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

[superbit]

The Flash Return Rate for USD swaps is becoming insanely low these days. What gives?

Shouldn't bitfinex be concerned of this as it reduces fee income for insurance?

Lots of lenders still seem to be offering their USD quite low after the last major rate drop a few weeks ago.  It's pretty easy to post above flash rate and have your loans taken though.

[1715471805]

1715471805

[Dalmar]

Lots of lenders still seem to be offering their USD quite low after the last major rate drop a few weeks ago.  It's pretty easy to post above flash rate and have your loans taken though.

It seems to get consistently lower the past couple of weeks (at ATLs) almost to levels that I am starting to worry that BFX would not have sufficient insurance funds. IMO, these rates seem too high risk given the market we are dealing with.

[superbit]

Lots of lenders still seem to be offering their USD quite low after the last major rate drop a few weeks ago.  It's pretty easy to post above flash rate and have your loans taken though.

It seems to get consistently lower the past couple of weeks (at ATLs) almost to levels that I am starting to worry that BFX would not have sufficient insurance funds. IMO, these rates seem too high risk given the market we are dealing with.

I don't lend when rates are this low either. 

[DoubleSwapper]

We've just broken downwards 0.05 %. Aside from some fat fingers this is an all time low. What I've predicted in former posts has completely come true.
Interest rates have never been that low. This does not only come from the bear market we're currently expierencing but from money that comes in under the false illusion that these loans are insured.
I've stopped lending entirely at these rates and will not lend out any money below 0.1 %. If we break below 0.03 % I'm going to pull all of my swap funds off BFX for good.
Pseudo-insuring these funds was such a stupid decision by bfx for lenders and the stability of the platform....

Just quoting my former post again:

I've read the announcement and have to admit that these are potentially very dangerous changes in my opinion. I even start to feel uneasy trusting Bitfinex with the sums I have deposited there.
Let me explain in detail why I feel these changes are not positive at all in my opinion.

1. The fee structure for trading seems fine. It's a popular model although I think offering something like the Vault of Satoshi "flatrate" would have been even more attractive.

2. Previously unannounced percentage fees for fiat withdrawals. Bitfinex, are you kidding me? With this changed you have just stated that our money is basically trapped at Bitfinex. I chose BFX because it had NO percentage withdrawal fees with a reasonable fixed fee which was just doubled as well. What if you suddenly announce tomorrow that the withdrawal fee is one percent? Considering the already obscure international wire transfer system this makes fiat withdrawals extremely unattracitve closely to obsolete.

3. Change in the swap fee structure and insurance: This is by far the biggest and most dangerous change. You have just increased the fees by 50 % for the removal of a feature that was basically never available and not thought out at all. If you had provided completely transparent insurance I would have gladly taken it for 30 % but insurance was always a mirage.

Quote from: oyvinds on March 16, 2014, 04:26:30 PM
"Another reason for removing swap insurance is that we have decided to effectively insure all swaps on the platform."

I take this to mean that all swaps are now ensured by BFX and that the enormous total scandal fee hike for lenders is meant to cover this. I'm not sure why the word "effectively" is there, though. It's really binary, either swaps a) are insured OR b) swaps are not insured.

I can tell you what that means. It means that BFX tries to make lenders believe that their swaps are insured when there are actually no sufficient funds to insure the swaps in case of a serious crash. They just assume they will be able to halt (manipulate) trading fast enough for nobody to be able to close their shorts in time.

This is extremely dangerous as it basically takes the "indifferent for BFX p2p lending" away from the platform making it BFX the liquidityp provider who borrows the money to lend it out. We have seen how BTCe has handled the flash crash and why this change adds serious counterparty risk.

On top of that the illusion of insured loans will lead people to offer more swaps hereby increasing the supply of swaps and mutually decreasing the lending rate. The decreased lending rate will encourage people to more reckless margin trading and actually increase the risk for flash crashes.

"effectively insured" is a really dangerous term and I just can repeate that these changes have made BFX a whole lot more untrustworthy for me.

[Sukrim]

I agree and while I still have a few >0.1% loans running interest gets into a zone that I personally consider dangerously low... The 50% fee increase is just the cherry on top.

[superbit]

I agree about the rates being too low for my personal risk, but clearly for others it isn't.

I think it is great that bitfinex took the time to do a BTC audit and that is a great start.  What I would like to see now is the cash reserve they have to cover loans in case of a loss.  It is very unlikely that they have enough to cover the full amount, but they have been making roughly 1 million a month in fees (got this number from an early post, haven't worked it out myself)

So let's say they have 8 million sitting in a bank account.  If that was the case then maybe rates do justify a maximum of a 50% loss.  I'm not saying this is the case, but it would be nice to know what the ratio is, because I do think if the market were to dive there is enough liquidity to dodge a 100% loss.  Even a 50% loss should be easy to liquidate out of.

All of my loans are above 0.1%, I do have some cash sitting that hasn't gone out in a couple of days.  It might be time to bring the money home until rates see and uptick.

As for the increase in fees, I can live with it, but I would like a little more transparency, but it is clear the bitfinex team is constantly working and improving.

[wilfried]

Hi Bitfinex team. I have a problem with your API ("is_hidden" parameter).

When I send a request to your server (open an order), something like this:

Code:

{
       ...
	"is_hidden":	0
}

I receive an error:

Code:

{"message":"Key is_hidden should be a bool."}

Okay, "bool" should mean true/false.
I corrected my program and sent this:

Code:

{
       ...
	"is_hidden":	false
}

And your server sends me the following responce:

Code:

{"message":"Key is_hidden was not present."}

WTF?

I tried also: "is_hidden": "false" and "is_hidden": "0" (as a string, with quotes) - not working.

Please tell me how this parameter must look.

Thanks!

you trying to place orders? python? try

payloadobject = {
         'request':'/v1/order/new',
         'nonce':str(long(time.time() * 100000)),         
         'symbol':'ltcusd',
         'amount':str(amount),
         'price':str(price),   
         'side':'sell',
         'type':'exchange limit',
         'exchange':'bitfinex'
         }

[DoubleSwapper]

I agree about the rates being too low for my personal risk, but clearly for others it isn't.

I think it is great that bitfinex took the time to do a BTC audit and that is a great start.  What I would like to see now is the cash reserve they have to cover loans in case of a loss.  It is very unlikely that they have enough to cover the full amount, but they have been making roughly 1 million a month in fees (got this number from an early post, haven't worked it out myself)

So let's say they have 8 million sitting in a bank account.  If that was the case then maybe rates do justify a maximum of a 50% loss.  I'm not saying this is the case, but it would be nice to know what the ratio is, because I do think if the market were to dive there is enough liquidity to dodge a 100% loss.  Even a 50% loss should be easy to liquidate out of.

All of my loans are above 0.1%, I do have some cash sitting that hasn't gone out in a couple of days.  It might be time to bring the money home until rates see and uptick.

As for the increase in fees, I can live with it, but I would like a little more transparency, but it is clear the bitfinex team is constantly working and improving.

When the change was made and the illusion of insurance was questioned Giancarlo said that BFX holds about 10 % of the momentary total swap sum (which was like 17 m at the time and is 15 m now) as a reserve. So with time having passed bfx holding 20 % as a reserve would be a generous estimate. It's also not so much about having enough money to cover the "loss" of lenders money (it's not really a loss for bfx, it's just money that goes from lenders to shorters) but that they have indicated they will halt trading to prevent exactly that which makes shorting a whole lot more unattractive in a hard crash scenario.

With the illusion of insurance no rate is low enough as long as it stays over the rate that you would get at classsical capital markets etc. which is very low so we potentially have a long, long way to go with lending rate.
While there will be upticks in turbulent times and rates will also rise in more bullish times I feel that lending will go the way of any attractive money making opportunity. It will stop being attractive after some time.   

[BitBits]

What lenders must realize, is that swap rates are 100% controllable by them. If coordinated just a bit, the rates can be held at no less than a agreed upon minimum. The reasoning, especially for a big hand is that "I'd better get less than usual, than nothing at all", which obviously backfires. Moreover, when one posts a lot lower rates than wanted, he/she typically sets shortest duration possible (2 days) in hopes for rates to improve, so that new offer can be made 2 days later. This, backfires even more, because without major market movements and all existing swaps expiring every 2 days, the rate decrease is amplified even faster.

So, if Bitfinex team does not feel that "capping" the lower end of lending (and perhaps cancelling the FRR for better rates discovery) is a viable option for the system, the only solution I could think of and AM suggesting, is for those concerned to get together and communicate the strategies to each other in some sort of a "club". If anyone knows about the existence of such group, please let me know. If not, feel free to PM me and we can think of something together.

Another, very easy to implement right now suggestion, in attempt to recover the rates, especially to those who already stated (just above) that you do not wish to lend at the current rates, let's see if we can indeed communicate a bit. As the first step, I suggest you to set your offer to 0.09% (even) not less. I personally agree with your reasoning, I am NOT lending at 0.05 and I did set my offer to 0.09% even, please go see and join. I also have other swaps expiring in about a day and set my autolending to 0.09% as well.

[fr33d0miz3r]

you trying to place orders? python? try

payloadobject = {
         'request':'/v1/order/new',
         'nonce':str(long(time.time() * 100000)),         
         'symbol':'ltcusd',
         'amount':str(amount),
         'price':str(price),   
         'side':'sell',
         'type':'exchange limit',
         'exchange':'bitfinex'
         }

No. I'm coding in C. And I showed raw JSON text examples which I was trying to send to BFX.

Btw, where is 'is_hidden' parameter in your code? I thought it's mandatory.
Does your example work?

Edit. Oh, I tried to completely remove this parameter from the query and it works!  
Thanks for the idea!

It's their API bug.

[medicine]

What lenders must realize, is that swap rates are 100% controllable by them. If coordinated just a bit, the rates can be held at no less than a agreed upon minimum. The reasoning, especially for a big hand is that "I'd better get less than usual, than nothing at all", which obviously backfires. Moreover, when one posts a lot lower rates than wanted, he/she typically sets shortest duration possible (2 days) in hopes for rates to improve, so that new offer can be made 2 days later. This, backfires even more, because without major market movements and all existing swaps expiring every 2 days, the rate decrease is amplified even faster.

So, if Bitfinex team does not feel that "capping" the lower end of lending (and perhaps cancelling the FRR for better rates discovery) is a viable option for the system, the only solution I could think of and AM suggesting, is for those concerned to get together and communicate the strategies to each other in some sort of a "club". If anyone knows about the existence of such group, please let me know. If not, feel free to PM me and we can think of something together.

Another, very easy to implement right now suggestion, in attempt to recover the rates, especially to those who already stated (just above) that you do not wish to lend at the current rates, let's see if we can indeed communicate a bit. As the first step, I suggest you to set your offer to 0.09% (even) not less. I personally agree with your reasoning, I am NOT lending at 0.05 and I did set my offer to 0.09% even, please go see and join. I also have other swaps expiring in about a day and set my autolending to 0.09% as well.

I also am not lending out these days.  I don't really feel like lending out below 0.1.
As for bitfinex's financial holdings, is it stated somewhere that they will use some of their cash to cover lenders losses accrued via leveraged trade losses in a catastrophic price drop?  I'd bet they aren't going to cover a penny of anyone's loses.  
Can someone from Bitfinex clarify this point?  How much if any losses and in what sort of event will you cover any of the lenders losses?
Peace

[Ente]

What lenders must realize, is that swap rates are 100% controllable by them. If coordinated just a bit, the rates can be held at no less than a agreed upon minimum. The reasoning, especially for a big hand is that "I'd better get less than usual, than nothing at all", which obviously backfires. Moreover, when one posts a lot lower rates than wanted, he/she typically sets shortest duration possible (2 days) in hopes for rates to improve, so that new offer can be made 2 days later. This, backfires even more, because without major market movements and all existing swaps expiring every 2 days, the rate decrease is amplified even faster.

So, if Bitfinex team does not feel that "capping" the lower end of lending (and perhaps cancelling the FRR for better rates discovery) is a viable option for the system, the only solution I could think of and AM suggesting, is for those concerned to get together and communicate the strategies to each other in some sort of a "club". If anyone knows about the existence of such group, please let me know. If not, feel free to PM me and we can think of something together.

Another, very easy to implement right now suggestion, in attempt to recover the rates, especially to those who already stated (just above) that you do not wish to lend at the current rates, let's see if we can indeed communicate a bit. As the first step, I suggest you to set your offer to 0.09% (even) not less. I personally agree with your reasoning, I am NOT lending at 0.05 and I did set my offer to 0.09% even, please go see and join. I also have other swaps expiring in about a day and set my autolending to 0.09% as well.

That's funny! :-)
How about "no, the liquidity takers controll 100% of the rates!1!!"
I don't have to state that the rates and FRR are set where those two groups meet, do I?

I'll gladly pay higher rates than now, when we leave the bear market. Do you have any idea how expensive it is to go through five months of bear valley with any "reasonable" rates? In no way would I take anything even close to 0.9%. Wake me up when we crossed the ATH, then we talk.

In other news, I lend out a smaller position since January too.

Ente

[Dalmar]

That's funny! :-)
How about "no, the liquidity takers controll 100% of the rates!1!!"
I don't have to state that the rates and FRR are set where those two groups meet, do I?

I'll gladly pay higher rates than now, when we leave the bear market. Do you have any idea how expensive it is to go through five months of bear valley with any "reasonable" rates? In no way would I take anything even close to 0.9%. Wake me up when we crossed the ATH, then we talk.

In other news, I lend out a smaller position since January too.

Ente

While there is a bear market, the volatility has been high and if margin longs get in at the lower end of the ranges they still make a lot of money. Also, bear markets are actually riskier for USD lenders. So, it does not justify these cheap rates.

As others have suggested, the biggest culprit seems to be the illusion of insurance and more people using auto lend, which is not a sustainable business practice and may backfire at BFX one day.

[dreamspark]

I havent leant out BTC or USD before but I thought I'd try it out and see how it worked.

So I loaned out a few BTC yesterday afternoon and logged in this morning to see what sort of payment it would accrue.

When looking at the history I see the swap payment on wallet deposit but then above that there is a swap charge on wallet trading. This is more than the swap payment on wallet deposit.

Im not using any swaps myself and have no open positions. Maybe im missing something, whats going on ?

[Sukrim]

Maybe you borrowed some BTC while clicking around?

[dreamspark]

Maybe you borrowed some BTC while clicking around?

Nope pretty much 100% sure thats not the case all I did yesterday was lend out the BTC.

EDIT: Situation resolved by Ente through PM. Thanks again for that.

[Ente]

Maybe you borrowed some BTC while clicking around?

Nope pretty much 100% sure thats not the case all I did yesterday was lend out the BTC.

Strange, then..
Post a log?

Ente

[0x3d]

Hey fellow traders,

I've already mentioned this in the Wall observer thread about a week ago but obviously that's not quite the place for some sort of advertising.

Today I improved my Bitcoinsounds-tool even more so I thought I might as well share it in the official BFX-thread as it's using their data exclusively:

http://bitcoinsounds.0x3d.lu/

It makes a customizable sound whenever one of 3 conditions is given:
- When price changes by an absolute value of n dollars
- When volume during the past n seconds passes a threshold of m BTC
- When the number of executed trades during the past n seconds passes a threshold of m trades

I'm going to add some more (less annoying ) sounds this evening or during the next days so stay tuned.

If you have any other suggestions feel free to contact me using the email at the bottom of the page.

[BitBits]

What lenders must realize, is that swap rates are 100% controllable by them. If coordinated just a bit, the rates can be held at no less than a agreed upon minimum. The reasoning, especially for a big hand is that "I'd better get less than usual, than nothing at all", which obviously backfires. Moreover, when one posts a lot lower rates than wanted, he/she typically sets shortest duration possible (2 days) in hopes for rates to improve, so that new offer can be made 2 days later. This, backfires even more, because without major market movements and all existing swaps expiring every 2 days, the rate decrease is amplified even faster.

So, if Bitfinex team does not feel that "capping" the lower end of lending (and perhaps cancelling the FRR for better rates discovery) is a viable option for the system, the only solution I could think of and AM suggesting, is for those concerned to get together and communicate the strategies to each other in some sort of a "club". If anyone knows about the existence of such group, please let me know. If not, feel free to PM me and we can think of something together.

Another, very easy to implement right now suggestion, in attempt to recover the rates, especially to those who already stated (just above) that you do not wish to lend at the current rates, let's see if we can indeed communicate a bit. As the first step, I suggest you to set your offer to 0.09% (even) not less. I personally agree with your reasoning, I am NOT lending at 0.05 and I did set my offer to 0.09% even, please go see and join. I also have other swaps expiring in about a day and set my autolending to 0.09% as well.

That's funny! :-)
How about "no, the liquidity takers controll 100% of the rates!1!!"
I don't have to state that the rates and FRR are set where those two groups meet, do I?

I'll gladly pay higher rates than now, when we leave the bear market. Do you have any idea how expensive it is to go through five months of bear valley with any "reasonable" rates? In no way would I take anything even close to 0.9%. Wake me up when we crossed the ATH, then we talk.

In other news, I lend out a smaller position since January too.

Ente

Sorry, can we make at least a little sense here? I have no idea where are you coming from with your reasoning.

Once again, "liquidity takers" can ONLY take what lenders are offering, absolutely not the other way around. Market conditions do obviously have an effect on rates, but purely technically, it is only the lenders who determine the rates, 100%. For instance, if hypothetically lenders do somehow manage to agree on the lowest rates they wish to offer all together, then THIS will be the rate, which "takers" WILL have to use (or pass of course).

"...I don't have to state that the rates and FRR are set where those two groups meet, do I?...."  <-- I do not see how is this even relevant. The "two groups meet" all over the place, FRR is just an average of that process over time. I personally "met" several traders at 0.1085 a few days ago, we are still doing business right now and this value is NOT where the FRR has been for a while now.

I do have a perfect, first hand and quite extensive idea about how expensive the loans can be. No one is forcing you to play the "sideways" market, I don't and that is why I am currently lending. No one will be "waking you up", you'll need to set you own alarm that would float your own boat.
P.S. Did you mean to say 0.09% or you did say 0.9%? If 0.9% I agree, a lot of traders, would most likely prompt for lending.

[Ente]

What lenders must realize, is that swap rates are 100% controllable by them. If coordinated just a bit, the rates can be held at no less than a agreed upon minimum. The reasoning, especially for a big hand is that "I'd better get less than usual, than nothing at all", which obviously backfires. Moreover, when one posts a lot lower rates than wanted, he/she typically sets shortest duration possible (2 days) in hopes for rates to improve, so that new offer can be made 2 days later. This, backfires even more, because without major market movements and all existing swaps expiring every 2 days, the rate decrease is amplified even faster.

So, if Bitfinex team does not feel that "capping" the lower end of lending (and perhaps cancelling the FRR for better rates discovery) is a viable option for the system, the only solution I could think of and AM suggesting, is for those concerned to get together and communicate the strategies to each other in some sort of a "club". If anyone knows about the existence of such group, please let me know. If not, feel free to PM me and we can think of something together.

Another, very easy to implement right now suggestion, in attempt to recover the rates, especially to those who already stated (just above) that you do not wish to lend at the current rates, let's see if we can indeed communicate a bit. As the first step, I suggest you to set your offer to 0.09% (even) not less. I personally agree with your reasoning, I am NOT lending at 0.05 and I did set my offer to 0.09% even, please go see and join. I also have other swaps expiring in about a day and set my autolending to 0.09% as well.

That's funny! :-)
How about "no, the liquidity takers controll 100% of the rates!1!!"
I don't have to state that the rates and FRR are set where those two groups meet, do I?

I'll gladly pay higher rates than now, when we leave the bear market. Do you have any idea how expensive it is to go through five months of bear valley with any "reasonable" rates? In no way would I take anything even close to 0.9%. Wake me up when we crossed the ATH, then we talk.

In other news, I lend out a smaller position since January too.

Ente

Sorry, can we make at least a little sense here? I have no idea where are you coming from with your reasoning.

Once again, "liquidity takers" can ONLY take what lenders are offering, absolutely not the other way around. Market conditions do obviously have an effect on rates, but purely technically, it is only the lenders who determine the rates, 100%. For instance, if hypothetically lenders do somehow manage to agree on the lowest rates they wish to offer all together, then THIS will be the rate, which "takers" WILL have to use (or pass of course).

"...I don't have to state that the rates and FRR are set where those two groups meet, do I?...."  <-- I do not see how is this even relevant. The "two groups meet" all over the place, FRR is just an average of that process over time. I personally "met" several traders at 0.1085 a few days ago, we are still doing business right now and this value is NOT where the FRR has been for a while now.

I do have a perfect, first hand and quite extensive idea about how expensive the loans can be. No one is forcing you to play the "sideways" market, I don't and that is why I am currently lending. No one will be "waking you up", you'll need to set you own alarm that would float your own boat.
P.S. Did you mean to say 0.09% or you did say 0.9%? If 0.9% I agree, a lot of traders, would most likely prompt for lending.

Well, I guess we are talking the same here. Yes, lenders set the rates, and takers accept or refuse. And then lenders either lower, or don't.
For every time you probably think "hey, let's form a lenders union", I slam my head on the desktop shouting "why did he put up a borrowing offer at 50% higher than the highest one? Why not just 0.001% higher?!?".

Don't worry, I don't need a wake up call. I'm still taking liquidity, and using this sideways action to lower my swap average. Instead of closing altogether. Which is, I guess, in the best interest for all three of us.

Oh, yes, I did write 0.9%, where you wrote 0.09%. I liked the old "yearly rate display" better :-)

Let's have a vote altogether: Who wants bear, who wants sideways, who wants bubble? ;-)
Ah, screw that, we'll get there soon enough anyways.

Ente