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Author Topic: bitfloor - get paid to trade bitcoins!  (Read 1180 times)
vadimg
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November 06, 2011, 08:41:18 PM
 #1

We are pleased to announce that we are now offering a rebate for providing liquidity on our exchange. This means that if your order was on the book when it gets paired with another trade, you will be paid a rebate instead of being charged a fee. A more detailed explanation is on our blog: https://blog.bitfloor.com/?p=6

We have a page which details some of our security practices here: https://bitfloor.com/docs/security
We believe that from a systems engineering and cryptography standpoint, we have the most secure bitcoin exchange. Here's an example of the poor security practices at mtgox: http://news.ycombinator.com/item?id=2676781

Sign up for an account and start trading!

https://bitfloor.com/

https://bitfloor.com - Get paid to trade!
Get paid a 0.1% rebate for providing liquidty.
Pay only a 0.4% fee for taking liquidity.
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blueadept
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November 07, 2011, 06:57:02 PM
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I was wondering when someone would do this. Hopefully, this will help your exchange grow!

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Gyom
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November 08, 2011, 05:20:40 AM
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Incentives to add liquidity are a great step.

Your site looks great so far... any way you can add the volume / last trades somewhere in Market Data?
GamingG
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November 08, 2011, 05:39:22 PM
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If someone will receive a fee rebate for providing liquidity, wouldn't any rational trader factor this in to his or her trade, thus effectively eradicating the rebate?
epetroel
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November 08, 2011, 06:05:08 PM
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Looking at the API docs, what are the acceptable values for productid?

Passed "1", which seemed to work, but didn't see anything in the docs about that.
vadimg
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November 09, 2011, 03:16:42 AM
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Your site looks great so far... any way you can add the volume / last trades somewhere in Market Data?
It's on our list of things to do. We're brand new, so we don't have much trade history or volume anyway. We have some nice visualizations of market data in testing and will deploy them as things pick up.

If someone will receive a fee rebate for providing liquidity, wouldn't any rational trader factor this in to his or her trade, thus effectively eradicating the rebate?
I'm not sure what you mean... The entire point is for traders to factor the rebate into their trade, thus giving them an incentive to create tighter spreads.

Looking at the API docs, what are the acceptable values for productid?

Passed "1", which seemed to work, but didn't see anything in the docs about that.
1 is correct. Sorry for the confusion, we will document this better.

https://bitfloor.com - Get paid to trade!
Get paid a 0.1% rebate for providing liquidty.
Pay only a 0.4% fee for taking liquidity.
GamingG
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November 09, 2011, 05:29:12 AM
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If someone will receive a fee rebate for providing liquidity, wouldn't any rational trader factor this in to his or her trade, thus effectively eradicating the rebate?
I'm not sure what you mean... The entire point is for traders to factor the rebate into their trade, thus giving them an incentive to create tighter spreads.
If, as a trader, I have two goals:
  • My trade gives me at least my target amount of USD for Bitcoin, and
  • My trade is executed as soon as possible, without sacrificing the above point.
Then, if my target amount of USD for Bitcoin is, say, 4 USD/BTC, then, factoring in your rebate, I would instead sell for around 3.996 USD/BTC, since selling for 4 USD/BTC with no fee or rebate is identical to selling for around 3.996 USD/BTC with a 0.1% rebate.  So, in all reality, the one who takes liquidity will always be paying the total amount of fees and the bid-ask spread if all liquidity-givers are behaving rationally.

Put another way, your exchange would operate identically if you charged something like a 50.3% fee to liquidity-takers and gave the 50% as a rebate to the liquidity-givers.  The rebate doesn't amount to anything other than a gimmick to get people to use the exchange (unless you actually believe that such an exchange would have the same market price as the other exchanges?).
shtylman
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November 09, 2011, 08:26:25 PM
 #8

The rebate is not just about offsetting costs; it acts an an incentive for a trader to put their order on the book and keep it there (being first in line) and thus providing a market for others.

Also, because we have a minimum tick increment, there is a minimum size to the bid/ask spread. If you there are orders on both sides of the book (3.00 x 3.01 lets say), then pricing in the rebate no longer applies in the same manner. The market is already as tight as it can be and now there are incentives to inject liquidity on the inside since you will trade at where the market is while being given a rebate. This is certainly true in a market with higher volume where a single trader acts as a price taker.
BTCurious
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November 09, 2011, 09:31:23 PM
 #9

If you there are orders on both sides of the book (3.00 x 3.01 lets say), then pricing in the rebate no longer applies in the same manner.
What do you mean?
Your site states:
Taker Fee: 0.4%
Provider Rebate: 0.1%
So the provider rebate is always 0.1%, right? No matter what conditions or spread?


In any case, it sounds interesting.
What are your options for getting money into an account? (Besides BTC, of course)

bitdragon
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November 09, 2011, 10:00:55 PM
 #10

could the rebate fee not be more than 50% of taker fee thereby encouraging even more volume. It wil take longer to be profitable but encourage more volume and eventually compensate. I know this sounds maybe basic, but I'm curious of the dynamics between the 2 variables as it might be that the increase in volume exceeds the loss in fee per trade. The marginal cost of a trade is close to zero?

It will attract more traders and each one more inclined to trade.
What are the downsides?

shtylman
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November 10, 2011, 01:59:14 AM
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If you there are orders on both sides of the book (3.00 x 3.01 lets say), then pricing in the rebate no longer applies in the same manner.
What do you mean?
Your site states:
Taker Fee: 0.4%
Provider Rebate: 0.1%
So the provider rebate is always 0.1%, right? No matter what conditions or spread?


In any case, it sounds interesting.
What are your options for getting money into an account? (Besides BTC, of course)

Yes, the rebate is always 0.1%. I was trying to explain that once the spread is small enough, you can't alter the price and still account for the rebate without potentially matching.

The current options are BTC and Dwolla. I will document that better. Right now it is only obvious once you are logged in and try to transfer funds.
shtylman
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November 10, 2011, 02:00:03 AM
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could the rebate fee not be more than 50% of taker fee thereby encouraging even more volume. It wil take longer to be profitable but encourage more volume and eventually compensate. I know this sounds maybe basic, but I'm curious of the dynamics between the 2 variables as it might be that the increase in volume exceeds the loss in fee per trade. The marginal cost of a trade is close to zero?

It will attract more traders and each one more inclined to trade.
What are the downsides?


It could be. We had to pick a number and start with that for now. A small rebate is better than no rebate Wink and even better than being charged on both sides.
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