Bitcoin Forum

Hi all

since Kronos.io is now in alpha/beta testing and we're about to see what this is all about, I'd like to collect some informations about that new offering. I'm aware that the site isn't officially launched yet, and I take it that we'll get more accurate information in the near future. Anyway, I think its time to start collecting questions to clarify, so that we, as a community, are able to judge that new site.

The site is announced to offer a better security level then Bitcoinica -- this is highly appreciated. We'll know for real how resilient this website is actually, after it has been hacked for the first time. Thus, not much to add on that topic for now ;-)


Indeed, for the moment I'm far more interested in understanding the financial construction and the business model.

Judging from what is accessible now for beta testers, the site is pretty much a clone of Bitcoinica. Thus, for starters, it's also a contract for difference business. When compared with Bitcoinica, I noticed two differences.

- all accounting seems to be done in BTC solely (Yay!)
- while the offered leverage options are the same, the account size limits are a bit more conservative (400 BTC on 5:1 and 200 BTC on 10:1)


Based just on these observations, I'd like to pose the following questions.

• how does Kronos.io get its liquidity?
• especially how does it get the USD for going long on leverage?
• what mechanisms are in place to prevent customers from opening positions which aren't sufficiently backed by available liquidity?
• what mechanisms are in place to protect the business from collapsing when the market moves too fast while force liquidating positions?
• opening a position corresponds to -- exactly what?
  • is there an 1:1 relation, i.e every position corresponds to a trade made on some exchange
  • or does the site do a netting of all open positions and just trades the difference/excess on some exchange
  • or is there an internal buffer to work against, and actual trades will happen only when this buffer is exceeded
  • or are all positions just virtual and the site is thus speculating against its own users? (hopefully not)
• the displayed rates are connected to what exchange? (probably Mt.Gox?). How tight is that connection? How closely do those rates follow the exchange rates? How frequently are they updated?
• since the margin seems to be calculated in BTC (is that correct?), I'd expect this tradeable margin to be independent from the current exchange rate. So you can't be zhoutonged just by a decreasing BTC rate, correct?
• what values and properties are automatically and dynamically adjusted?
  • the spread, or even premium added on top of the current spread at the backing exchange?
  • interest rates? (where are they accessible?)

I don't think there would be any way where the margin wouldn't fluctuate with the exchange rate.  i.e., if you are long and the BTC/USD drops, your margin will drop.

...of course
But contrast this with Bitcoinica, where you could found your currency account with both $ and BTC, but the margin value would be calculated in USD. A drop in the BTC/USD rate squeezes the margin value from two sides in that situation.

In Kronos.io, if the calculation is really done in BTC, I'd expect the margin increase/decrease only to depend on the value of the BTC in the trading account. Question: is this reasoning correct?

Cheers,
Ichthyo

This should answer a lot of the questions: http://atlas.bitkoin.su/post/24166211138/an-interview-with-jonathan-ryan-owens-of-kronos-io

Is this dead? Just checked the site and it didnt load  :'(

AFAIK they went into open beta with some serious security holes that may or may not have been put there intentionally by one of the owners(code writers) which led to a 4kBTC hack right off the bat which was too much damage for them to recover from.

That's my recollection as well (not sure about the amount though), here's the thread about it for more info.
https://bitcointalk.org/index.php?topic=101109.0