I was studying about bitfinex and:
- It seems their rate is a bit lower then poloniex (0.14% in average, per day), against 0.19% at Poloniex. I have to run my Bot into it to see if I can get a better rate then 0.14%, it will take a while.
Just had time to study how the Lending market works at Bitfinex: it seems terrible, in my option:
1. They pay less then Polo (3.5% per month at Bitfinex against 5.5% per month on Poloniex)
The interest rate is ultimately determined by the markets on each of the platforms. A variety of factors will cause the interest rate to be different on various platforms, such as the ability to deposit/withdraw the currency in question, the 'markets' perception of the exchange's ability to manage risk in handling liquidations in volatile markets, the 'markets' perception of the chances that an exchange will run away with users' money, the exchange's policy regarding forks, among potentially other factors. The interest rate on poloinex for BTC will be substantially higher than on bitfinex because poloniex's policy is to not give BTC lenders credit for any minority chain in the event of a fork, while it is the policy of bitfinex to give credit for minority chain (that is expected to have economic value), and a fork on the Bitcoin blockchain is expected in the near future. Another factor that may affect interest rates is the currencies that a particular asset can be traded again, for example poloniex allows CLAMs to be traded against BTC on margin, while bitfinex does not, so if many people wanted to buy CLAMs on margin, then the interest rate for BTC may increase verses the interest rate for BTC on bitfinex.
Interest rates will also differ across various assets based on a number of factors. For example, the interest rate on ETH is likely depressed because ETH withdrawals are disabled on most exchanges due to high tx fees on the ETH blockchain. All else being equal, if "the market" believes that a certain asset's value will decline in the near future, then it's interest rate will be higher, and if "the market" believes that an asset's value will increase in the near future, its interest rate will be lower.
[bitfinex]
2. They have a FRR (Flash Return Rate) feature, which is an average value from last hour saying the best rate to make Loans - This is terrible because it creates an influenced market by FRR feature. It's not a free market. The sentence "create a loan for the highest price, get a loan for the cheapest price, the market will close the best deals for both sides" is FALSE because of this FRR feature. If you check this image (
http://imgur.com/a/HOnmK) - you will see there's a huge gap between rates, showing the influence of FRR feature. Terrible feature.
The large gap between the FRR and the "current market" USD rates on bitfinex is an indication that USD interest rates are generally declining. Many lenders will make long term loans (30 days, or somewhat less), so if they make a loan (that has not yet been repaid) today at the current market interest rate, and in 7 days, the market interest rate declines, then that loan will cause the FRR to be higher than it otherwise would be -- when there are many loans in this situation, the FRR will be much higher.
The FRR takes all outstanding fixed rate loans at the time the FRR is calculated (weighted by loan size), and is the average of all of these outstanding loans, regardless of time remaining until each loan expires. If you make a FRR based loan, the interest rate may change, so if interest rates increase over the term of your loan, then you will receive a higher interest rate than you would have if you had made a "current market rate" loan. In my experience, most FRR based loans are repaid within a couple of days, and I tend to not make FRR loans.
Over the very long term, the FRR rate should be the benchmark that you use to determine your lending performance.
3. A Bot could not work in a non-free market like this at Bitfinex, where the price is determined by "an average value of last hour" - but in the last hour the FRR was ruling the market, closing the 95% of the deals, then guess what: the rate will be almost the same, for ever, tending to zero.
You are currently describing a situation in which there are large amounts of USD that (potential) lenders want to lend out, but there is not sufficient demand by borrowers to take out these loans. When there is sufficient demand, the FRR offers will get taken by borrowers, and offers above the FRR will start to get taken, causing the FRR to increase. If you go to
https://www.bfxdata.com/swaphistory/usd you can look at the bottom chart and see how the FRR rate (the green line) has changed over time.
Again, I would note that the FRR is the average interest rate charged on all fixed rates loans calculated every hour, not the average interest rate on loans made in the past hour. If you make a fixed rate loan today, it will affect the FRR until it is repaid.
- bitifinex does Lending in USD - this is awesome (for me, that I am not an "adventure investor"). For me, make Loans in USD is much better then BTC.
I agree that the ability to lend USD is good, as it gives you the ability to earn interest on your USD while you wait for the time to purchase BTC (which may be a very long time -- at least for me).
Do you make Loans in bitfinex, Quickseller? Perhaps we can build the logic together.
Yes, I have a fairly large amount of USD that I lend out on bitfinex.
I would be happy to give input to help you build logic, but I don't think I would be willing to use your bot -- several people have asked me to use their bots in the past, and I have always declined as I prefer to use my own strategy (that may change) to lend out my money.
