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Title: Bitfinex: total return swap Post by: rhader on July 28, 2014, 04:05:39 AM Can anyone explain how these work for USD swaps on Bitfinex from the prospective of the lender? I cant seem to find any clear information on the risk involved and how it really works. Right now on Bitfinex I can lend USD for around .14% per day. That seems like a very high ROI and am wondering how it can be this high, and what risk is involved.
Title: Re: Bitfinex: total return swap Post by: Gargulan on July 28, 2014, 04:12:39 AM Risk is when bitcoin price decline rapidly, the borrowers won't be able to pay back your loan.
And there is always a risk that the exchange will turn gox. Title: Re: Bitfinex: total return swap Post by: twiifm on July 28, 2014, 04:15:34 AM Can anyone explain how these work for USD swaps on Bitfinex from the prospective of the lender? I cant seem to find any clear information on the risk involved and how it really works. Right now on Bitfinex I can lend USD for around .14% per day. That seems like a very high ROI and am wondering how it can be this high, and what risk is involved. The risk is bitfinex goes insolvent and you can't get your money back. Its high interest because you dont know the credit risk of borrower. And they use your money for speculatiing Bitfinex give margin accounts to their traders. So when the margined positions lose money bitfinex closes the trade. But if the traders account is underwater the trader is supposed to deposit more money. Its called a 'margin call' You can imagine what happens if there is a rapid drop and bitfinex can't dump the trades fast enough. They become illiquid. If the traders cant deposit money or if bitfinex can't borrow more money to get liquidity then insolvency. Similar thing as Bear Stearns or Lehman Bros If asset price keeps going then everyone happy. But if if doesn't then big crash. Title: Re: Bitfinex: total return swap Post by: Coinfan on July 29, 2014, 03:15:20 AM You can check all the risks of lending money at Bitfinex on this thread: https://bitcointalk.org/index.php?topic=667105.300
Title: Re: Bitfinex: total return swap Post by: Mieehayii on July 29, 2014, 06:26:19 AM the exchanges that offer leveraged trading is little now, I hope LakeBTC can launch the appropriate trading business
Title: Re: Bitfinex: total return swap Post by: Mobius on August 02, 2014, 08:39:13 PM You would have your money tied up for the period of the swap. Your risk is that Bitfinex is unable to unwind the specific trade that your swap is tied to prior to the price declining so much that the borrower looses all of his equity.
Title: Re: Bitfinex: total return swap Post by: bcmine on August 02, 2014, 11:19:40 PM Can anyone explain how these work for USD swaps on Bitfinex from the prospective of the lender? I cant seem to find any clear information on the risk involved and how it really works. Right now on Bitfinex I can lend USD for around .14% per day. That seems like a very high ROI and am wondering how it can be this high, and what risk is involved. The risk is bitfinex goes insolvent and you can't get your money back. Its high interest because you dont know the credit risk of borrower. And they use your money for speculatiing Bitfinex give margin accounts to their traders. So when the margined positions lose money bitfinex closes the trade. But if the traders account is underwater the trader is supposed to deposit more money. Its called a 'margin call' You can imagine what happens if there is a rapid drop and bitfinex can't dump the trades fast enough. They become illiquid. If the traders cant deposit money or if bitfinex can't borrow more money to get liquidity then insolvency. Similar thing as Bear Stearns or Lehman Bros If asset price keeps going then everyone happy. But if if doesn't then big crash. wow. what a complete BS summary for the reason of the interest rate. -total return swaps are insured, of high drop of price. see faq! -the high interest of 30% a year is because the people borrowing dollars from you and buying bitcoin speculate that the grow of bitcoin in one year will be higher. when you lend dollars you cant hold btc. vice vers the interest for swaps in btc is about 3%. Title: Re: Bitfinex: total return swap Post by: twiifm on August 03, 2014, 12:45:35 AM Can anyone explain how these work for USD swaps on Bitfinex from the prospective of the lender? I cant seem to find any clear information on the risk involved and how it really works. Right now on Bitfinex I can lend USD for around .14% per day. That seems like a very high ROI and am wondering how it can be this high, and what risk is involved. The risk is bitfinex goes insolvent and you can't get your money back. Its high interest because you dont know the credit risk of borrower. And they use your money for speculatiing Bitfinex give margin accounts to their traders. So when the margined positions lose money bitfinex closes the trade. But if the traders account is underwater the trader is supposed to deposit more money. Its called a 'margin call' You can imagine what happens if there is a rapid drop and bitfinex can't dump the trades fast enough. They become illiquid. If the traders cant deposit money or if bitfinex can't borrow more money to get liquidity then insolvency. Similar thing as Bear Stearns or Lehman Bros If asset price keeps going then everyone happy. But if if doesn't then big crash. wow. what a complete BS summary for the reason of the interest rate. -total return swaps are insured, of high drop of price. see faq! -the high interest of 30% a year is because the people borrowing dollars from you and buying bitcoin speculate that the grow of bitcoin in one year will be higher. when you lend dollars you cant hold btc. vice vers the interest for swaps in btc is about 3%. Wow you said the same thing I said in different words and Im BS? ::) You lend money to anonymous traders. That's why you can ask high interest. How much insurance do they have? Isn't the insurance fund like 50K on 30M of swaps? You have link about insurance? I couldn't find anything in faq |