The Great Bitfinex Game!
1) Bitfinex will pay a bounty of 1 BTC for anybody that comes out with an idea that actually makes sense in order to improve our liquidity on Bitstamp
2) Anybody that will post an idea that is flawed, doesn't make sense, will never work for the reasons I will be honored to explain or just say things like " why don't you transfer to Bitstamp more money if 2 millions a day is not enough" will have to pay 1 BTC cent to the address:
1J14J1ZR11CsFKXyhneXpfVBp34ovQuh7C
All the coins collected by this game will be donated to
www.seansoutpost.com , a homeless outreach in Florida accepting bitcoins.
Giancarlo
Bitfinex Team
I'll go first. Have a second account at bitstamp that is integrated into bitfinex the same, but only goes live when funds are dry on the main account.
Give lenders the option to not only lend out USD as normal, but they could have it sent to bitfinex instead. The second account at bitfinex would have higher trading fees and would then compensate the lenders. Any one buying BTC would be notified that there is no BTC in the main account and the fees are X% higher. The order book would automatically integrate the higher fees when deciding whether to use the bitstamp exchange or the internal exchange.
When the purchase is made the USD would leave the borrowers account and go equally back to each lender in proportion to how much USD is in the second bitfinex account. So let's say there was $10,000 in there from lenders. Someone buys $5,000 +fees. The funds would then go $0.50 on the dollar to each of the bitstamp lenders PLUS their share of the higher fees.
The higher fee will have to be calculated to be worthwhile instead of lending out the USD, but that will just take some math.
Then the lenders could choose to do what they want with the USD, either include it in the next batch you send over to the second bitstamp account, lend it out, etc...
Ok, your idea is good, much better than any others I've heard so far.
Wonderful from a theoretical point of view, a nightmare from a logistic point of view.
Here are the problems I see:
1) A lenders decides to stop lending and to move his money on Bitstamp.
This will take at least 2 working days (banks are slow).
It normally takes 1 hour for the money to disappear into bitcoin.
How much would you have to charge a customer that decides to use this reserve ( you have to come up with a number that makes sense compared to what a lender actually gets in 2 days of interests in this moment) ?
2) Once money arrive on the 2nd Bitstamp account a lender might decide he wants to repatriate his money and this will originate extra bank fees ( Bitfinex do charge a percentage on outgoing wires) and extra working time.
3) The total amount lent is around 3 millions in this moment and we transfer about the same amount every day on Bitstamp.
Even if a good part of the lenders would stop lending ( causing a big raise in interest rate and hurting borrowers in a bad way) it would be like a drop in the ocean, 300k wont last more than 10 minutes or so.
I could go on for another 3 points at least, but I think I already convinced you as you appear to be a quite smart person to me.
Believe me, we don't sleep at night to solve problems like this one.
And apart for me, all the other players in the team are quite intelligent and skilled in finding solutions.
In this moment people keep 90% in coins and 10% in liquidity and this causes problems.
Not much we can do about it.
We receive money every day.
We transfer money every day.
After a while they are gone into BTC and LTC.
In my opinion the only possible solution is the following:
Every customer, before entering an order must consider to tick the option " Bitfinex only".
He will save money on commission ( we cost one third of Bitstamp).
He will make our order book thicker.
He won't lose any money in slippage if he puts up a limit order (it might sound imbecile to some, but most people do place market orders, including the ones that think it's imbecile).
It's not much, but it's all I have to say.
If you think I'm right, please donate your cent to the homeless at Shawn's Outpost and have a great day, otherwise just have a good day.
Giancarlo
Bitfinex Team
