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

[davidgdg]

I have a question. What happens to (say) a 30 day swap at a fixed (not FRR) rate if the trader closes the position early? Does the swap provider get any compensation or does the swap just get closed with no penalty even if rates have fallen and the swap has say 28 days to go?
Thanks
D

The trader can close the swap anytime and only has to pay the time he consumed rounded up to the next full hour (iirc).

Also soon (or already) a feature will be introduced, that will automatically close fixed swaps and replace them with cheaper rates for the lender.

So a fixed rate loan is a one way bet for the borrower? If rates fall he can close the swap and take out a cheaper one. If rates rise then he benefits and the lender is locked in? Something seems wrong there.

[TwinWinNerD]

I have a question. What happens to (say) a 30 day swap at a fixed (not FRR) rate if the trader closes the position early? Does the swap provider get any compensation or does the swap just get closed with no penalty even if rates have fallen and the swap has say 28 days to go?
Thanks
D

The trader can close the swap anytime and only has to pay the time he consumed rounded up to the next full hour (iirc).

Also soon (or already) a feature will be introduced, that will automatically close fixed swaps and replace them with cheaper rates for the lender.

So a fixed rate loan is a one way bet for the borrower? If rates fall he can close the swap and take out a cheaper one. If rates rise then he benefits and the lender is locked in? Something seems wrong there.

This wasn't always the case. Before the swap bot (so if it is not active this is still true) the loan will stay active as long as the trader won't cancel it himself manually. Most traders didn't do that.

[davidgdg]

I have a question. What happens to (say) a 30 day swap at a fixed (not FRR) rate if the trader closes the position early? Does the swap provider get any compensation or does the swap just get closed with no penalty even if rates have fallen and the swap has say 28 days to go?
Thanks
D

The trader can close the swap anytime and only has to pay the time he consumed rounded up to the next full hour (iirc).

Also soon (or already) a feature will be introduced, that will automatically close fixed swaps and replace them with cheaper rates for the lender.

So a fixed rate loan is a one way bet for the borrower? If rates fall he can close the swap and take out a cheaper one. If rates rise then he benefits and the lender is locked in? Something seems wrong there.

This wasn't always the case. Before the swap bot (so if it is not active this is still true) the loan will stay active as long as the trader won't cancel it himself manually. Most traders didn't do that.

Whether or not traders actually cancel fixed rate loans, it seems wrong in principle that they can but lenders can't.

[RyNinDaCleM]

I have a question. What happens to (say) a 30 day swap at a fixed (not FRR) rate if the trader closes the position early? Does the swap provider get any compensation or does the swap just get closed with no penalty even if rates have fallen and the swap has say 28 days to go?
Thanks
D

The trader can close the swap anytime and only has to pay the time he consumed rounded up to the next full hour (iirc).

Also soon (or already) a feature will be introduced, that will automatically close fixed swaps and replace them with cheaper rates for the lender.

So a fixed rate loan is a one way bet for the borrower? If rates fall he can close the swap and take out a cheaper one. If rates rise then he benefits and the lender is locked in? Something seems wrong there.

This wasn't always the case. Before the swap bot (so if it is not active this is still true) the loan will stay active as long as the trader won't cancel it himself manually. Most traders didn't do that.

Whether or not traders actually cancel fixed rate loans, it seems wrong in principle that they can but lenders can't.

It works the same way with your mortgage, car financing or personal loan.
You can get a loan at x% and if rates rise, the lender only has the ability to sell the balance of the loan to another company, otherwise, they must stay locked in. As the borrower, you can pay off the loan at any time. Some (but not all) institutions require an early pay-off fee.

[TwinWinNerD]

I have a question. What happens to (say) a 30 day swap at a fixed (not FRR) rate if the trader closes the position early? Does the swap provider get any compensation or does the swap just get closed with no penalty even if rates have fallen and the swap has say 28 days to go?
Thanks
D

The trader can close the swap anytime and only has to pay the time he consumed rounded up to the next full hour (iirc).

Also soon (or already) a feature will be introduced, that will automatically close fixed swaps and replace them with cheaper rates for the lender.

So a fixed rate loan is a one way bet for the borrower? If rates fall he can close the swap and take out a cheaper one. If rates rise then he benefits and the lender is locked in? Something seems wrong there.

This wasn't always the case. Before the swap bot (so if it is not active this is still true) the loan will stay active as long as the trader won't cancel it himself manually. Most traders didn't do that.

Whether or not traders actually cancel fixed rate loans, it seems wrong in principle that they can but lenders can't.

You even specify the MAX lending time, while the borrower specify the MINIMUM time he wants access. It is even implied.

[0x3d]

Weren't you guys saying back after the lowering of the max. leverage to 2.5:1 back in 2013 that you would probably/maybe raise it again should you see some kind of stability in the market? What have these past few months been if not overwhelmingly boring aka stable?

Your orderbooks are much thicker now and your swap market can't even be compared to december's without adding zeroes and multiplying some more so don't you think a bit of a raise in leverage would make sense now? After all we still lack a replacement for dear WillyBot

[DoubleSwapper]

I am not sure the criteria to add more coins, but I'd like to suggest XMR (Monero).

Would be interesting. After Darkcoin turned out to be such a fail (over 70 % down since it's peak) maybe it's time for the next anoncoin.

I have a question. What happens to (say) a 30 day swap at a fixed (not FRR) rate if the trader closes the position early? Does the swap provider get any compensation or does the swap just get closed with no penalty even if rates have fallen and the swap has say 28 days to go?
Thanks
D

The trader can close the swap anytime and only has to pay the time he consumed rounded up to the next full hour (iirc).

Also soon (or already) a feature will be introduced, that will automatically close fixed swaps and replace them with cheaper rates for the lender.

So a fixed rate loan is a one way bet for the borrower? If rates fall he can close the swap and take out a cheaper one. If rates rise then he benefits and the lender is locked in? Something seems wrong there.

This wasn't always the case. Before the swap bot (so if it is not active this is still true) the loan will stay active as long as the trader won't cancel it himself manually. Most traders didn't do that.

Whether or not traders actually cancel fixed rate loans, it seems wrong in principle that they can but lenders can't.

Doesn't seem wrong to me at all. Both parties agree to a contract of which the details are known. Nothing unfair about it. I think more people need to be reminded that BFX swaps are not some kind of savings account. Do you understand what kind of implications any other model would have?

Example: Trader decides to go long on margin at 0.15 % and is willing to hold for some time (chooses 10 days)
Price dips but trader is willing to hold. Now suddenly interest rate goes to 0.8 %. Lender cancels trader's loan and trader has to take 0.8 % and gets annihilated.

People have to realize that 60-70 % APR is not standard. It's no savings account. Traders need incentives to take out these kind of usurious (in comparison to the almost non existing interest rates on the world's financial markets at the moment) loans. Judging from the volume there's less and less people trading and more and more asking about lending. (check reddit/btcmarkets everyday a new thread about "Is BFX safe/should I lend my btc at BFX etc.)
That's why I think BFXs pseudo-insurance on swaps was a mistake. I would much rather is a large red box over the lending page (YOU CAN LOSE YOUR MONEY ON SWAPS) but be able to offer my money for 8 X leverage for 10 hours at 0.5 % a day. The illusion of profitable/safe/risk-free lending leads to an influx of newbs, sucks the order book dry and clutters trading and support threads with the ever same questions: (is my money safe on lending, can i lose money on lending, who needs bitcoin if i can double my money by lending etc. etc. etc.)

rant done.

[DoubleSwapper]

Weren't you guys saying back after the lowering of the max. leverage to 2.5:1 back in 2013 that you would probably/maybe raise it again should you see some kind of stability in the market? What have these past few months been if not overwhelmingly boring aka stable?

Your orderbooks are much thicker now and your swap market can't even be compared to december's without adding zeroes and multiplying some more so don't you think a bit of a raise in leverage would make sense now? After all we still lack a replacement for dear WillyBot

lol everybody is doom and gloom about current "bfx credit bubble", long-squeeze/margin cascades and bfx has just introduced changes to further reduce(!!!) the leverage for btc collaterals and you are asking for an increase in leverage XD.
I'd say no problem for me but not with socializing pseudo insurance. I want to know who takes my swap so I can calculate the risk.

[pitchbend]

i assume the recent decline in swap rates is caused by the introduction of the swap bot?
(-> the bot replaces swaps with cheaper swaps automatically)

I don't think so. I still have some swaps way above current rates, and right now I can see on the order books matching swaps at lower rates sitting there.

The moment this thing is introduced it'll be a nightmare for lenders, right now my offers are being split in several swaps, when you have maye 15 - 20 swaps provided and they start being closed by the bot randomly and automatically you're forced as a lender to login constantly during the day to place new offers...

I hope they at least give us an opt-in option to (even if our swap is at fixed rate) match the rate of other swap if the bot of the trader is going to close ours for that other swap, so at least our swaps aren't being closed constantly even if rates are going down.

[davidgdg]

I have a question. What happens to (say) a 30 day swap at a fixed (not FRR) rate if the trader closes the position early? Does the swap provider get any compensation or does the swap just get closed with no penalty even if rates have fallen and the swap has say 28 days to go?
Thanks
D

The trader can close the swap anytime and only has to pay the time he consumed rounded up to the next full hour (iirc).

Also soon (or already) a feature will be introduced, that will automatically close fixed swaps and replace them with cheaper rates for the lender.

So a fixed rate loan is a one way bet for the borrower? If rates fall he can close the swap and take out a cheaper one. If rates rise then he benefits and the lender is locked in? Something seems wrong there.

This wasn't always the case. Before the swap bot (so if it is not active this is still true) the loan will stay active as long as the trader won't cancel it himself manually. Most traders didn't do that.

Whether or not traders actually cancel fixed rate loans, it seems wrong in principle that they can but lenders can't.

It works the same way with your mortgage, car financing or personal loan.
You can get a loan at x% and if rates rise, the lender only has the ability to sell the balance of the loan to another company, otherwise, they must stay locked in. As the borrower, you can pay off the loan at any time. Some (but not all) institutions require an early pay-off fee.

In the UK it is not possible for a borrower to repay a fixed rate mortgage early without payment of a large penalty (which can be as much as 5% of the outstanding loan).

[noggin-scratcher]

The moment this thing is introduced it'll be a nightmare for lenders, right now my offers are being split in several swaps, when you have maye 15 - 20 swaps provided and they start being closed by the bot randomly and automatically you're forced as a lender to login constantly during the day to place new offers...

Agreed, that sounds like it's going to make it really difficult to continue securing a reasonable return, and result in having half your balance sat idle most of the time because no-one holds a swap for longer than it takes for a lower offer to appear.

I hope they at least give us an opt-in option to (even if our swap is at fixed rate) match the rate of other swap if the bot of the trader is going to close ours for that other swap, so at least our swaps aren't being closed constantly even if rates are going down.

Disagree, that sounds like a bad plan - the appearance of a lower offer could then, theoretically, result in everyone lowering their rate to match without the offer being taken off the book... madness ensues. Imagine a hypothetical market where everyone offers swaps of exactly $1000, all with "match rate to avoid swap closure" turned on. Then someone comes along and offers $1000 at 0.001% ... every other account in turn gets pinged with "Hey, lower your rate?" and they price-match... and now everyone is lending at ridiculously low rates because one guy put in a low offer.

[ledmaniak]

nvm.

[Delarock]

Two things:

Swap “Bot”: We will soon be offering traders the ability to automatically replace the swaps that fund their positions with cheaper ones should they be available at the same or better terms, eliminating the rather laborious manual process that is available today. There are many nuances to making this work efficiently and it will be offered on an “opt in” basis, but we anticipate that this feature will make the swap market much more efficient and reduce volatility in the average swap rates. We will provide further updates on the specific functionality by the end of July.

Any updates?

Term: Swap interest will be capitalized in to position every night by automatically accessing swap offers to cover the required payment.

It looks like this is occurring on an hourly basis. Is this as intended?

[davidgdg]

I am not sure the criteria to add more coins, but I'd like to suggest XMR (Monero).

Would be interesting. After Darkcoin turned out to be such a fail (over 70 % down since it's peak) maybe it's time for the next anoncoin.

I have a question. What happens to (say) a 30 day swap at a fixed (not FRR) rate if the trader closes the position early? Does the swap provider get any compensation or does the swap just get closed with no penalty even if rates have fallen and the swap has say 28 days to go?
Thanks
D

The trader can close the swap anytime and only has to pay the time he consumed rounded up to the next full hour (iirc).

Also soon (or already) a feature will be introduced, that will automatically close fixed swaps and replace them with cheaper rates for the lender.

So a fixed rate loan is a one way bet for the borrower? If rates fall he can close the swap and take out a cheaper one. If rates rise then he benefits and the lender is locked in? Something seems wrong there.

This wasn't always the case. Before the swap bot (so if it is not active this is still true) the loan will stay active as long as the trader won't cancel it himself manually. Most traders didn't do that.

Whether or not traders actually cancel fixed rate loans, it seems wrong in principle that they can but lenders can't.

Example: Trader decides to go long on margin at 0.15 % and is willing to hold for some time (chooses 10 days)
Price dips but trader is willing to hold. Now suddenly interest rate goes to 0.8 %. Lender cancels trader's loan and trader has to take 0.8 % and gets annihilated.

A better system would surely be to hold both sides to the deal. The less good alternative is to allow both sides to cancel. But the worst system is to allow one side only the option to cancel. Normal contracts don't work like that. And the problem will get worse when the swap bots are introduced.

[QwertyCore]

I have a question. What happens to (say) a 30 day swap at a fixed (not FRR) rate if the trader closes the position early? Does the swap provider get any compensation or does the swap just get closed with no penalty even if rates have fallen and the swap has say 28 days to go?
Thanks
D

The trader can close the swap anytime and only has to pay the time he consumed rounded up to the next full hour (iirc).

Also soon (or already) a feature will be introduced, that will automatically close fixed swaps and replace them with cheaper rates for the lender.

So a fixed rate loan is a one way bet for the borrower? If rates fall he can close the swap and take out a cheaper one. If rates rise then he benefits and the lender is locked in? Something seems wrong there.

This wasn't always the case. Before the swap bot (so if it is not active this is still true) the loan will stay active as long as the trader won't cancel it himself manually. Most traders didn't do that.

Whether or not traders actually cancel fixed rate loans, it seems wrong in principle that they can but lenders can't.

It works the same way with your mortgage, car financing or personal loan.
You can get a loan at x% and if rates rise, the lender only has the ability to sell the balance of the loan to another company, otherwise, they must stay locked in. As the borrower, you can pay off the loan at any time. Some (but not all) institutions require an early pay-off fee.

In the UK it is not possible for a borrower to repay a fixed rate mortgage early without payment of a large penalty (which can be as much as 5% of the outstanding loan).

And in the US the borrower will most likely have to pay points, origination fees, documentation fees, etc. for the new loan.  The borrower has to decide if the new rate and term and closing costs are a better term deal than their current loan.

There is a cost associated with 'switching' loans.  Without a cost to the borrower, the rates are going to plummet.

[TwinWinNerD]

I am not sure the criteria to add more coins, but I'd like to suggest XMR (Monero).

Would be interesting. After Darkcoin turned out to be such a fail (over 70 % down since it's peak) maybe it's time for the next anoncoin.

I have a question. What happens to (say) a 30 day swap at a fixed (not FRR) rate if the trader closes the position early? Does the swap provider get any compensation or does the swap just get closed with no penalty even if rates have fallen and the swap has say 28 days to go?
Thanks
D

The trader can close the swap anytime and only has to pay the time he consumed rounded up to the next full hour (iirc).

Also soon (or already) a feature will be introduced, that will automatically close fixed swaps and replace them with cheaper rates for the lender.

So a fixed rate loan is a one way bet for the borrower? If rates fall he can close the swap and take out a cheaper one. If rates rise then he benefits and the lender is locked in? Something seems wrong there.

This wasn't always the case. Before the swap bot (so if it is not active this is still true) the loan will stay active as long as the trader won't cancel it himself manually. Most traders didn't do that.

Whether or not traders actually cancel fixed rate loans, it seems wrong in principle that they can but lenders can't.

Example: Trader decides to go long on margin at 0.15 % and is willing to hold for some time (chooses 10 days)
Price dips but trader is willing to hold. Now suddenly interest rate goes to 0.8 %. Lender cancels trader's loan and trader has to take 0.8 % and gets annihilated.

A better system would surely be to hold both sides to the deal. The less good alternative is to allow both sides to cancel. But the worst system is to allow one side only the option to cancel. Normal contracts don't work like that. And the problem will get worse when the swap bots are introduced.

Please think one step ahead.

How can a trader know how long he needs the funds for?

Your proposed scenario would make bitfinex completely unattractive for traders... This is not a savings account guys...

[davidgdg]

I am not sure the criteria to add more coins, but I'd like to suggest XMR (Monero).

Would be interesting. After Darkcoin turned out to be such a fail (over 70 % down since it's peak) maybe it's time for the next anoncoin.

I have a question. What happens to (say) a 30 day swap at a fixed (not FRR) rate if the trader closes the position early? Does the swap provider get any compensation or does the swap just get closed with no penalty even if rates have fallen and the swap has say 28 days to go?
Thanks
D

The trader can close the swap anytime and only has to pay the time he consumed rounded up to the next full hour (iirc).

Also soon (or already) a feature will be introduced, that will automatically close fixed swaps and replace them with cheaper rates for the lender.

So a fixed rate loan is a one way bet for the borrower? If rates fall he can close the swap and take out a cheaper one. If rates rise then he benefits and the lender is locked in? Something seems wrong there.

This wasn't always the case. Before the swap bot (so if it is not active this is still true) the loan will stay active as long as the trader won't cancel it himself manually. Most traders didn't do that.

Whether or not traders actually cancel fixed rate loans, it seems wrong in principle that they can but lenders can't.

Example: Trader decides to go long on margin at 0.15 % and is willing to hold for some time (chooses 10 days)
Price dips but trader is willing to hold. Now suddenly interest rate goes to 0.8 %. Lender cancels trader's loan and trader has to take 0.8 % and gets annihilated.

A better system would surely be to hold both sides to the deal. The less good alternative is to allow both sides to cancel. But the worst system is to allow one side only the option to cancel. Normal contracts don't work like that. And the problem will get worse when the swap bots are introduced.

Please think one step ahead.

How can a trader know how long he needs the funds for?

Your proposed scenario would make bitfinex completely unattractive for traders... This is not a savings account guys...

I see what you mean. It's not an easy problem but I guess if it ain't broke don't fix it.

[davidgdg]

i assume the recent decline in swap rates is caused by the introduction of the swap bot?
(-> the bot replaces swaps with cheaper swaps automatically)

No, that is just a lot more supply than demand manifesting in lower and lower interest rates.

I am not sure the criteria to add more coins, but I'd like to suggest XMR (Monero).

Would be interesting. After Darkcoin turned out to be such a fail (over 70 % down since it's peak) maybe it's time for the next anoncoin.

What's the point? You can't short DRK now can you. Yes, it'd be fun to short XMR but if BFX adds it then they will probably not let us short that either.

Weren't you guys saying back after the lowering of the max. leverage to 2.5:1 back in 2013 that you would probably/maybe raise it again should you see some kind of stability in the market? What have these past few months been if not overwhelmingly boring aka stable?

Could you please visit http://www.bfxdata.com/combined/btc.php and click "6m" on the second chart from the top and take a really good hard look at it and tell me more about how increasing the max leverage makes a whole lot of sense to you at this point in time?

A better system would surely be to hold both sides to the deal. The less good alternative is to allow both sides to cancel. But the worst system is to allow one side only the option to cancel. Normal contracts don't work like that. And the problem will get worse when the swap bots are introduced.

WHY oh why do people take these loans in the first place? Do I as a trader take your loan to buy a new house or to hold BTC until doomsday OR am I simply looking to buy at a seemingly low price just to sell it off to someone else at a better price? Do I have any reason what so ever to keep holding a loan after I've sold off my position?

Please try to realize that TRADERS take these loans in order to DO A TRADE. That's it. It may seem unfair to you that I take a 30 day loan and return it after 7 days or 10 days or 14 days if my price-target is reached but that is how it works.

Consider this: I can take 2 day loans and replace them with new 2 day loans when the first loans expires and keep my position for years if I want to do that - all with 2 day loans. You are saying that I will have to accept that I will be charged for 30 days if I take a max-30 day loan. Do you seriously believe anyone in their right mind would take a 30 day loan under those terms when there are always 2-day loans available?

I understand your greed but it's just stupid and ignorant, you are clearly new here and I bet you don't even lift. The current system works and it works well for both traders and lenders and there is no point in demanding very stupid changes that would end up giving you nothing anyway. You will get nothing if the terms change in a way that makes it very unattractive to take loans, no traders borrowing equals zero interest for you.

You're right. I'm wrong (there's a first time for everything 😞)

[Ente]

Also, if lenders could close swaps, they could get the trader liquidated instantly if he is underwater already and the then-best offer has too high costs for his position.

Or, more extreme: what if there was one lender with a huge swap, and one trader has a position open with that? Sometimes the swap book dries up. Now when that swap is closed by the lender, the trader might not find enough swap on the whole book to refill it. In that case his position would have to be liquidated. Which then might even lead to an avalanche, resulting in a flash crash, wiping everything out.

So, the difference is that when a lender gets his swap closed, he has his money and that's it. A failsafe situation.
A trader who suddenly gets his swaps closed might be in trouble, and he couldn't do anything against it in advance.

Ente

[TwinWinNerD]

Also, if lenders could close swaps, they could get the trader liquidated instantly if he is underwater already and the then-best offer has too high costs for his position.

Or, more extreme: what if there was one lender with a huge swap, and one trader has a position open with that? Sometimes the swap book dries up. Now when that swap is closed by the lender, the trader might not find enough swap on the whole book to refill it. In that case his position would have to be liquidated. Which then might even lead to an avalanche, resulting in a flash crash, wiping everything out.

So, the difference is that when a lender gets his swap closed, he has his money and that's it. A failsafe situation.
A trader who suddenly gets his swaps closed might be in trouble, and he couldn't do anything against it in advance.

Ente

This is generally a big attack vector when thinking about it.

Scenario:
Lets say you have a huge amount of funds to play with and want to flashcrash BTC prices to rebuy cheap. Now you observe the lending market and analyze the biggest borrowers and when they have to restock their loans to not get liquidated.
You now take ALL avaliable loans for a given amount of time and dump BTC on the market, once the loan of the big traders run out, they are so dried up that they must liquidate their position thus leading to an even bigger downwards pressure, hopefully resulting in more forced liquidation.

Is this too far off? Someone could literally post an offer for all funds at 1.00001 % and know that noone else could get his loan renewed because the system never takes loans higher.