Bitmex liquidation fund refunded to biggest traders ?

boumalo

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Quote from: logfiles on June 25, 2021, 06:09:34 PM

Quote from: boumalo on June 24, 2021, 05:35:10 PM

37,251.4309 BTC in the Bitmex insurance fund, 1,289B$, it would be profitable if they had to redistribute it to the traders

Not gonna happen Grin

It seems to me you don't understand the purpose of insurance fund. It's not some kind of bonus, yield farming rewards or airdrop that will be distributed to traders after some time. If that's what you think will happen, then forget about it.

You are both right saying the insurance fund is needed.

I do understand exactly how it works and its purpose. I was thinking they could be legally forced to repay traders for their losses, it's very unlikely at this point and I hope for them that they won't have to.

logfiles

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Quote from: boumalo on June 24, 2021, 05:35:10 PM

37,251.4309 BTC in the Bitmex insurance fund, 1,289B$, it would be profitable if they had to redistribute it to the traders

Not gonna happen Grin

It seems to me you don't understand the purpose of insurance fund. It's not some kind of bonus, yield farming rewards or airdrop that will be distributed to traders after some time. If that's what you think will happen, then forget about it.

Darker45

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Quote from: boumalo on June 24, 2021, 05:35:10 PM

37,251.4309 BTC in the Bitmex insurance fund, 1,289B$, it would be profitable if they had to redistribute it to the traders

Why would they do that? That insurance fund is there to serve a purpose. It is not some kind of an idle fund just lying around which they could do anything about.

As per BitMEX's site, "BitMEX uses an Insurance Fund to avoid Auto-Deleveraging in traders’ positions. The fund is used to aggress unfilled liquidation orders before they are taken over by the auto-deleveraging system."^[1]

Furthermore, "the Insurance Fund grows from liquidations that were able to be executed in the market at a price better than the bankruptcy price of that particular position."^Ibid.

I don't understand much what it says but that's definitely saying it has its specific use so it can't simply be redistributed to its traders. Cheesy

[1] https://www.bitmex.com/app/insuranceFund

boumalo

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Quote from: boumalo on January 12, 2020, 10:35:23 AM

Bitmex has a huge insurance fund : https://www.bitmex.com/app/insuranceFund

As of this morning there is : 33 749 XBT in it so 275 millions of USD at current market price.

Does it need such a big fund and have they withdrew from it for an other purpose than fund unfilled liquidation orders ?

If they never withdraw from it, it could grow way bigger than needed, I am curious if there is some information available in terms of speculating what they could do with it in the future

Once in a while, it goes down, for example :
10/3/2016   37,3167 XBT
10/2/2016   43,7329 XBT

6/23/2016   24,4343 XBT
6/22/2016   48,7981 XBT

37,251.4309 BTC in the Bitmex insurance fund, 1,289B$, it would be profitable if they had to redistribute it to the traders

boumalo

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The Bitmex insurance fund has 37 055,3070 XBT in it so 1,056,172,593.30 USD, more than 1 Billion $ at current price. Tongue

If someone is educated in the markets and allowed to play on Bitmex in his jurisdiction, he can go to my profile where he will find my referral link to Bitmex so I can finally get my hands on some news bitcoins. Wink

boumalo

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Quote from: hello_good_sir on January 20, 2020, 03:18:09 AM

It would make no sense for Bitmex to refund it to its traders.

The funds collected in this fund is all through fee structures which are Bitmex's own revenue. It is not a communal pool of funds (although it may seem like it on paper) that the traders pool together in order to prevent bankruptcies in positions.

The owners should be free to withdraw from it whenever they want. Also, sometimes it goes down simply because of flash crashes which causes a ton of bankruptcies and fire sales, which will all draw from the fund.

Yes you are correct.

Some traders probably succeed in finding profitable trades exploiting the limit risk on Bitmex when the price is extremely volatile, thanks to the insurance fund.

hello_good_sir

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It would make no sense for Bitmex to refund it to its traders.

The funds collected in this fund is all through fee structures which are Bitmex's own revenue. It is not a communal pool of funds (although it may seem like it on paper) that the traders pool together in order to prevent bankruptcies in positions.

The owners should be free to withdraw from it whenever they want. Also, sometimes it goes down simply because of flash crashes which causes a ton of bankruptcies and fire sales, which will all draw from the fund.

exstasie

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It all comes down to this:

Quote

Although 21,000 Bitcoin inside an insurance fund, worth around 0.1% of the total Bitcoin supply may seem large, BitMEX cannot offer the same robust guarantees to winning traders, compared to those provided by traditional leveraged trading platforms. While the insurance fund has achieved a healthy size, it may not be large enough to give winning traders the confidence they need in the volatile and unpredictable bumpy road ahead in the crypto-currency space. Given such volatility, it’s not impossible that the fund is drained down to zero again.

33,749 BTC isn't that much when you consider the potential volatility of BTC. Another event like this could happen at any time:

Quote

Auto-deleveraging has not occurred on the BitMEX Bitcoin perpetual swap contract since March 2017. In early March 2017, the SEC disapproved the Winklevoss’ application for the COIN Bitcoin ETF. On that day, the market dropped 30% in five minutes. The sharp price drop depleted the insurance fund entirely. Many XBTUSD shorts were ADL’d (Automatic Deleveraging) and their profits were capped.

Bitmex has never publicly used the fund for anything else, nor should they.

boumalo

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Any bitmex traders here ??

boumalo

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Bitmex has a huge insurance fund : https://www.bitmex.com/app/insuranceFund

As of this morning there is : 33 749 XBT in it so 275 millions of USD at current market price.

Does it need such a big fund and have they withdrew from it for an other purpose than fund unfilled liquidation orders ?

If they never withdraw from it, it could grow way bigger than needed, I am curious if there is some information available in terms of speculating what they could do with it in the future

Once in a while, it goes down, for example :
10/3/2016   37,3167 XBT
10/2/2016   43,7329 XBT

6/23/2016   24,4343 XBT
6/22/2016   48,7981 XBT

Topic: Bitmex liquidation fund refunded to biggest traders ? (Read 225 times)