November 8, 2018

Announcing BCH Hard Fork Policy

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UPDATED 6 DECEMBER 2018 18:30 UTC

BCH transfers re-enabled and BSV distributed

UPDATED 22 NOVEMBER 2018 11:40 UTC

UPDATED 14 NOVEMBER 2018 12:30 UTC

UPDATED 13 NOVEMBER 2018 18:20 UTC

UPDATED 12 NOVEMBER 2018 11:45 UTC

Technical Background

The BitcoinCash (BCH) community has planned two distinct network upgrades for November 15th, 2018 (“Upgrade”) in which two competing node implementations, Bitcoin ABC (“ABC”) and BitcoinSV (“SV”) have incompatible road maps with respect to the consensus rules. This could result in two separate BCH blockchains post the Upgrade: ABC and SV.

The respective consensus rule changes are coded to come into effect at UNIX timestamp 1542300000 (November 15th, 2018, 4:40 pm UTC), for ABC see here and for SV see here.

The ABC road map mainly introduces two new rules:

  • Enforcing Canonical Transaction Ordering in blocks
  • Unlocking OP code OP_CHECKDATASIG

The SV roadmap introduces different rules:

  • Unlocking OP codes OP_MUL, OP_LSHIFT, OP_RSHIFT, OP_INVERT
  • Raising limit to 500 OP codes per script
  • Increasing default excessive parameter to 128 MB

The hashrate of the BCH network is currently roughly evenly divided between ABC and SV.

If miners continue to support both ABC and SV, two hard forks from the current chain would result.

BCH Deposits and Transfers

On November 15th, 10:00 am UTC, we may suspend all deposits and withdrawals of BCH for an extended period of time to avoid any adverse impact of network instability on BCH deposits and transfers. Please note that any BCH deposits sent after that time may be lost.

BCH transfers will resume once we determine, at our sole discretion, that network stability is satisfactory and a clear consensus has emerged for BCH. If you would like to control how you handle the upgrade, the best option is for you to withdrawal your BCH so you are in control of your private keys. Please ensure you submit your withdrawal request before November 15th, 10:00 am UTC.

We will take a snapshot of all BCH client balances (including realized and unrealized PnL) at UNIX timestamp 1542300000. If we determine, at our sole discretion, that any forked tokens have material value and can be secured and credited with reasonable effort, we will credit the holders of BCH balances (as determined by the snapshot) the relevant amount of new tokens on forked chains after November 15th.

BCH Futures

We currently list a Perpetual BCH:USD Futures, settling on the CF Bitcoin Cash-Dollar Spot Rate as well as a Monthly and Quarterly BCH:USD Futures, settling on the CF Bitcoin Cash-Dollar Settlement Price. Both indices are calculated based on BCH spot data from Bitstamp and Kraken.

Any BCH tokens (ABC or SV) will be included in the settlement prices of the Futures if, and only if, it meets the below criteria for at least 2 UTC days out of the first 7 UTC days after the Upgrade:

  • The token is listed on at least one of Bitstamp and Kraken, and
  • There must be at least 100 trades in the token across Bitstamp and Kraken combined, and
  • The token contributes at least 10% to the combined trading volume of all BCH tokens, and
  • The token trades at at least 10% of the average combined price of all BCH tokens.

For Monthly and Quarterly Futures, all conditions must be met prior to their Last Trading Times.

Note that if the settlement rate reported by the Index is, for any reason, deemed to not adequately represent the underlying market, the Mark Risk Committee of Crypto Facilities reserves the right to select its own appropriate fair value settlement rate.

In anticipation of potential price volatility around the Upgrade, we have implemented the following market parameters in relation to BCH:USD Futures trading:

  • Max Position: 100,000 contracts
  • Initial Margin Requirement: 25%

At our sole discretion, we may at any time prior to or after the Upgrade do any of the following in relation to BCH:USD Futures trading:

  • mark open positions to the last trade price,
  • reduce position limits,
  • increase initial margin and maintenance margin,
  • allow only trades that close out existing positions, and
  • suspend trading.

Please reach out to [email protected]cilities.com if you have any comments or questions.

Inclusion of SV in BCH Futures Settlement Prices (Added 22 November 2018)

The BCH Futures listed on CF at the time of the Upgrade will settle to the sum of ABC and SV based on the following:

  • Kraken listed SV on 19 November
  • On both of 19 and 20 November, more than 100 trades in SV occurred on Kraken (1,499 and 523, respectively)
  • On both of 19 and 20 November, SV contributed at least 10% to the combined USD trading volume of ABC and SV on Bitstamp and Kraken (26.3% and 14.0%, respectively)
  • On both of 19 and 20 November, SV traded at at least 10% of the average combined price of ABC and SV on Bitstamp and Kraken (18.9% and 10.5%, respectively)

CF will therefore settle the Perpetual and Monthly BCH:USD Futures at 16:00 UTC on 30 November 2018 on the sum of ABC and SV using pricing data from Bitstamp and Kraken observed between 15:00 and 16:00 UTC. At the same time, CF will relist the Perpetual BCH:USD Futures referencing ABC only as well as a new Quarterly BCH:USD Futures referencing ABC only that will expire on 29 March 2019. The currently listed Quarterly BCH:USD Futures will be settled on the sum of ABC and SV on 28 December 2018.

APPENDIX

Definitions:

  • “UTC day”: the time from 00:00 to 23:59 UTC
  • “trading volume”: total combined USD notional trading volume across Bitstamp and Kraken in ABC and SV, respectively, on a given UTC day.
  • “price”: the volume-weighted average price across Bitstamp and Kraken of ABC and SV, respectively, on a given UTC day

Example threshold analysis: Assume across Bitstamp and Kraken, ABC trades $200mm notional and SV trades $100mm on the same UTC day. Then ABC makes up 2/3 of combined volume and SV makes up 1/3 of comined volume and both have fulfilled the 10% threshold on that UTC day.

Example threshold analysis: Assume across Bitstamp and Kraken, ABC trades at a VWAP of $500 and SV trades at a VWAP of $100 on the same UTC day. Then ABC makes up 5/6 of the combined VWAP and SV makes up 1/6 of the combined VWAP and both have fulfilled the 10% threshold on that UTC day.

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Crypto Facilities is a group of companies which is in turn a member of the Payward, Inc. group of companies. Payward, Inc. is the owner and operator of the Kraken Exchange, a venue that facilitates the trading of cryptocurrencies.

Crypto Facilities Ltd is authorised and regulated by the Financial Conduct Authority (FRN 757895) and registered in England with registered number 9172128 and registered office at 6th Floor, One London Wall, London, United Kingdom, EC2Y 5EB.