Topic: BTC Lending Market (Poloniex) Discussion - page 5. (Read 21283 times)

Hey sooooo, a bunch of people were really irresponsible with their money so now we have to take some of *your* money. 
 
hmmm... where have I heard this before? 

This happend already on btc-e or bitfinex. its no problem as long the exchange is solvent. On higher leverage exchanges like okcoin or 796 they are socialising losses

Than it can indeed really cause a massive crash to occur if too many people have these calls open.. Quite dangerous in these circumstances.. Would be interesting to see what happens though

Yep. In the regular asset markets, exactly the same procedure applies. It's usually buffered by a "margin call," which gives you a short window to deposit more funds to increase your capital buffer, but legally a "margin call" is a courtesy. Once the asset's value drops below the "minimum maintenance margin" amount, the firm you're dealing with has iron-clad legal right to sell your position whenever they want. They don't want to eat the loss themselves!

yes, but the possibility exists that this does not work(becasue there are no buyers) and the lender also does not get everything back if the exchange does not jump in and cover the losses

polo still refuses to publish the needed numbers. with the current  ETH volume this is just insane and gives them way too much power, market participants should not accept this. also power is given to those who have enough to lend out so they can estimate the total numbers and still have enough coins to manipulate the markets.

Let Uncle Pegasus dispense some priceless wisdom.  :
  
People are going to get so excited that they can buy on margin, so when they see a coin (ahem, ETH) go up and up they will naturally think, "Gee.... why am I limiting my profits!?  Let me borrow some more ETH based on the ETH I already own!"  They won't even look at the lending rates because who has time to worry about that?  
  
Then the price of ETH will go up.  
  
Others will see this and come to same conclusions, and also borrow ETH based on the ETH they already own.  
  
Then the price of ETH will go up.  
  
Suddenly, the price will stall slightly.  Now, the first borrower has a comfortable liquidation margin (to the point where it's not even an issue).  He thinks.... hmmm.... it looks like the market may retract soon and I will lose even more than usual based on the retraction.  Well, let me just fire a few more margin bullets at this problem and "help the cause".  
  
Then the price of ETH will go up.  
  
Others will follow suit, all doing their part to keep the price of ETH on the uptrend because they are all margined to the hilt in this thing together now.  All of them are pumping ETH hard because they all know they have a lot to lose now.  Also, those prices to liquidation are suddenly a lot closer than they once were.  The air of enthusiasm suddenly takes on a slightly desperate edge.
  
Then the price of ETH goes up.  
  
But nothing can go up forever.  Eventually someone will take profit.  Eventually one man in the madness will say, "Ok, enough.  Let me get the fuck out of here before this shit goes iceberg."  
  
Then the price of ETH goes down.    
  
The most margined-to-the-hilt fool is hit first.  His entire account is liquidated and sold off to meet the demands of those he owes.  This floods the ETH market with a little extra ETH than usual.  Supply will outstrip demand, especially at these inflated prices.  
  
Then the price of ETH will go down.  
  
This sets off a nuclear fission reaction that will cause ETH to FUCKING DROP LIKE A ROCK.  
  
And this children, is a story as old as time: the margin crash.  And we are going all get to see it again soon, and the traders, lenders, and even Poloniex will all learn a valuable lesson.

up to 2%

ETH hype makes it possible lol



 

So just stumbled across this recently.  What kind of prices, volume & terms have you guys who lend & borrow BTC for trading been getting?