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

[unclescrooge]

Hope last night trading session didn't exhausted you too much.

This little crash yesterday was probably the first fire test for Bitfinex, wasn't it?

Anyway, judging from a users perspective, the performance was OK-ish. Maybe slightly more sluggish, but not really an issue. Bitfinex is not fast enough to allow grabbing really interesting offers when the market is moving quickly, but I don't think that is a real issue, because situations like yesterday are the exception. On the other hand, at some times, bitfinex was still updating, while both bitcoincharts and clarkmoody stalled. Another feature I learned to love yesterday is the ability to borrow the leverage beforehand, e.g. when you expect a good opportunity in the next 15 minutes

Yep, that was a real stress test for Bitfinex, with quite some volume traded.

And the only issue we had was, indeed, a quite overloaded system. That's why I'll upgrade the trading server asap, to keep in pace with the increased user load that we've seen since last week. That will allow quicker order execution too

Thanks for your feedback Ichthyo!
Raphael

[unclescrooge]

Hi everyone,

Our main server has been upgraded for Bitfinex to be faster than ever. I hope that you'll notice the difference. To give you an idea of the new system, let's just say than when my dear associate saw the server order email, he says "Holy crap this will eat all the profits!". No it won't, but now you'll enjoy the speed

Enjoy,
Raphael

[myself]

The basic documentation have been posted here => http://community.bitfinex.com/forumdisplay.php/15-Official-Bitfinex-Documentation

[Ichthyo]

The basic documentation have been posted here...

Wow. Looks pretty much complete

[unclescrooge]

Yep, he did a great job

New feature update for our dear lenders The auto-lending feature:

How it works:
When this feature is on, an offer will be posted with all your available balance. If this balance varies (for example when you get your daily interests), the offer is updated. You can choose the rate and the maximum period of this automatic offer.

How to activate it:
On the lending page, you'll find a new button to activate or deactivate this feature.
Set your desired rate (fixed or variable), set the maximum loan period, and click on "Activate auto-lend".
It can take up to 15 minutes for the automatic offer to be posted, that's normal.

You can of course turn it off any time, it will cancel all active offers.

Enjoy,
Raphael

[Ichthyo]

Our main server has been upgraded for Bitfinex to be faster than ever. I hope that you'll notice the difference.

Yes, I'd say the effect is tangible.

[Ichthyo]

Some questions regarding the variable interest rates:

• how are they calcualted? as an average of the open offers, or the currently taken offers? or something else?
• is the current variable rate displayed somewhere?

especially: does the fact that someone offers $ 2000 at almost 300% APY in some way affect the variable rates?

[Ichthyo]

... what I'm getting at: I exchanged most of my collateral and tried to offer at somewhat lower rates, but the displayed rates didn't go down as expected. Thus I'm suspecting the considerable block of offers with variable rate to exhibit an accelerating effect, in case they support the average, which was pushed up by that extremely expensive offer, and since variable rates are preferred when opening positions.

Does it work this way?

[unclescrooge]

Hi Ichthyo

The average is calculated from the currently taken offers (reserved margin and open positions), ie the active loans. If we took the active offers that would lead to abuse (you could offer at 3000% a year just to increase your VIR loan rate).

You can see the current rate on the market statistics page: https://www.bitfinex.com/pages/stats (these stats are updated every 15 minutes). The average rate doesn't take into account loans at VIR, only loans at fixed rate., thus it must reflect real market rates.

On the other hand, the rate you see on the margin box in the trading page take into account the VIR offers, so the trader can make the best decision.

If you see a way to improve the system don't hesitate to suggest it

Raphael

[myself]

@ Ichthyo if needed i will improve this section to leave things clear (if you are registered dont hesitate to click on discussion tab)
community.bitfinex.com/showwiki.php?title=Bitfinex+Documentation:Lending

[Ichthyo]

The average is calculated from the currently taken offers (reserved margin and open positions), ie the active loans. If we took the active offers that would lead to abuse (you could offer at 3000% a year just to increase your VIR loan rate).

The average rate doesn't take into account loans at VIR, only loans at fixed rate., thus it must reflect real market rates.

sounds like a reasonable approach.

However, I see a problem with a corner case. I'd guess even that it's not so much a "corner" case.

Consider the following:

• when opening a position, the system prefers VIR offers
• VIR is also quite beneficial for the lenders, since it minimises the risk of offering a "wrong" rate at the current situation
• for a lender, the only incentive not to offer by VIR is to offer at a over average rate, hoping that people desperate for leverage will take it eventually

Thus there is the danger, that at times, a large fraction, if not all actively taken offers are VIR -- the result would be for a tiny fraction of the overall active lends (namely the ones with fixed rate) to dominate the rate -- more yet, chances are, that this rate tends to go above VIR (since lenders with fixed rate have an incentive to offer above current VIR).


Right now, I only see a rather uninspired fix for this problem (hopefully someone has a better idea):

Introduce a damping factor: choose the VIR as the (weighted) average of the currently active fixed rate loans and the moving average of past loans over a significant amount of time (several months). And weight those two components according to the relation of currently active fixed rate to variable rate loans. That is, if we have 100% VIR loans, use the past average. If we have 40% VIR, 60% fixed rate, use the past average to 40% and the current fixed rate average to 60%

The reasoning behind this idea is based on the assumption, that, averaged over a significant time, excessively high loan rates (as we see them right now) won't be sustainable. People will avoid taking longs most of the time, this way favouring the VIR loans, and driving the excessive rates out of market.

[Ichthyo]

Another observation: I'm quite sure the trailing stop orders aren't working properly.

To verify that, during yesterday's race, I opened a small trailing stop sell order, deliberately very close below the current bid rate. It should have triggered already on a very minor retraction of the Bid. Moreover, the values displayed in the "rate" field of that order behave weird, and this order never triggered. It would have been forced to trigger for sure at least during the first retract from 20.60 down this afternoon.

This was order No. 5715 Trailing Stop -1.11
 set at 2:25  at 19.64 while at that moment Bid = 19.67

displayed values in the rate field:
$0.0437   2:27     19.80 / 19.68
$0.1799   2:29     19.81 / 19.69
$0.1799   2:40     19.81 / 19.70
$0.2051   3:32     19.79 / 19.74
$0.2400    5:27     19.88 / 19.81
...
$1.0600   13:28     20.40 / 20.37

Judging from the start value immediately after setting the order, I'd guess the value in the "rate" field is the current headroom left until the order triggers. Since, in my case, after opening, this value did read $0.031 (which is correct). But then, this value shouldn't increase while the Bid goes up. It should remain the same. And it should decrease when the Bid goes down (which it doesn't).


PS: generally speaking, trailing stops aren't very useful. Maybe a situation like yesterday is exactly that exception to the rule, where you could set a trailing stop to protect your gains when the rally is over.

[picobit]

PS: generally speaking, trailing stops aren't very useful.

Generally speaking, stop orders are exceedingly risky!  I am sure you are aware of that, but newbies may loose a lot of money this way.

TL;DR:

The current price is 20$.  You put a stop-loss sell order at $16 to protect yourself against a crash.  Market crashes to 12$.

Your expectation:  You sold at 16 and can now buy back at 12.
Reality:  You probably sold at 5$ !!!



The full story:

When the price drops to 16$ and your stop-loss sell is triggered, your sell order is places in the queue of the trading engine, behind all the stop-loss sells triggered at 16.5$, 17$ etc.  Yes, there is such a queue, you normally don't notice, but in case of sudden heavy trading it is important.

Now this long queue of sell orders execute, burning away the bid side of the order book faster than anyone can submit new orders.  The automated triggering of stop-loss sells make this process very fast.  When your order reaches the head of the queue, the price has dropped to 5$

Moments later, people realise that there are cheap bitcoins available, and start buying back. The price rises to 12$, and the stop-loss sell has been very expensive.

Many variations are possible.  Not all end this badly, but many do.

[PAPASO]

Margin reserved: 0.0 BTC Margin available: 175.2 BTC at 5.13%/day

What does it mean? if i send 100btc, but 100btc, had to pay
5.13BTC per day? after 20 days, my 100btc=0 ?

[unclescrooge]

Hello Ichthyo,

Thanks for the suggestion.

Hello PAPASO,

This mean lenders are asking crazy rates and you should not accept it.

My question to everyone: we thought we'd leave the lenders fix their rates freely. But the rates are going up very high putting in danger traders profit. So my question is: should we limit the rate asked? If yes, what is acceptable?

Ichthyo, I'll try to implement osomething approaching what your proposed, to try to limit the increase of the interest rates. I'll do that asap.

Meanwhile, be careful when you want to go long. I'd advise to borrow directly the margin on the lending page to control the rate you pay to lenders.

Raphael

[PAPASO]

if i want to margin buy,what show i do?
first go to the lending web,then borrow btc or usd cash(low rate)
then margin buy?

[unclescrooge]

if i want to margin buy,what show i do?
first go to the lending web,then borrow btc or usd cash(low rate)
then margin buy?

Yes, providing you find rates low enough to borrow, you should do that.

On the lending page, you can click beside the lending offer that interests you, and click on the "Borrow" button just beside the lending offers that you want, and the offer will be taken.

Then, on the trading page, you will see: "margin reserved: XX BTC" (corresponding of what your borrowed). You will then be able to go long with this reserved margin.

When you see rates like that (higher than 1% a day), consider you can't go long directly.

On other news, there could be some USD coming for next week

[PAPASO]

if i open a long position more than 1 years
and i had to borrow BTC, should i choice
fixed rate? variable Interest Rate only for
the people who opend position daily trading?

[unclescrooge]

It's your choice, but i'd say you're safer with fixed itnerests rates.

The only thing is that no lender currently lend for more than 365 days.

What you can do is, on the lending page, put a borrow demand at the rate of your choice and for 365 days or longer.

Then you have to wait for it to be filled.

Generally speaking the longer term you will find is 60 days (some posted for 90 days but that's an exception).

Raphael

[PAPASO]

if i borrow BTC 60 days and then opend a long position.if btc price grow,but 60 days later this position will be closed auto?
I had to borrow again and buy again? Now Maximum lending time (days) is 60 days, the rate is 10%. if i borrow 100 BTC
after 60 days, how many rate should i pay? 100 X 10% X 60/365= 1.64btc ?

position question:
if want to open long you had to borrow cash
if want to open short you had to borrow btc

and now i want to open long, but cash rate is very high 30 days rate is 1854%
it means i cannot open long position.


Security question:
print BTC on paper means nobody can attack and got btc?