I have a few questions about BDD, being new to these derivatives:
1. Does the difficulty reset every 10 days on average?
Difficulty is not "resetting". Difficulty is just the current difficulty and it changes every 10-14 days on average. Have a look here for history:
http://runeks.dk/bitcoin/diff.txt2. At the posted BDD.EXCH price of 0.24310364, if this price includes the 1% fee, then is the NAV/U actually 0.24069666?
No, the current price of BDD.EXCH is 210 days of dividends (will change to 200 days after next difficulty change), so NAV/U is 0.22923491
3. If this 0.24310364 does in fact represent 210 days of daily dividends, then is this daily dividend = 0.00114617?
Correct.
4. Using the formula in the prospectus (5,000,000,000*25*86,400*65,535/2^48/2,514,532) the daily dividend computes to 0.00000023. Why the difference? Does it imply 5,000 shares outstanding? (0.00114617/0.00000023)
What is that 2,514,532? Difficulty is 2,193,847,870 right now.
5. About how much time will each cycle (intro to end game) represent? Do you intend to restart the derivative funds anew after the end game has concluded?
Depends on how much the difficulty will increase on average, about 2-5 months per cycle.
6. Since you are not actually mining for BTC, where do the BTC you need to pay those daily dividends come from? In other words, is there an independent source of income using cash flows not provided by your investors?
No, dividends come from the investors. It's part of the zero sum game.
7. I get the impression that the way you have designed the BDD pairs it's a zero sum game--if difficulty increases the BDD.Mine will get most of the 0.24 initial cash flow and if difficulty decreases then BDD.Sell will get the majority of the cash flow. Is this inference accurate, and if not why not?
You are right on the zero sum game, the invested coins are redistributed between MINE and SELL holders, depending on the difficulty changes.
For your second part: Higher difficulty increases (than expected) are bad for MINE holders, because it reduces prices and dividends. You are right when we reach the "endgame", as most of the investment thats left goes to MINE holders.
@twentyseventy: If I explained something wrong, please correct me.