BTC Lending Market (Poloniex) Discussion

[rdnkjdi]

So just stumbled across this recently.  What kind of prices, volume & terms have you guys who lend & borrow BTC for trading been getting?

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[sofu]

up to 2%

ETH hype makes it possible lol



 

[americanpegasus]

Let Uncle Pegasus dispense some priceless wisdom.  :
  
People are going to get so excited that they can buy on margin, so when they see a coin (ahem, ETH) go up and up they will naturally think, "Gee.... why am I limiting my profits!?  Let me borrow some more ETH based on the ETH I already own!"  They won't even look at the lending rates because who has time to worry about that?  
  
Then the price of ETH will go up.  
  
Others will see this and come to same conclusions, and also borrow ETH based on the ETH they already own.  
  
Then the price of ETH will go up.  
  
Suddenly, the price will stall slightly.  Now, the first borrower has a comfortable liquidation margin (to the point where it's not even an issue).  He thinks.... hmmm.... it looks like the market may retract soon and I will lose even more than usual based on the retraction.  Well, let me just fire a few more margin bullets at this problem and "help the cause".  
  
Then the price of ETH will go up.  
  
Others will follow suit, all doing their part to keep the price of ETH on the uptrend because they are all margined to the hilt in this thing together now.  All of them are pumping ETH hard because they all know they have a lot to lose now.  Also, those prices to liquidation are suddenly a lot closer than they once were.  The air of enthusiasm suddenly takes on a slightly desperate edge.
  
Then the price of ETH goes up.  
  
But nothing can go up forever.  Eventually someone will take profit.  Eventually one man in the madness will say, "Ok, enough.  Let me get the fuck out of here before this shit goes iceberg."  
  
Then the price of ETH goes down.    
  
The most margined-to-the-hilt fool is hit first.  His entire account is liquidated and sold off to meet the demands of those he owes.  This floods the ETH market with a little extra ETH than usual.  Supply will outstrip demand, especially at these inflated prices.  
  
Then the price of ETH will go down.  
  
This sets off a nuclear fission reaction that will cause ETH to FUCKING DROP LIKE A ROCK.  
  
And this children, is a story as old as time: the margin crash.  And we are going all get to see it again soon, and the traders, lenders, and even Poloniex will all learn a valuable lesson.

[NorrisK]

Let Uncle Pegasus dispense some priceless wisdom.  :
  
People are going to get so excited that they can buy on margin, so when they see a coin (ahem, ETH) go up and up they will naturally think, "Gee.... why am I limiting my profits!?  Let me borrow some more ETH based on the ETH I already own!"  They won't even look at the lending rates because who has time to worry about that?  
  
Then the price of ETH will go up.  
  
Others will see this and come to same conclusions, and also borrow ETH based on the ETH they already own.  
  
Then the price of ETH will go up.  
  
Suddenly, the price will stall slightly.  Now, the first borrower has a comfortable liquidation margin (to the point where it's not even an issue).  He thinks.... hmmm.... it looks like the market may retract soon and I will lose even more than usual based on the retraction.  Well, let me just fire a few more margin bullets at this problem and "help the cause".  
  
Then the price of ETH will go up.  
  
Others will follow suit, all doing their part to keep the price of ETH on the uptrend because they are all margined to the hilt in this thing together now.  All of them are pumping ETH hard because they all know they have a lot to lose now.  Also, those prices to liquidation are suddenly a lot closer than they once were.  The air of enthusiasm suddenly takes on a slightly desperate edge.
  
Then the price of ETH goes up.  
  
But nothing can go up forever.  Eventually someone will take profit.  Eventually one man in the madness will say, "Ok, enough.  Let me get the fuck out of here before this shit goes iceberg."  
  
Then the price of ETH goes down.    
  
The most margined-to-the-hilt fool is hit first.  His entire account is liquidated and sold off to meet the demands of those he owes.  This floods the ETH market with a little extra ETH than usual.  Supply will outstrip demand, especially at these inflated prices.  
  
Then the price of ETH will go down.  
  
This sets off a nuclear fission reaction that will cause ETH to FUCKING DROP LIKE A ROCK.  
  
And this children, is a story as old as time: the margin crash.  And we are going all get to see it again soon, and the traders, lenders, and even Poloniex will all learn a valuable lesson.

Do I understand correctly that if you take a loan on polo and your account value is about to drop below what you owe someone, all your assets are automatically sold to meet the debt you owe?

[medusa13]

polo still refuses to publish the needed numbers. with the current  ETH volume this is just insane and gives them way too much power, market participants should not accept this. also power is given to those who have enough to lend out so they can estimate the total numbers and still have enough coins to manipulate the markets.

[medusa13]

Let Uncle Pegasus dispense some priceless wisdom.  :
  
...

Do I understand correctly that if you take a loan on polo and your account value is about to drop below what you owe someone, all your assets are automatically sold to meet the debt you owe?

yes, but the possibility exists that this does not work(becasue there are no buyers) and the lender also does not get everything back if the exchange does not jump in and cover the losses

[Nxtblg]

Do I understand correctly that if you take a loan on polo and your account value is about to drop below what you owe someone, all your assets are automatically sold to meet the debt you owe?

Yep. In the regular asset markets, exactly the same procedure applies. It's usually buffered by a "margin call," which gives you a short window to deposit more funds to increase your capital buffer, but legally a "margin call" is a courtesy. Once the asset's value drops below the "minimum maintenance margin" amount, the firm you're dealing with has iron-clad legal right to sell your position whenever they want. They don't want to eat the loss themselves!

[NorrisK]

Do I understand correctly that if you take a loan on polo and your account value is about to drop below what you owe someone, all your assets are automatically sold to meet the debt you owe?

Yep. In the regular asset markets, exactly the same procedure applies. It's usually buffered by a "margin call," which gives you a short window to deposit more funds to increase your capital buffer, but legally a "margin call" is a courtesy. Once the asset's value drops below the "minimum maintenance margin" amount, the firm you're dealing with has iron-clad legal right to sell your position whenever they want. They don't want to eat the loss themselves!

Than it can indeed really cause a massive crash to occur if too many people have these calls open.. Quite dangerous in these circumstances.. Would be interesting to see what happens though

[sofu]

Do I understand correctly that if you take a loan on polo and your account value is about to drop below what you owe someone, all your assets are automatically sold to meet the debt you owe?

Yep. In the regular asset markets, exactly the same procedure applies. It's usually buffered by a "margin call," which gives you a short window to deposit more funds to increase your capital buffer, but legally a "margin call" is a courtesy. Once the asset's value drops below the "minimum maintenance margin" amount, the firm you're dealing with has iron-clad legal right to sell your position whenever they want. They don't want to eat the loss themselves!

Than it can indeed really cause a massive crash to occur if too many people have these calls open.. Quite dangerous in these circumstances.. Would be interesting to see what happens though

This happend already on btc-e or bitfinex. its no problem as long the exchange is solvent. On higher leverage exchanges like okcoin or 796 they are socialising losses

[americanpegasus]

Do I understand correctly that if you take a loan on polo and your account value is about to drop below what you owe someone, all your assets are automatically sold to meet the debt you owe?

Yep. In the regular asset markets, exactly the same procedure applies. It's usually buffered by a "margin call," which gives you a short window to deposit more funds to increase your capital buffer, but legally a "margin call" is a courtesy. Once the asset's value drops below the "minimum maintenance margin" amount, the firm you're dealing with has iron-clad legal right to sell your position whenever they want. They don't want to eat the loss themselves!

Than it can indeed really cause a massive crash to occur if too many people have these calls open.. Quite dangerous in these circumstances.. Would be interesting to see what happens though

This happend already on btc-e or bitfinex. its no problem as long the exchange is solvent. On higher leverage exchanges like okcoin or 796 they are socialising losses

Hey sooooo, a bunch of people were really irresponsible with their money so now we have to take some of *your* money. 
 
hmmm... where have I heard this before? 

[rdnkjdi]

I guess I'm more curious what the market was like pre eth ....

[bitofc]

i see there is 0 loan demand in Poloniex now? 

[weryo]

i see there is 0 loan demand in Poloniex now? 

The loan demand column is usually empty. Most traders are willing to pay a higher loan rate then the lowest loan offer, so the order get executed immediately.

[biggbox]

i see there is 0 loan demand in Poloniex now? 

It's mid December now and it is still 0 loan demand now. But the Loan Offer column is moving with each refresh. Is there some kind of bots that is snapping up the loans?

[iefken]

Do you need a certain level of account to be able to loan btc here? I can't seem to find it. I do find the tab of loan, but I don't see anything in that tab to make it able to loan ... Any help? :p

[weryo]

These loans are only used for margin trading.

With margin trading you can (for example) lend a coin and sell it, and later buy it back cheaper (and settle the loan).

[kyrios_]

Do you need a certain level of account to be able to loan btc here? I can't seem to find it. I do find the tab of loan, but I don't see anything in that tab to make it able to loan ... Any help? :p

no you don't have to have a certain level. just make sure you transfer to your lending wallet in order to start loaning out

[ashkanb]

i have mixed feelings about this!;

was just checking on the exchange, the highest demand was 1.78 btc at 0.1% interest for 2 days,
1.5% a month if you manage to pull it off back to back for a whole month.

based on what's in this thread, the risks are virtually nonexistent unless sth happens to poloniex itself.
it's certainly better than just having your btc sit;
but at the same time you have to be hopeful nothing happens to ur precious coins on poloniex!

its free money and a compromise at the same time!!!

and what is with their strange account verification?!
filling in a few boxes which has no meaning since they aren't actually checking them against anything!
what guarantee is there that people are providing actual information?!
i'm confused!

[templebar]

The loan rte is very low these days and you could earn much more in alt trading, if you just watch the market and place orders.

[biggbox]

Anyone tried to use scripts to automate lending and automatically adjust the interest rates? There is one on github but it is not working very well, or poloniex blocked it.