X.IDIFF.JUN has settled.

Wednesday, 18 June, Year 6 d.Tr. | Author: Mircea Popescu

Today being the third Wednesday of June, X.IDIFF.JUN has just settled. This was one of those relatively rare elective settlements, which is to say that as a difficulty change happened today, as per the terms of the contract it'd be my option whether to settle in the earlier (and in this case, lower) difficulty period or in the later (and so in this case higher) difficulty period.

Also remarkable, as the previous settlement was 4`250`217`919, the coverage limit implicitly is 12`325`631`965, which would have been sufficient to cover the earlier difficulty (11`756`551`916.9) but is insufficient to cover the later difficulty (13`462`580`114`525.3). Thus it was actually my option as to whether to settle in such a way as to triger the 2.9x cap or not.

Either of these options is quite sensitive, in that it materially affects the results of investors. The latter situation is particularly sensitive, in that it not only materially affects the results of investors, but also alters the net balance of trade in between the two sides.

I opted to settle in the later, higher difficulty period, principally because it is my hope and expectation that the slow down observed last settlement may indeed continue, and that we shall not in the future run against the 290% cap again. This instance is however not to be regarded as precedent in any manner for future settlements where either of the two options discussed above will come before us again.

Thus, Bitcoin difficulty at time of settlement was 13`462`580`114`525.3, a 316.75% increase over the previous period. The settlement value should thus have been 0.01346258 BTC per contracti.

Unfortunately, this exceeds the 290% per quarter limit built into the coverage mechanism. As a result, X.IDIFF.JUN were only covered up to 0.01232563 BTCii. It is pleasant to notice that this interval the contract stayed within the strict limits of its putative coverage.

The rate of difficulty increase slowed down significantly this period, in continuation of the trend started last period. I am reasonably confident we are entering the last leg of the insane triple digit difficulty increases over a quarter, and so we're slowly but surely becoming a usable asset over here.

  1. Due to the enormous increase of difficulty the contract trades in 1/10`000 lots since December 2013 . []
  2. Previous settlement (4`250`217`919) × 2.9 / 10`000 = 1232563. []
Category: MPEx
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