So the recent discussion about Identabit wanting to sharedrop at an unknown time in order to encourage holders and avoid the spike up and spike down in BTS price which could disrupt internal markets has got me thinking about how best to do this.
The main concern, I think, is that if there is some insider or group of insiders who know what the date is, then there is a profit potential for them at the expense of everyone else. They can wait for the time to pass, then do a big dump. The traders could see this big dump (or actually ANY big dump) as a sign that insiders knew the time was passed, and then they could dump as well, making things worse, and cause a potential black swan.
To avoid this, we need the impact of the sharedrop to be spread evenly over a range of time.
The solution I have come up with is this:It is announced that the share drop will occur at some random time between block number A and block number B. (Where these are spread far apart, like a month or two).
After block B is reached, some mathematical property of the next N blocks is used in order to calculate a random number. This number is used to choose which block was the cutoff point for the sharedrop.
(For example, multiply the hashes of these blocks together, take a mod and divide by a number to get a range from 0 to 1, multiply this by the number of blocks for the sharedrop period range, to get the specific block number for the cutoff).
Because no one could predict what those numbers would be in the blocks that are used, and because these blocks are made by a variety of delegates (maybe N=101?), no one can know in advance what time the share drop will occur.
Imagine that the market perceives the value of BTS to be X, and the value of the sharedrop to be Y.
At block A, the market will price BTS at a value of X+Y. A quarter of the way along, the market will expect only a 75% chance of gettnig the sharedrop, and therfore prices it at X + 0.75*Y. Halfway along its X + 0.5*Y, and when block B comes around, there is no longer any chance of the sharedrop, and the market now prices BTS at value X.
This way, the value of the sharedrop leaves BTS evenly over the course of a period of time, avoiding shocks to the market, and avoiding the possibility of insider trading.
This also encourages people to hold BTS in their own wallet throughout the duration of the sharedrop, helping to remove sell pressure.
I hope that makes sense!