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

[Barabbas0]

Wow, we've gone full swing to traders wanting outright manipulation and market fixing to protect their rates. The solution is quite simple, first, remove FRR. With the number of autolending bots, there's no need for it.

Second, put lend durations on their own books. Have, say, four lend books total, 2 day, 7 day, 14 day, and 30 day. This more accurately reflects how true fixed interest markets work. It would also prevent bid/ask from crossing. Additionally, because the lends are callable (the borrower can end the loan and return the funds at any time) borrowers can automatically take the best rate from any book they want. All the time duration risk lies on the lender and can be reflected in yield curve.

[mjr]

Hi all,


Ok, First, I am going to (again) talk about the FRR...if you read my other points, basically the same thing I usually say (tl;dr markets set rates, sorry if you don't like what is currently available, thats how markets work). If that bores you, please feel free to skip to the bottom where I will discuss our new plans for the upcoming year.

I still don't understand the debate about this. If the rate is low, you express that opinion by either leaving an offer at a higher rate, or simply not offering at all. The rate wouldn't be, and in fact COULD NOT be this low, if people weren't clicking buttons and entering a lower rate than you would prefer. People are CHOOSING to offer funds at these rates, so the fact that these rates EXIST means that they aren't too low.

Again, whenever we discuss this, people take the opinion that we should have a rate in mind. We shouldn't. If it is too low, then you are free to not take it. What you are seeing is the greater supply chasing the limited demand. This is classic, texbook even, supply and demand. You can blame the FRR all you want, but honestly, I have always felt that the rates people had seen in the past were really great...in other words, you were taking advantage of a market inefficiency. As people discovered it, it goes away. I currently have a LOT of people who are specifically interested in offering out millions, they find the rates very acceptable, and are curious how they can proceed as a business.

If you, today, got rid of the FRR, the rate would not change at all...because the FRR is not the rate that you are currently competing with.

Total Number of Swap Contracts    Number of Swap Contracts    Rate           Time    Offer Count
427.79                                  427.79                          0.0253%   2      1

It was whichever random user decided that for HIM, 0.0253% was a good enough return for his $427.79. Without the FRR, this would be EXACTLY the same situation you currently face. I find it funny though, we are in a HUGE bear market, and people are wondering why the demand for going long (and with it the subsequent rate for a USD swap) are dropping, while, for the first time in a LONG time, the demand for BTC is up...its almost as if there is some sort of correlation between the demand for a certain position, and the rates that people are willing to give...

In a previous post, I specifically said that I thought it was very strange that the BTC rate was so low. I thought it was an inefficiency, in that if I had to choose to short or long over the next 30 days, I would specifically look for shorting opportunities, because they cost a lot less. I honestly wish we could get rid of the FRR, just to prove that it wouldn't make any difference at all...is it an ideal tool for calculating a "going rate" for swaps, NO. Could it be better, yes! But you will see that the rates are just reacting to the market. There is a finite, but unknown, demand for going long, whoever is willing to offer a swap for the lowest rate gets to be first in line to fill that demand. For a lot of people, something > nothing.

One last point, I find it funny that people think that for us this is some sort of financial move or something, but then point out that we could make more by raising rates. That is mathematically correct. Our rates are 15% of the returns generated, if we increase your returns, we would get 15% of a larger number. This is math, and we are aware of this. We have no interest in raising rates, in order to pad our cut. We would rather that supply and demand lead to whatever rate it leads to. In other words, a market.

Now that I have responded (again) to the FRR discussion. I want to wish you all a Happy New Year.

We have a live, working version of our new backend, and are currently testing it. It looks fast...REALLY fast. This is going to open up a lot of doors for us, in this new year.

We are going to be able to offer a FIX gateway, for institutional players who have been patiently waiting for one.

We will also have an official websockets API.

We are currently looking into other pairs that we may offer, including other fiat currencies.

We will finally be able to divert some resources into the growing list of suggestions and requests, specifically better reports and more user customization in the interface. 

We are moving cautiously, we definitely don't take risks when it comes to our users funds and we appreciate the trust you place in us. I am SO excited about this, it is going to be a real game changer (sorry if I was grumpy in the first part, I am just really bored and annoyed by FRR talk, and the new backend is WAY more exciting and interesting).

I am looking into perhaps setting up a simulation/testnet environment, where perhaps some people could test it out, etc. No promises yet, but it is an idea I am throwing around. I know that a lot of people here have been with us since the beginning, and I really want to hopefully reward your patience, and show you guys what we have been working on. I know that things aren't perfect, I know that there are a lot of people who don't have things just the way they would prefer. I am sorry about that. We are working really hard, doing our best, to make the best exchange for bitcoin in the world. 2015 is going to be a great year, I hope. If you have more questions, feel free...

By the way...what are your opinions on the current prices? I am kind of shocked to see sub $300 bitcoins again. Any theories?

[DoubleSwapper]

So now, Bitfinex, tell us, that Bitstamp is down and possibly hacked: Do you have meaningful funds left on Bitstamp that could cause liquidity problems for your operation?

Wow, we've gone full swing to traders wanting outright manipulation and market fixing to protect their rates. The solution is quite simple, first, remove FRR. With the number of autolending bots, there's no need for it.

Second, put lend durations on their own books. Have, say, four lend books total, 2 day, 7 day, 14 day, and 30 day. This more accurately reflects how true fixed interest markets work. It would also prevent bid/ask from crossing. Additionally, because the lends are callable (the borrower can end the loan and return the funds at any time) borrowers can automatically take the best rate from any book they want. All the time duration risk lies on the lender and can be reflected in yield curve.

+++++
Barabbas is making some clever and useful proposals for changing the swap market and making it more efficient. I've already given up on BFX changing anything fundamental though and now it's merely a question for me whether keeping the funds on the platform is worth it or not.

Did the algorithm change already, somehow?

Yesterday, while there was HUGE demand for BTC-swaps in the selloff to ~$260, the BTC-FRR sharply DROPPED from about 0.11% to 0.07%.

The only way this could possibly explain that imo is:
- FRR calculation model changed or
- someone accidently lent out a big amount of BTC for 0.01 instead of 0.1, or some similar mistake.

Funny thing is that now that BTC swaps have risen in interest rate they seem to suffer from the exact same FRR related problems USD swaps have been plagued with. I'm wondering whether BTC swaps have only been so low the entire time because of the FRR related mechanics as even mjr seemed to be wondering about the normally super low rate of BTC swaps.

[mjr]

Can you explain what is the problem with lending? I see people talk about it a lot but i didn't understand (i only trade, not lend).

In a nutshell:
Rates go down more and more. Soon, there will be better options to invest the dollars in. That will lead to lenders withdrawing their money from BFX, leading to fewer available swap funds for margin traders to use.

All that is no problem under current market circumstances, there will still be enough available.

But as soon as demand for funds increases (i.e. when volatility increases or the bear market turns into a bull market), there will be WAY more demand for swaps. But not enough funds available to be lent. That will lead to traders being unable to use leveraged trading until swap-money comes back to BFX, which could take quite some time.
That will make traders unhappy and will make BFX miss a lot of fees from traders/lenders. Possibly traders will leave for other sites where they can use leverage in volatile times.

They should probably plan for a time with high demand.

If this is actually happening...I think the people who should plan for this are the people who are offering swaps.

If you believe:
A) There is a sudden exodus of funds about to happen due to rates decreasing.
B) There will be a shortage of funds, and margin traders will need to pay much higher rates to be able to open a position

Then the liquidity provider can plan for this by simply putting out an offer at a much higher rate. Once the lower rate offers exit en mass (why they currently have offers that aren't filled, and are content to leave those offers on the books...its not my theory, I don't know) you are now at the top of the book. Congrats, you are now receiving the returns that you think are appropriate.

The reason this doesn't work, and why it won't work, is because there is no shortage. There is more supply than is currently demanded. We DID see the opposite however. The BTC swap market was much thinner, but lo and behold, when demand for short positions started increasing, somehow, BTC appeared on the books...

If you believe, as I do, that markets are usually the most efficient method of allocating resources, then you see that there is NO problem with supply or demand. The rate will move just enough to incentivize just enough dollars or BTC, and you can see this in the BTC swap market. The rates were, if i remember correctly, 10% of the return that you could get on the USD side. They are now around double. People wanted more BTC short positions, people offered BTC as they saw they could get better rates, as more people jump to that side, the better rates will dry up, until people stop offering.

[artenais]

Can you tell us if API security is coming soon? Like a key for swap deposit operations only, another for exchange only, one for margin trade only. Also the ability to "lock" your account type [ deposit/exchange/margin ] will be awesome.

Thank you for your time,
S.

PS:. Please VIP program for large accounts like okcoin

[Mythoughts]

Without the FRR, this would be EXACTLY the same situation you currently face.

Please, since there would be no difference in your opinion as well: just remove it and prove me wrong.
If it's the same situation, there's no harm trying, right?

[mjr]

So now, Bitfinex, tell us, that Bitstamp is down and possibly hacked: Do you have meaningful funds left on Bitstamp that could cause liquidity problems for your operation?

Wow, we've gone full swing to traders wanting outright manipulation and market fixing to protect their rates. The solution is quite simple, first, remove FRR. With the number of autolending bots, there's no need for it.

Second, put lend durations on their own books. Have, say, four lend books total, 2 day, 7 day, 14 day, and 30 day. This more accurately reflects how true fixed interest markets work. It would also prevent bid/ask from crossing. Additionally, because the lends are callable (the borrower can end the loan and return the funds at any time) borrowers can automatically take the best rate from any book they want. All the time duration risk lies on the lender and can be reflected in yield curve.

+++++
Barabbas is making some clever and useful proposals for changing the swap market and making it more efficient. I've already given up on BFX changing anything fundamental though and now it's merely a question for me whether keeping the funds on the platform is worth it or not.

Did the algorithm change already, somehow?

Yesterday, while there was HUGE demand for BTC-swaps in the selloff to ~$260, the BTC-FRR sharply DROPPED from about 0.11% to 0.07%.

The only way this could possibly explain that imo is:
- FRR calculation model changed or
- someone accidently lent out a big amount of BTC for 0.01 instead of 0.1, or some similar mistake.

Funny thing is that now that BTC swaps have risen in interest rate they seem to suffer from the exact same FRR related problems USD swaps have been plagued with. I'm wondering whether BTC swaps have only been so low the entire time because of the FRR related mechanics as even mjr seemed to be wondering about the normally super low rate of BTC swaps.

Not sure about Bitstamp, when I read that story, I didn't even think about that, because it has been so long since we really did much over there. I will get back to you, but I don't believe that it has any effect on us.

So, lets talk about the FRR stuff (again).

So, if the FRR is broken, and with an increase in demand, the rates responded and now the FRR for BTC is twice that of the FRR for USD. That is exactly what I would have expected to happen, with or without FRR. Oh, a lot of people want to short, the rates for shorting went up. I think that the FRR probably acts as a counterbalance against large swings, dampening effect either way, but with autolending bots all over the place, I really think it is completely backwards to want to get rid of it. You are literally asking for the people who are not managing their funds, content to sit on the sideline, to be forced to jump into the market. In other words, those people are NOT competing, and it is preferable for them to start competing. I don't see how that would possibly help people who want rates to go up. All of a sudden, they have to pick their own rates, and don't really care that much, as evidenced by the fact they use the FRR...so they should download any marginbot, set it to "as long as i get something", and that would get rid of the downward pressure? I understand you don't like FRR, but how do you account for ALL the offers IN FRONT of the FRR...those people are CHOOSING a lower rate. If you pick whatever rate you like, I don't think that most people are going to say, oh, well if his rate isn't the FRR then I don't want to beat it...anyway, coming from the perspective of someone who doesn't care at all what the rate is, I don't see how that is better. I think the fact that the rates have risen, basically shows, definitively, that with enough demand to overtake the supply, the FRR won't stop rates from rising. The rates can rise, if demand is high enough, as demand for longs sagged, they just weren't enough to raise the USD rate...the USD rate would have fallen either way.  I'm not sure why rates dropped (have to look into that), but in the short term, yes, rates are erratic, over the longer term, they make more sense.

Short answer: Demand for BTC grew, rates rose. Demand for USD dropped, rates dropped. That is what I would expect.

The other thing you mentioned. Which is separate from the FRR. I think that is a GREAT idea. Very useful and constructive. I think separating out the books makes sense (somewhat), and in theory, would be great. I am not sure if it is that easy to do, however. Either way, it is definitely worth talking about, and looking into. I don't really see a problem with it, but I have just started thinking about it this morning. These are the kind of ideas I would really like to hear more of. I have wondered if there was a time premium placed on longer length swaps, and what exactly it was. This would be very helpful in getting more data, and probably help price discovery (how much of the rate is specifically because I am willing to give up use of funds for 30 days vs 2). The thing though, is that if a person seeking a swap is going to simply take the best rate possible from any of the books (per the example), then aren't we really just talking about a different view of the same book that exists now? I can choose which offer I want to take, and I specify the time. So, if people automatically take whatever is lowest on any of the separated books, all the individuals are still competing with each other. I am just starting to think about this, so I could be wrong, lets talk more about this though.

[mjr]

Can you tell us if API security is coming soon? Like a key for swap deposit operations only, another for exchange only, one for margin trade only. Also the ability to "lock" your account type [ deposit/exchange/margin ] will be awesome.

Thank you for your time,
S.

PS:. Please VIP program for large accounts like okcoin

I am not sure if that is currently on the list, but it definitely will be. There have been quite a few things on the frontend that we want to revisit, but its all hands on deck for the backend upgrade, so I definitely think those suggestions make sense, especially as we see more institutional and business clients. It would make sense to be able to split up privileges for different functions.

I am not aware of the VIP program at okcoin...what do they offer? Currently, if you are a large trader (25k coins per rolling 30 days) you pay no fees to place an order on our book. Also, through the affiliate program, if you are introducing people to Bitfinex, you are rewarded with a portion of their fees. I believe you have to request access to that. If you can let me know exactly what the VIP program is, I will definitely look into it more. 

[mjr]

Without the FRR, this would be EXACTLY the same situation you currently face.

Please, since there would be no difference in your opinion as well: just remove it and prove me wrong.
If it's the same situation, there's no harm trying, right?

Like I said, I wish I could. Unfortunately, it is not that simple, you have a couple million in offers at that rate, just what...cancel their offers? The implementation of that, affecting potentially thousands of accounts, is kind of tricky, as are all large changes on a platform like bitfinex. We have been pretty stable over the years, haven't been hacked, and have had very little downtime. We don't like to take risks, we play it safe when it comes to an ecosystem that a lot of people rely on. But, if the FRR were magically removed, just so we could prove a point, currently, it would change nothing unless your order was going long for more than ~$300k. The reason I wish we could see this, is because I wonder what rate the almost 3 million at the FRR would pick...I am guessing it would prob be around 0.025%. If THAT were true...then in order to make rates go up, it would take an order of around 3 million dollars to move the rates (assuming they all simultaneously put in their offers at the same time, if they put them in over time, you could see the rates go much lower).

People who are content to take whatever they can get, will probably take whatever they can get...another alternative is that it is too much work and that 3 million vanishes from the book. Either way, it doesn't change the fact that some guy is perfectly content offering a swap for .025%

[HowardF]

So, lets talk about the FRR stuff (again).

So, if the FRR is broken, and with an increase in demand, the rates responded and now the FRR for BTC is twice that of the FRR for USD. That is exactly what I would have expected to happen, with or without FRR. Oh, a lot of people want to short, the rates for shorting went up. I think that the FRR probably acts as a counterbalance against large swings, dampening effect either way, but with autolending bots all over the place, I really think it is completely backwards to want to get rid of it. You are literally asking for the people who are not managing their funds, content to sit on the sideline, to be forced to jump into the market. In other words, those people are NOT competing, and it is preferable for them to start competing. I don't see how that would possibly help people who want rates to go up. All of a sudden, they have to pick their own rates, and don't really care that much, as evidenced by the fact they use the FRR...so they should download any marginbot, set it to "as long as i get something", and that would get rid of the downward pressure? I understand you don't like FRR, but how do you account for ALL the offers IN FRONT of the FRR...those people are CHOOSING a lower rate. If you pick whatever rate you like, I don't think that most people are going to say, oh, well if his rate isn't the FRR then I don't want to beat it...anyway, coming from the perspective of someone who doesn't care at all what the rate is, I don't see how that is better. I think the fact that the rates have risen, basically shows, definitively, that with enough demand to overtake the supply, the FRR won't stop rates from rising. The rates can rise, if demand is high enough, as demand for longs sagged, they just weren't enough to raise the USD rate...the USD rate would have fallen either way.  I'm not sure why rates dropped (have to look into that), but in the short term, yes, rates are erratic, over the longer term, they make more sense.

So, I'll keep this short, since the rates are too low for me to find interest in discussing margin lending anymore, but you did specifically mention MarginBot, so I'll respond.

If everyone who was currently using FRR switched to a bot, I can pretty much guarantee rates would be more responsive, and in all likelihood, higher, for a couple of reasons.

1) Minimum rates - you can't set this with FRR.  You claim people are happy to take what they can, and to some extent that's true, but part of this is because they CAN'T choose the minimum they'll take with FRR...  This option alone would have a HUGE effect on rates, even if people literally installed the bot, added their API Key and walked away, the rates would be floating closer to .065% (default minimum).  One way or the other, this would at least make people spend just a few seconds thinking about what they're willing to take.
2) Spread Lending - right now all the money going to FRR is one big ass lump.  Spread it out, and the "wall effect" would go away, or at least be reduced.  Each upward step would have a smaller wall to climb, small runs would still move us up, not sideways.
3) Reactive lending - loan targets would be constantly moving, looking for new targets every few minutes, instead of every hour.  Rates would adapt quicker.

I could go into detail on lots of other, far more complex reasons as well, but honestly, I'm not particularly interested in this discussion.  I never was, but somehow got sucked in.  FRR is broken.  You talk about wanting a free market, but then manipulate the hell out of it with the FRR.  Honestly, have you ever seen a financial market anywhere else in the world with an auto-averaging system like this?

[2586]

Please, since there would be no difference in your opinion as well: just remove it and prove me wrong.
If it's the same situation, there's no harm trying, right?

Like I said, I wish I could. Unfortunately, it is not that simple, you have a couple million in offers at that rate, just what...cancel their offers?

Remove the FRR option from UI and API, and just let existing FRR offers run their course.

You could either turn off autorenew on those offers, or just wait for lenders to gradually do it themselves.

[Sukrim]

A question about the new backend: Will the History CSV reports (https://www.bitfinex.com/account/ledger/usd, https://www.bitfinex.com/account/ledger/btc etc.) still look the same? I've written some extensive tools to parse them and enter them into my bookkeeping system, it would be good to know if I have to rewrite everything from scratch or not.

Another question: It's been nearly a year now since https://www.bitfinex.com/account/audit happened - any plans for another one? Maybe also including LTC + DRK as well as auditing USD amounts too (via an auditing firm, not via block chain I guess)?

[Mythoughts]

1) Minimum rates - you can't set this with FRR.  You claim people are happy to take what they can, and to some extent that's true, but part of this is because they CAN'T choose the minimum they'll take with FRR...  This option alone would have a HUGE effect on rates (...)

I like that idea.

Arguably a good improvement with absolutely no downside for anyone.
Super-easy to implement, just add a new box "minimum acceptable rate" or something similar, can even be checked client-side with simple javascript code. Allow "0" for the lenders which will take anything, according to mjr. But provide no default value and require the box to be filled, so that whatever they enter is a conscious decision.
Only re-offer their BTC or USD if the FRR > their minimum rate. Sit on the sidelines if not, and maybe check once an hour if the FRR raised to an acceptable level and re-offer then.

[noggin-scratcher]

Not sure about Bitstamp, when I read that story, I didn't even think about that, because it has been so long since we really did much over there. I will get back to you, but I don't believe that it has any effect on us.

Good to hear, but can some sort of official confirmation there be prioritised?

All I've seen is some deliberately-vague Reddit posts from Raphael (from some time ago) talking about how you used to have a reasonable quantity of funds on Bitstamp to implement mirroring their orderbook onto 'Finex (effectively arbitrage between the two to add some depth to the books here), and that they were intending to "reduce" the amount of that they did.

That was offered as an explanation for the price on Stamp and Finex starting to diverge and when someone asked for details of how that reduction was going to happen they were turned down with words to the effect of "I can't tell you that". I'd been assuming that, with that link severed, you would have no need to keep funds with a 3rd party and would have withdrawn them out since then, but it would be calming to hear it officially and definitively.

As for FRR...

Then the liquidity provider can plan for this by simply putting out an offer at a much higher rate. Once the lower rate offers exit en mass (why they currently have offers that aren't filled, and are content to leave those offers on the books...its not my theory, I don't know) you are now at the top of the book. Congrats, you are now receiving the returns that you think are appropriate.

Became tired of the effort of manually placing offers for the current returns, placed high offers to wait for better rates... so I guess I'll be able to report back soon eventually, as to whether this strategy pays off.

[Barabbas0]

mjr is a joke. Only response is to say lenders are greedy and want better rates. At best, it's laziness. The simple fact is, I'm pulling my money back from lending. Not because of low interest rates, but because of low interest from BFX. They would rather run from a problem than admit it. There will undoubtedly be more volatility and shortages of liquidity.

This community has put forth some great ideas. I'm looking forward to Bitfinex reacting (not really, I expect nothing more than further ignorant insulting from mjr). In the meantime, the equity markets are far more interesting. Additionally, my stock broker actually answers my emails, so I'm content giving my money to them instead. They also know something about fixed interest lending.

[nrd525]

While the swaps operate as a market, there are also transaction costs that make it harder to get USD in or out of the exchange.  By contrast BTC moves around fluidly but also has much fewer competing investments - so less reason to move.

Transaction costs include time (cannot use the money for several days - ex. if you have to do a wire transfer and then bank transfer to transfer the money to your preferred investment) and fees (wire transfer fees are hardest on small players, like me, who may be better off using Circle and a bank transfer).

These transaction costs reduce the speed at which the swap market rates increase or decrease to reflect market demand.

[mjr]

A question about the new backend: Will the History CSV reports (https://www.bitfinex.com/account/ledger/usd, https://www.bitfinex.com/account/ledger/btc etc.) still look the same? I've written some extensive tools to parse them and enter them into my bookkeeping system, it would be good to know if I have to rewrite everything from scratch or not.

Another question: It's been nearly a year now since https://www.bitfinex.com/account/audit happened - any plans for another one? Maybe also including LTC + DRK as well as auditing USD amounts too (via an auditing firm, not via block chain I guess)?

We are maintaining full backwards compatibility. Nothing will change as far as this API, and the reports will remain the same. We are trying very hard to make this transition seamless. If we do introduce changes, we will make them optional, and hopefully, just enable more customization by the users.

[mjr]

While the swaps operate as a market, there are also transaction costs that make it harder to get USD in or out of the exchange.  By contrast BTC moves around fluidly but also has much fewer competing investments - so less reason to move.

Transaction costs include time (cannot use the money for several days - ex. if you have to do a wire transfer and then bank transfer to transfer the money to your preferred investment) and fees (wire transfer fees are hardest on small players, like me, who may be better off using Circle and a bank transfer).

These transaction costs reduce the speed at which the swap market rates increase or decrease to reflect market demand.

I agree, but the same could be said of any market. The bitcoin market has long suffered from the inability to move fiat funds rapidly.

[mjr]

1) Minimum rates - you can't set this with FRR.  You claim people are happy to take what they can, and to some extent that's true, but part of this is because they CAN'T choose the minimum they'll take with FRR...  This option alone would have a HUGE effect on rates (...)

I like that idea.

Arguably a good improvement with absolutely no downside for anyone.
Super-easy to implement, just add a new box "minimum acceptable rate" or something similar, can even be checked client-side with simple javascript code. Allow "0" for the lenders which will take anything, according to mjr. But provide no default value and require the box to be filled, so that whatever they enter is a conscious decision.
Only re-offer their BTC or USD if the FRR > their minimum rate. Sit on the sidelines if not, and maybe check once an hour if the FRR raised to an acceptable level and re-offer then.

Exactly, if you have a default rate, you just move the wall to whatever that default rate is. None of those people would get filled, as anyone who wanted to get filled would just jump in front of them...very similar to how the FRR is currently acting. It doesn't matter what rate you choose, if it is not the ACTUAL rate (the lowest rate that someone is willing to offer a swap) it will just sit untaken. It seems that there are two different discussions happening. One the one side, force users to have to set a rate that they want, in order to hopefully induce them into picking higher rates, and raising the rates overall. On the other side, when discussing the FRR, it  is simply a calculation. If you wanted to, you could simply average the swaps taken over the last hour and then set your own offers at this price. It happens to be built into our system, but it is still just people choosing a number. What  I mean by this, is that if people wanted to, they could replicate the FRR without it being built into our system. I think it just comes down to what is easiest for people to do.

So, if the discussion is about forcing people to try to choose higher rates, we have no interest in that. We have no horse in the race, and the rates are whatever they should be as dictated by the swap market. There is no "right" rate. The BTC market has again illustrated this. If the rate needs to be higher, in order to attract more offers, it will rise. If it doesn't...it won't.

If people want to discuss a tool like the FRR, and how it could be improved (it is basically just an index), then that is a different discussion. What I am trying to do is separate out the "we want higher rates" discussion, from the "the FRR is not a good tool" discussion, because again, we do not want to set rates, because the market handles that on its own.

Again, YOU, the person offering swaps, get to set the rate that YOU would like to receive. It is up to other people if they are willing to accept less. Whoever is willing to accept the least wins. So, any discussion that centers around "how can we make the rate higher (or lower)?" is basically pointless. There is a method for doing this now. If the rate is too low, either set an offer with a higher rate, or just pull your offers until the rates climb to the level you find acceptable. As an example, if every person who offers swaps decided that they would not accept any offers beneath 1% a day, that would be the rate...so why doesn't that happen? Because many people are willing to accept FAR less than that, in order to get something. They undercut those people who have such high expectations, and those people end up with funds that are not being used at all. I just get frustrated because it seems to me that some people (not all) are using the FRR as a scapegoat for the underlying market forces that they don't like. As I said, a person who offers a swap gets to pick whatever rate they want, but it is up to other people to offer a better rate. The complaint boils down to "other people are willing to accept less than I am!", and I just don't have any answer for people who think this way. If some people want  to discuss how to create a BETTER index, as a value for autolenders, that is useful and constructive. We are more than happy to discuss and consider any such suggestions.

[mjr]

mjr is a joke. Only response is to say lenders are greedy and want better rates. At best, it's laziness. The simple fact is, I'm pulling my money back from lending. Not because of low interest rates, but because of low interest from BFX. They would rather run from a problem than admit it. There will undoubtedly be more volatility and shortages of liquidity.

This community has put forth some great ideas. I'm looking forward to Bitfinex reacting (not really, I expect nothing more than further ignorant insulting from mjr). In the meantime, the equity markets are far more interesting. Additionally, my stock broker actually answers my emails, so I'm content giving my money to them instead. They also know something about fixed interest lending.

That is a perfect response. If you can find a better use of your funds, that is how you "vote" on the rate on the swap market. If enough people feel the way you do, there will be a lack of supply and the rates will rise. If they get attractive enough, perhaps you will offer swaps again. Either way, good for you for making decisions about how you want to use your money, that is the free market in action!