Author Topic: [ANN] Cryptohedge Financial Services soft launch  (Read 15189 times)

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Offline infovortice2013

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Bit-stability arrived. Nice DAC good luck
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Offline Rune

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Here is the article http://thevalueswan.com/cryptohedge-io-cfsassets-cfsgold-market-making-bots-20-to-50-yearly-return-maybe-black-swan-proof-maybe/

Really nice article, thanks! The 20 - 50 percent yearly return is a bit of an overstatement. I'd be happy if we can get a 1% monthly return on each CFS asset once the markets mature, but right the only real short term return from CFSGOLD will be the speculative future value of the CFSCOIN sharedrop that CFSGOLD holders will receive.

Offline yellowecho

I'm keeping an eye on this very closely.  I've been wanting to invest in an arbitrage hedge fund in this space for awhile.  Any idea when other assets will be launched?
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Offline eagleeye

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Nice initiative Rune,  ill write something up about what your doing on www.thevalueswan.com
« Last Edit: February 07, 2015, 11:02:43 am by eagleeye »

Offline donkeypong

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It's really hard to say what the expected return per CFSGOLD will be. At first it will be close to zero and the value of holding CFSGOLD will be the CFSCOIN sharedrop.

Even if this is a break-even proposition that helps BitShares, then it will be a success. No need to worry about making a big profit here.

Offline Rune

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So i assume that you're going take the official price of gold from NY and London (which we know is rigged). Alternatively, will you do what bytemaster suggests and go 5% above the official price to reflect the real physical price? China is also opening an exchange that may take over from NY/London.

I like the idea though. What sort of annual return would you be expecting your customers to receive?

We will go with whatever price bitgold has. I imagine that in the future when bitgold is better established, delegates will begin to monitor its peg to physical gold directly rather than going gold -> usd -> cny -> bts. So if there ever is a paper decoupling bitgold should not be affected if bitshares is properly established.

It's really hard to say what the expected return per CFSGOLD will be. At first it will be close to zero and the value of holding CFSGOLD will be the CFSCOIN sharedrop. Our target will be to make about 0.3% of pure earnings after fees (if any) and after hedging/arbitrage per trade. So if we have 200k USD volume per day, we will earn 18k USD per month of which 12600 will be distributed to CFSGOLD holders in the form of increased NAV. The question is how much bitgold is required to accomodate 200k volume, and ultimately what's the volume generated per bitgold? There's also some other concerns and even conflicts of interest, because CFSGOLD holders will want the volume per bitgold maximized (which means reducing bitgold supplies and thus CFSGOLD), and CFSCOIN holders will want absolute volume maximized (maximizing bitgold and CFSGOLD supply at the cost of volume per bitgold).

Once we are actually trading it will be possible for us to begin doing analysis on these things and figure out what the best way to deal with it is.

Offline CLains

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Offline nz

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So i assume that you're going take the official price of gold from NY and London (which we know is rigged). Alternatively, will you do what bytemaster suggests and go 5% above the official price to reflect the real physical price? China is also opening an exchange that may take over from NY/London.

I like the idea though. What sort of annual return would you be expecting your customers to receive?
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Offline roadscape

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Offline Empirical1.2

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If you want to take the island burn the boats

Offline Rune

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I'm considering that a better way to offer CFS assets is with a fixed return rather than the current model, because with the current model all CFS asset holders will have their return reduced every time new CFSGOLD is issued.

Yes but be very careful and don't follow I3s paradigm to change the "rules" every now and then, because even if it is to the right direction, investors (specially the "old" ones) will loose confidence... (I think you know what I mean :) )

Absolutely. If we decide to change the rules we will not suddenly change the rules for CFSGOLD, we will instead create a new UIA and stop issuing CFSGOLD if we determine it is not an efficient way to do it. There will be a lot of changes here in the beginning though, but we hope the CFSCOIN sharedrop will make up for that.

On that note we've decided to already create the Cryptohedge investor token and registered it as CFSCOIN. Using this longer name is partly to save investor funds here in the beginning, and partly to emphasize the contract free nature of cryptohedge (most people understand that a coin is not an IOU or security and does not confer any legal rights or responsibilities).

Offline Volker

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+5%

very good idea!
It will certainly help the bitshares project to succeed !

I have already bought some CFSGOLD , but I have to make one question...
Why is the supply 20 CFSGOLD right now and not 10 CFSGOLD? Have you already found a big investor that bought 10 CFSGOLD? Am I missing something?

I had a buyer contact me who was interested in buying 10 bitgold. Since the supply of bitgold already on the books wasn't exhausted I just put up an extra 10 bitgold.

Question: Why do you  need outside money for  this? I assume you've already designed the trading bots. Why not just run them yourselves and take 100% of the earnings instead of giving 70% to CFSGOLD holders? You're not going to need a million dollars to provide liquidity on BTC:bitGOLD.

You're launching with 10-20 CFSGOLD. That's not exactly big money.

Launching with the small amount of BitGold is just to test the funding system. We hope that once BitGold and other assets get started and our hedgebots begin providing a return we can scale CFSGOLD and other CFS assets as reliable, low risk financial products that will appeal to investors outside the bitshares community as well and drive attention and users to bitshares.

Regarding the expected return. I'm actually having a hard time figuring out the best way to model it, because it's impossible for us to predict how much demand there will be for actually trading bitgold on the exchange platforms themselves (rather than buy into bitgold to hold or maybe use it as an on ramp for BTS). Depending on the kind of trading people do we can accomodate it with smaller or larger pools of capital. I'm considering that a better way to offer CFS assets is with a fixed return rather than the current model, because with the current model all CFS asset holders will have their return reduced every time new CFSGOLD is issued.

Is it necessary to issue new CFSGOLD? Just do it Bershire Hathaway style

Offline liondani

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I'm considering that a better way to offer CFS assets is with a fixed return rather than the current model, because with the current model all CFS asset holders will have their return reduced every time new CFSGOLD is issued.

Yes but be very careful and don't follow I3s paradigm to change the "rules" every now and then, because even if it is to the right direction, investors (specially the "old" ones) will loose confidence... (I think you know what I mean :) )


Offline Rune

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+5%

very good idea!
It will certainly help the bitshares project to succeed !

I have already bought some CFSGOLD , but I have to make one question...
Why is the supply 20 CFSGOLD right now and not 10 CFSGOLD? Have you already found a big investor that bought 10 CFSGOLD? Am I missing something?

I had a buyer contact me who was interested in buying 10 bitgold. Since the supply of bitgold already on the books wasn't exhausted I just put up an extra 10 bitgold.

Question: Why do you  need outside money for  this? I assume you've already designed the trading bots. Why not just run them yourselves and take 100% of the earnings instead of giving 70% to CFSGOLD holders? You're not going to need a million dollars to provide liquidity on BTC:bitGOLD.

You're launching with 10-20 CFSGOLD. That's not exactly big money.

Launching with the small amount of BitGold is just to test the funding system. We hope that once BitGold and other assets get started and our hedgebots begin providing a return we can scale CFSGOLD and other CFS assets as reliable, low risk financial products that will appeal to investors outside the bitshares community as well and drive attention and users to bitshares.

Regarding the expected return. I'm actually having a hard time figuring out the best way to model it, because it's impossible for us to predict how much demand there will be for actually trading bitgold on the exchange platforms themselves (rather than buy into bitgold to hold or maybe use it as an on ramp for BTS). Depending on the kind of trading people do we can accomodate it with smaller or larger pools of capital. I'm considering that a better way to offer CFS assets is with a fixed return rather than the current model, because with the current model all CFS asset holders will have their return reduced every time new CFSGOLD is issued.

Offline Volker

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Question: Why do you  need outside money for  this? I assume you've already designed the trading bots. Why not just run them yourselves and take 100% of the earnings instead of giving 70% to CFSGOLD holders? You're not going to need a million dollars to provide liquidity on BTC:bitGOLD.

You're launching with 10-20 CFSGOLD. That's not exactly big money.

Offline liondani

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 +5%

very good idea!
It will certainly help the bitshares project to succeed !

I have already bought some CFSGOLD , but I have to make one question...
Why is the supply 20 CFSGOLD right now and not 10 CFSGOLD? Have you already found a big investor that bought 10 CFSGOLD? Am I missing something?

Offline inarizushi

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Congrats Rune, Riverhead and the other people involved, that's huge, thank you ! And it's a great way to divest inside the BTS ecosystem. It's very exciting again !
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Offline Volker

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Oh, right. You buy your own shorts. And the trading bots are trading bitcoin and bitgold. I definitely read that too fast. So you're exposed to BTS and CFS the company. And your profits are exposed to gold.
« Last Edit: February 04, 2015, 06:20:19 am by Volker »

Offline arhag

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Cliffnotes on operations:

The CFS company will make money as it earns up to 1% on the bid:ask spread between bitcoin and CFSGOLD using trading bots on exchanges. 70% of those earnings go back into CFSGOLD, increasing the NAV. So now CFSGOLD might be worth 1.x : 1 with bitGOLD.

At the end of the quarter, the CFS company will offer a full buyback of the CFSGOLD at the 1.x value if you want to cash out.

Note: As you've likely shorted the bitGOLD into existence (due to the lack of available bitGOLD) you have no choice but to expose yourself to BTS.  Your exposure to BTS is double that of CFSGOLD at the beginning. So ultimately you should be bullish on both BTS and gold (and the honesty and competence of CFS).

Do I have that right?

The trading bots trade between bitcoin and BitGold not bitcoin and CFSGOLD.

If you buy your own short you are still only exposed to BTS and not gold. If you exchange your BitGold for CFSGOLD, you are still not exposed to gold at all (assuming you trust CFSGOLD to track the value of BitGold). Actually, that's not completely accurate. Since CFSGOLD's NAV should grow larger than 1, you will be exposed to a little bit of gold as the NAV increases.

Offline Volker

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So to participate in this you should:

1. Acquire BTS.
2. Use 2/3rds of your BTS to short bitGOLD
3. Use 1/3rd of your BTS to buy your bitGOLD
4. Trade your bitGOLD for CFSGOLD 1:1

Cliffnotes on operations:

The CFS company will make money as it earns up to 1% on the bid:ask spread between bitcoin and CFSGOLD using trading bots on exchanges. 70% of those earnings go back into CFSGOLD, increasing the NAV. So now CFSGOLD might be worth 1.x : 1 with bitGOLD.

At the end of the quarter, the CFS company will offer a full buyback of the CFSGOLD at the 1.x value if you want to cash out.

Note: As you've likely shorted the bitGOLD into existence (due to the lack of available bitGOLD) you have no choice but to expose yourself to BTS.  Your exposure to BTS is double that of CFSGOLD at the beginning. So ultimately you should be bullish on both BTS and gold (and the honesty and competence of CFS).

Do I have that right?

With all that said, do you have any wild estimates of how profitable this might be for CFSGOLD holders? Realistically, how much could CFSGOLD be worth if it attained a trade volume similar to say, nubits?
« Last Edit: February 04, 2015, 05:51:12 am by Volker »

Offline Ander

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Offline toast

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I got bter.com to start working on bitGOLD market
Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.

Offline pseudoscops

How come the CFSGOLD/bitGOLD market in windows wallet has no graph and no purchase history?

edit: using win 7 client_version": "v0.5.3

I'm wondering this too. Anyone got any ideas?

Offline toast

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Yunbi is the best bet for bitgold

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Offline roadscape

We're really excited to see so much community support. Almost half of the 10 CFSGOLD has already been sold! Now we just need to get at least one of the BTS supporting exchanges to list bitgold so we can actually start using it.

Have you already contacted BTER regarding bitgold?
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Offline Rune

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Be careful to watch if there are already buy orders at the feed price if you try to short to yourself! If you're unlucky you can have your shorts snatched up immediately buy orders already on the books.

I just put up a short order for 1 bitgold, so if anyone had this happen to them they can buy from my short order and either cover their short, or invest the amount with us (if you want to stay 100% exposed to BTS but still want the CFS sharedrop and small return from CFSGOLD).

Offline Rune

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Thanks everyone for the support!

We're really excited to see so much community support. Almost half of the 10 CFSGOLD has already been sold! Now we just need to get at least one of the BTS supporting exchanges to list bitgold so we can actually start using it.

Btw some might have noticed I put up another 10 CFSGOLD. This is to accomodate a potential large buyer, and since the CFSGOLD for free sale hasn't run out I decided to just put it directly up there.

There is still a lot of stuff we need to figure out regarding the CFS investor shares (maybe we should call them high risk shares vs CFSGOLD's low risk model). But the fact that at least 10% of them will be sharedropped on CFSGOLD holders won't change.

Offline cass

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Offline donkeypong

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Wishing you guys the best of success with this!

Offline mdj

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I've bought in a little - will be great to see BitGold and other BitAssets climb up coinmarketcap

Offline xeroc

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cool thing .. gonna read into it .. +5%

Offline svk

Awesome, I'm gonna have to read over all that stuff tomorrow!

BTW I have a feeling this is what caused the bitsharesblocks back end to crash: unhandled error when looking up price history for a new asset that doesn't have one yet :)
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Offline joele

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How come the CFSGOLD/bitGOLD market in windows wallet has no graph and no purchase history?

edit: using win 7 client_version": "v0.5.3

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I'm in ( just a little gold  :P+5%

Glad to be a small part in something huge!

Offline Rune

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This is really compelling. 

Could you clarify this point for me.  Its not clear to me if what is being sold right now is part of your initial CFS Blockchain Offering.  If we purchase CFSGold now, will we be part of this 40% sharedrop?


"CFS sharedrop
When Cryptohedge begins public trading on the BitShares Decentralized Exchange, the share
allocation will be 40% to employees, 40% offered to the public in the CFS Initial Blockchain
Offering. The remaining 20% of CFS shares will be given for free to CFSasset investors, with
half of these (10% of total CFS) going to CFSGOLD investors."


Sorry, it wasn't properly clarified.

20% of the total CFS shares will go to CFSasset funders, to compensate for the early risk they take. CFSGOLD will be given 10% of the total amount of CFS shares, this will happen at the time of the IBO. The other 10% will probably go to BitUSD or BitSilver, but could also be spread out over other assets that needs to be kickstarted (like BitOIL maybe?). 40% of the shares will be paid out as salary to employees. These will initially probably not be liquid, and staff will hold on to their shares at first. Later there will be the "IBO" where we offer out 40% of total shares on the market and sharedrop 20% on CFSassets, and after which share buyback through CFS income begins. This should make the market liquid and enable us to use the CFS shares as liquid salary that can instantly be converted to bitassets. Then we can use those resources to pay for development that will get some interesting projects going that Cryptohedge can leverage its CFSasset reserves for, that will also improve the bitshares ecosystem (such as high volume light wallet trading bridge and bitcoin facing products to increase adoption).
« Last Edit: February 01, 2015, 10:23:11 am by Rune »

Offline Empirical1.2

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Quote
It's about time that bitshares starts getting the attention it deserves, and we are going to force bitassets into the spotlight by making them the most highly traded cryptocurrency token second to bitcoin, through large amounts of capital, the tightest possible spread, and sheer force of will as we approach every single exchange in existence and makes sure they know why they NEED to implement bitasset trading pairs in order to stay competetive in the business.

 +5%  +5%

Sounds incredible, great initiative, exactly one of the things BitShares needs.

If this was moderately successful I believe it would have a huge impact on how people view and value BitShares too.
I wish you the best of luck!!

Starting with BitGold too, is also brilliant.
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Offline matt608

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Offline Pheonike

I was on 5.1,  upgraded to 5.3 and now its visible in GUI.  :)

Offline joele

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+5% awesome!
More awesome if shapeshift.io will offer bitGold exchange as well

Offline arhag

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This is fantastic! +5%

By the way, I like the trading gateway idea. This is something that I hope will eventually be implemented in BitShares directly: limit orders + atomic chained fill-or-kill market orders  (basically what Ripple already does with their path finding algorithm) with price limits on the end-point asset conversion. But until that day, CFS could do it at the cost of exposing the user to counterparty risk over the <20 second duration of the trade ;). I would also like to see you guys go further and actually implement the path finding algorithm on your end to provide the most optimal conversion path, allow the user to specify conversion limits so that you do not go through with the order if the best available liquidity is not good enough (as determined by the user), and even allow the user to specify a fixed amount of the end-point asset that they want delivered to another BTS account (with the remainder returned backed to the user). With these features implemented, light wallets could easily integrate an API that you guys provide to pay a fixed BitUSD payment to a merchant which is paid for by the user's BitGold balance, all within 20 seconds.
« Last Edit: February 01, 2015, 07:45:50 am by arhag »

Offline lovejoy

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Yet another EPIC development!

Great work fellas! 

Offline BunkerChainLabs-DataSecurityNode

It's strange some of you are not seeing the symbol. I am seeing it just fine and the address included in the post showed up for me.

I even bought in!

Hope you guys are a big success!

Jonathan
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Offline onceuponatime

I'm finding it fine in GUI with a search for CFSGOLD:BitGold.

EDIT: I'm on 0.5.3, Linux QT wallet.

I'm on 0.5.3 Windows  and that (CFSGOLD:BitGold) and all its variations for capitalization give me nothing.

Offline Troglodactyl

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I'm finding it fine in GUI with a search for CFSGOLD:BitGold.

EDIT: I'm on 0.5.3, Linux QT wallet.

Offline onceuponatime

Nothing shows up when I search CFSGOLD in the GUI at the Market page.

And when I search bitGold, I get a list of trading pairs but bitGOLD:CFSGOLD  isn't one of them.

It's there. The pair is the other way though. Search for CFSGOLD:bitGOLD and it'll come up.

I searched both ways. It does not show up for me in the GUI.

In the console however I do get:

>> blockchain_list_assets CFSGOLD

ID    SYMBOL NAME                    DESCRIPTION                                     ISSUER                          ISSUED    SUPPLY                     
===========================================================================================================================================================
345   CFSGOLDCryptohedge gold fund.  Cryptohedge gold fund.                          cryptohedge                     0.00 %    10.000000 CFSGOLD           
344   CFSUSD Cryptohedge USD fund    Cryptohedge USD fund                            cryptohedge                     0.01 %    8,200.000000 CFSUSD   

Offline Bitcoinfan

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This is really compelling. 

Could you clarify this point for me.  Its not clear to me if what is being sold right now is part of your initial CFS Blockchain Offering.  If we purchase CFSGold now, will we be part of this 40% sharedrop?


"CFS sharedrop
When Cryptohedge begins public trading on the BitShares Decentralized Exchange, the share
allocation will be 40% to employees, 40% offered to the public in the CFS Initial Blockchain
Offering. The remaining 20% of CFS shares will be given for free to CFSasset investors, with
half of these (10% of total CFS) going to CFSGOLD investors."

Offline Pheonike


Offline Riverhead

Nothing shows up when I search CFSGOLD in the GUI at the Market page.

And when I search bitGold, I get a list of trading pairs but bitGOLD:CFSGOLD  isn't one of them.

It's there. The pair is the other way though. Search for CFSGOLD:bitGOLD and it'll come up.

Offline edilliam


Offline onceuponatime

Nothing shows up when I search CFSGOLD in the GUI at the Market page.

And when I search bitGold, I get a list of trading pairs but bitGOLD:CFSGOLD  isn't one of them.

Offline Method-X

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 +5% This is a fantastic idea Rune.

Offline Rune

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Cryptohedge Financial Services soft launch announcement

Cryptohedge.io

Dear friends,

For the past few weeks Riverhead and I have been working off the trading bot system that Toast developed to create an economic framework for large scale BitAsset/bitcoin market making. The result is Cryptohedge, a DAC that uses BitShares UIA's to raise funds for market making operations from the BitShares and bitcoin community in the form of low risk, steady reward investment instruments called CFSassets.

The idea is simple: We sell a CFSasset for each of the BitAssets that we do bitcoin market making for, and then our bots use these funds for high-volume market making while automatically hedging all exposure they have to bitcoin in order to minimize risk. This ensures that there is no volatility risk and the spread our bots take can thus be set very low, driving more volume to the BitAsset markets they operate in. Our first CFSasset, CFSGOLD, will initially be set for sale at the price of 1 BitGold per CFSGOLD, giving it a NAV of 1. Over time as the bots generate income from the spread this NAV will increase, but our hedging system is meant to ensure that it will not be able to decrease since all trades will be done at a 1 to 2% spread and gold exposure will always be close to 100%. Funders will be rewarded through the mechanism described in the CFSGOLD prospectus linked below.

Pooling our funds this way will enable our community to work together to produce the same kind of massive buy and sell walls that nubits has used to gain their huge volume over the past several months. The main difference is that our volume is actually done with a sound, collateralized asset, and we've also decided to focus on gold at first, since this is an asset that is not currently represented on any bitcoin exchanges and will be highly sought after if it can be made liquid, since almost everyone who's into bitcoin also loves gold. Because gold hedging is a valuable service that many exchanges will understand their clients demand, it's likely that we can negotiate highly favorable market making discounts if we can accomodate gold hedging at high volume. This is another advantage of pooling our funds for market making.

Currently there are still no exchanges that have implemented bitgold/BTC and our first offering of CFSGOLD is just a small amount (10 CFSGOLD sold for 1 BitGold each)to test the funding system and allow us to put up walls the second an exchange integrates BitGold. Our goal will then be to get every exchange that currently supports a BTS trading pair to also implement BitGold/BTC and BitUSD/BTC. We will then use the BitGold volume that we create on these altcoin exchanges to incentivize larger bitcoin exchanges to integrate BitGold.

It's about time that bitshares starts getting the attention it deserves, and we are going to force bitassets into the spotlight by making them the most highly traded cryptocurrency token second to bitcoin, through large amounts of capital, the tightest possible spread, and sheer force of will as we approach every single exchange in existence and makes sure they know why they NEED to implement bitasset trading pairs in order to stay competetive in the business.

Moy Hau is our exchange relations guy, he has worked for several chinese exchanges and has personal connections to the management at several top chinese exchanges and has already seen positive interest from huobi and ANX regarding the demand for bitcoin to gold hedging. We haven't actually pitched our service to the big players yet because we want it to be established with high volume on the altcoin exchanges first, but our medium term goal is to see bitgold traded for bitcoin on the largest bitcoin exchanges, next to CNY and USD.

You can see our HedgeBot in action market making BTC/BitUSD on bter here: https://bter.com/trade/btc_bitusd The volume is relatively low because of competition by nubits, but the spread we offer is similar to theirs.

To learn more about Cryptohedge you can read the business case:

CFS business case

To learn more about CFSGOLD, its withdrawal system and its early funder perks, read the prospectus:

CFSGOLD prospectus

To see our exchange pitch check out our exchange integration reference document:

High volume bitcoin to gold hedging

If you want to become a CFS funder and help make BitAsset liquidity explode while earning a steady return with low risk, then you can buy CFSGOLD right now directly from the decentralized exchange (unless it has sold out). The open sell orders can be found by searching for CFSGOLD:bitGOLD on the "market" page in the GUI.

Since the BitGold market still isn't liquid, the only way you can obtain bitgold at this point is by shorting it to yourself. It's a bit difficult to do, but doesn't put you at any risk and your total exposure to bitshares and gold remains the same (since you both short and go long gold). To do it, you have to go into the market page, find bitgold:BTS and then click on the SHORT tab. Here you have to check the box that says "short mode", and once you've done that you need to specify the quantity you want to short while putting price limit and interest rate to 0. Then you execute the order like a normal order, and will see it show up on the books. As soon as the order shows up on the order book, you go to the BUY tab and click on the new short order that you just created in order to have the client automatically fill out the buy information so you can buy into your own order. Once you've done this you will have bought your own short, and will now posses the amount of bitgold you shorted while having 3x that amount worth of BTS tied up as collateral. Your total exposure to BTS remains the same as before, and your exposure to gold will stay at 0 as long as you keep your bitgold, or use it to buy into CFSGOLD. We will do full buybacks with all our bitgold every week in the beginning of our operations (as described in the CFSGOLD prospectus), so you will always be able to get your bitgold back in time to cover your own short. If you need any assistance with covering your short I will always be happy to help and will make sure no one gets a forced cover after the 30 day time limit runs out.
« Last Edit: February 01, 2015, 10:30:22 am by Rune »