Quote from: VTC on September 26, 2013, 01:44:21 AM

Thank you guys for understanding me.

That's why if Doog divested everyone by 75% when Nakowa was playing, it would lower his max bet to 80 btc as the total invested amount would drop to 8,000. But this would also leaving 24,000 spread out in player balances.

And then those that want to invest more that .25% of there balance can feel free to do so from their account player balance.

Now investors are at the mercy of Doog's change. It would have been much easy to divest everyone by 75% so it can free up our coins instead of keeping them at cold storage. Now the only way to get back to 1% risk is to buy 3 times the amount of BTC we have invested off of an exchange and invest more, introducing more counterparty risk, and a more cumbersome process.

The best would be set max bet to a flat 2%. And you can invest 1/2 of what you would have invested for 1% risk, or 1/8 of what you want to invest for .25% risk. Thoughts?

(I am an investor with a triple digit amount of BTC in JD)

Hey VTC. I totally understand your point and I think the CP risk is an important aspect to take into account as an investor. I'll address this again in a moment.

However, I just want to quickly point out that while divesting everyone 75% when we were at 32,000 would make the max PROFIT (not max bet) 80 just as it did by lowering max profit to 0.25% of invested funds, these are not actually mathematically equal. Remember these numbers are dynamic. For example, let's compare these two scenarios, A and B respectively if the site a player comes in and loses 1000BTC (site wins 1000 BTC):

A) Invested goes from 8,000 to 9,000. Max profit goes from 1% * 8,000 = 80 to 1% * 9,000 = 90
B) Invested goes from 32,000 to 33,000. Max profit goes from 0.25% * 32,000 = 80 to 0.25% * 33,000 = 82.5

The same goes if a player wins 1000 BTC (site loses 1000BTC):

A) Invested goes from 8,000 to 9,000. Max profit goes from 1% * 8,000 = 80 to 1% * 7,000 = 70
B) Invested goes from 32,000 to 33,000. Max profit goes from 0.25% * 32,000 = 80 to 0.25% * 31,000 = 77.5

Thus, what Dooglus actually did (reduce max profit to 0.25%) is fundamentally different-- it reduced risk, not just adjusted the max profit downward.

Now, having said that, I wasn't thrilled either about him reducing the max profit, and I still believe going 100% Kelly Criterion is the way to go. HOWEVER, I understand his motivation (trying to avoid what would essentially be a bank run), and I think his new plan is fantastic!

The new plan is a combination of allowing an investor to change their Max Profit percentage to a number between, say, 0.001 and 2% (less than 1% being fractional Kelly and over 1% being a multiple of Kelly) AND also allowing players to have what I will imperfectly call fractional investing.

Fractional investing is a little confusing at first, but makes a ton of sense. Say you want to invest 100 BTC in Just Dice at 1%. Fractional investing will allow you to, say, deposit 10 BTC in Just-Dice, and tell JD that you have 90 BTC more off site. Since your total investment is 100BTC, you will be risking up to 1BTC on that first bet. If your investment increases, no problem. If it decreases, no problem as well, because if it ever dips to below 10BTC, you'll be auto-divested until you desposit more funds.

This goes back to the Counter Party Risk, VTC, that you mentioned. By allowing you to have part of your investment off site, you reduce your CP risk with sacrificing returns. For Doog this is win-win because it allows risk-seeking investors to get the returns they want while protecting more risk-averse investors. Finally, this is great for gamblers and whales, as this will tend to increase the Max Profit back up to the levels people love to play and spectate (Also, don't forget that it's max PROFIT: whales make 300BTC bets, but plenty of people make long-shot bets to try to win that much, kinda like a lottery)

tl;dr: new variable investment risk doog is implementing is great. Let's bear with him as he implements it.