold for the Difficulty period.

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July 18, 2012, 01:35:22 AM
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MEI.OZCOIN.B has activated, however no bonds sold so I will not provide updates here until I offer it again, or if someone purchases bonds before the expiry. I have removed my asks now, so if you wish to purchase MEI.OZCOIN.B place a bid or pm me.

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