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

[Spaceman_Spiff]

2 more questions:

1) Is LTC/BTC just a derivative, or is there any way to redeem litecoins or bitcoins from it?
2) I took a position shorting a few LTC/BTC, but it looks to me like there is some sort of glitch.  My "active positions" in trading wallet show the position completely filled, but in the "margin available" part, it looks as if the orders were only filled partially (it still shows available LTCs, while my active positions show all shorted in LTC/BTC form).  In the lending tab as well it looks as if the order only went through partially ("unused borrowed funds" is not empty, "borrowed funds used in margin" shows only part of the position).  

[AndrewWilliams]

I did my first Bitfinex loan. Small amount just to test the water.

How does this work exactly? How are the loans guaranteed? What happens if borrower defaults? I was interested in doing this too but found the info to be a bit vague.

[LOADING.READY.RUN]

When you reduce (partially close) a position you close loans accordingly, which means that to enlarge your position you would have to borrow with new interest rates.

If there is a way to keep borrowed funds after reducing a position, I would love to know.

Yes, I would also love to have this option. Is this possible or is this planned at some point? Or is this undesirable to avoid monopolizing cheap interest rates?

Something else: It's common practice to keep an open (e.g. long) position safe by setting a stop loss slightly below the entry point and a limit order at the trade target. In Bitfinex this isn't safe because with considerable market volatility _both_ can get filled and I end up with a short position of the same size. Any suggestions how to avoid this?

[Spaceman_Spiff]

2) I took a position shorting a few LTC/BTC, but it looks to me like there is some sort of glitch.  My "active positions" in trading wallet show the position completely filled, but in the "margin available" part, it looks as if the orders were only filled partially (it still shows available LTCs, while my active positions show all shorted in LTC/BTC form).  In the lending tab as well it looks as if the order only went through partially ("unused borrowed funds" is not empty, "borrowed funds used in margin" shows only part of the position).  

This seems to have resolved itself.

[traderman]

What happens if I lend someone money and lets say a few hours later they return the loan. Do I get any interest for that? Or is it only calculated daily.

[Spaceman_Spiff]

What happens if I lend someone money and lets say a few hours later they return the loan. Do I get any interest for that? Or is it only calculated daily.

calculated per hour, paid out daily

[traderman]

Is the interest paid into the deposit acc or the exchange acc?

What happens if I lend someone money and lets say a few hours later they return the loan. Do I get any interest for that? Or is it only calculated daily.

calculated per hour, paid out daily

[Ente]

So, bitfinex, how'd the last days go? Many margin calls? Any losses, where the margin call was executed too late? Any losses covered by insurance or being passed to the lender (without insurance)? Any insights on server performance, or any crazy stats from all the panicking users rushing at once?

People, I'd like to start a round of applause to the bitfinex team for upgrading the servers back then. It wasn't that pleasant back then, but it made the last hours so much more bearable! Imagine lack and downtimes *now*!
*applause*

Ente

[Spaceman_Spiff]

So, bitfinex, how'd the last days go? Many margin calls? Any losses, where the margin call was executed too late? Any losses covered by insurance or being passed to the lender (without insurance)? Any insights on server performance, or any crazy stats from all the panicking users rushing at once?

People, I'd like to start a round of applause to the bitfinex team for upgrading the servers back then. It wasn't that pleasant back then, but it made the last hours so much more bearable! Imagine lack and downtimes *now*!
*applause*

Yeah, the site seemed to be performing well (for me at least).

Is the interest paid into the deposit acc or the exchange acc?

deposit

[nmtrader100]

I really don't understand how lending works.  It seems I have lent my $ twice today, 365 day loan - both times it seems it was payed back in under an hour which could mean I collect no interest at all for them.  Are people gaming this system?  I won't know until tomorrow because the interest is only payed out once per day.  It is also cumbersome that the auto-lend feature does not post your loan offer right away, it takes a lot more than 15 minutes, more like an hour or longer.  So people are borrowing and paying it back right away and I am not making any money and my loan offer is offline and taking a long time to be reposted.

I also don't understand the Minimum and Maximum lend times.  It appears that lending offers have a maximum amount of time they can be loaned out for but the borrower can pay these loans back any time they want?  On the loan request column it has a Minimum column which I assume means that the loan cannot be paid back sooner than this?  What happens if someone wants to pay back a minimum 365 day loan in 30 days?  I don't know exactly because there is no explanation of any of this anywhere on bitfinex.

[Ichthyo]

I did my first Bitfinex loan. Small amount just to test the water.

How does this work exactly? How are the loans guaranteed? What happens if borrower defaults? I was interested in doing this too but found the info to be a bit vague.

Disclaimer: I am just a user, so this is just what I've figured out from various sources.

First off, Bitfinex offers a derivative instrument called "Contract-for-Difference". The Wikipedia page covers the basics how this works. The special thing with Bitfinex is that the loans are obtained from an internal market for loan offers. To generate revenue, Bitfinex keeps a fraction of the rates plus some trading fees.

Regarding guarnatees: you deal with Bitfinex, which is a company. Engaging in a contract with them bears some "Conterparty Risk". When Bitfinex defaults, it can't fulfil the contract anymore. As long as Bitfinex doesn't default or otherwise break the contract, it is of course the liability of Bitfinex to get your loans back, irrespective how.

There is the option to take an "insured loan".
In this case, an additional insurance contract with some Investor of Bitfinex is included. You pay that with significant additional fees.

Any loans used for trading are backed by the current value of the trader's trading account (margin), plus the current value of the opened trading position. Once the trading losses eat up the collateral, a margin call is issued and then the trader's position is force liquidated, to protect your loan. Thus, effectively the trader's own money (not the company's money) is used to cover the loan. But the essential risk of the derivative offered here is that the market rate can slip away while executing the forced liquidation, leaving the platform (Bitfinex) with an excess loss to cover.

[Spaceman_Spiff]

I also don't understand the Minimum and Maximum lend times.  It appears that lending offers have a maximum amount of time they can be loaned out for but the borrower can pay these loans back any time they want?  On the loan request column it has a Minimum column which I assume means that the loan cannot be paid back sooner than this?  What happens if someone wants to pay back a minimum 365 day loan in 30 days?  I don't know exactly because there is no explanation of any of this anywhere on bitfinex.

The first part of your understanding is correct.  A borrower can pay back the loan at any time he wants, provided that it is within the limits (max. lending time) as chosen by the lender.  The right column in the lending tab are demands from borrowers for a certain loan.  The minimum lending time here indicates the minimal "max. lending time" they request.  Thus, if you start a new lending offer, and max.lending time => min. lending time and the offered rate =< requested rate, then your lending offer will be filled nearly instantly.  If the rates of your outstanding lending offers are too high for current demand, they will just end up in the left column, until somebody comes by and borrows the money.

[nmtrader100]

A loan should be for a certain number of days at a certain interest rate and if the borrower wants to pay it back early then there is a 2-5% early repayment fee.  This would be so much better. 

[Spaceman_Spiff]

A loan should be for a certain number of days at a certain interest rate and if the borrower wants to pay it back early then there is a 2-5% early repayment fee.  This would be so much better.  

I understand where you are coming from, but imho Bitfinex isn't going to do that.  They will want people to move in and out of trades easily because they get an exchange fee each time.
Plus, being able to exit a position whenever you feel like it may drive up demand for margin trading, and thereby increase lending rates.

[Sukrim]

Well, you can just auto-lend, but please check current rates from time to time, it makes 0 sense to auto-lend at less than 150-200% at current rates. I regularly get 364.99% loans filled (yes, they are for significant amounts of money too, not just 10 USD).

I'd love to see confirmation that loans will ALWAYS be charged interest by the way, so far it seems interest gets calculated on all open lonas randomly about every 10 minutes or so, people who do a bit of experimentation might be able to have short time positions that don't pay interest at all. On the other hand it often takes ages until auto-lend triggers, especially problematic as you need to use auto-lend for anything below 100 USD (it is hard for me to get above 100 USD in interest per day).

[Spaceman_Spiff]

I'd love to see confirmation that loans will ALWAYS be charged interest by the way, so far it seems interest gets calculated on all open lonas randomly about every 10 minutes or so, people who do a bit of experimentation might be able to have short time positions that don't pay interest at all.

Is that really an issue though?  If it is really calculated every 10 minutes, you would have to make 0.24% /10 minutes just to break even.  Not saying it can't be done, but hardly seems worth the trouble to me.

[Sukrim]

If a loan is even taken for 1 minute I should be paid interest for 1 hour per the rules. If that doesn't happen, I loose out - I don'T see how there should be a "break even" point.

Also on the other hand, due to the low frequency that auto-lend seems to post new loans once funds become available, taking a loan for 1 minute can mean that there are several hours where my loan offer will not be reposted and not available to be taken. All this for free.

Edit: This could be a viable tactic to drive up loan rates by the way - borrow funds for a few seconds and hope that the ones lending out were using auto-lend or even worse are posting manually. While I still find it horrible that loans above 365% won't be considered and require manual intervention, this potential for manipulation is still not nice in my opinion.

A tip for people "trying out" the lending feature: If you have no idea what to do, use the flash rate. If you know what you do, you can earn about 0.8%-0.9% per day on USD loans.

[Spaceman_Spiff]

If a loan is even taken for 1 minute I should be paid interest for 1 hour per the rules. If that doesn't happen, I loose out - I don'T see how there should be a "break even" point.

I meant that traders wouldn't do this because there is no clearly profitable incentive for them.

Also on the other hand, due to the low frequency that auto-lend seems to post new loans once funds become available, taking a loan for 1 minute can mean that there are several hours where my loan offer will not be reposted and not available to be taken. All this for free.

good point

[ParmaBTC]

I'm Bitfinex user from August
i learned myself after i made some mistake.
I'm invinting some friend to have a test with this platform. some of they  enjoys

thanks

[urwhatuknow]

So, bitfinex, how'd the last days go? Many margin calls? Any losses, where the margin call was executed too late? Any losses covered by insurance or being passed to the lender (without insurance)? Any insights on server performance, or any crazy stats from all the panicking users rushing at once?

People, I'd like to start a round of applause to the bitfinex team for upgrading the servers back then. It wasn't that pleasant back then, but it made the last hours so much more bearable! Imagine lack and downtimes *now*!
*applause*

Ente

Ente

thanks for your words of appreciation.
As I stated several times it's always a good reward for us at Bitfinex to get some hattips.

A quick update on the situation:
We are growing fast and this caused some problems as our upgrades never seem to be lasting for a long time without getting under pressure again.
We are basically doubling our users every month ( recently broke the 10,000th user record) and it's difficult to keep the pace.

Due to recent price volatility today we also broke 2 new records: biggest amount of coins traded and usd value exchanged.
And yes, we had some forced liquidations taking place, but all went as smooth as silk, apart of course for the liquidated traders who truly have all our comprehension.
The market is a rollercoaster these days and I can't stress enough the fact that leveraged positions can bring excellent results but also be disastrous in case the market turns nasty.

In the next week we'll shore up our servers once more to give some more stability to our system.
We are also studying a better system that will allow both lenders and borrowers to be more balanced in their approach and will avoid extremisms in loans.

All in all this was a good year ( we recently turned 1 year old ) and we expect next year to bring to our community an even better performance.

Sorry for not being too present on this forum during these last days, but we have been all busy in getting things done.

One last word: Bitfinex is now hiring people and in case you are looking for a job we need your help.
Raphael needs developers to help him, I need customer support people and all sorts of help would be appreciated.

Do not hesitate to drop me a PM in case you have an idea and/or you want to help us developing it.

Thanks a lot and have a good day.

Without you all, Bitfinex would not exist.

Giancarlo
Bitfinex Team