Policy on BIP91, BIP148, and a Potential Chain Split

Arthur Hayes

There is potential for the Bitcoin network to split if BIP91 (“Reduced Threshold SegWit MASF”) is not activated before the BIP148 UASF (“Mandatory Activation of SegWit Deployment”) start time of 01 Aug 2017 at 00:00 UTC. The following actions will be taken by BitMEX in the event of a potential network split:

Wallets

  • If BIP91 locks-in and enters an activation period (336 blocks, approximately 56 hours), starting 4 hours before the potential activation time, BitMEX will require 6 block confirmations before crediting deposits due to the threat of a blockchain reorg as non-segwit blocks will be orphaned. This restriction will be lifted shortly after BIP91 activates, once BitMEX principals have ascertained that the chance of further reorgs is below a safe threshold.
  • If BIP91 does not activate before 31 July 2017 13:00 UTC, deposits and withdrawals will be halted until further notice in anticipation of a possible chain split. A round of withdrawals will be processed that day.
  • If you wish to trade the chain split, this date is also the deadline for deposits.
  • If there is a prolonged chain split and thus there are two or more versions of Bitcoin, once enabled, BitMEX will process withdrawals of the majority and minority chain.
    • In order for coins on either chain to be properly withdrawn, a viable method of avoiding replay attacks must be developed.
      • While there is a risk of a replay attack (transactions on one chain also being valid on another), it will not be possible to process deposits or withdrawals.
    • BitMEX will create a snapshot of user’s margin balances (including unrealised PNL) on 31 July 2017 13:00 UTC. A user’s balance of the minority chain’s coins will be equal to his/her balance at this time.

Contract Settlement and Marking

  • If the Bitcoin network splits, currently-listed futures at the time of the split will settle on the sum of spot exchange-listed versions of Bitcoin.
    • It may not be possible to predict or plan to get reliable pricing data from our current Index exchanges, or they may not list the minor coin(s) at all. In the event of a network split BitMEX reserves the right to move all Bitcoin derivatives to Last Price Protected Marking, until a stable index can be composed.
    • Each chain will be represented by a different index, and the sum will be taken to compose the Mark and Settlement Prices. The indices will be separated as to handle a split whereby not every constituent of the BitMEX Index lists a chain.
      • For example, if “Classic” (pre-BIP148) coins are listed on Bitstamp but not GDAX, the Bitstamp “Classic” price will comprise 100% of that part of the index sum.
  • Contracts listed after the split will settle on one version of Bitcoin, chosen by BitMEX. Only contracts listed pre-split will settle on the sum.
  • After the split, the XBTUSD Perpetual Swap will be timed to switch underlying indices in tandem with a futures contract. Ample notice will be given. Like futures, the new index will reference only one chain.