[BETA]Bitfinex.com first Bitcoin P2P lending platform for leverage trading

[myself]

The explanation there is a bit hard to understand. I need the dumbed down version, that is all. I mean, I am lending money on your platform, the least you guys can do is answer my question. Sorry if this sounds arrogant, but I gotta know if it's worth it.

Not to mention I am new to trading, all the terms are not even known to me, even Trailing Stop and whatnot I had to read every single time I did a trade to make sure I didn't do anything wrong.

example
https://docs.google.com/spreadsheet/ccc?key=0At11s2B50mC1dEVtUTlIaXdSR3RPWnIwSFR5U0FaRWc&usp=sharing

[Remember remember the 5th of November]

Alright, almost two dollars of income. I am content with that

[Ichthyo]

Like if the interest rate is %500 per year, then for a day or less that would be a really smal percentage, right, or am I wrong and it depends on the profits of the borrower?

The explanation there is a bit hard to understand. I need the dumbed down version, that is all.

Not to mention I am new to trading, all the terms are not even known to me, even Trailing Stop and whatnot I had to read every single time I did a trade to make sure I didn't do anything wrong.

Uhm, Remember remember the 5th of November,

just a kind, friendly hint from a fellow user here. If you really have problems to figure out what 500% APY means per day or per hour, or if you are absolutely new to trading and not able to teach yourself using Wikipedia, then you should really really really stay away. Or at least approach it very careful and pragmatically, like put 1 BTC in and figure out how this thing works with a really tiny position. Some people learn more by theory, other people learn by experimenting, but for sure, it takes some time and effort....

Contracs-for-Difference, day trading, leveraged trading are really like a sharp knife. It is easy to sink $2000 in just some minutes if you are clueless. Even if you know how it works, it can be challenging to get a decent profit out of trading.


Generally speaking, one interesting thing with Bitcoin is that suddenly a lot of people get exposed to the world of finnance, which was up-to now the playground for specially trained people living in kind of a parallel universe.

[bit-fxtrader]

So seeing as lenders got paid, my other question is did bitfinex accurately reflect btc prices on their platform during the fall? There were claims earlier that prices only fell to 180$ not to the actual 100$ like on other exchanges.

[Ichthyo]

Unless I'm reading this wrong, prices went from 266 to 100 in few hour. Curious to see how this affects the lenders on this platform. Guess this is the test to see if this thing works or not.

It is certainly yet another fire test. I am using this platfrom since some time, and it survived several "flash crashes", and some quite dramatic ones too. In the beginning, there were some minor software bugs, but they got nailed out quickly. Meanwhile Bitfinex looks quite reliable. I got some margin calls myself, and can tell you, the engine works correct (I've checked the numbers afterwards, using the history function).

Btw on the website there is a claim that they will stop losses to the lenders by using margin calls, but in comments here they don't appear as convincing.

The people behind Bitfinex are just honest. They point out (correctly), that there is an essential risk in Contracts-for-Difference trading.
But to state that clearly, what we saw today was maybe dramatic, but it was really far from the "Black Swan"-Event pointed out in those comments. The market was in "rally mode", and the real buy liquidity placed in limit orders below the (constantly increasing) rates was often quite low. Also you should consider that the market is moved to some extent by those bid and ask "walls" placed by the professional investors and similar people with deep pockets. All what happened is that the market fell back into the more solid support.

Lets try to explain how "margin calls" work this way: once the trading engine figures out that one trader's position has generated so much loss that this loss will require all of the user's collateral (margin balance) to be covered, then a margin call will be triggered. Effectively this means that at this point the risk of getting this position really closed is taken by the platform. When the Mt.Gox API is lagging heavily, the engine can issue an order to execute this margin call, but that is all that can be done. This order will end up in the order queue at Mt.Gox, and it might well take 30 minutes until it's up at the head of that queue and is executed. It will be executed at the market rate available at that point.

Now, if that effective rate is below the rate where the Bitfinex engine determined that a margin call would be due, then Bitfinex takes a loss. OTOH, if the crash is already over and rates are rebounding, then it might even be executed at a better rate. In this case, Bitfinex will credit back what comes out, after deducing the losses from the user's margin balance. As long as the market rebounds and doesn't crash entirely, some of these gains/losses will cancel each other out, and the remaining losses can be covered drawing from the reserve liquidity of the platform (e.g. gains from fees). So lenders will be paid out correctly. Only if the market crashes catastrophically and all margin calls will be executed at a huge loss, then the platform might simply go bankrupt. And only in that case, the lenders will loose too. This is simply part of the "Counterparty Risk". If you are dealing with a financial platform like Bitfinex, or Mt.Gox or whoever, then there is a certain risk that this platform will collapse financially, and then your money will be lost.

The Bitfinex folks have always been completely honest to point out that they don't have much reserve liquidity. That means that the Counterparty Risk is definitively higher than when dealing with a well established, long-term surviving partner like Mt.Gox. Basically for us users this is a risk/reward judgement.

Also curious what kind of leverage do borrowers get? Can they just borrow without limits? What are the leverage and margin limits for traders?

The leverage for traders is 1:5 at max. That means, a trader covers 20% of any trading position with his own collateral (margin value) and 80% are backed by loans only. Thus, at the point where the losses sum up to 20% of the overall position size, the trader's collateral has been used up and a margin call will happen.

[Ichthyo]

So seeing as lenders got paid, my other question is did bitfinex accurately reflect btc prices on their platform during the fall? There were claims earlier that prices only fell to 180$ not to the actual 100$ like on other exchanges.

Bitfinex constantly reads the rate feed from the Mt.Gox API. If you look at the page "2nd level orderbook", you can see the current Mt.Gox bids/asks and the bids/asks of the internal Bitfinex exchange being combined. BUT, when the Mt.Gox API lags considerably, this also has the consequence that Bitfinex sees the bids/asks from Mt.Gox at a later point in time (delayed by that API lag amount). Thus, in the middle of such a market amount, the Bitfinex engine doesn't see the real market situation, but only an approximation based on already outdated data.

It can even happen that the Mt.Gox feed stalls completely. In that case, you'll see a warning on the trading page and you will see only the bids/asks of the Bitfinex internal exchange on the orderbook. As a further protective means, the Bitfinex people have implemented a safeguard that under this conditions, no margin calls will be executed, since executing those against the low liquidity of  the internal orderbook might move that internal rate by such an amount as to cause an avalanche of further margin calls.

[drawingthesun]

Just wanted to say thanks to the Bitfinex team!

Bitfinex was up all during the mayhem and the lenders didn't lose any money even when Gox had 1 hour lag and the price hit $120. Thanks!

[GCInc.]

It's good to see the platform seems to have survived such a capitulation of borrowed positions.

So seeing as lenders got paid, my other question is did bitfinex accurately reflect btc prices on their platform during the fall? There were claims earlier that prices only fell to 180$ not to the actual 100$ like on other exchanges.

I could not make any sense of the prices on the BFX order page. Very difficult to get even market orders filled, or orders priced far past the best BFX price quoted. I'm also wondering how the lowest prices I saw at BFX were in the $140's when other exchanges traded at $100 (and BFX could not fulfill my orders most of the time). But hey never mind, we got along

[im3w1l]

How big execution losses / wins did Bitfinex have? As a lender I need to know this, to evaluate the risk.

[urwhatuknow]

Like if the interest rate is %500 per year, then for a day or less that would be a really smal percentage, right, or am I wrong and it depends on the profits of the borrower?

The explanation there is a bit hard to understand. I need the dumbed down version, that is all.

Not to mention I am new to trading, all the terms are not even known to me, even Trailing Stop and whatnot I had to read every single time I did a trade to make sure I didn't do anything wrong.

Uhm, Remember remember the 5th of November,

just a kind, friendly hint from a fellow user here. If you really have problems to figure out what 500% APY means per day or per hour, or if you are absolutely new to trading and not able to teach yourself using Wikipedia, then you should really really really stay away. Or at least approach it very careful and pragmatically, like put 1 BTC in and figure out how this thing works with a really tiny position. Some people learn more by theory, other people learn by experimenting, but for sure, it takes some time and effort....

Contracs-for-Difference, day trading, leveraged trading are really like a sharp knife. It is easy to sink $2000 in just some minutes if you are clueless. Even if you know how it works, it can be challenging to get a decent profit out of trading.


Generally speaking, one interesting thing with Bitcoin is that suddenly a lot of people get exposed to the world of finnance, which was up-to now the playground for specially trained people living in kind of a parallel universe.

Thanks dude, we all appreciate your help!


Giancarlo
Customers Relations
The Bitfinex Team

[urwhatuknow]

Dear Bitfinex Community

I'm glad to announce to you all that we survived the toughest night we ever experienced since the beginning of our activity.
I would lie if I said that it was an easy task.
Most of the leveraged positions were forced into liquidation and at a certain moment MtGox lag was up to 1 hour.
So we really had no idea if we were still alive or dead, as we didn't know where the market was and if our selling orders were executed.
But to make a long story short we were lucky, we made it and we are now recovering the stress and licking our wounds.
And yes, we did lose some money, but for once more Bitfinex will eat up the losses and shield our lenders.
I hope you appreciate that.
Save the clapping for the end of the message.

On the other end we need to learn from what happened and after a long skype meeting with our "deep pocketed" Hong Kong financial investors (that hate losing money more than I do) we decided to implement the following rules:

1) Market is too volatile at the moment, therefore maximum leverage of 1:5  will be temporarily suspended. Only 1:2.5 leverage will be possible starting from friday the 12th of April 00.00 GMT. Therefore all traders using 1:5 should calmly wind up their positions, they have plenty of time to do that.
All 1:5 positions not liquidated by the deadline will get into forced liquidations until the ratio 1:2.5 is reached.

2) We will soon create 2 different lending options. Insured ones and non insured ones. The lender that choses to be insured will not lose any money in case his borrower can't be liquidated in time because of MtGox malfunction (re-quote or lag). The lender that doesn't choses to be insured will have to face the hard reality of life and eat a loss if a phenomenon like the one of yesterday will repeat (from 260 to 105 and no visibility where the market stood). Bitfinex commission on interest for non insured lenders will remain unchanged at 10% while the insured one will be 30%. It's up to you to make the right choice, whether sleep safe but make a little less (still a helluvalot ! ) or to risk and boogie when the sea gets rough.
Or as they say in France: faites vos jeux!

For the few that will consider 30% too high we reserve the right to take down the commission on insured lending once this proves to be too conservative.
Please try to understand we are in unknown waters and we are just trying to make things work.

That's pretty much it for the moment.
Any comment will be much appreciated (as usual) but please don't start complaining and just bless your God we all made it thru the last night Tsunami.

Keep smiling

Giancarlo & all the Bitfinex Team

[myself]

So seeing as lenders got paid, my other question is did bitfinex accurately reflect btc prices on their platform during the fall? There were claims earlier that prices only fell to 180$ not to the actual 100$ like on other exchanges.

the price did move quite allot but also the orders did pop up to fill the gaps i did trade the bounce up and i did manage to buy longs at 137, bfx user did not panic so much like on other exchanges and take the price to 100usd and i am personally happy to see this reaction.

@BFX users if you have any questions about trading please take some time and visit https://community.bitfinex.com/forumdisplay.php/7-Trading and if you want to view a system that i do use please read and post in this thread https://community.bitfinex.com/showthread.php/98-Myself-Scalping-Strategy

[oakpacific]

Hi folks, is everything OK? Given the current situation, I hope there was no delayed margin calls/negative balances, etc?

[LoweryCBS]

Getting an error (when moving funds between wallets): "You can't double click on the transfer button"

[myself]

Getting an error (when moving funds between wallets): "You can't double click on the transfer button"

1 make sure you dont double click
2 if your funds are like 100.0001 move just 100 the 0001 is likely to be rounding from the 8 decimal

[unclescrooge]

There indeed were a problem with that, it has been solved.

Have a nice day
Raphael

[Sukrim]

Well, of course I hope in the future the insurance fee will be lowered again, maybe once mtgox manages to finally update their laggy engine. On the other hand I'm glad that you managed to survive this week's crazy day.

Earning 22% less interest with insurance sucks of course - but if it helps you to stay alive I'm all for it!
Can we choose to be insured after a loan has been taken by the way or does this have to be decided right when putting up the loan offer? Right now nearly all my USD are taken and I have no idea when I get them back to later put them into insured loans...

Also it seems to that lots of other exchanges are as well not coping too well with a lot of orders in a short time... Please also stress test your own a engine, I already linked an open source engine to benchmark against. Also you might wanna look into becoming a ripple gateway.

Still I'm glad everything seems to be not fine but at least OK and running and I'm looking forward to the next rally with great interest rates and profits for traders!

[SlipperySlope]

The lender that chooses to be insured will not lose any money in case his borrower can't be liquidated in time because of MtGox malfunction (re-quote or lag).

Would you publish your reserve amount or ratio that Bitfinex will maintain, or that its backers commit to? Otherwise, insuring lenders is only based upon your *excellent* record.

[Sukrim]

Weird that there are still so few bears...
Nobody dares to go short or what?

[drawingthesun]

2) We will soon create 2 different lending options. Insured ones and non insured ones. The lender that choses to be insured will not lose any money in case his borrower can't be liquidated in time because of MtGox malfunction (re-quote or lag). The lender that doesn't choses to be insured will have to face the hard reality of life and eat a loss if a phenomenon like the one of yesterday will repeat (from 260 to 105 and no visibility where the market stood). Bitfinex commission on interest for non insured lenders will remain unchanged at 10% while the insured one will be 30%. It's up to you to make the right choice, whether sleep safe but make a little less (still a helluvalot ! ) or to risk and boogie when the sea gets rough.
Or as they say in France: faites vos jeux!

For the few that will consider 30% too high we reserve the right to take down the commission on insured lending once this proves to be too conservative.
Please try to understand we are in unknown waters and we are just trying to make things work.

I find this a little confusing, are you saying that lenders lost money yesterday but you repaid them? If not then why do you need to offer this 2 tier system?

Or alternatively, If this two tier system already existed when the crash happened, what would of our outcome been? Say I had $10,000 loaned out insured and $10,000 loaned out uninsured when the price went from $266 to $105.

Would have the uninsured actually lost money? Are you saying the LAG caused positions not to close quick enough?

Please explain, cheers.