Quote from: dooglus on March 05, 2018, 09:12:49 PM

Quote from: 01010100b on March 04, 2018, 05:18:02 AM

Quote from: devans on February 28, 2018, 07:39:46 AM

That is only the case for an individual investor that (ab)uses the offsite investment system to risk more than he actually has.

The offsite system is meant to allow investors to lower their counterparty risk and free up liquidity by not depositing their entire investment. I strongly recommend to only use it for that purpose. If you use the offsite system properly or don't use it at all, you never have an expectation of negative growth.

This statement is false, just think about it. Suppose there are two investors, A and B, and each have 50 btc onsite and 50 btc offsite. A is lying about it but B isn't. Why would A have -EBG but B have +EBG?

I've been attempting to find a good answer to your question, and came up with a surprising realization. Your "A" guy would appear to be running a 2x kelly risk, and so we would say he has zero expected bankroll growth. We know that if the percentage you risk is twice the house edge then your expected growth is zero.

BUT... he is only risking 2x on the first bet. After that his offsite stays constant. If the house loses money, A starts risking more than 2x kelly, and if the house wins money, A finds himself risking less than 2x kelly. A isn't really using "leverage" at all. Leverage would be where he is constantly risking 2%. But this "offsite" feature means he is always risking 1% of (onsite + 50) - which is quite a different thing.

In conclusion, we can't accurately say that if you go 2x using offsite investment then you can expect 0 bankroll growth. That's not true, because kelly only talks about what happens if you are risking the same percentage of your actual bankroll on every bet, and A isn't...

Yes, that's exactly why I'm saying that it would be best if they just stopped referring to it as leverage, because the system doesn't function as one.