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Introducing Darwinian Dividiends

Introducing Darwinian Dividends

Darwinian Dividends

The DARWIN Exchange will soon pay Darwinian Dividends (April 2018) in addition to success fees on the current DarwinIA notional capital allocation.

 

Sign up to earn darwinian dividend

Exchange members are aligned to make the most return on capital using everyone’s data. This facilitates a collective Darwinian Dividend

 
If you’re wondering:
  • Why add Darwinian Dividends?
  • Where do the dividends come from?
  • How is the amount determined?
Read on for all the answers!
 
We hope you’re as excited about this development as we are! It’s a merit-driven icing on the proverbial “DarwinIA cake” if you will.

Collective data -> Darwinian Dividends

The dividend source is Community DARWINS, e.g. $DWC, DarwinexLabs‘ first, tradable community sentiment indicator, and recently followed by its sibling, $DWF.
 
Both let investors trade real-time community loss aversion. In particular, their “performance fees” sections suggest users trade it for both pleasure and profit.

Feeling left out?

A Community DARWIN is like every other DARWIN in that:
  • It competes for investor capital with other signals.
  • Investors replicate trades while not knowing trade specifics in order to protect trader intellectual property (IP)
  • Investors pay the standard 20% performance fee
It differs from all other DARWINs, in benefiting from private information that belongs:
  • Not to the Exchange
  • Not to any one Exchange member
  • But to every Exchange member
For this reason, Darwinex will pay out all the performance fees you see on a Community DARWIN’s performance fees profile section, as Darwinian Dividends.

Community data -> just $DWC & $DWF?

In the long run, Darwinex aims to share all raw community signals, not just towards existing Community DARWINs.

Before that, however..

It needs signal wrapping/encryption technology.

Barring that, publishing the raw data would gift free-riding signal users more than 80% profit share, as it would be possible for them to trade on the signal outside Darwinex, at the expense of the Darwinex community

Alas, encrypting everyone’s real-time signal to secure 20% success fee is a tough technical cookie.

Until we crack it, DarwinexLabs will act as the community data’s caretaker.

In this regard, $DWC and $DWF are the result of transforming raw community loss aversion data into tradable assets.

Rest assured that DarwinexLabs is hard at work investigating further siblings… but for now, you know why DarwinIA “just” pays dividends on $DWC and $DWF.

On to the distribution key.

Distribution key -> meritocracy

Darwinex hopes you agree that:
  • Member community data is valuable
  • 20% performance fee is the fair price for it
  • Dividends belong to Darwinex members
But, what is the best way to structure dividend payouts resulting from community signals?
  • Pro-rata payment: every trader receives an equal pay-out?
  • Skewed payment: according to some meritocratic criteria?

Our take: meritocracy!

Darwinex will pay dividends (=cash prizes) to the best providers, because it’s a win-win for traders, investors and Darwinex:
  • The better the traders supplying individual DARWINs..
  • The bigger the incentive for new traders and investors to join.
  • The more statistically significant the collective signal available to all..
  • The bigger:

          – the 80% kept by demand (=investors) for individual and collective signals.

          – the 20% earned by signal suppliers (=DARWIN Providers)


Payout format

Dividend payouts will be skewed to maximise incentive from every pennie of performance fee paid by data users.
As such, dividends will be paid:
  • To the top 10 DarwinIA participants in a given month should $DWC had accumulated 10K in performance fees paid, if not it will be paid in multiples of 1000  starting from the winner downwards
  • In T+1 monthly cycles, meaning that the winners in month X will share the performance fees accumulated up until the end of such month
For illustration purposes, assume 3 success-fee scenarios for total success fees collected by $DWC and/or $DWF in a given month:
  • Performance fees paid 5500  : Top 5 DarwinIA winners will receive 1000  each, with 500  rolled over to the following months payout
  •  Performance fees paid 12.500 : Top 10 DarwinIA winners will receive 1000  each, with 2500  rolled over to the following months payout
  •  Performance fees paid 1.500 : The DarwinIA will receive 1000 , with 500  rolled over to the following months payout

The initial payout in April 2018 will:

  • Be paid to the top 10 participants in DarwinIA rankings in March 2018 if performance fees reaches 10000
  • Be based on cumulative performance fees earned by DWC through end March 2018
  • Per subsequent payouts, be capped at EUR 10k, with excess performance fees generated rolled over to the following months payout

What’s your take?

What are your thoughts? Do you:

 We look forward to your thoughts!

 


Want to know more about $DWC?

Here’s an insightful webinar about $DWC hosted by Juan Colón where he explains the rationale, for Darwinex and DARWIN investors, of backing the $DWC community sentiment indicator:

You can leave your comments here, in our YouTube Channel or writing at info@darwinex.com.

Almost forgot to say! Please, do not hesitate to share this content with your fellow traders & investors by using the icons you see on the left hand side of this post 😉

DWC DARWIN- Mean Reversion, Stable Volatility

Advantages of Trading $DWC vs. Other Assets

This post describes some of the advantages of trading $DWC over other listed assets on the DARWIN Exchange.

Click here to watch the Webinar Recording.

The underlying fundamentals of DARWIN $DWC give rise to historically consistent behaviours in the asset that benefit both active and passive traders.

Compared to any other DARWIN on the Exchange (where only the DARWIN Provider’s decisions affect the asset’s movements), it considers a large number of community participants’ behaviours in its decision-making.

This affords its investment attributes and returns profile, a higher level of statistical significance than other DARWINS, and presents advantages for both active and passive trading.

We go on to describe these benefits in terms of:

  1. Return
  2. Risk and,
  3. Suitability as a Trading Instrument.

1) Return: Range-Bound Returns / Cycles

$DWC’s returns visibly demonstrate a fair degree of mean reversion, fluctuating in a stable range compared to other assets on the Exchange.

This range-bound behaviour presents itself on all time-frames in the $DWC, enabling short, medium and long-term traders to trade the asset.

For a quantitative perspective on this, you may find the following blog post useful, where we have conducted mean reversion tests using the $DWC dataset on six different timeframes:

[Darwinex Blog] Mean Reversion Tests on DARWIN $DWC

 

Active traders in particular can benefit from this tendency by e.g. being able to trade the $DWC standalone if they wish, designing strategies around the asset as it approaches its historical peaks (resistances) and troughs (supports) on any time-frame of their choice.

DWC Range-Bound Returns Cycles

DWC Range-Bound Returns Cycles (1-Year)

 

As its primary function is trading the opposite of asymmetric community exposure – behaviour which in itself is mean reverting by definition – $DWC demonstrating cyclical returns in this manner makes sense, further strengthening the case for active range-trading strategies leveraging this tendency.

This benefit is not limited to just active traders, as passive traders too can leverage this behaviour to time $DWC portfolio allocations for better value.

 

For more on this, you may find this blog post and the following webinar recordings helpful:

  1. [Webinar Recording] $DWC – Real Time Sentiment Index & Security
  2. [Webinar Recording] Effects of Market Volatility on Trader Performance
  3. [Darwinex Blog] Hedging DARWIN Portfolio Risk with $DWC

 


2) Risk: Stable Volatility Profile

$DWC trades a large number of currency pairs simultaneously.  The combined portfolio of currency pairs results in individual assets effectively cancelling out each other’s excess volatility, leading to stable movements overall in the $DWC.

DWC - Assets & Timeframes Summary

DWC – Assets & Timeframes Summary

Stable volatility coupled with mean reverting returns cycles, therefore makes $DWC a strong candidate for range-trading.


3) Suitability as a Trading Instrument

Active traders in the Darwinex Community frequently engage in trading price ranges and short-term retracements on currency pairs.

Retracement Trading Example

Range/Retracement Trading – Negatively Impacted by Deep Market Movements

 

Deep market movements in currency pairs can adversely affect such strategies, making range and retracement trading opportunities incredibly hard to exploit in live trading – especially for beginner traders.

With its stable volatility and mean reverting properties, $DWC presents traders (particularly those with mechanical trading strategies) with stable range and retracement trading opportunities, making it a suitable alternative to volatile currency pairs.

 

DWC - Normalized (With Range Boundaries)

DWC – Normalized (With Range Boundaries)


Webinar Recording: Advantages of Trading $DWC vs. Other Assets

Do you have what it takes? – Join the Darwinex Trader Movement!

Darwinex - The Open Trader Exchange

Darwinex – The Open Trader Exchange