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The Collapse of HYIPs

learn-from-the-pros - The Collapse of HYIPs

HYIPs stop existing when they finish paying interest. In most cases, it does not mean that they have gone bankrupt. Visa versa, a HYPE admin just considers that it is profitable for him to wind all up. The HYPE life span is almost impossible to figure out when they are closed down.

learn-from-the-pros - The Collapse of HYIPs

Researchers have made the survival analysis that deals with analysis of time duration to clear up this question. 187 (12% of the 1 576 total) HYIPs were still effective at the end of the survey.

How is it calculated? The survival function, conventionally denoted S, is defined as

S (t) = Pr (T > t)

where t is some time, T is a random variable showing the end-time, and Pr stands for probability. That is, the survival function is the probability that the end-time is later than some specified time t.

learn-from-the-pros - The Collapse of HYIPs

CDF of the standard deviations of HYIP lifetimes (left); the graph indicates that aggregators assess similar lifetimes for around 80% of HYIPs. Survival function of HYIP lifetime (right); the graph shows that most HYIPs collapse within a few weeks, but that a small fraction can remain open for several years.

We have calculated that the average lifespan of HYIPs is just 28 days, one in four will last more than three months, and one in ten – for more than ten months. Shortly, many HYPEs with lower daily interest rates stop operating almost immediately, while a small minority with longer mandatory investment period can last for long.

What might prolong a lifespan of HYIPs?

The first factor is different profit rates. The less generous profit rate is (less than a few percent daily), the greater chance that the HYIP will last for longer. Once the profit rates become more outlandish (such as the half of HYIPs offering more than 10% daily returns), HYIP lifetimes are more consistently short. We conclude that the offering of higher rates of return does not bring in sufficient investment to offset the cost of servicing existing commitments.

The second factor is the minimum investment period should be to be more stable. So, HYIPs that require longer investment terms tend to be more stable. However, we note that there is still substantial variation in lifetime even for less generous interest rates and longer investment terms.

Can the HYIPs end-time be predicted?

Although the rating may depend on different things like user rating, it is sure to be associated with the risk level.

The ratings we study are based on a score of zero to five, zero to ten, or out of 1 00; we normalize all ratings to a percentage, taking a closer look at the rating given 7 days prior to each HYIP’s end-time.

learn-from-the-pros - The Collapse of HYIPs

What we have observed is those who have already invested in an HYIP do want to attract new investors, so they leave positive ratings. The aggregators, being more objective, fully expect HYIPs to collapse and must provide more accurate assessments in order to gain the trust of visitors. So it is better to rely on the aggregators’ ratings.

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