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

[superbit]

I also would expect Bitfinex to push more BTC to Bitstamp in case they think a correction is near rather than narrowing the margin (is 2:1 even worth the hassle to select where to lend from etc. compared to just do a 1:1 trade and be done with it?) to be able to sell into the correction as quickly as possible once positions get liquidated. Also they might increase margin requirements (e.g. 15% instead of 10%) if they are afraid that they are not able to sell fast enough.

I would be happy to lend my money to someone trading 10:1 with 20% margin, if I am assured that Bitfinex has a proper connection and a dedicated server monitoring prices and trading on Bitstamp (ideally on a VPN, whitelisted by any firewall/load balancer from Bitstamp side).
I might charge high(er) interest, like about 1-2% per day for the higher risk though.

It sucks that there seems to be no way for me (aside from private deals) to allow people who want to, to take this lending offer. Maybe we could also specify not only the lending duration (a not so good concept anyways, in my opinion...) and rate but also the max. leverage we allow our borrowers to take, maybe even up to more ridiculous ones like 20:1 - there the current margin requirement alone though would anyways not allow this...

If you get nervous, just up the margin requirement (in the current case it would be 50%) for new positions and deal with the protests from traders and lenders. Removing options however is not so cool in my opinion.

Also, why is the margin on BTC also reduced? It would make more sense in my opinion to even increase it there, as this would counterbalance your potential losses if you can't sell BTC fast enough. It seems you are more afraid of people dumping BTCs than someone suddenly buying up 10 million USD of coins with a market order...

About trading on margin elsewhere:
Kraken wants to allow trading on margin once they have more volume - unfortunately they seem to have weird developers which don't like bots so the API sucks as it is binning data unnecessarily. It might be enough for some more general arbitrage scripts but I doubt that anyone will write liquidity providing bots for that umprecise mess soon until they get their act together there.
There is always the chance to do the lending manually, but then again there is a VERY high need for trust - I wouldn't do that without a written contract and meeting anyone that wants to do that in person before transferring any funds in USD or BTC.

On a different note:
Please publish audits, if (when!) you do them, it is quite vital for people to see that you are actually able to cover the funds deposited and a positive audit statement from an independent 3rd party is definitely helping there. If you don't have any to publish, please consider doing one as soon as possible.

+1 to everything, overall one of the better BTC sites out there

[Spaceman_Spiff]

I don't think bitfinex is "making decisions for the traders".  (Ok, it restricts options for the traders, but on the other hand the lenders are more protected). They are just looking at the volatility, which has increased lately, thereby increasing the chance for a big liquidation.  It makes sense to me to lower leverage in that scenario.  

And yes, there is the insurance pool, but it is always occupied.  The rate at which it grows due to interest is way less than the increase in lending amounts that has gone on in the past months.

[nrd525]

About a week or two ago I was thinking that Bitcoin was becoming more stable and they could probably increase the leverage ratio.  It's got to eventually become more stable, right?

On the other hand, demand and supply for lending USD on BFX is already growing rapidly - so I'm guessing this isn't going to put much of a damper on growth.

I wonder if they could develop an algorithm for changing the leverage ratio based on volatility?  Past volatility is a decent predictor of future volatility.

[Sukrim]

Margin requirement = STDDEV(trades of last x days/hours) * scaling_factor for example...

Then they could allow nearly any leverage, as the limiting factor would be the margin required for new positions (10% margin means in the end you can only go to 10:1 in practice, as a 100:1 leverage has to be bolstered by 10 units, making it 100:10 in the end). In calmer phases that means people get larger leverage (meaning hey still increase their risk to loose all) while if the price is more volatile, it already IS volatile, so there is no need to enforce it via leverage.

[SkRRJyTC]

Margin requirement = STDDEV(trades of last x days/hours) * scaling_factor for example...

Then they could allow nearly any leverage, as the limiting factor would be the margin required for new positions (10% margin means in the end you can only go to 10:1 in practice, as a 100:1 leverage has to be bolstered by 10 units, making it 100:10 in the end). In calmer phases that means people get larger leverage (meaning hey still increase their risk to loose all) while if the price is more volatile, it already IS volatile, so there is no need to enforce it via leverage.

This seems like a much better way to address the risk.

Any reason this doesnt work?

[urwhatuknow]

Margin requirement = STDDEV(trades of last x days/hours) * scaling_factor for example...

Then they could allow nearly any leverage, as the limiting factor would be the margin required for new positions (10% margin means in the end you can only go to 10:1 in practice, as a 100:1 leverage has to be bolstered by 10 units, making it 100:10 in the end). In calmer phases that means people get larger leverage (meaning hey still increase their risk to loose all) while if the price is more volatile, it already IS volatile, so there is no need to enforce it via leverage.

very good suggestion.
Not only this one, but also the previous one where lenders can choose at which level of leverage they want to borrow.
I'll talk to Raphael about it and we will see how to implement it.

Have a good day

Giancarlo
Bitfinex Team

[superbit]

Margin requirement = STDDEV(trades of last x days/hours) * scaling_factor for example...

Then they could allow nearly any leverage, as the limiting factor would be the margin required for new positions (10% margin means in the end you can only go to 10:1 in practice, as a 100:1 leverage has to be bolstered by 10 units, making it 100:10 in the end). In calmer phases that means people get larger leverage (meaning hey still increase their risk to loose all) while if the price is more volatile, it already IS volatile, so there is no need to enforce it via leverage.

very good suggestion.
Not only this one, but also the previous one where lenders can choose at which level of leverage they want to borrow.
I'll talk to Raphael about it and we will see how to implement it.

Have a good day

Giancarlo
Bitfinex Team

Thank-you for being more active in the thread as of late.

[oda.krell]

Margin requirement = STDDEV(trades of last x days/hours) * scaling_factor for example...

Then they could allow nearly any leverage, as the limiting factor would be the margin required for new positions (10% margin means in the end you can only go to 10:1 in practice, as a 100:1 leverage has to be bolstered by 10 units, making it 100:10 in the end). In calmer phases that means people get larger leverage (meaning hey still increase their risk to loose all) while if the price is more volatile, it already IS volatile, so there is no need to enforce it via leverage.

very good suggestion.
Not only this one, but also the previous one where lenders can choose at which level of leverage they want to borrow.
I'll talk to Raphael about it and we will see how to implement it.

Have a good day

Giancarlo
Bitfinex Team

Both are good suggestions, IMO. Thanks for monitoring this thread and picking them up, it's what makes bitfinex outstanding I believe.

Personally, I like the 'lender choses max leverage' a bit better... in the end, I'm all for the choice of market participants -- if both sides are comfortable with a higher risk, let them do the deal.

probably would be wise to add a warning though, along the lines of "allowing traders to take a leverage higher than x:1 brings along substantial risks to your capital, consider yourself warned."

[8fold]

I give you guys at Bitfinex A+ for the effort. If I were to describe - in very simplistic terms - your attitude towards us, the users, I'd use one word: CARE

[nrd525]

Two things to track to help decide what kind of leverage ratio is sustainable:
1) percent of time Bitstamp is down  (and does this happen more or less often during major price swings)
2) how often BFX runs out of its balance on Bitstamp.

Connecting to another exchange is of course top priority as it would fix this.

That said, it could be that the internal BFX exchange is developed enough to handle closing positions on its own?  I know it at least more capable of doing this than in April.

[superbit]

Two things to track to help decide what kind of leverage ratio is sustainable:
1) percent of time Bitstamp is down  (and does this happen more or less often during major price swings)
2) how often BFX runs out of its balance on Bitstamp.

Connecting to another exchange is of course top priority as it would fix this.

That said, it could be that the internal BFX exchange is developed enough to handle closing positions on its own?  I know it at least more capable of doing this than in April.

Would running out of $$ at bitstamp really be an issue for leverage?  The fear would be being able to sell BTC in case leveraged positions need to be closed and selling doesn't require Fiat at bitstamp?

Maybe I am missing something?

[Progressive]

Could somebody explain how to use the "close selected loan" feature?

Does it close the position that is relying on the selected loan?
-Does it then take new (the cheapest available) loan instead?

Or could the position persist even without any loan backing it (if the position is already profitable)?

Anything else I should know before using this feature?

[nrd525]

Two things to track to help decide what kind of leverage ratio is sustainable:
1) percent of time Bitstamp is down  (and does this happen more or less often during major price swings)
2) how often BFX runs out of its balance on Bitstamp.

Connecting to another exchange is of course top priority as it would fix this.

That said, it could be that the internal BFX exchange is developed enough to handle closing positions on its own?  I know it at least more capable of doing this than in April.

Would running out of $$ at bitstamp really be an issue for leverage?  The fear would be being able to sell BTC in case leveraged positions need to be closed and selling doesn't require Fiat at bitstamp?

Maybe I am missing something?

You are correct as BFX users are typically long and the danger comes from a fast crash.   

 It is possible at some point that more users would be shorting, and then the danger would come from a fast rise (then you'd need enough USD to buy the BTC to cover the loans).

[trade-for-pokermoney]

am i the only lender that finds it unfair, that borrowers can repay loans instant without any extra intrest?

Basically all the loans that are taken within spikes, get closed soon after and are retaken with lower intrest.

This leads to low intrest loan running for ever and lenders simply never participate in the high intrest rates.

E.g. I take a borrow offer at 365 day with 80% intrest and half an hour later the contract closes and he retakes with then lower 50% or whatever...

[gog1]

am i the only lender that finds it unfair, that borrowers can repay loans instant without any extra intrest?

Basically all the loans that are taken within spikes, get closed soon after and are retaken with lower intrest.

This leads to low intrest loan running for ever and lenders simply never participate in the high intrest rates.

E.g. I take a borrow offer at 365 day with 80% intrest and half an hour later the contract closes and he retakes with then lower 50% or whatever...

I think there should be some kind of minimum charge.  Also, cancel the variable interest rate option.

[sangaman]

Is there a way to see how much interest I've earned to date? I can see the history page, but there's no way to filter only for interest credit payments or export all transactions to a spreadsheet. Thanks.

[Audriux9]

Is there a way to see how much interest I've earned to date? I can see the history page, but there's no way to filter only for interest credit payments or export all transactions to a spreadsheet. Thanks.

I asked this once, about spreadsheet (xml or csv), for now you can only request it by contacting support. Although that would be really useful to make it automated.

[trade-for-pokermoney]

This site isnt here to only serve the borrowers...
At the moment everything is in favor of the borrowers, if there would be a change to even lower lendig times the APR would go down even more.


also, it really sucks that you have to constantly watch the rates or you lend with autolend at completely wrong rates (either too high or too low). Thats why i want a minimum lending period, like 12 hours..

[Remember remember the 5th of November]

Your Bitcoin deposit #22150, of 0.12 BTC has been completed on November 10, 2013 - 01:18:11 PM UTC so why do I have 0.11999244 instead?

https://blockchain.info/tx/5203269e525e52ffdcc75b1bc363f9bef2cd9d756d37f025407ab13781768250

I find this rounding bug pretty unprofessional and request that it gets fixed

[trade-for-pokermoney]

im sorry for your 0,002268$ loss!!!