Quote from: jjdub7 on November 19, 2014, 04:28:31 AM

Heya 2070, been a while-ish.

Suggestion: If you do decide to reincarnate BDD with a 5TH/s initial offering, I'd suggest making the B.EXCH market price percentage over the NAV/U increase with the number of excess days of funds in reserve (if there is an excess - otherwise keep it at the fat 2%).

The reasoning behind this is similar to a point I made a while ago in response to thread members' observations that buyers of B.EXCH who held both the B.MINE and B.SELL shares saw a net yield due to the time series (essentially, in isolation of the capital inflows themselves, "Ponzi"-like) effect of more investors moving capital into the fund after them. I argued that this was a beneficial effect of the fund's mechanics in that overall it encouraged aggregate net inflows into the fund over time by giving investors an incentive to move capital into the fund sooner rather than later - filling fund reserve deficits more quickly than if this "implied" yield was somehow removed from the fund.

However, when the fund holds an excess of reserves, this means that potential new investors can explicitly buy into a higher-valued pair of units for the same cost. Granted, this situation would only arise in situations where difficulty periods saw heavy volatility in the forecasted difficulty increase (especially evident with this fund, where some traders use BitcoinWisdom's moving-average-Taylor-Series-like forecasting mdoel), or similarly, when heavy sales of B.EXCH/pair buybacks occurred late in the period (typically past the 10th day). The circumstances would be rather rare, but still, such a B.EXCH pricing policy should have the effect of further padding the fund NAV/U over fund lifetimes (as well as padding your commission on sales margins, I might add).

Cheers!

I think I see what you're saying here, but I want to make sure - I'm going to break everything down by-point and comment or ask for clarification that way-

Suggestion: If you do decide to reincarnate BDD with a 5TH/s initial offering, I'd suggest making the B.EXCH market price percentage over the NAV/U increase with the number of excess days of funds in reserve (if there is an excess - otherwise keep it at the fat 2%).

So, currently, the EXCH sales price is 3% over the NAV/U at the start of the Period - 2% as the management fee, .6% to the balance of the assets, and .4% to Havelock for the trading fee. DMS actually changed the EXCH price each day based on the NAV/U for each day - the reason that I don't do this is that the MINE divs are paid at the same time each day and I don't want to log in each day at noon to do this. It would be a pain for me to do so and also it would be unfair to some purchasers of EXCH - if divs were paid at Noon and I didn't log in to change the EXCH price until 3PM, all EXCH purchasers would be overcharged.

The reasoning behind this is similar to a point I made a while ago in response to thread members' observations that buyers of B.EXCH who held both the B.MINE and B.SELL shares saw a net yield due to the time series (essentially, in isolation of the capital inflows themselves, "Ponzi"-like) effect of more investors moving capital into the fund after them. I argued that this was a beneficial effect of the fund's mechanics in that overall it encouraged aggregate net inflows into the fund over time by giving investors an incentive to move capital into the fund sooner rather than later - filling fund reserve deficits more quickly than if this "implied" yield was somehow removed from the fund.

This is an issue I foresaw - you can gain a (slight) profit simply by holding MINE and SELL - you just need to do it over a pretty long period of time in which shares of EXCH are purchased. While it's beneficial to holders of MINE and SELL (moreso for one side depending on which way the difficulty is going at the time) for there to be more excess funds available as a whole, purchasing now vs. later doesn't make much of a difference in my opinion, as it's not as if BDD is investing the funds somewhere - BDD isn't missing out on any 'profit' or gains by not holding those coins sooner.

However, when the fund holds an excess of reserves, this means that potential new investors can explicitly buy into a higher-valued pair of units for the same cost.

This is not necessarily true - unless there was a massive inflow of new shares, purchasers are EXCH are always going to be overpaying for EXCH relative to the NAV/U. At the beginning of the period, as soon as I put up the new EXCH sales price, the new purchasers are already paying (Period NAV/U * 1.03) and only receiving Period NAV/U less one day of dividends. As the period lengthens, purchasers of EXCH are still paying Period NAV/U * 1.03 and getting Period NAV/U - X days of dividends. The later on that people purchase EXCH, the less that they get for it in terms of NAV/U (this ignores the market price of course).

I would actually like a solution to this problem ('overcharging' for EXCH to the benefit of the fund) that doesn't involve a manual update of the EXCH price every day, but I haven't come up with one yet.

I'm not sure that I addressed all of the points adequately, or if I misunderstood some of them, how far did I get to where you were going?

And I'm sure that few people here read the thread this often, but I'd appreciate it if people would let me know if there's any interest in starting up a 5TH/s offering - Sometimes bigger players need more liquidity and/or higher prices to make it worth their trading time. If I did start one, separate from the current 5GH/s offering of course, I would probably institute a higher/sooner End-Game for it.