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Simple Summary

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The current binary options system doesn't have any support for early bidders, thus it makes sense for everyone to wait untill the last possible moment before casting their bids.\nThis is a proposal on how to achieve a system where bidders would be incentivisized to cast their bids as soon as possible

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Abstract

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There would be three bidding phases, automatically created on the creation of the market. Earlier phases will have smaller bid and withdrawal fees. Early bidders will have their withdrawal fee locked even when the bid gets to later phases, so they still achieve the \"discount\".

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Motivation

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With the current system for Binary Options it makes sense for bidder to wait until the last possbile moment:

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  1. They will have a clear picture on the final odds
    2. \n
  2. They mitigate the withdrawal need and can use their funds in different places until the bid gets to final stages
    3. \n
  3. So finally they have no reason to lock their funds early in a bid
    4. \n
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For this reason currently only markets with shortterm bid windows make sense.\nWe want to balance this out so that long term bid windows are also attractive for both market creators and bidders.

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Specification

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Overview

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As soon as a binary market is created the bid window is split into 3 phases equal in length:

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  1. Early Bird: 0.5% fee, 3% withdrawal
    2. \n
  2. Standard 1% fee, 5% withdrawal
    3. \n
  3. Late Riser 2% fee, 7% withdrawal
    4. \n
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Early birds will have 0.5% fee on bids and 3% withdrawal cost till end of the bid phase.\nStandard bidders will have the current 1% bid fee and 5% withdrawal cost until the end of the bid phase.\nLate Risers will have 2% bid fee and 7% withdrawal fee.

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UI will have to be adapted to support these phases.\nMarkets already created will keep their default configuration.

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Rationale

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Technical Specification

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Test Cases

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John Doe create a market with bid deadline in 72h:

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  1. Early bird phase is until hour 24, with 0.5% bidding fee. Everyone who joined on the bid phase has 3% withdrawal fee until the end of the bid deadline.
    2. \n
  2. Standard phase is 1% fee. Everyone who joined in the standard phase has 5% withdrawal fee until the end of the bid deadline.
    3. \n
  3. Late Riser phase is from hour 48 till hour 72, with 2% fee and 7% withdrawal fee.
    4. \n
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Configurable Values (Via SCCP)

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  1. All fees are subject to configuration
    2. \n
  2. Number of phases is subject to configuration
    3. \n
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Copyright

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Copyright and related rights waived via CC0.

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