Quote from: xe99 on May 25, 2014, 03:37:01 PM

Quote from: twentyseventy on May 25, 2014, 12:24:29 AM

Quote from: xe99 on May 25, 2014, 12:05:59 AM

are we getting close to the end of this round/reset if difficulty goes above 12,000,000,000? if i read and understood the way this fund works...if we go much above 12,000,000,000 difficulty the dividend payout will be at or under 0.0002 which would make dividend payments (if i understood correctly) not worth paying out.

No, we're actually quite a bit away. It's not the daily dividend that needs to be below .2mBTC, but the Reserve that needs to be less than .2mBTC (Reserve = 200 Days of Dividends).

The last published Reserve is 0.04809800 BTC. Since the dividends are made off-blockchain, there's no fee to pay them, but they are getting smaller.

In hindsight, I probably would have chosen a higher Final Reserve / Minimum Reserve, as this Round is currently scheduled to last well into next year. Functionally, everything would operate exactly as-is even if the last published Reserve was ten times less than it is now, but, so far it seems that exchange volume tends to wane with a decreasing NAV/U / Reserve / Daily Div.

DMS, the model upon which BDD is based, had no minimum - holders of SELL had to vote if/when to close the fund. I do think that it was a good idea to build-in a Minimum Reserve, but a .2mBTC Reserve means a daily dividend of 100 satoshi, which the market may tire of.

Ah...ok i didn't get that...thanks for the clarification. I need to re-read the first few pages again.

Couldn't you put it to shareholder vote then and possibly change the reserve to a higher minimum that would cause the fund to reset sooner if your right and traders do in fact tire of the fund if the payout would be so low? I for one wouldn't be against it so long as I had at least a month or two to exit the position I have now.

This is something that I could do, but it is complicated to do so for two reasons:

First, HL does not have a shareholder vote option. We could get around this by either sending a survey link to all holders, and having them tie their votes to their email address; or, they could email me directly. So, the voting could be a little complicated.

Second, SELL holders that believe that the difficulty will increase well into next year would (correctly or otherwise) would be giving up expected profit by doing this.

For instance, the Minimum Reserve (that's what I'm calling it now) is .2mBTC. So, holders of SELL, in the case of continuously increasing Difficulty, can reasonably expect to give up .2mBTC as a final 200 Days of Dividends payout to MINE holders. In practice, it could be a bit less than this, but the amount is so small that it wouldn't matter much.

So, let's say that I proposed a new Minimum Reserve of 2 mBTC. Holders of sell, in the case of continuously increasing Difficulty, would then need to plan to give up about 1.8 mBTC more than they would have if they had waited until the Minimum Reserve had more significantly decreased.

I would assume that some traders could/would make more profit by entering a new Round with high-share prices instead of trading in a very low-share-price environment, but I can't be sure that they would see it the same way.

TL;DR - Holders of SELL, in the case of continuously increasing Difficulty, would essentially be 'giving up' the new Minimum Reserve amount (less .2 mBTC) to holder of Mine. Holders of Sell would need to decide if they would stand to make more profit in a new Round vs. this amount 'given up' to holders of Mine.

For now, I'm going to let the fund run as-is, but I would like to hear from holders of SELL. MINE doesn't get a say, since they only stand to benefit from this change. If the subject is repeatedly broached, I'll consider putting it to a vote. There's currently no mechanism in the contract for voting, which may need to be rectified for issues like this.