Blocksize Prediction Market
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A light web version of the Excel spreadsheet at: http://www.truthcoin.info/papers/LogMSR_Demo.xlsx
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Total Capital Supplied (BTC)20
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Liquidity Parameter14.42695041
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StatesGoal Metric (USD/BTC)
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Min (0$)Max ($50,000)
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Blocksize 1 MB#1#3
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Blocksize >1 MB#2#4
Red: higher blocksize, Blue: 1 MB blocksize, (Orange: today's expected future value)
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EDITABLE (Numbers only, please)exp_sum
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SharesShare PricesLMSR (Market Account)Update Cost (User Pays)Exchange RateP(Increase)
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Time#1#2#3#4#1#2#3#40--1 MB>1 MBexpected
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17.08.04.05.026.63%28.55%21.63%23.19%26.0865015726.08650157$22,410$22,41051.73%$22,4106.10
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215.013.012.09.029.92%26.04%24.30%19.74%32.409521266.323019686$22,410$21,55645.78%$22,0199.45
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322.019.017.014.032.32%26.25%22.86%18.57%38.2933725.88385074$20,711$20,71144.82%$20,71114.21
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430.023.025.018.036.26%22.32%25.64%15.78%44.635985356.342613354$20,711$20,71138.10%$20,71122.06
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538.031.032.023.038.04%23.42%25.10%13.45%51.944480447.308495082$19,875$18,24136.86%$19,27336.62
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645.035.040.028.039.76%19.88%28.12%12.24%58.304969536.360489099$20,711$19,05132.12%$20,17856.91
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751.041.048.032.038.76%19.38%31.48%10.38%64.674805286.369835751$22,410$17,44629.76%$20,93288.49
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855.049.054.040.033.94%22.39%31.67%12.00%70.589240895.9144356$24,134$17,44634.39%$21,834133.34
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962.054.061.045.035.52%20.40%33.14%10.93%76.93221166.342970713$24,134$17,44631.34%$22,038206.96
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1070.058.067.052.039.45%17.17%32.05%11.33%83.418162946.485951344$22,410$19,87528.50%$21,687324.44
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1174.064.074.058.035.34%17.67%35.34%11.66%89.007393375.589230424$25,000$19,87529.33%$23,497477.96
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1275.064.075.060.035.46%16.54%35.46%12.54%89.957309160.9499157901$25,000$21,55629.08%$23,999510.49
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1382.570.482.566.036.35%15.71%36.35%11.58%97.099082977.141773812$25,000$21,21727.30%$23,967837.48
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1485.573.485.569.036.35%15.71%36.35%11.58%100.0990833$25,000$21,21727.30%$23,9671031.06
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1588.545.988.572.042.18%2.20%42.18%13.44%100.95394140.8548583942$25,000$42,96315.64%$27,8101094.00
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1688.545.988.572.042.18%2.20%42.18%13.44%100.95394140$25,000$42,96315.64%$27,8101094.00
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1788.545.988.572.042.18%2.20%42.18%13.44%100.95394140$25,000$42,96315.64%$27,8101094.00
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1888.545.988.572.042.18%2.20%42.18%13.44%100.95394140$25,000$42,96315.64%$27,8101094.00
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1988.545.988.572.042.18%2.20%42.18%13.44%100.95394140$25,000$42,96315.64%$27,8101094.00
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88.545.988.572.042.18%2.20%42.18%13.44%100.95394140$25,000$42,96315.64%$27,8101094.00
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At t = 12 someone purchases the "pro-increase portfolio".
("pro-increase portfolio" shares in box form)
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At the given level of Initial Capital Supplied (cell C5)...
1.001.00
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...it consisted of these shares...
1.000.001.002.00<-->0.002.00
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...and it cost...0.9499
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...but if we had infinitely liquid markets it would have cost 1 (try increasing "total capital supplied" at the top).
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...the b-independent price, by naive multiplication...
0.9399
..(while currently ~8% overexpensive, this is sometimes underexpensive, depends on price-distribution).
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Now, assume that the future Bitcoin price is...
$4,800...or...9.60%
...of the way between 0 and 50,000
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...and recall that it was...
$23,497
...when the "pro-increase portfolio" was purchased (t=11)...
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...implying a Bitcoin Return of...
-79.572%.
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StatesGoal Metric (USD/BTC)
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Min (0$)Max ($50,000)
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Blocksize 1 MB???
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Blocksize >1 MB
???
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So, we can fill in this half ---------------------------------->
90.40%9.60%
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If the blocksize does increase...
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StatesGoal Metric (USD/BTC)
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Min (0$)Max ($50,000)
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Blocksize 1 MB0%0%0.00%
<----------- Now, this half.
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Blocksize >1 MB
90%10%100.00%
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90.40%9.60%
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Revenue0.1920
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b-indep Cost0.9399
(if bought at avaliable prices)
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Infinite Liquidity Cost
1.0000
(if bought at avaliable prices under infinite liquidity)
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b-indep Return-79.572%
(equal to E49...fully replicated)
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IL Return-80.800%
(approaches E49 as liquidity increases or ERs equalize)
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If the blocksize does not increase...
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StatesGoal Metric (USD/BTC)
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Min (0$)Max ($50,000)
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Blocksize 1 MB90%10%100.00%
<----------- Reversed.
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Blocksize >1 MB
0%0%0.00%
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90.40%9.60%
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Revenue1.0000
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b-indep Cost0.9399
(if bought at avaliable prices)
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Infinite Liquidity Cost
1.0000
(if bought at avaliable prices under infinite liquidity)
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b-indep Return6.396%
(approaches zero as liquidity increases or ERs equalize)
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IL Return0.000%
(equal to zero, full refund)
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It is best to have the b-indep and IL returns equal each other...
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...this happens when b is high (ie large "Total Capital Supplied")....
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...which costs money, so take out your wallets, please!
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Changing the Units from BTC to USD
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Setup
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Sum#1#2#3#4#5#6#7#8
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Random Numbers3.5910.4580.5420.0940.3270.4420.6750.7730.280
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Initial Prices12.75%15.10%2.61%9.10%12.31%18.80%21.54%7.79%
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Random Numbers1.4960.5020.0630.8540.077
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