How does Doubler Perfectly Interpret “Martingale”
If you purchased 1 BTC at a price of $30,000, is there any strategy that can guarantee your investment to be profitable without losses?
For those familiar with “Martingale,” they might devise the following strategy:
Firstly, set a threshold, for example, trigger additional investments when the price drops by 10%, with each subsequent investment being double the previous one.
Secondly, set a take-profit threshold, for instance, sell to take profits when the overall gain reaches 5%.
Now, let’s consider an extreme market situation where BTC drops to $10,000. According to the above strategy, you would need to make an additional purchase of 64 BTC.
For an average investor, this quantity may be too large, leading them to abandon the strategy, resulting in its failure.
The above example illustrates once again the requirement for successfully executing “Martingale”: Unlimited funds are needed.
Based on the impracticality of fulfilling this condition, we created Doubler and employed blockchain smart contract technology to perfectly embody “Martingale” in the world of cryptocurrency.
How does Doubler combine with “Martingale” through smart contracts?
- Standardizing and automating the execution process of “Martingale” through smart contracts
Firstly, we introduce the concept of a Pool, which can be understood as a collective betting pool. For example, a BTC pool aggregates market forces to collectively bet on BTC (the following examples are based on BTC, but it applies to other cryptocurrencies as well).
Users can set the following parameters for the pool:
A: Unit Size: Sets the minimum participation quantity for the pool, where participants can only join the pool in multiples of the unit size. B: Initial Injection: The initial amount of cryptocurrency injected into the pool at an early stage. C: Doubling: When the price drop threshold is triggered, it determines the capacity of the next level, ranging from 2X to 5X. D: Fall Rate: Sets the threshold for triggering the next level after a price drop.
Once a user creates a Pool, the smart contract will use Chainlink to obtain the current price of BTC and record it as the cost price. When the price of BTC falls below the threshold set by the user during Pool creation, the Pool will be opened for other users to deposit BTC. The smart contract will use an oracle to read the price of the BTC deposited by the user and store it.
However, the deposited quantity cannot exceed N times the quantity of the previous level. If the price of BTC continues to fall, the Pool will automatically open new levels for new users to join, based on the initial parameters set in the smart contract. Each new level allows a maximum quantity of BTC to be deposited that is N times the quantity of the previous level (where N ≥ 2 and can be freely set).
At this point, we consider the Pool as a whole. As more BTC with lower cost prices is deposited into the Pool, the average cost price of BTC in the Pool will continue to decrease. With the continuous downward trend of BTC, according to the doubling principle, the average price in the Pool will approach the current price infinitely. The Pool will terminate once the current price of BTC reaches the profit target set by the Pool initiator, and settlement will be conducted through the smart contract.
2. Ensuring the Security of Funds in the Betting Pool through Smart Contracts
To aggregate the power of the market and achieve “martingale” together, the security of user funds is of paramount importance. Doubler utilizes blockchain technology to lock the funds in the pool in a decentralized manner within the smart contract, eliminating any reliance on third parties and fundamentally mitigating risks associated with moral hazards. Additionally, Doubler actively embraces the spirit of open-source in blockchain technology, making all core codes publicly available. This approach stands in stark contrast to centralized entities.
How does Doubler attract a massive amount of capital from the market and solve the major bug of “martingale”?
- Participants in Doubler can mitigate the depreciation risk of holding BTC.
Based on the previous description, it is determined that if the current price of BTC exceeds the target price of the Pool, the Pool will achieve its profit target. In other words, when the Pool settles, the value of BTC in the Pool exceeds the sum of the cash costs invested by all participants in the protocol, and there may even be a certain proportion of profit. Therefore, when the protocol settles through smart contracts, the BTC within the protocol is divided into two parts: cost and profit.
Following the principles mentioned earlier, the cost portion of the settled BTC is allocated to all participants who joined the Pool with the cash value of BTC at the time of entry, ensuring that their cash value remains intact. For example, if a user joined the Pool with 1 BTC when the cash value of BTC was $30,000, and the cash value later drops to $10,000, when the protocol reaches the target price and settles, the user will receive a total of 3 BTC, precisely matching their initial cash cost.
2. Be a lucky supporter and receive additional BTC rewards.
To incentivize users in the market to actively join already created Pools, we allocate a portion of the profits from the settlement as rewards to the last batch of users who join the Pool, ensuring the continuous operation of the Pool according to the parameters set by the creator.
According to the above diagram, it can be observed that the capacity of each Layer depends on the initial investment amount by the Pool creator. When the capacity of a Layer is less than 200 times the initial injection amount of the Pool, the provider of the last 50% quantity of BTC in the settlement Layer will receive all the profits. When the capacity of a Layer exceeds 200 times the initial injection amount of the Pool, regardless of how the capacity of the subsequent Layers increases, the profits will be obtained by the provider of the BTC based on 200 times the initial injection amount, who joins the last Layer. The profits will be distributed according to a weighted average method. (The value of 200X unit mentioned here is an example value, in actual operation, this value will be pre-set by the Pool creator)
3. Assets participating in Doubler can be redeemed at any time.
In the Doubler protocol, users can redeem their digital assets at any time in the majority of cases. After the successful creation of the Pool, it enters two states: “In Progress” and “Settlement Completed.”
In Progress state: If a user participates in a Pool that is in progress, any user from any Layer, except for the users in the last Layer, can freely redeem their cryptocurrency assets. Users in the last Layer can choose to wait for the Pool to reach the target price or continue to drop and open the next Layer before redeeming their assets.
Settlement Completed state: When the current price exceeds the target price of the Pool, the Pool immediately transitions from the “In Progress” state to the “Settlement Completed” state, and all users can redeem their invested cryptocurrency assets.
In summary, it is evident that Doubler has provided a perfect optimization and upgrade to “martingale” through its secure, flexible, low-risk, and high-yield mechanism. This effectively solves many issues encountered during the practical execution of “martingale.”
