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Author Topic: bitfloor liquidity rebate  (Read 1819 times)
shtylman
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November 07, 2011, 02:43:51 PM
 #1

At bitfloor, we offer a rebate to liquidity providers. This means that if you are adding orders to our order book for others to execute against, you will be paid a small commission when your order is matched. Read more at: https://blog.bitfloor.com/ and start trading at https://bitfloor.com!

Cross-posted here incase some traders do not visit the marketplace section. Original post:
https://bitcointalk.org/index.php?topic=51078.0
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runeks
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November 07, 2011, 04:04:18 PM
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Interesting! I have some questions:

  • Are both asks and bids a liquidity provider? Or is liquidity provided only by asks, ie. when someone is willing to sell BTC?
  • Can you quantify this rebate? How much will I make if I offer to sell X BTC for $Y/BTC? EDIT: It's 0.1%
  • What are the options of cancelling an order on bitfloor.com? Can I retract my order at any time? For example, if I see that amazon.com starts to accept Bitcoins?
shtylman
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November 07, 2011, 05:02:32 PM
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Interesting! I have some questions:

  • Are both asks and bids a liquidity provider? Or is liquidity provided only by asks, ie. when someone is willing to sell BTC?
  • Can you quantify this rebate? How much will I make if I offer to sell X BTC for $Y/BTC? EDIT: It's 0.1%
  • What are the options of cancelling an order on bitfloor.com? Can I retract my order at any time? For example, if I see that amazon.com starts to accept Bitcoins?

Liquidity providing can be done on any side. It just means your order went onto the book instead of matching against an order already on the book.

Yes, you can cancel an order at any time. Orders are first come first serve basis.
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November 07, 2011, 09:19:47 PM
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A question:

Suppose the highest bid is $2 and the lowest ask is $3. Bob decides he can get a good price and a rebate if he places a bid, so he does so at $2.5, a natural psychological point.

Alice, thinking the same, places an ask at $2.5 thinking she will get the rebate. Bob's order is sent to the server first, but only by a couple of milliseconds. Does Alice get charged the fee, or is she given a chance to cancel her order?
shtylman
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November 07, 2011, 10:10:51 PM
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A question:

Suppose the highest bid is $2 and the lowest ask is $3. Bob decides he can get a good price and a rebate if he places a bid, so he does so at $2.5, a natural psychological point.

Alice, thinking the same, places an ask at $2.5 thinking she will get the rebate. Bob's order is sent to the server first, but only by a couple of milliseconds. Does Alice get charged the fee, or is she given a chance to cancel her order?

Since both Alice and Bob are placing a bid @ 2.5 both of their orders will go onto the book. When Jerry comes around and places and aks @ 2.5 he will first execute against Bob's order (since it was first one the book). Then if Jerry still has shares outstanding, he will execute against Alice's order. *BOTH* Alice and Bob will be given the rebate since their orders were already on the book (providing liquidity) and Jerry will be charged a fee.

Hope that clears it up!
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November 08, 2011, 01:22:23 AM
 #6

A question:

Suppose the highest bid is $2 and the lowest ask is $3. Bob decides he can get a good price and a rebate if he places a bid, so he does so at $2.5, a natural psychological point.

Alice, thinking the same, places an ask at $2.5 thinking she will get the rebate. Bob's order is sent to the server first, but only by a couple of milliseconds. Does Alice get charged the fee, or is she given a chance to cancel her order?

Since both Alice and Bob are placing a bid @ 2.5 both of their orders will go onto the book. When Jerry comes around and places and aks @ 2.5 he will first execute against Bob's order (since it was first one the book). Then if Jerry still has shares outstanding, he will execute against Alice's order. *BOTH* Alice and Bob will be given the rebate since their orders were already on the book (providing liquidity) and Jerry will be charged a fee.

Hope that clears it up!
I meant Alice places an ask, while Bob a bid. Does the system prevent that in any way?
shtylman
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November 08, 2011, 01:39:55 AM
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A question:

Suppose the highest bid is $2 and the lowest ask is $3. Bob decides he can get a good price and a rebate if he places a bid, so he does so at $2.5, a natural psychological point.

Alice, thinking the same, places an ask at $2.5 thinking she will get the rebate. Bob's order is sent to the server first, but only by a couple of milliseconds. Does Alice get charged the fee, or is she given a chance to cancel her order?

Since both Alice and Bob are placing a bid @ 2.5 both of their orders will go onto the book. When Jerry comes around and places and aks @ 2.5 he will first execute against Bob's order (since it was first one the book). Then if Jerry still has shares outstanding, he will execute against Alice's order. *BOTH* Alice and Bob will be given the rebate since their orders were already on the book (providing liquidity) and Jerry will be charged a fee.

Hope that clears it up!
I meant Alice places an ask, while Bob a bid. Does the system prevent that in any way?

The system does not prevent that at all. If Bob beat Alice to the book, then he gets the rebate. Alice's order will execute right away and she will pay the fee. In the case you just described, Alice will have no time to cancel her order as it would be executed by the matching engine as soon as received (because Bob's order is already there).
2weiX
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November 16, 2011, 11:44:33 AM
 #8

hi,

i cannot find USD withdrawal options. SEPA an option? /me is in €land and would much prefer withdrawing in €.
also - data on turnover and whatnot... only available after signup?
runeks
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March 05, 2012, 04:58:10 AM
 #9

A question:

Suppose the highest bid is $2 and the lowest ask is $3. Bob decides he can get a good price and a rebate if he places a bid, so he does so at $2.5, a natural psychological point.

Alice, thinking the same, places an ask at $2.5 thinking she will get the rebate. Bob's order is sent to the server first, but only by a couple of milliseconds. Does Alice get charged the fee, or is she given a chance to cancel her order?

Since both Alice and Bob are placing a bid @ 2.5 both of their orders will go onto the book. When Jerry comes around and places and aks @ 2.5 he will first execute against Bob's order (since it was first one the book). Then if Jerry still has shares outstanding, he will execute against Alice's order. *BOTH* Alice and Bob will be given the rebate since their orders were already on the book (providing liquidity) and Jerry will be charged a fee.

Hope that clears it up!
I meant Alice places an ask, while Bob a bid. Does the system prevent that in any way?

The system does not prevent that at all. If Bob beat Alice to the book, then he gets the rebate. Alice's order will execute right away and she will pay the fee. In the case you just described, Alice will have no time to cancel her order as it would be executed by the matching engine as soon as received (because Bob's order is already there).
Would it be possible to tag an order to notify the matching engine that this order should only be placed if it goes on the order book, not if it would match an order already on the book? So that I can intentionally only place orders that will only provide liquidity, and never take it.
As far as I can see, it could help create a larger order book, because people would be interested in getting paid the 0.1% for providing liquidity. And both Bitfloor and its users are also interested in incentivizing this because they want more market depth.
shtylman
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March 05, 2012, 05:08:55 AM
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Would it be possible to tag an order to notify the matching engine that this order should only be placed if it goes on the order book, not if it would match an order already on the book? So that I can intentionally only place orders that will only provide liquidity, and never take it.
As far as I can see, it could help create a larger order book, because people would be interested in getting paid the 0.1% for providing liquidity. And both Bitfloor and its users are also interested in incentivizing this because they want more market depth.

You can achieve this by just placing an order equal to or outside the inside of the book. If the current bid-ask spread is 4.98 - 5.00 placing a bid for <= 4.98 or an ask for >= 5.00 will put you on the book. Even a bid for 4.99 or an ask for 4.99 will put you on the book. Since we do not have dark pool or hidden orders, the market data gives you all of the information you need to place such an order. At this time there is no order flag that would indicate a reject if it would take liquidity but I think that could be an interesting feature to add but not at the top of my todo list yet Smiley
runeks
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March 07, 2012, 05:34:46 PM
 #11

^ The problem is if two traders see an open slot in the order book, and both send in an order to fill up this slot. Whoever has the lowest latency to the server will become the provider and the other trader will take his liquidity. So I think it would be useful to be able to guarantee that a given order will only provide liquidity, or else be dropped. But of course I understand that it isn't on top of your to-do list. Just an idea Smiley.
shtylman
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March 07, 2012, 05:37:33 PM
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^ The problem is if two traders see an open slot in the order book, and both send in an order to fill up this slot. Whoever has the lowest latency to the server will become the provider and the other trader will take his liquidity. So I think it would be useful to be able to guarantee that a given order will only provide liquidity, or else be dropped. But of course I understand that it isn't on top of your to-do list. Just an idea Smiley.

This is only true if they are placing orders for two different sides (one bid one ask). If both of them place orders on the same side for this open slot, they will both go onto the order book and be liquidity providers. Liquidity provider does not mean you had to be first on the order book, it just means your order was not immediately crossed with another and went on the public order book. Does that make sense?
runeks
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March 07, 2012, 06:21:20 PM
 #13

^ Yes, that makes sense. I'm pretty sure I understand how this works. My previous post was just formulated a bit unclearly. I was referring to the scenario where two traders see a hole in the order book, and one sends off a sell order at that price, and the other trader a buy order. Whichever order gets to the exchange first will become the liquidity provider and the other the taker, even though neither party had a way of knowing that this was going to happen. It is this specific scenario that would be solved by allowing an order to be tagged with "liquidity provider-only".

This seems even more relevant in case of high frequency trading where latency is even more important. As far as I can see it would level out the playing field somewhat (though, of course, whoever has the lower latency will still have the upper hand).
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