It is no doubt Grayscale’s booming popularity as a mainstream investment has caused a lot of community hullabaloo lately. As such, I felt it was worth making a FAQ regarding the topic. I’m looking to update this as needed and of course am open to suggestions / adding any questions. The goal is simply to have a thread we can link to anyone with questions on Grayscaleand its products. Instead of explaining the same thing 3 times a day, shoot those posters over to this thread.My hope is that these questions are answered in a fairly simple and easy to understand manner. I think as the sub grows it will be a nice reference point for newcomers. Disclaimer: I do NOT work for Grayscale and as such am basing all these answers on information that can be found on their website / reports. (Grayscale’s official FAQ can be found here). I also do NOT have a finance degree, I do NOT have a Series 6 / 7 / 140-whatever, and I do NOT work with investment products for my day job. I have an accounting background and work within the finance world so I have the general ‘business’ knowledge to put it all together, but this is all info determined in my best faith effort as a layman. The point being is this --- it is possible I may explain something wrong or missed the technical terms, and if that occurs I am more than happy to update anything that can be proven incorrect Everything below will be in reference to ETHE but will apply to GBTC as well.If those two segregate in any way, I will note that accordingly.
ETHE is essentially a stock that intends to loosely track the price of ETH. It does so by having each ETHE be backed by a specific amount of ETH that is held on chain. Initially, the newly minted ETHE can only be purchased by institutions and accredited investors directly from Grayscale. Once a year has passed (6 months for GBTC) it can then be listed on the OTCQX Best Market exchange for secondary trading. Once listed on OTCQX, anyone investor can purchase at this point. Additional information on ETHE can be found here.
So ETHE is an ETF?
No. For technical reasons beyond my personal understandings it is not labeled an ETF. I know it all flows back to the “Securities Act Rule 144”, but due to my limited knowledge on SEC regulations I don’t want to misspeak past that. If anyone is more knowledgeable on the subject I am happy to input their answer here.
How long has ETHE existed?
ETHE was formed 12/14/2017. GBTC was formed 9/25/2013.
How is ETHE created?
The trust will issue shares to “Authorized Participants” in groups of 100 shares (called baskets). Authorized Participants are the only persons that may place orders to create these baskets and they do it on behalf of the investor. Source: Creation and Redemption of Shares section on page 39 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here Note – The way their reports word this makes it sound like there is an army of authorizers doing the dirty work, but in reality there is only one Authorized Participant. At this moment the “Genesis” company is the sole Authorized Participant. Genesis is owned by the “Digital Currency Group, Inc.” which is the parent company of Grayscale as well. (And to really go down the rabbit hole it looks like DCG is the parent company of CoinDesk and is “backing 150+ companies across 30 countries, including Coinbase, Ripple, and Chainalysis.”) Source: Digital Currency Group, Inc. informational section on page 77 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here Source: Barry E. Silbert informational section on page 75 of the “Grayscale Bitcoin Trust (BTC) Form 10-K (2019)” – Located Here
How does Grayscale acquire the ETH to collateralize the ETHE product?
An Investor may acquire ETHE by paying in cash or exchanging ETH already owned.
Cash: The investor pays the subscription amount in cash and the Authorized Participant will use that cash to purchase ETH.
ETH: The investor transfers the ETH to the Authorized Participant, which will contribute the ETH in-kind to the Trust.
Source: Creation and Redemption of Shares section on page 40 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Where does Grayscale store their ETH? Does it have a specific wallet address we can follow?
ETH is stored with Coinbase Custody Trust Company, LLC. I am unaware of any specific address or set of addresses that can be used to verify the ETH is actually there. As an aside - I would actually love to see if anyone knows more about this as it’s something that’s sort of peaked my interest after being asked about it… I find it doubtful we can find that however. Source: Part C. Business Information, Item 8, subsection A. on page 16 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Can ETHE be redeemed for ETH?
No, currently there is no way to give your shares of ETHE back to Grayscale to receive ETH back. The only method of getting back into ETH would be to sell your ETHE to someone else and then use those proceeds to buy ETH yourself. Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Why are they not redeeming shares?
I think the report summarizes it best:
Redemptions of Shares are currently not permitted and the Trust is unable to redeem Shares. Subject to receipt of regulatory approval from the SEC and approval by the Sponsor in its sole discretion, the Trust may in the future operate a redemption program. Because the Trust does not believe that the SEC would, at this time, entertain an application for the waiver of rules needed in order to operate an ongoing redemption program, the Trust currently has no intention of seeking regulatory approval from the SEC to operate an ongoing redemption program.
Source: Redemption Procedures on page 41 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the fee structure?
ETHE has an annual fee of 2.5%. GBTC has an annual fee of 2.0%. Fees are paid by selling the underlying ETH / BTC collateralizing the asset. Source: ETHE’s informational page on Grayscale’s website - Located Here Source: Description of Trust on page 31 & 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
What is the ratio of ETH to ETHE?
At the time of posting (6/19/2020) each ETHE share is backed by .09391605 ETH. Each share of GBTC is backed by .00096038 BTC. ETHE & GBTC’s specific information page on Grayscale’s website updates the ratio daily – Located Here For a full historical look at this ratio, it can be found on the Grayscale home page on the upper right side if you go to Tax Documents > 2019 Tax Documents > Grayscale Ethereum Trust 2019 Tax Letter.
Why is the ratio not 1:1? Why is it always decreasing?
While I cannot say for certain why the initial distribution was not a 1:1 backing, it is more than likely to keep the price down and allow more investors a chance to purchase ETHE / GBTC. As noted above, fees are paid by selling off the ETH collateralizing ETHE. So this number will always be trending downward as time goes on. Source: Description of Trust on page 32 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
I keep hearing about how this is locked supply… explain?
As noted above, there is currently no redemption program for converting your ETHE back into ETH. This means that once an ETHE is issued, it will remain in circulation until a redemption program is formed --- something that doesn’t seem to be too urgent for the SEC or Grayscale at the moment. Tiny amounts will naturally be removed due to fees, but the bulk of the asset is in there for good. Knowing that ETHE cannot be taken back and destroyed at this time, the ETH collateralizing it will not be removed from the wallet for the foreseeable future. While it is not fully locked in the sense of say a totally lost key, it is not coming out any time soon. Per their annual statement:
The Trust’s ETH will be transferred out of the ETH Account only in the following circumstances: (i) transferred to pay the Sponsor’s Fee or any Additional Trust Expenses, (ii) distributed in connection with the redemption of Baskets (subject to the Trust’s obtaining regulatory approval from the SEC to operate an ongoing redemption program and the consent of the Sponsor), (iii) sold on an as-needed basis to pay Additional Trust Expenses or (iv) sold on behalf of the Trust in the event the Trust terminates and liquidates its assets or as otherwise required by law or regulation.
Source: Description of Trust on page 31 of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here
Grayscale now owns a huge chunk of both ETH and BTC’s supply… should we be worried about manipulation, a sell off to crash the market crash, a staking cartel?
First, it’s important to remember Grayscale is a lot more akin to an exchange then say an investment firm. Grayscale is working on behalf of its investors to create this product for investor control. Grayscale doesn’t ‘control’ the ETH it holds any more then Coinbase ‘controls’ the ETH in its hot wallet. (Note: There are likely some varying levels of control, but specific to this topic Grayscale cannot simply sell [legally, at least] the ETH by their own decision in the same manner Coinbase wouldn't be able to either.) That said, there shouldn’t be any worry in the short to medium time-frame. As noted above, Grayscale can’t really remove ETH other than for fees or termination of the product. At 2.5% a year, fees are noise in terms of volume. Grayscale seems to be the fastest growing product in the crypto space at the moment and termination of the product seems unlikely. IF redemptions were to happen tomorrow, it’s extremely unlikely we would see a mass exodus out of the product to redeem for ETH. And even if there was incentive to get back to ETH, the premium makes it so that it would be much more cost effective to just sell your ETHE on the secondary market and buy ETH yourself. Remember, any redemption is up to the investors and NOT something Grayscale has direct control over.
Yes, but what about [insert criminal act here]…
Alright, yes. Technically nothing is stopping Grayscale from selling all the ETH / BTC and running off to the Bahamas (Hawaii?). BUT there is no real reason for them to do so. Barry is an extremely public figure and it won’t be easy for him to get away with that. Grayscale’s Bitcoin Trust creates SEC reports weekly / bi-weekly and I’m sure given the sentiment towards crypto is being watched carefully. Plus, Grayscale is making tons of consistent revenue and thus has little to no incentive to give that up for a quick buck.
That’s a lot of ‘happy little feels’ Bob, is there even an independent audit or is this Tether 2.0?
Actually yes, an independent auditor report can be found in their annual reports. It is clearly aimed more towards the financial side and I doubt the auditors are crypto savants, but it is at least one extra set of eyes. Auditors are Friedman LLP – Auditor since 2015. Source: Independent Auditor Report starting on page 116 (of the PDF itself) of the “Grayscale Ethereum Trust Annual Report (2019)” – Located Here As mentioned by user TheCrpytosAndBloods (In Comments Below), a fun fact:
The company’s auditors Friedman LLP were also coincidentally TetheBitfinex’s auditors until They controversially parted ways in 2018 when the Tether controversy was at its height. I am not suggesting for one moment that there is anything shady about DCG - I just find it interesting it’s the same auditor.
“Grayscale sounds kind of lame” / “Not your keys not your crypto!” / “Why is anyone buying this, it sounds like a scam?”
Welp, for starters this honestly is not really a product aimed at the people likely to be reading this post. To each their own, but do remember just because something provides no value to you doesn’t mean it can’t provide value to someone else. That said some of the advertised benefits are as follows:
Access to trading within a tax advantaged retirement account
Institutions can easily and safely get exposure to crypto in a more legal-friendly manner
Ease of use for those who are not very technologically savvy
Ease of access for someone who doesn’t want to set up a Coinbase account
Perceived trust in institutional platforms over something like Coinbase or Kraken
Degen traders who just want access to the volatility ETHE provides that have no interest in crypto beyond that
So for example, I can set up an IRA at a brokerage account that has $0 trading fees. Then I can trade GBTC and ETHE all day without having to worry about tracking my taxes. All with the relative safety something like E-Trade provides over Binance. As for how it benefits the everyday ETH holder? I think the supply lock is a positive. I also think this product exposes the Ethereum ecosystem to people who otherwise wouldn’t know about it.
Why is there a premium? Why is ETHE’s premium so insanely high compared to GBTC’s premium?
There are a handful of theories of why a premium exists at all, some even mentioned in the annual report. The short list is as follows:
ETHE is NOT redeeming shares and as such doesn’t have an effective arbitrage mechanism
ETHE has a 1 year wait to be sold on the secondary market, again negating the ability to effectively arbitrage the premium
People may simply be willing to pay a premium for the benefits stated above.
Why is ETHE’s so much higher the GBTC’s? Again, a few thoughts:
ETHE hasn’t been around as long, so there is less secondary market supply to go around
ETHE was listed at an insanely high premium to begin with
ETHE might simply be more popular at the moment
Could just be sheer stupidity (investors think ETHE is a 1:1 ratio not 1:11)
Are there any other differences between ETHE and GBTC?
I touched on a few of the smaller differences, but one of the more interesting changes is GBTC is now a “SEC reporting company” as of January 2020. Which again goes beyond my scope of knowledge so I won’t comment on it too much… but the net result is GBTC is now putting out weekly / bi-weekly 8-K’s and annual 10-K’s. This means you can track GBTC that much easier at the moment as well as there is an extra layer of validity to the product IMO.
I’m looking for some statistics on ETHE… such as who is buying, how much is bought, etc?
There is a great Q1 2020 report I recommend you give a read that has a lot of cool graphs and data on the product. It’s a little GBTC centric, but there is some ETHE data as well. It can be found here hidden within the 8-K filings.Q1 2020 is the 4/16/2020 8-K filing. For those more into a GAAP style report see the 2019 annual 10-K of the same location.
Is Grayscale only just for BTC and ETH?
No, there are other products as well. In terms of a secondary market product, ETCG is the Ethereum Classic version of ETHE. Fun Fact – ETCG was actually put out to the secondary market first. It also has a 3% fee tied to it where 1% of it goes to some type of ETC development fund. In terms of institutional and accredited investors, there are a few ‘fan favorites’ such as Bitcoin Cash, Litcoin, Stellar, XRP, and Zcash. Something called Horizion (Backed by ZEN I guess? Idk to be honest what that is…). And a diversified Mutual Fund type fund that has a little bit of all of those. None of these products are available on the secondary market.
Are there alternatives to Grayscale?
I know they exist, but I don’t follow them. I’ll leave this as a “to be edited” section and will add as others comment on what they know. Per user Over-analyser (in comments below):
As asked by pegcity - Okay so I was under the impression you can just give them your own ETH and get ETHE, but do you get 11 ETHE per ETH or do you get the market value of ETH in USD worth of ETHE?
I have always understood that the ETHE issued directly through Grayscale is issued without the premium. As in, if I were to trade 1 ETH for ETHE I would get 11, not say only 2 or 3 because the secondary market premium is so high. And if I were paying cash only I would be paying the price to buy 1 ETH to get my 11 ETHE. Per page 39 of their annual statement, it reads as follows:
The Trust will issue Shares to Authorized Participants from time to time, but only in one or more Baskets (with a Basket being a block of 100 Shares). The Trust will not issue fractions of a Basket. The creation (and, should the Trust commence a redemption program, redemption) of Baskets will be made only in exchange for the delivery to the Trust, or the distribution by the Trust, of the number of whole and fractional ETH represented by each Basket being created (or, should the Trust commence a redemption program, redeemed), which is determined by dividing (x) the number of ETH owned by the Trust at 4:00 p.m., New York time, on the trade date of a creation or redemption order, after deducting the number of ETH representing the U.S. dollar value of accrued but unpaid fees and expenses of the Trust (converted using the ETH Index Price at such time, and carried to the eighth decimal place), by (y) the number of Shares outstanding at such time (with the quotient so obtained calculated to one one-hundred-millionth of one ETH (i.e., carried to the eighth decimal place)), and multiplying such quotient by 100 (the “Basket ETH Amount”). All questions as to the calculation of the Basket ETH Amount will be conclusively determined by the Sponsor and will be final and binding on all persons interested in the Trust. The Basket ETH Amount multiplied by the number of Baskets being created or redeemed is the “Total Basket ETH Amount.” The number of ETH represented by a Share will gradually decrease over time as the Trust’s ETH are used to pay the Trust’s expenses. Each Share represented approximately 0.0950 ETH and 0.0974 ETH as of December 31, 2019 and 2018, respectively.
What would happen if sovereign governments gave bitcoin a gold peg?
This is a totally theoretical post, but I believe it is a really interesting idea and would love to get the Internet's feedback on it, and what you think the ripple effects would be in the scenario described. Am very interested in writing this up and republishing it widely so it can be read by monetary policymakers in all major developed countries - if you know anyone like that, pass it on. In a move that would act like a bridge to a pre-Bretton Woods type of gold peg, (here is a great paper on a history of this in the US: https://fas.org/sgp/crs/misc/R41887.pdf) sovereign governments with gold holdings could (again, it is a theoretical idea - I am saying they COULD do this NOT that anyone or any country is doing this that I know of) establish open market operations to purchase bitcoins (partly as a diversification strategy) using their physical gold holdings at a fixed peg rate of 5 ounces per bitcoin. The reason I say 5 is because the current chart here seems to suggest that somewhat of a convergence to 5 oz is already occurring: https://www.xe.com/currencycharts/?from=XBT&to=XAU&view=10Y If any government did this and offered to buy physically delivered bitcoins from private holders of bitcoin (no other coins just BTC) in exchange for private delivery of physical gold, then the standard governmental unit of physical gold (held in places like Fort Knox) - known as the Good Delivery Bar which is 400oz of gold - could be procured by any holder of 80 or more coins in a secure and sanctioned exchange with the government in question - the most impactful of course would be if the US did this. My theory is that any time the exchange rate mechanisms in the forex or crypto markets violated the peg, there would be arbitrage opportunities that would bring the peg back in line. It would not only stabilize BTC, but the stabilization might spread via the 24/7 exchange rate mechanism in the crypto market to stabilize many cryptos that are still somewhat worthy experimental stores of value. Depending on the strength, credit, and depth of gold holdings of whatever governments engaged in this, it would seem that such a strategy could transform bitcoin into a new type of sound money, and also signal that owning bitcoin and gold is a priority of governments as well as their citizens. The gold standard was powerful both because it was tethered to something of limited quantity in the earth's crust with unique properties, but also because pre-Bretton Woods gold standards acted very much like a peg - and the government honored the peg no matter what. So in some sense it was still the "faith and credit of the government" that made that peg work so famously. I was partly inspired by this recent award-winning documentary www.inmoneywetrust.org in formulating this idea, and partly by my own academic interest in cryptocurrency. I believe bitcoin, above all others, because of its deflationary nature and algorithmically fixed quantity, is powerful all in itself - but with a peg from a real government to a real precious metal that many governments do in fact hoard (for whatever reason) - it could become both an international currency, and a form of truly sound money backed by governments' physical gold reserves and a legal or policy commitment to a peg of 5 ounces to 1 bitcoin. What do you all think would happen if a major government or many major governments did this? Remember the idea is to convince monetary policymakers in governments to willingly and openly bypass completely the fiat currencies of their governments and to make no informational commitment to those free-floating fiat markets for forex - so the bitcoins transacted for in the peg wouldn't be bought with dollars or yen or anything that could be printed by fiat. This would simply be a convertibility guarantee by major governments that 1 bitcoin, transferred to the Treasury by a private citizen or business (again so the Treasury could diversify holdings of sound money), would be convertible and be guaranteed to be convertible to 5 oz of physical, deliverable gold bullion (or 80 bitcoins per bar). Here is a list of the largest physical gold holders on earth who could theoretically engage in this type of operation: https://www.investopedia.com/ask/answers/040715/what-countries-have-largest-gold-reserves.asp Thanks Reddit! Looking forward to your thoughts! Alex Kaufman
Lastupdated2018-01-29 This post is a collaboration with the Bitcoin community to create a one-stop source for Lightning Network information. There are still questions in the FAQ that are unanswered, if you know the answer and can provide a source please do so!
Lightning Network White Paper - The protocol has changed since this original paper, but covers the mid-level mechanics of the Lightning Network with an emphasis on the smart contracts that make it trustless
If you can answer please PM me and include source if possible. Feel free to help keep these answers up to date and as brief but correct as possible
Is Lightning Bitcoin?
Yes. You pick a peer and after some setup, create a bitcoin transaction to fund the lightning channel; it’ll then take another transaction to close it and release your funds. You and your peer always hold a bitcoin transaction to get your funds whenever you want: just broadcast to the blockchain like normal. In other words, you and your peer create a shared account, and then use Lightning to securely negotiate who gets how much from that shared account, without waiting for the bitcoin blockchain.
Is the Lightning Network open source?
Yes, Lightning is open source. Anyone can review the code (in the same way as the bitcoin code)
Who owns and controls the Lightning Network?
Similar to the bitcoin network, no one will ever own or control the Lightning Network. The code is open source and free for anyone to download and review. Anyone can run a node and be part of the network.
I’ve heard that Lightning transactions are happening “off-chain”…Does that mean that my bitcoin will be removed from the blockchain?
No, your bitcoin will never leave the blockchain. Instead your bitcoin will be held in a multi-signature address as long as your channel stays open. When the channel is closed; the final transaction will be added to the blockchain. “Off-chain” is not a perfect term, but it is used due to the fact that the transfer of ownership is no longer reflected on the blockchain until the channel is closed.
Do I need a constant connection to run a lightning node?
Not necessarily, Example: A and B have a channel. 1 BTC each. A sends B 0.5 BTC. B sends back 0.25 BTC. Balance should be A = 0.75, B = 1.25. If A gets disconnected, B can publish the first Tx where the balance was A = 0.5 and B = 1.5. If the node B does in fact attempt to cheat by publishing an old state (such as the A=0.5 and B=1.5 state), this cheat can then be detected on-chain and used to steal the cheaters funds, i.e., A can see the closing transaction, notice it's an old one and grab all funds in the channel (A=2, B=0). The time that A has in order to react to the cheating counterparty is given by the CheckLockTimeVerify (CLTV) in the cheating transaction, which is adjustable. So if A foresees that it'll be able to check in about once every 24 hours it'll require that the CLTV is at least that large, if it's once a week then that's fine too. You definitely do not need to be online and watching the chain 24/7, just make sure to check in once in a while before the CLTV expires. Alternatively you can outsource the watch duties, in order to keep the CLTV timeouts low. This can be achieved both with trusted third parties or untrusted ones (watchtowers). In the case of a unilateral close, e.g., you just go offline and never come back, the other endpoint will have to wait for that timeout to expire to get its funds back. So peers might not accept channels with extremely high CLTV timeouts. -- Source
What Are Lightning’s Advantages?
Tiny payments are possible: since fees are proportional to the payment amount, you can pay a fraction of a cent; accounting is even done in thousandths of a satoshi. Payments are settled instantly: the money is sent in the time it takes to cross the network to your destination and back, typically a fraction of a second.
Does Lightning require Segregated Witness?
Yes, but not in theory. You could make a poorer lightning network without it, which has higher risks when establishing channels (you might have to wait a month if things go wrong!), has limited channel lifetime, longer minimum payment expiry times on each hop, is less efficient and has less robust outsourcing. The entire spec as written today assumes segregated witness, as it solves all these problems.
Can I Send Funds From Lightning to a Normal Bitcoin Address?
No, for now. For the first version of the protocol, if you wanted to send a normal bitcoin transaction using your channel, you have to close it, send the funds, then reopen the channel (3 transactions). In future versions, you and your peer would agree to spend out of your lightning channel funds just like a normal bitcoin payment, allowing you to use your lightning wallet like a normal bitcoin wallet.
Can I Make Money Running a Lightning Node?
Not really. Anyone can set up a node, and so it’s a race to the bottom on fees. In practice, we may see the network use a nominal fee and not change very much, which only provides an incremental incentive to route on a node you’re going to use yourself, and not enough to run one merely for fees. Having clients use criteria other than fees (e.g. randomness, diversity) in route selection will also help this.
What is the release date for Lightning on Mainnet?
Would there be any KYC/AML issues with certain nodes?
Nope, because there is no custody ever involved. It's just like forwarding packets. -- Source
What is the delay time for the recipient of a transaction receiving confirmation?
Furthermore, the Lightning Network scales not with the transaction throughput of the underlying blockchain, but with modern data processing and latency limits - payments can be made nearly as quickly as packets can be sent. -- Source
How does the lightning network prevent centralization?
How would the lightning network work between exchanges?
Each exchange will get to decide and need to implement the software into their system, but some ideas have been outlined here: Google Doc - Lightning Exchanges Note that by virtue of the usual benefits of cost-less, instantaneous transactions, lightning will make arbitrage between exchanges much more efficient and thus lead to consistent pricing across exchange that adopt it. -- Source
How do lightning nodes find other lightning nodes?
Does every user need to store the state of the complete Lightning Network?
According to Rusty's calculations we should be able to store 1 million nodes in about 100 MB, so that should work even for mobile phones. Beyond that we have some proposals ready to lighten the load on endpoints, but we'll cross that bridge when we get there. -- Source
Would I need to download the complete state every time I open the App and make a payment?
No you'd remember the information from the last time you started the app and only sync the differences. This is not yet implemented, but it shouldn't be too hard to get a preliminary protocol working if that turns out to be a problem. -- Source
What needs to happen for the Lightning Network to be deployed and what can I do as a user to help?
Lightning is based on participants in the network running lightning node software that enables them to interact with other nodes. This does not require being a full bitcoin node, but you will have to run "lnd", "eclair", or one of the other node softwares listed above. All lightning wallets have node software integrated into them, because that is necessary to create payment channels and conduct payments on the network, but you can also intentionally run lnd or similar for public benefit - e.g. you can hold open payment channels or channels with higher volume, than you need for your own transactions. You would be compensated in modest fees by those who transact across your node with multi-hop payments. -- Source
Is there anyway for someone who isn't a developer to meaningfully contribute?
Sure, you can help write up educational material. You can learn and read more about the tech at http://dev.lightning.community/resources. You can test the various desktop and mobile apps out there (Lightning Desktop, Zap, Eclair apps). -- Source
Do I need to be a miner to be a Lightning Network node?
Do I need to run a full Bitcoin node to run a lightning node?
lit doesn't depend on having your own full node -- it automatically connects to full nodes on the network. -- Source LND uses a light client mode, so it doesn't require a full node. The name of the light client it uses is called neutrino
How does the lightning network stop "Cheating" (Someone broadcasting an old transaction)?
Upon opening a channel, the two endpoints first agree on a reserve value, below which the channel balance may not drop. This is to make sure that both endpoints always have some skin in the game as rustyreddit puts it :-) For a cheat to become worth it, the opponent has to be absolutely sure that you cannot retaliate against him during the timeout. So he has to make sure you never ever get network connectivity during that time. Having someone else also watching for channel closures and notifying you, or releasing a canned retaliation, makes this even harder for the attacker. This is because if he misjudged you being truly offline you can retaliate by grabbing all of its funds. Spotty connections, DDoS, and similar will not provide the attacker the necessary guarantees to make cheating worthwhile. Any form of uncertainty about your online status acts as a deterrent to the other endpoint. -- Source
How many times would someone need to open and close their lightning channels?
You typically want to have more than one channel open at any given time for redundancy's sake. And we imagine open and close will probably be automated for the most part. In fact we already have a feature in LND called autopilot that can automatically open channels for a user. Frequency will depend whether the funds are needed on-chain or more useful on LN. -- Source
Will the lightning network reduce BTC Liquidity due to "locking-up" funds in channels?
When setting up a Lightning Network Node are fees set for the entire node, or each channel when opened?
You don't really set up a "node" in the sense that anyone with more than one channel can automatically be a node and route payments. Fees on LN can be set by the node, and can change dynamically on the network. -- Source
Can Lightning routing fees be changed dynamically, without closing channels?
Yes but it has to be implemented in the Lightning software being used. -- Source
How can you make sure that there will be routes with large enough balances to handle transactions?
You won't have to do anything. With autopilot enabled, it'll automatically open and close channels based on the availability of the network. -- Source
How does the Lightning Network stop flooding nodes (DDoS) with micro transactions? Is this even an issue?
https://preview.redd.it/mncmn8v8vhe31.jpg?width=1200&format=pjpg&auto=webp&s=b841af25f4c3e0efde7d47ab2db94b432215bcbf BankDex is a decentralised cryptocurrency exchange built on an innovative and ground-breaking technology that facilitates inter-blockchain transfer of crypto assets. At present, traders are forced to use centralised exchanges where traders share their control on the assets which creates a huge risk for them. However, BankDex is the first decentralised exchange that solves the transaction problem of cross-chain transfer between dierent blockchain accounts in a distributed ledger network. On BankDex traders will be able to trade BITCOIN, ETHEREUM, AND other ERC20 TOKENS.
BankDex solves the challenges for both types of exchanges by:
1.Connecting the different blockchains in a distributed manner 2.Enables both Cross-chain and intra-chain transactions 3.Integrates with any public, private or consortium chain 4.Enables high token exchange privacy 5.Supports low cost transactions BankDex architecture How will we reach these goals? BankDex is built on a peer to peer architecture without the involvement from any third party APIs as the latter ones are the points of failure9 10. The underlying technology is a high-speed, fully decentralized and public blockchain platform that possesses Turing complete, autonomous Smart Contracts. BankDex protocol BankDex overcomes the scalability limits of current blockchain systems with the BankDex protocol that balances the trade-off between throughput and latencies. Thereby, enables the secure validation and confirmation of initial transactions in seconds, in place of minutes or even hours as in regular blockchain transactions. BankDex provides more than million transactions per second and data transaction per 0.1 seconds — 1000 times faster than other decentralized exchanges. New decision consensus algorithm is based on secure data processing and multiple validation. BankDex smart contracts The BankDex platform consists of fraud-proof & completely automated smart contracts with powerful business logic. They allow multiple transactions or order matching from multiple users at the same time at a fast rate. Smart contracts are responsible for: the assets storage and trade settlements execution; arbitrage for processing and keeping track of the transaction; wallet to wallet transactions. These contracts ensure easy methods for the creation and exchange of tokens, increasing their tradability and liquidity. Multi-currency E-Wallet Multi-currency E-Wallet to support all kind of hardware and software wallets with no need to install various wallets on devices. Just one single BankDex secure wallet to store and transfer lots of cryptocurrencies. Multiple currency wallet facility enables the national currency transfer through compliant gateway operators. This is truly a breakthrough achievement. Not only DEX don’t support fiat. There are only several large CEX that do support the conversion to fiat: Coinbase, Gemini, Kraken, Coinmama, Bitstamp11. Credit/debit cards, as well as bank transfers, are the two most popular payment means on these platforms12. Others exchanges force traders to buy BTC/ETH from a ‘gateway’ exchange before transferring it to the crypto exchange to trade with. This process takes time as well incurring a fee for the transfer. BankDex Gateways Gateways to allow trading crypto and fiat currencies as long as they are on the BankDex platform. In the initial phase of development, BankDex users could trade US DollaEuro along with other 50 cryptocurrency tokens. BankDex provides scalability with the provision to trade more than 500 coins in the future. BankDex Interface Intuitive one-stop-shop interface to buy, sell, exchange cryptocurrencies and fiat. Our team involved experienced graphic designers and did the best to set up a very user-friendly environment for all users. A wide range of main languages of the world is supported. As a result, all people interested in crypto trading can enter the exchange and easily carry out their business activities without any hitch. https://preview.redd.it/pvu8lx8ivhe31.jpg?width=1016&format=pjpg&auto=webp&s=83b01d8edb4672ae9330f888436bf347370e5cac Other benefits & solutions
Near-feeless transactions and Simulator Exchange
BankDex includes simulator exchange that helps to improve trading without risking real money. BankDex allows free trading, without any fees for the first 90 days. After the period, it imposes a nominal fee of 0.003USD.
Make and cancel all types of trade orders freely without penalties.
There is no limit to number of times or amount withdrawn.
No KYC procedure
Maintain your privacy, no need for identity confirmation, truely decentralized.
In case of a lost account, BankDex has the built-in provision, so users can recover their account.
All the details of transactions are stored visible to everyone on the blockchain. BankDex Platform uses DAG that makes it impossible to tamper with trading transaction history.
https://preview.redd.it/c2amtnx1a8631.jpg?width=1200&format=pjpg&auto=webp&s=116620e5fa29717548934ef6cac2bf27d0b0a62e BankDex is a decentralised cryptocurrency exchange built on an innovative and ground-breaking technology that facilitates inter-blockchain transfer of crypto assets. At present, traders are forced to use centralised exchanges where traders share their control on the assets which creates a huge risk for them. However, BankDex is the first decentralised exchange that solves the transaction problem of cross-chain transfer between dierent blockchain accounts in a distributed ledger network. On BankDex traders will be able to trade BITCOIN, ETHEREUM, AND other ERC20 TOKENS. BankDex solves the challenges for both types of exchanges by: 1.Connecting the different blockchains in a distributed manner 2.Enables both Cross-chain and intra-chain transactions 3.Integrates with any public, private or consortium chain 4.Enables high token exchange privacy 5.Supports low cost transactions BankDex architecture How will we reach these goals? BankDex is built on a peer to peer architecture without the involvement from any third party APIs as the latter ones are the points of failure9 10. The underlying technology is a high-speed, fully decentralized and public blockchain platform that possesses Turing complete, autonomous Smart Contracts. BankDex protocol BankDex overcomes the scalability limits of current blockchain systems with the BankDex protocol that balances the trade-off between throughput and latencies. Thereby, enables the secure validation and confirmation of initial transactions in seconds, in place of minutes or even hours as in regular blockchain transactions. BankDex provides more than million transactions per second and data transaction per 0.1 seconds — 1000 times faster than other decentralized exchanges. New decision consensus algorithm is based on secure data processing and multiple validation. BankDex smart contracts The BankDex platform consists of fraud-proof & completely automated smart contracts with powerful business logic. They allow multiple transactions or order matching from multiple users at the same time at a fast rate. Smart contracts are responsible for: the assets storage and trade settlements execution; arbitrage for processing and keeping track of the transaction; wallet to wallet transactions. These contracts ensure easy methods for the creation and exchange of tokens, increasing their tradability and liquidity. Multi-currency E-Wallet Multi-currency E-Wallet to support all kind of hardware and software wallets with no need to install various wallets on devices. Just one single BankDex secure wallet to store and transfer lots of cryptocurrencies. Multiple currency wallet facility enables the national currency transfer through compliant gateway operators. This is truly a breakthrough achievement. Not only DEX don’t support fiat. There are only several large CEX that do support the conversion to fiat: Coinbase, Gemini, Kraken, Coinmama, Bitstamp11. Credit/debit cards, as well as bank transfers, are the two most popular payment means on these platforms12. Others exchanges force traders to buy BTC/ETH from a ‘gateway’ exchange before transferring it to the crypto exchange to trade with. This process takes time as well incurring a fee for the transfer. BankDex Gateways Gateways to allow trading crypto and fiat currencies as long as they are on the BankDex platform. In the initial phase of development, BankDex users could trade US DollaEuro along with other 50 cryptocurrency tokens. BankDex provides scalability with the provision to trade more than 500 coins in the future. BankDex Interface Intuitive one-stop-shop interface to buy, sell, exchange cryptocurrencies and fiat. Our team involved experienced graphic designers and did the best to set up a very user-friendly environment for all users. A wide range of main languages of the world is supported. As a result, all people interested in crypto trading can enter the exchange and easily carry out their business activities without any hitch. Other benefits & solutions
Near-feeless transactions and Simulator Exchange
BankDex includes simulator exchange that helps to improve trading without risking real money. BankDex allows free trading, without any fees for the first 90 days. After the period, it imposes a nominal fee of 0.003USD.
Make and cancel all types of trade orders freely without penalties.
There is no limit to number of times or amount withdrawn.
No KYC procedure
Maintain your privacy, no need for identity confirmation, truely decentralized.
In case of a lost account, BankDex has the built-in provision, so users can recover their account.
All the details of transactions are stored visible to everyone on the blockchain. BankDex Platform uses DAG that makes it impossible to tamper with trading transaction history.
On the new batch of comments to the SEC about the SolidX ETF, some honorable mentions, and some negative comments
The SEC just posted a new batch of 286 comments on the SolidX ETF, bringing the total to 1147. I am skimming through them and posted some of the best already to this sub. The vast majority are short comments, obviously submitted in response to some mail-in campaign. The names sound very much like the invented ones of spam emails that I have been receiving for years. A telling detail is the lack of a middle initial. They also mostly repeat the same arguments, and many are obviously written by people who don't understand what is the ETF, only that if that SEC thing approves it then the bitcoin price will go to the moon. I have just seen a dozen that start with the same phrase "I hearby[sic] state my acceptance and full support..." Some are so sloppy that they submit with one name but sign with a different name. Here are some honorable mentions:
Secured by math: "Please allow Bitcoin ETF as Bitcoin is an implementation of the perfect math and therefore based on the truth. Math has brought prosperity for mankind"
The New Age approach: [In Spanish] "Cordial salute. The new age of aquarius, which is the age of conscience and light, brings with it bread under the arm, in the second world war when the enigma code was deciphered to end the devastating war, we were at the door of the new age, and cryptography was making its first redeeming steps. Why resist what is good and favorable, when thanks to cryptography the second world war ended, and now it gives us again the hand, to an anti-corrupted technology, which wants to end a war disguised as crime, drug traffic, and political corruption, war that is carried out in silence and keeps obstaclizing the good development of mankind. Blockchain the technology of the new age of aquarius. Approved."
Johnny I: "an asset as it sits on the highly volatile market where distribution of coins are unevenly formed by small number of holders across the world (1% of addresses own 80-90% mined coins) who could manipulate prices effortlessly over the fake news. Also, sky-rocketing mining cost and inevitable hike of transfer fee (soon it will be only source of revenue for miners) will cast doubt to sustainability for a public investment tool. Bitcoin ETF would only serve as investing fads."
Mark Szyszkowski, CCRCP.org: "[...] Where is the intrinsic value derived from? What is the backing of Bitcoin? What is the definition of purely cyber infrastructure? Who runs it? How is expansion allocated and its technology upgraded? What inherent technological security risks does it have? [...]"
D. B.: "The Proposed Rule Change does not appear to detail the policy and procedure in event of a bitcoin blockchain fork. "
William Morrison: "The abundance of comments submitted on subject of this ETF speaks clearly: there is a mass of unsophisticated retail investors---most with no previous investing experience---looking to get rich quick or make back losses from the Bitcoin market plunge over the last half year. And of course the many savvy retail and institutional investors more than happy to take advantage of them. [...] For all the comments urging the importance of the United States being at forefront of blockchain or distributed ledger technology and innovation by allowing a Bitcoin ETF, few if any are able to explain why it is hinged on expansion on the wholly speculative nature of this asset class. [...] it is telling that the mention-able examples of companies succeeding in this sector are mining equipment manufacturers (https://www.cnbc.com/2018/02/23/secretive-chinese-bitcoin-mining-company-may-have-made-as-much-money-as-nvidia-last-year.html) and online cryptocurrency exchanges (https://www.businessinsider.com/binance-cryptocurrency-exchange-profit-prediction-2018-7). In other words, casinos are the biggest profit-makers in the market of gamblers."
Ken I Maher: "[...] There is improvement from 2 years ago when 96% of volume occurred unregulated in China but this leaves 86% of market activity still under no official established regulation against fraudulent trading activity or manipulation. US bitcoin exchanges still blindly and automatedly follow the dominant unregulated markets due to their own thinness of volume and liquidity. [...] More incredible is the emergence of USDT (Tether) a cryptocurrency token issued by a single exchange that claims to be 'pegged' to USD value and unprovenly to be backed by USD reserve. It now commands over 130% of global trading volume compared to all fiat pairs. [...]"
Kash Ranks: "In a world where making a daily living is hard enough, how can you in good conscience, allow a speculative/scam instrument like Bitcoin to exist let alone approve an ETF. Blockchain has its merits but Coins are nothing more than a digital scam which is robbing people of their hard earned money and enabling speculative fervor."
Ran Lagil: "[...] can one claim that the price action of the bitcoin spot market in the unregulated exchanges, which holds the vast majority of volume, as acknowledged by the SEC, doesn’t affect the XBT future market? Of course not. In any financial market where arbitrage is available, the price change in one source will affect the rest of the market. [...] Please find the bellow image which demonstrate the volume manipulation in the ETCBTC market in the world largest Crypto Exchange - Binance. [...]"
Peter Quinn: "Bitcoin is a pure speculation vehicle with no traditional value or commercial/industrial use. It has no fundamentals, is exceptionally volatile and is easily manipulated due to poor market liquidity and no market regulation. A CBOE listed ETF that is proposing to be a passive Bitcoin holding vehicle is nothing more than trying to get a broader pool of investors involved in something that would never be allowed for listing on a regulated stock exchange if it was a company. [...] Additionally, much of the purported size of Bitcoin is an illusion, with "market cap" as reported on private websites such as Coinmarketcap.com taking all coins ever in existence multiplied by an average of the last traded price in dollars. Volume is commonly reported as all Bitcoins traded in dollar value even if, as is the case, most of them did not trade against hard currency at all, instead trading against other cryptocurrencies or Tether, a purported 1:1: USD backed cryptocurrency that has been used to artificially pump the price and is more comparable to counterfeit money. [...]"
Sam Ahn: "I am opposed to the whole idea of bitcoin, because bitcoin does not have intrinsic value and SEC was created to prevent sale of pieces of the blue sky. [...] Bitcoin is a commodity money, which cannot be a store of value without having its own value established before becoming money. "
A friend told me there was no way that Bitcoin could go up 10x from $750. So I made this list for him.
Growing use of bitcoin for the unbankable. For example in the USA, the “legal” marijuana industry is a $20 billion industry that operates primarily in cash since marijuana businesses cannot get bank accounts. What if they started using bitcoin for their banking needs. Worldwide probably 3+ billion people are unbankable due to lack of ID, trustworthy domestic banking system, etc. Bitcoin on a phone could leapfrog legacy banking systems for billions of people.
If a Bitcoin ETF ever launches it will create a potentially huge onramp of new investors. The Gold ETF generated $9 MM purchase per day. The less popular oil ETF generated $4 MM purchases of oil per day. The entire trading market for USD / BTC is $10 MM per day right now. Traders estimate that it’s only possible to buy $1.7 of new BTC a day without moving the price. Even that seems really high to me. Either way, if a ETF comes online now, it sure seems likely to inflate a bitcoin bubble for good or ill. See : https://www.sec.gov/comments/sr-batsbzx-2016-30/batsbzx201630-23.pdf for a good explanation here.
Development of smart contracts creates entirely new industries that ride on bitcoin. Work by Rootstock and Blockstream are promising here. Bitcoin could have Ethereum like smart contract ability by 2017. Success here could create payment options for entirely new industries, which would boost demand for BTC.
Bitcoin theft resistance improves. Right now it’s tough for a non-technical person to store bitcoin independently securely. It’s also impossible for central authorities to keep bitcoin online securely. Technology almost already exists to change that though.
Easier access to purchase in foreign countries. Places where BTC is most needed like Egypt, Venezuela, India, etc it’s hard to get.
Bitcoin continues the linear pace of adoption it has today -- no heroic gains but just slow and steady with time. Steady growth of adoption combined with limited inflation or even deflation of supply will lead to price growth.
Commercial / transactional uses emerge that drive more widespread ownership and lower volatility
The world continues to deliver moments that test faith in fiat currency such as the 2008 financial crisis and subsequent bailouts and quantitative easing, paper currency expiration in India, hyperinflation in Argentina, Chinese Yuan devaluation, Cyprus bank confiscation, systemic collapse in Venezuela, etc. Combine those moments with greater access to bitcoin worldwide and belief that it’s a decent store of value.
Bitcoin use as the rails for remittance and cross border transactions. This use is already growing at 100%+ year on year, albeit from a very small base. It would need to grow much, much more to materially increase demand for bitcoin.
Most countries are terrible managers of their own currency. Some countries such as Panama and El Salvador have already given up on the idea of managing their own currency and simply use US Dollars. What if just one of the 190+ countries on earth adopted Bitcoin as legal tender for some or even all uses? For comparison sake, the 55th largest currency, New Zealand has a money supply of $105 billion which is approximately 10x the size of bitcoin’s current market cap. China has a money supply of $20 trillion which is 1800x bitcoin. Bitcoin money supply is currently equivalent to Cambodia and Ghana at around $11 billion.
Bitcoin becomes the replacement of higher-fee processors like Visa, MasterCard and American Express, which have a combined market capitalization of almost $350 Bn today. If Bitcoin were to capture that value, one Bitcoin would be worth almost $17,000. While bitcoin transaction volume is slowly growing, bitcoin is not on pace to get anywhere near visa like transactions at current pace.
Some countries begin to buy Bitcoin for foreign reserves the way they buy gold today.
Bitcoin is increasingly used for crowdfunding and investment funding. This is already happening. In 2016 there have already been dozens of ICOs of startups using bitcoin and ethereum as currency for multi-million dollar fundraisings.
Use of bitcoin for regulation arbitrage grows. For example the growth of bitcoin for prediction markets, internet betting, drugs, darknet trades, etc.
Development of micro payments that ride on bitcoin. There are a few startups working on this such as Brave browser, Yours, 21 but there is no real traction yet. Success here could create payment options for entirely new industries, which would boost demand for BTC.
Increased ability to scale and associated lower transaction fees. After SegWit goes live multiple scaling solutions become possible including the lightning network, other off chain solutions, or a fork to a larger block size. Right now high transaction fees and full blocks are retarding the growth of bitcoin as a payment system. Scaling solutions could and should reverse this though.
The development of a stablecoin which makes it possible for Bitcoin to become the behind the scenes asset for many applications, where the user might not be aware that they are actually using bitcoin.
Some of these things alone could create a 10x price increase. Other things will merely push the price slightly north. What do you think? Anything you would add or remove from this list?
I got a lot of negative feedback from simply reporting that the SEC wanted answers to questions about regulating bitcoin in the mainstream market from My Post Yesterday. I am not here to argue about that, I have my opinions and you have yours. I think we can all agree that we do want bitcoin to be a mainstream commodity, and I think the SEC is a step in the right direction, you may disagree. I'm simply reporting the questions and hoping to bring in a communal response for those that agree that this could lead to a good thing for all of us and want to contribute thoughtfully. I think a lot of these questions are ones we should be able to answer anyways, some I'm not sure I quite understand to begin with which is why I'm bringing this here, to a public forum. /u/Fiach_Dubh spearheaded a similar project when This Very Thing hit Canada, and I think this generated a positive community response from BitcoinCA which led to This being sent as a response. They brought up a possibility of bringing this to BitcoinUSA but they only have 174 members and I think a US interest in bitcoin regulation might pique the interest of everyone, but I may be being presumably too "american" for my own good on that point. Regardless, here are the questions, let's discuss. Questions as follows:
What are commenters’ views on whether the Exchange has entered into a surveillance-sharing agreement with a regulated market of significant size related to bitcoin? What are commenters’ views of the Exchange’s assertion that the trading volume in bitcoin futures makes the market for bitcoin futures a regulated market of significant size related to bitcoin? What are commenters’ views on whether there is a reasonable likelihood that a person attempting to manipulate the Shares would also have to trade in the bitcoin futures market to manipulate the Shares? What are commenters’ views on whether it is likely that trading in the Shares would be the predominant influence on prices in the bitcoin futures market?
What are commenters’ views on the relationship between the bitcoin futures market and the bitcoin spot market? For example, what is the relative size of these markets, and where does bitcoin price formation occur? Does the market, spot or futures, in which price formation occurs affect commenters’ analysis of whether it is reasonably likely that someone attempting to manipulate the Shares would have to trade in the bitcoin futures market, or that trading in the Shares would be the predominant influence on prices in the bitcoin futures market? To what extent, if at all, do recent developments in the bitcoin futures market—namely, the cessation of new bitcoin futures contract trading on the Chicago Futures Exchange—affect commenters’ analysis of these questions?
What are commenters’ views on whether the trading relationship between the market for bitcoin futures contracts and the proposed Trust, which would hold physical bitcoins, would be similar to, or different from, the relationship between the market for freight futures contracts and the Breakwave Dry Bulk Shipping ETF (cited by the Exchange in the Notice),20 which directly holds futures contracts traded on that market? What are commenters’ views on how these similarities or differences might affect an analysis of whether it is reasonably likely that someone attempting to manipulate the Shares would have to trade in the bitcoin futures market, or that trading in the Shares would be the predominant influence on prices in the bitcoin futures market?
What are commenters’ views on the Trust’s proposal to value its bitcoin holdings based on an index—the MVBTCO—that is calculated through a proprietary, non-public methodology that uses the privately reported bid/ask spreads of an unidentified set of U.S.-based market-makers in the OTC marketplace, which, the Exchange says, has no formal structure and no open-outcry meeting place? Is the use of a non-public, proprietary index to value holdings based on OTC activity an appropriate means to calculate the NAV of an exchange-traded product (“ETP”)? What are commenters’ views on whether determining NAV based on the index value at 4:00 p.m. E.T. might, or might not, create an opportunity for manipulation of the NAV or of the Shares? What are commenters’ views on the assertion in the Notice that, according to the Sponsor, the MVBTCO’s methodology reduces the possibility of an attempt to manipulate the price of bitcoin as reflected by the MVBTCO? What are commenters’ views on the Sponsor’s assertion, as described by the Exchange in the Notice, that “the OTC desks have a better measure of the market than any exchange-specific reference price, whether individually or indexed across multiple exchanges”
What are commenters’ views on the Exchange’s representation that it will have in place a comprehensive surveillance sharing agreement with each of the OTC platforms that constitute the MVBTCO prior to the Shares listing on the Exchange? What are commenters’ views on the Exchange’s assertion that the regulated nature of each of the OTC platforms that make up the MVBTCO, the notional volume of trading and liquidity available on these platforms, the principal-to-principal nature of these platforms, and comprehensive surveillance sharing agreements with each of the OTC platforms (in addition to the Exchange’s standard surveillance procedures) are sufficient to prevent fraudulent and manipulative acts and practices in the Shares? What are commenters’ views on the extent to which each of these OTC platforms is regulated? What are commenters’ views on the extent to which each of these OTC platforms can, or does, conduct surveillance of bitcoin trading activity?
What are commenters’ views on the size, liquidity, transparency, number and nature of market participants, and price discovery in the OTC market for bitcoin, both on an absolute basis and relative to the bitcoin spot market as a whole? What are commenters’ views on whether the volume of U.S. dollar trading of bitcoin—which excludes bitcoin trading against other sovereign currencies or digital assets—is a meaningful or appropriate measure of bitcoin market volume?
The Exchange states that the Trust does not intend to report its OTC trading. What are commenters’ views on how the Trust’s unreported OTC trades may affect the calculation of the Trust’s NAV and the ability of market makers to engage in arbitrage?
What are commenters’ views on each of the set of alternative means by which the Trust proposes to value its holdings in the event that the Sponsor determines that the MVBTCO, or another alternate pricing mechanism, has failed, is unavailable, or is deemed unreliable? What are commenters’ views on whether any of these pricing mechanisms, primary or alternate, would be affected by, or resistant to, manipulative activity in bitcoin markets?
What are commenters’ views on the assertion by the Exchange that the dissemination of information on the Trust’s website, along with quotations for and last-sale prices of transactions in the Shares and the intra-day indicative value (or “IIV”) and NAV of the Trust, will help to reduce the ability of market participants to manipulate the bitcoin market or the price of the Shares and that the Trust’s arbitrage mechanism will facilitate the correction of price discrepancies in bitcoin and the Shares? What are commenters’ views on whether the liquidity of the OTC bitcoin market is sufficient to support efficient arbitrage between the price of the Shares and the spot price of bitcoin?
The Exchange represents that it has entered into a comprehensive surveillancesharing agreement with the Gemini Exchange and is working to establish similar agreements with other bitcoin venues. What are commenters’ views on whether the Gemini Exchange is a regulated market of significant size? What are commenters’ views on whether there is a reasonable likelihood that a person attempting to manipulate the proposed ETP would also have to trade on the Gemini Exchange? What are commenters’ views on whether trading in the proposed ETP would be the predominant influence on prices in the Gemini Exchange? What are commenters’ views on whether the Exchange could enter into surveillance-sharing agreements with regulated spot markets of significant size related to bitcoin?
What are commenters’ views of the Exchange’s assertions that bitcoin is arguably less susceptible to manipulation than other commodities that underlie ETPs; that the geographically diverse and continuous nature of bitcoin trading makes it difficult and prohibitively costly to manipulate the price of bitcoin; that trading on inside information regarding bitcoin is unlikely; that the fragmentation across bitcoin markets, the relatively slow speed of transactions, and the capital necessary to maintain a significant presence on each trading platform make manipulation of bitcoin prices through continuous trading activity unlikely; that manipulation of the price on any single venue would require manipulation of the global bitcoin price to be effective; that a substantial OTC bitcoin market provides liquidity and shockabsorbing capacity; that bitcoin’s “24/7/365 nature”21 provides constant arbitrage opportunities across all trading venues; and that it is unlikely that any one actor could obtain a dominant market share?
What are commenters’ views of the Exchange’s assertions that transacting in the Shares will be geared toward more sophisticated institutional investors and will be costprohibitive for smaller retail investors? What are commenters’ views regarding whether brokerdealers are likely to offer fractional shares in the Trust to retail investors, permitting retail investment with a smaller financial commitment? What are commenters’ views of the Exchange’s assertions that the Sponsor believes that demand from new, larger investors accessing bitcoin through investment in the Shares will broaden the investor base in bitcoin, which could further reduce the possibility of collusion among market participants to manipulate the bitcoin market, in light of the possibility that broker-dealers may offer fractional shares to their customers?
What are commenters’ views on the Exchange’s assertion that a minimum of 100 Shares outstanding at the time of commencement of trading will be sufficient to provide adequate market liquidity? What are commenters’ views on whether the 100-share minimum would affect the arbitrage mechanism? What are commenters’ views on the Exchange’s assertion that, even though the Trust would not comply with the minimum number of shares outstanding required by Exchange rules, the policy concerns underlying that requirement would be otherwise mitigated in the case of the Trust, because the lower number of Shares is merely a function of the price of the Shares and will have no effect on the creation and redemption process or on arbitrage?
What are commenters’ views of whether the Trust’s proposed insurance coverage would affect trading in the Shares or in the underlying bitcoins? What are commenters’ views regarding the Trust’s proposed security, control, and insurance measures?
The rise of bitcoin and other crypto assets has led to an improvement in the process of making these investments, as well as financial investments. In the past, all investments were inherently linked to a physical entity and managed by large corporations. Digital currencies such as bitcoin and Ethereum (ETH) are not subject to physical assets and can be purchased, purchased and sold directly by owners through many online exchange centers. These advantages have led to tremendous growth and have led to more than 1,600 digital currencies being traded publicly today with dozens of more each week. While traditional securities such as stocks can be evaluated based on the parent company's financial performance, the criteria used to assess Krypto assets have been less established. To solve this problem, trading experts have created complex quantitative or Intelligent Trading Strategies (from statistical model analysis to deep strengthening learning from machine learning) that could predict the foreign exchange price or arbitrage based on large data sets (large data). These professional traders hope to benefit from the idea that numbers and raw data are superior to people based on intuition and market investment experience.Despite having a solution, the cryptocurrency environment still suffers from two systemic problems – complexity and trust in conducting business. These deficiencies create a disadvantageous situation for all parties involved in the crypto asset ecosystem: investors, trading experts, and exchange centers. CHALLENGES FOR INVESTORS Currently, the frame of the current encryption market lacks many rules, regulations and best practices. This uncertain encryption has been heavily weighted in favor of traditional investment institutions with resources and investment experience to navigate the investment market. To be competitive, there are many obstacles to overcome an investor, among them chief: market complexity, choosing an effective financial advisor, data security and service reliability. Bincentive Website Whitepaper Bounty0x username : Adassg
The rise of bitcoin and other crypto assets has led to an improvement in the process of making these investments, as well as financial investments. In the past, all investments were inherently linked to a physical entity and managed by large corporations. Digital currencies such as bitcoin and Ethereum (ETH) are not subject to physical assets and can be purchased, purchased and sold directly by owners through many online exchange centers. These advantages have led to tremendous growth and have led to more than 1,600 digital currencies being traded publicly today with dozens of more each week. While traditional securities such as stocks can be evaluated based on the parent company's financial performance, the criteria used to assess Krypto assets have been less established. To solve this problem, traders have created complex quantitative or Intelligent Trading Strategies (from statistical model analysis to deep-strengthening learning from machine learning) that can predict the foreign exchange price or arbitrage based on large data sets (large data). These professional traders hope to benefit from the idea that numbers and raw data are superior to people based on intuition and market investment experience. Although it has a solution, the crypto currency environment is still suffering from two systemic problems - complexity and trust in business adhesions. These deficiencies create a disadvantage for all parties involved in the crypto asset ecosystem: investors, trade experts and exchange centers. 2.1 CHALLENGES FOR Investors Currently, the frame of the current encryption market lacks many rules, regulations and best practices. This uncertain encryption has been heavily weighted in favor of traditional investment institutions with resources and investment experience to navigate the investment market. To be competitive, there are many obstacles to overcome an investor, among them chief: market complexity, choosing an effective financial advisor, data security and service reliability. MARKET COMPLEX As the number of total investment options increases, complexity and difficulty in choosing the best investment is increasing. Both new and experienced investors need generous amounts of information to effectively trade. Collecting information can be difficult and can often be very difficult. The most recent encryption can be more than an investor can handle alone by keeping up with the latest currencies, ICOs, market insight and the differences between various stock markets. Most of the time, these same investors have to use the robo consultant or just rely on intuition or popular news media stores. However, these methods come with disadvantages. Bincentive Website Whitepaper Bounty0x username : Adsaa1
Hello, My name is Rosa, I'm the Business Development Manager for ARBIT Corporation. I was also part of the CAVIRTEX operations team. I am reaching out to you because we are investors of your coin and hold it in our portfolio. We notice you trade on BINANCE, DIGIFINEX, BITTREX, and POLONIEX, and we want to help increase your volume and generate some revenue for you with our market making arbitrage as partners. We invest our own AUM to match a loan from you to increase liquidity around the world. We have done this for 7 other coins already totalling $220 Million in trading volume in 3 years (results shown in PDF). ARBIT is a private Canadian Company founded in 2015 that conducts global arbitrage and market making services. Our team has over 20 years of combined experience dating back to 2011, when we launched the first Canadian Bitcoin Exchange CAVIRTEX. We later sold to KRAKEN.COM. Our CEO Joseph David appeared before the Canadian Senate to pave the way for Canadian Regulations (https://www.youtube.com/watch?v=v-aBJm9SerE&t=1s). We have a 12 person team and $3M in AUM, and we are rapidly growing. We trade on 13 exchanges and 2 DEX's across 5 Fiat Currencies and 25 Crypto Currencies totalling over 200 order books. We have robots that trade 24/7 that are managed by our team. We are one of the few companies that are revenue positive, even in the sea of red that crypto has experienced lately. We have a PDF presentation and a video that I can share. Are you interested in viewing the video and increasing DOGE volume. Thank you, Rosa Arbit Corporation Business Development Manager
The Javvy Protocol serves as the underlying processes by which Javvy works quickly and effectively to provide ID Verification, an automated cross-currency exchange, and liquidity for cryptocurrency/token order fulfillment. Overview of Registration and Rapid ID Verification Process Javvy requires no registration to send, receive, convert, or manage assets. When using advanced features, such as buying and selling crypto with FIAT (national currency), purchasing tokens in an ICO/STO, or an international debit card; Javvy offers a streamlined process for user verification to be able to scale quickly to a growing userbase while complying with KYC/AML regulation. Fig. 1 - Rapid ID Verification Process Rapid ID Verification Process • Users are not required to verify ID to perform send, receive, and convert transactions • Users attempting to perform regulated transactions initiate the ID verification process • Geo-location technology is used to help prevent unauthorized access and fraud Whenever a geo-location mismatch occurs against the user’s stated citizenship, it is logged and counts against the ‘trust score’ assigned to the ID verification • The system performs rapid ID verification of the supplied credentials, when possible • If rapid ID verification is not possible, the application is flagged for manual review • If verification is unsuccessful, the registration is declined with a detailed report • The user may submit further credentials with an explanation for review • The user may also request a manual review • If verified, the account is authorized to allow the user to conduct regulated transactions Overview of Automated FIAT-to-Crypto Exchange Process Javvy received a patent pending (#62543097) for a provisional patent that covers the process and methodology for the automatic, bi-directional conversion of supported national currencies and cryptocurrencies. The novelty of this process is that it is distributed, fully automated, and ties into legacy banking system technology utilizing current banking APIs. Existing providers are limited by the amount of reserves held as deposits needed to clear these transaction types, which impede their ability to scale their customer-base. The Javvy Solution overcomes the issue by providing a clear, fully-scalable path to buying and selling cryptocurrency easily, eliminating the need for massive cryptocurrency reserves. ![img](zn9tscv4k4o21 "Figure 2 - Overview of Automated FIAT-to-CRYPTO EXCHANGE Process ") FIAT-to-CRYPTO EXCHANGE Process • User places an order to exchange crypto and FIAT (national currency) • Peer nodes validate the transaction via network confirmations • If Javvy received a sell order, we check the OFAC list for the transaction details • If a match is found, the system cancels the order and flags the account for review • Otherwise, peer nodes periodically check for sufficient blockchain confirmations • If confirmed, initiate wire transfer to user • Otherwise, the order will eventually be cleared from the order book • If Javvy received a buy order, we check a crypto OFAC for the wallet address • If a match is found, the system cancels the order and flags the account for review • Otherwise, we periodically check for bank notification that funds have cleared • If the funds clear, with associated memo details, crypto transfer is initiated • Otherwise, the order will eventually be cleared from the order book Overview of Cross-Currency Exchange Javvy received a patent pending (#62558597) for a provisional patent that covers the process and methodology for conversion and settlement of cryptocurrency purchases, using an intermediary layer, the Javvy token (JVY), for the purpose of eliminating the need for holding disparate, volatile cryptocurrency reserves. This is a drastic improvement over current crypto exchanges that merely offer one (1) or two (2) cryptocurrencies (typically, bitcoin and Ethereum) to their users, due to the reserve limitation and extreme value risk. In contrast, by using this intermediary interchange process, Javvy will instantly be positioned to support nearly every major cryptocurrency in existence. Javvy users will be able to buy, sell, use, and manage them all, with the underlying framework remaining transparent from a user perspective. ![img](tckcyxfek4o21 "Figure 3 - Overview of Cross-Currency Exchange ") Details of the Intermediary Layer Interchange Process for Handling Crypto or TOKEN Fulfillment • User places an order to buy or sell cryptocurrency • When possible, orders will default to fulfillment through conversion of the JAVVY token (JVY), negating the need for Javvy to store massive crypto reserves • If possible, perform fullfilment trade from existing token liquidity • Otherwise, perform marketplace crypto/token trade to fulfill order • Complete user order for desired crypto/token (Figure 2) Liquidity Explained When a buy/sell order is placed, the Javvy wallet will securely connect to Javvy’s servers to nearly instantly poll all open order books, arbitraging prices across decentralized exchanges and partner centralized exchanges that support 3rdparty orders via an open API. Unless all crypto exchanges fail, Javvy will not provide its own centralized exchange component, as we believe that markets can be, and should be, decentralized. There are already several quality decentralized exchange projects and others that are working to provide liquidity and custodial services. So, Javvy supports those movements and will work with them to offer the best-in-class services to its users. While cryptocurrency liquidity is being ramped up in the markets, we will work with trusted liquidity providers to help place orders that cannot be filled elsewhere. https://javvy.com/?v=ebe021079e5a https://javvy.com/wp-content/uploads/2017/09/javvy_crypto-solution-white-paper.pdf Bounty0x ID: hllelek33
Welcome to r/GridPlus! (Introduction, Overview, Links, and Exchange Info)
Intro GridPlus creates hardware infrastructure that enables mainstream use of digital assets and cryptocurrencies. The GridPlus Lattice1 is a tamper resistant always-on hardware wallet that is the world's first fully integrated system for securely storing and spending digital assets. GridPlus products form a complete cryptocurrency infrastructure stack designed to support decentralized networks and allow new means of using crypto such as integration with your home energy system and other IoT devices, facilitating subscriptions and permissioned payments, scaling via off-chain hardware verified transactions using Phonon, and acting as programmable hardware security module for PoS chain validators or nodes. GridPlus Energy Their first major subsidiary of GridPlus is GridPlus Energy, a licensed Texas utility provider that leverages this technology to create dramatic savings on your home energy bill with a simple user experience powered by a mobile app. Texas residents in the Oncor and CenterPoint regions can sign up and start saving today at https://gridplus.io/energy. The Lattice1 connects to GridPlus Energy customers' electricity meters and automatically searches for the best wholesale rate then directly charges the customer the best rate plus a small fixed markup which creates huge savings versus traditional fixed rate plans. GridPlus Energy creates additional savings through using short time interval automatic crypto payments to circumvent expensive legacy payment systems. This also saves money through diminishing the cost of bad debt expenses and collections (a major expense for traditional electricity retailers) and this is passed on to customers. Customers can pay using ETH, DAI, BTC or via traditional credit card or ACH direct bank transfers. The Lattice1: Hardware Wallet and Crypto Infrastructure Platform The Lattice1 also provides a hardware platform for decentralized networks and applications. Eventually users will be able to connect to Lattice1 as a wifi hotspot and automatically use it to take advantage of IPFS, ENS, and TOR via any browser without using a browser extension or other software. The platform is intended to also host state channel nodes, PoS validators, and other decentralized applications that can benefit from its unmatched security. As a hardware wallet, the Lattice1 and GridPlus SafeCards use uncompromising security to enable the safest and most flexible cryptocurrency hardware storage ever created. The system boasts features not found in current gen alternatives such as simplified account recovery via easy out of the box hardware n-of-m multisig and secure permissioned payments and subscriptions. The hardware also facilitates many other use cases; take a look at this blog post for a look at what's on the roadmap and additional possibilities. The Company GridPlus was founded in 2017 by Mark DAgostino, Alex Miller, and Dr. Karl Kreder and is headquartered in Austin, Texas. The GridPlus Energy subsidiary is the result of energy and technology research beginning in 2015 at ConsenSys including work done in conjunction with L03 on the Brooklyn Microgrid. GridPlus Energy is located in Houston, Texas. GridPlus is the first major company to be incubated internally by ConsenSys as a main spoke and then spun out into its own venture. They are advised by Joseph Lubin, Ethereum cofounder and founder of ConsenSys. Their products are proudly designed and engineered in Austin and assembled in the United States. Timeline Hardware GridPlus is now accepting pre-orders for the Lattice1 hardware and SafeCards in the Americas, Europe, and Singapore which will begin shipping in Q3 2020. After the Lattice1 is shipped with firmware v1, additional integrations and features will begin to roll out: accessing DeFi dapps right from the touchscreen with no need for a computer, hardware multisig, support for eth2 BLS signatures as well as other chains, etc.. EnergyGridPlus Energy is now live and serving customers in Texas - you can sign up at https://gridplus.io/energy right now. In the first stage of the roll out, customers can opt for monthly fixed rates and pay via ETH, DAI, or traditional methods as well as redeem GRID for an additional discount. Later in 2020, the team will begin integration with smart home devices like Nest thermostats and smart plugs for pool pumps in order to optimize home energy consumption via dispatachable loads. Additionally, the transition to Ethereum L2-based short time interval payments will begin. The Hardware The Lattice1 is the cornerstone of the world’s first fully integrated system for securely storing and spending digital assets. At its core, the Lattice1 is a tamper resistant hardware wallet that links to your phone, your electricity meter, and other IoT devices using connectivity via Wifi, Bluetooth, and Zigbee antennas. The LDS mesh and other tamper resistance features essentially cause the unit to self destruct upon attempts to hack or reverse engineer the hardware. The Lattice1 can be expanded to a limitless number of accounts using cheap physically uncloneable Safe Cards which each have their own secure enclave chip and can be used for portable offline storage or hardware multisig. The Safe Cards’ physically uncloneable functions (PUFs) convert each chip’s unique electrical fingerprint into digital entropy that cannot be stolen or observed. The Lattice1 converts this entropy into a private key which cannot be hacked. Use this private key or restore another from a seed phrase to use as your digital wallet. Lattice1 Features: · 5” TFT Display with Multipoint Capacitive Touch Panel · Card Slot for Safe Cards to Provide a Limitless Amount of Accounts and Options · Lightbar Security Pattern for Notifications · Capacitive Home Button · Zigbee, Wifi, and BLE Antennas · Ethernet Jack · Internal Secure Enclave (and External via Safe Cards) · Secure Computing Environment · LDS Tamper Detection Mesh · Integrated PCD Security Mesh · Compressed Elastomer Intrusion Detection · Logic Power Isolation · Lithium Ion Backup Battery Use Cases Energy: The Lattice1 interfaces with your home's smart meter (which are already deployed across Texas) via Zigbee antenna. It looks up the best wholesale energy rates, automatically picks the best one, then directly charges you that plus a fixed markup creating huge savings for consumers. If you have a home battery or solar panels it manages these and sells to the grid at the optimal times or even earns money via automated energy arbitrage. All under the hood without having to do anything. This has the added benefit of smoothing out demand on the grid and making it more efficient. The Zigbee antenna also lets it control other home IoT devices like your Nest thermostat; automatic management of thermostats and other dispatchable loads makes your home more energy efficient and saves more money. Mobile Payments: The Grid+Pay mobile app will feel familiar to users of the many popular crypto wallets that exist today, but delegates its security to the Lattice1. Stop tying the fate of your crypto assets to your phone and a seed phrase — easily pair the app with your Lattice1 device and start spending your crypto assets more securely. Using the Lattice1 you can authorize the mobile wallet to spend a specified amount of crypto per time period from cold storage without having to be physically in front of the Lattice1 to approve each transaction. Retail Point of Sale: Grid+Commerce lets you easily accept digital currencies with no fees and no chargebacks. Integrate the Grid+Pay components into your site with just a few lines of code and accept physical payments using a Lattice1 device as a payment terminal. Grid+Pay provides merchants with an experience nearly identical to a traditional payment provider, but allows for direct peer-to-peer payments with their customers. Additionally, Grid+ is applying for PCI certification to allow the Lattice1 to accept traditional credit and debit card payments. Cutting out middlemen, businesses and consumers both save. Generalized Crypto Hardware Platform: The Lattice1 SDK has been feature-locked and is functionally ready for production pending the release of the hardware itself. Multiple teams are working behind the scenes to integrate the hardware into their own platforms. You can read the documentation here and check out the source code here. It is important to note that GridPlus will be evaluating additional signature schemas for future releases. Examples may include ERC721 transfers, Lightning transactions, or Maker CDP interactions. If you are a developer utilizing a signature schema outside of ether, ERC20, and bitcoin transfers (and if you want to integrate with the Lattice1), please reach out to the team and they may add the schema to a future firmware update. The Token GRID can be redeemed for 500 kWh of electricity with zero markup by GridPlus Energy or at other retail energy providers who implement the technology stack. Retail customers can buy these on the secondary market to redeem them for even more savings on their electricity bills, but GRID is not required to use the service. Additionally, customers can pay their full bill in GRID for even deeper discounts. The redemption rate is set monthly by taking the UniSwap spot price, multiplying this by 5, then setting a per GRID rates in kWh based on the prior period's average energy rate. Sounds complicated, but what it means is that no matter where the price of GRID and energy goes, customers will be able to pay their bill with GRID for a discount of as much as 80% off of wholesale rates! GRID can now also be redeemed for a discount of up to $200 off the purchase of a Lattice1. A fixed number of GRID have been created and when redeemed by a customer, they are taken out of circulation forever. Additional Resources
The team is often available on Discord for discussion and assistance. If you have lost your 2FA for the website, please send an email to [email protected] from your registered email address, with proof of identity documentation. There is a file size limit of 1MB, so attach a file under that size. The Crypto20 Fund Links
Information FAQ can be found here. Investment Information Please see a list of Hyperion's investments here. Meridian Fund Series [Minimum investment 100,000 USD] The Meridian Fund Series is composed of three index funds which track the top 10 crypto-currency assets by market capitalization. Each fund option has a variable contingency for cash allocation. Please see the links below for more information:
C10 Hedged C10 is a fund offered by Invictus, composed of the top 10 crypto-currency assets by market capitalization. Through a hedging mechanism, this fund offers greater drawdown protection for investors who may be more risk adverse. The fund is open-ended, and available to purchase through the Invictus Capital portal. Additionally, the use of margin-lending is designed to reduce fees.
FAQ can be found here. Invictus Margin Lending Fund The Invictus Margin Lending Fund offers investors the ability to take advantage of the volatile nature of the cryptocurrency market without risking direct exposure. The fund aims to maximize interest income on USD and USD equivalents with zero anticipated drawdown risk. Returns have a low or negative correlation to the S&P500, VIX, GLD and TNX — making for an excellent portfolio diversification tool. The fund targets compounded interest returns of 10 to 25% p/a net of fees on USD (and USD backed cryptocurrencies such as TUSD). This target should not be used as a prediction of performance. Investors will have access to daily performance reporting via the website and an API.
Emerging Markets Solar Fund The Emerging Markets Solar Fund aims to earn healthy returns whilst contributing to global clean energy production. The Fund provides investors with an opportunity to raise living standards in emerging markets, provide access to modern energy services, reduce global reliance on fossil fuels and offset their carbon emissions. The Emerging Markets Solar (“EMS”) Fund has teamed up with a launch partner, the Sun Exchange, to initiate the Fund. The Sun Exchange is a US-domiciled company operating out of Cape Town, South Africa and is the world’s first global, peer-to-peer, solar-cell micro-leasing online marketplace. They have a strong presence in the African market and have an impressive track record to date. Check out the fund via the Litepaper linked below!
Invictus Gold Plus Fund Gold has been favored and fought over by humans for thousands of years. With scarce supply and unwavering demand, the unmistakable precious metal has remained central to man’s concept of money and the preservation of wealth. Despite gold's initial sell-off in the wake of coronavirus fears, if history is to be a guide then the precious metal is poised for significant growth given the immense increase in money supply by global reserve banks (at this stage $2 trillion in the US alone) in an effort to buoy consumer demand. Invictus Capital presents our latest fund - the Invictus Gold Plus Fund - an open-ended fund that tracks the underlying gold price and earns an additional yield on your investment. The fund’s objective is to outperform gold as a long-term benchmark. The Fund will be held predominantly in gold-backed tokens, namely Tether Gold (XAUT) and PAX Gold (PAXG), with a small portion invested in our Margin Lending Fund (IML) for 24/7 liquidity purposes. The targeted outperformance will be accomplished by taking advantage of arbitrage opportunities and utilizing our proprietary software to margin lend the underlying tokens on platforms such as Bitfinex, expanding on the success and experience gained from operation of our IML fund. For reference, margin lending rates on Tether Gold haved spiked into the double digits in terms of annualized returns (25% APR as of 26/3/2020) due to the recent surge in trading activity.
Invictus Bitcoin Alpha Fund Invictus Capital is proud to present our Bitcoin Alpha Fund (IBA), an open-ended fund that is always long on Bitcoin (BTC), and aims to outperform it by utilizing options and lending strategies to offer both downside protection and yield. The Fund will have long BTC exposure, and it will utilize OTM put options as a protective mechanism which allows BTC downside to be capped at a maximum of 10% of the US dollar value of the Fund per month. Significant Bitcoin gains are made during any period of drawdown exceeding 10%, and IBA has, historically, strongly outperformed its benchmark of BTC. Bitcoin enjoys a first-mover advantage as well as substantial brand recognition, and it remains a popular investment choice for new market entrants. In historical terms Bitcoin has demonstrated low correlation to major asset classes such as equities, bonds and commodities. It can therefore offer superior risk-adjusted returns compared to more traditionally-oriented portfolios. A key aspect of Bitcoin is its scarcity and it can thus translate to a store of value for investors. With a current market capitalization of less than 5% of gold, there is significant room for Bitcoin to capture a larger share of global wealth. Bitcoin's property of scarcity can also serve as a bulwark against the inflationary pressures faced by fiat currencies and other risks associated with the traditional financial system. The IBA Fund offers the benefits of Bitcoin with reduced volatility - a concern which acts as a barrier to entry for many investors. In addition:
No management fee will be charged by the Fund
Portfolio margin agreements allow the fund to engage in lending activities of the USD collateral to generate interest returns as per the Invictus Margin Lending (IML) Fund. These yields will be applied to offset the cost of the purchased put
The Fund will also offset the cost through sale of OTM call options. The premium received from the sale of the call option helps to pay for the put option cost while capping the maximum fund gain to 30% for a given month
Backtested performance of the fund strategy over the past two years shows strong outperformance against the Bitcoin spot price, particularly in market drawdown
Perseus Perseus is a secure, end-to-end ICO raise platform. Perseus was developed by Invictus Capital to assist projects with their raise process in an efficient manner. Though often associated with the Hyperion Fund, any project can apply for this service. Perseus offers front-end, back-end, business, legal, technical, as well as marketing services. Projects can customize according to their requirements. On the front-end, Perseus provides a secure investment portal, including KYC/AML processes. This portal caters to different languages and currencies. Funds are received securely and stored cold, with user-specific information according to their investment history. On the back-end, analytics and reconciliation reports are available. This is in addition to other administrative and wallet tools. Business services can include assistance with exchange listings, advisors, community development, and ICO strategy. Perseus can also assist with roadmap and tokenomic planning. In terms of legal services, this extends to the drafting of agreements (such as SAFTs) and the creation of contractual terms. Technical services encompass the development and auditing of smart contracts, token issuance and security pen-testing. On the marketing side of things, this relates to content creation and dissemination, community management, brand consulting, campaigning, as well as general strategy. Perseus brings value to the blockchain ecosystem, and increases the chances of partner success. Please find FAQ regarding Perseus here.
Now that the Ethereum infrastructure is becoming increasingly mature, I thought that it would make sense to try to do some empirical tests of just how effective some of the cryptoeconomic tricks that we're been developing are. To that end, I wanted to throw out some proposed experiments that I would live to see community members take on; if you want to do any of them I'll be happy to offer any advice, and if your work is of sufficient quality it may even be worth a DEVgrant.
A large number of mechanisms that people have looked at on top of Ethereum have to do with using market prices as inputs into decentralized autonomous processes. A common example is futarchy, where an organization makes decisions by launching a pair of prediction markets on some publicly verifiable metric (eg. user adoption, its own stock price, happiness survey results), where the first market is denominated in a currency which pays out $1 if the company makes decision A and $0 otherwise, and the second market is denominated in a currency which pays out $1 if the company makes decision B and $0 otherwise. The theory is that the first market only has value if decision A is made, and so reflects the market's opinions on the likely value of the metric if decision A is made, and likewise with the second market for decision B. Whichever market shows a higher price, that decision is taken. For example, we may want to launch a pair of prediction market on some metric such as the price of ether, mining difficulty (reflecting the power of the network), etc, where the first market is valid if the Serenity release includes a line of code to increase the balance of the Ethereum Foundation's address (or possibly some other foundation's address, or some DAO's address, etc) by 4.5 million ether to pay for a greatly expanded and prolonged research and development effort, and the second market is valid if no such thing is done. The markets would then determine whether the market is more optimistic about the given metric (price, difficulty, etc) if the extra issuance is done or not. The efficient market hypothesis essentially states that such markets work reasonably well, ie. if by publicly available knowledge (strong-form EMH also includes private knowledge but is much more controversial) the expected return of a token is p, then the price should be roughly p. The argument is this: if the price is q < p, then there is an opportunity for people to buy the tokens at q, sit on them and reclaim an expected p, and thereby earn an expected p - q arbitrage profits. If the price is r > p, then people can short the tokens, and earn an expected r - p arbitrage profits. However, the strength of this "arbitrage force" is not infinite: there may not be many market participants with enough information to feel comfortable making such trades, and furthermore trading on the market exposes you to great secondary risk. For example, suppose that a company is deciding whether or not to hire a given CEO, and is making a prediction market on their revenues for the next 5 years in the cases of (i) them hiring the CEO and (ii) them not hiring a CEO. Suppose that you somehow know for a fact that hiring the CEO will add $5 million to their future revenues. However, the current expectation of the company's revenues is $1 billion, and really it could be anywhere from $500 million to $1.5 billion. Suppose that you see this market, and the CEO's cronies have secretly shorted the no shares and bought the yes shares, and thereby inflated the difference to $30 million; the CEO is using this information to demand a $10m salary. Would you be willing to buy no shares and sell yes shares? Not necessarily; assuming each share on the market represents a millionth of revenue, your expected gain from buying a no share and selling a yes share is $30 - $5 = $25, but depending on which way the decision goes you are also exposed to anything from a loss of $500 to a gain of $500 because of all the other factors affecting revenue, and you may not be willing to accept that risk. Hence, the empirical question is, under what circumstances is the arbitrage force strong enough to overpower manipulators? There are reasons to believe that, in fact, prediction markets will be among the most manipulation-resistant; unlike stock markets, where stock prices may be predicated on revenues 50 years down the line with great uncertainties, and where shorting is difficult and exposes you to a liquidation event if the price further goes up temporarily to a level above what you can pay, prediction market shares are about a specific event and usually have prices bounded within some specific range so there are no liquidation risks for shorters (this is definitely true for LMSR-style systems). However, even still the empirical question remains of just how good they are. Here are some proposed experiments that could be done on Augur, Gnosis or whatever else:
Launch a prediction market on "what will the output of this smart contract be on Mar 30, 2016?". The contract will be simply and verifiably coded to output 5. Launch a separate smart contract where some specific set of users is rewarded if the average market price exceeds 5; the more it exceeds 5 the higher their reward. This encourages them to try to manipulate the market upwards. See how well the market manages to keep the price close to 5.
Same as (1), except instead the smart contract returns either 0 or 10 depending on the value of a random bit (eg. a block hash); the expected value is still 5 but there is now risk.
Same as (1), except this time we launch two markets: one where the smart contract pays ethereum_blockchain_difficulty / 1 trillion + 5 and the other pays just ethereum_blockchain_difficulty / 1 trillion. Reward the manipulators for pushing the difference in prices above 5. To make the problem favor the manipulators more, reduce the 1 trillion constant to something lower. This simulates the "should we hire the CEO" example.
Same as (3), but replace 5 with a constant X that is only revealed to a select team. Use an interactive protocol to commit to the constant, so that they are convinced that you will need to input a value into the smart contract and that value can only be X, but set the protocol up so that they cannot prove X to others.
Same as (3) or (4), but randomize and privately reveal the direction in which the manipulators are incentivized to manipulate.
A lot of DAOs on ethereum are starting to look at voting mechanisms for decision-making. Can we bribe participants to vote in specific ways? Here's one interesting live experiment: use BTCrelay to trustlessly bribe bitcoin miners to vote for the Classic fork on blocks where block.number % 4 > 0 and Core otherwise (the weird bribing rule is chosen so that (i) it doesn't actually affect the outcome of the decision, as the threshold for Classic is 75% and so assuming Core and Classic miners are equally susceptible to the bribe it should proportionately shrink p-0.75 (where p is the percentage of miners that vote for Classic) and not change the sign, and (ii) so that we can actually tell how many miners are taking the bribe and don't have to argue about whether or not they took the bribe because they wanted Classic to succeed anyway).
DAO 51% attacks
Another attack on DAOs is the simple "buy 51% of the shares and use them to vote to give yourself 100% of the money" attack; in corporate land, this (and much more subtle versions of this) is essentially the reason why shareholder regulation exists. One possible countermeasure is to build in a cooldown period so as to let people pile in even more money on the "good guy" side if such an attack takes place, preventing the vote from passing through and even allowing the good guys to in turn disenfranchise the attackers. Make a DAO to empirically test this. (Note: this is essentially equivalent to the arguments around P + epsilon attacks)
Quadratic voting has seen a lot of attention recently as an incentive-compatible voting scheme. The idea is simple: anyone can make k votes for a decision by paying k^2 tokens; from there it's just a majority vote. The theory is that if someone gains x from a decision being made, and each vote has a probability p of being pivotal, then they have the incentive to keep buying votes for as long as the price of the next vote is less than px. Because the total price of k votes is k^2, and we know from calculus that the derivative of k^2 is 2k, users will have the incentive to keep buying tokens until 2k > px; hence, they will buy k = px/2 tokens. You can see from this math that the number of tokens that a voter buys should be proportional to x, ie. the amount that they gain from the decision being made. Hence, the number of votes that a voter makes should actually reflect the strength of their preference, and not just which option they prefer. We can empirically test this by setting up a quadratic voting DAO, and setting up choices that give users very obvious incentives. For example, the DAO could choose between decision A and B, where A gives user u x coins, user u x coins, etc, and B could give user u y coins, user u y coins, etc. We can then let these users vote, and see what the correlation is between whether sum(y) > sum(z) and whether A is chosen or B.
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