Topic: [OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading - page 103. (Read 723974 times)

Guess what, this concept exists as http://en.wikipedia.org/wiki/Dutch_auction for a long time already.

If the strategy of having everything in one wall is an optimal one is up to discussion. In the end FRR is the only rate where you can get higher returns after the market for funds goes up. Maybe it'll get less and less attractive over time, now that there are undercutting bots around that try to sneak in more fixed rate loans - if the return from the few spikes where rates go up a lot is worth getting 0 for the money you have wound up in open offers remains to be seen - I personally am relatively sceptic about that, at least the default MarginBot algorithm seems to perform very similar to 30 day autolend FRR while adding more work on your end.

... I, for one, would be really really interested in that!



I know you mentioned elsewhere that there'll be no changes to the api, but I can't see a backend swapout going through without a few unexpected quirks slipping in (e.g. things like the sign difference betweed order/new and order/new/multi), so I'd really appreciate the opportunity to test against the new backend before it goes into place.

Edit: props for your work here btw, and especially for your patience

Is it time for another wild-ass theory about FRR? Because here's one: it's not anything inherently wrong with having an algorithmically determined auto-rate; the problem is having $2.5M of money that's being unintelligently managed. Sure, a person theoretically could sit down and decide to make the same choices as FRR, and a thousand individuals could theoretically all decide to make the exact same choices in synchrony... but in practice they wouldn't, and if they did we would not think highly of those choices as sensible strategy.

Seriously - imagine sitting down with someone over lunch and having them tell you "So I have $2.5M I want to lend out, so what I did was put it all in one colossal offer set at a rate too high for anyone to want to take, then slowly and incrementally reduced the rate on offer with limited regard for fluctuations in demand. But it's the damnedest thing, even now that the rate I'm offering is really low, other people still keep slipping in and undercutting me... guess I'll just have to keep slowly and incrementally reducing the rate on offer some more."

...then imagine that they add to this description a caveat that "This one time there was a massive rush of demand that took everything I was offering along with every other offer on the book, so as soon as I had some more spare money I put it straight back in at almost exactly the same low rate I was offering before".

I'd for one would be telling them to stop being an idiot and start breaking that pile up into multiple tranches offered across a range of rates, and to pay far closer attention to what rates are being taken around them. The "markets are so awesome and efficient" part of economic thinking relies on participants being rational actors; doesn't necessarily hold true if they act dumb, but the current setup on 'finex is that your choices are constrained to either allow an algorithm to play dumb with your money, or spend a reasonably significant amount of effort on either manually offering or setting up a bot.

I thank you for your long response, but I believe there's a misconception about what you think I tried to say? I just wanted to express that I like HowardF's idea how to easily make the current FRR a little bit better without changing much.

There's no default rate in my post, so I'm unsure what you're trying to explain to me here. Nor is it about getting the rates higher.
Just a way to improve the current system with a slight, very easy to implement change that benefits everyone (or, if you disagree with that, has at least no downsides).

For Bitfinex, FRR already became a Religious persist......

This logic is flawed.  They don't necessarily accept that the minimum is 0, they just want a reactive rate that doesn't require babysitting, and this is their only choice on bitfinex.  Most people use FRR hoping to catch uptrends (not realizing the FRR is terrible at reacting to uptrends).   If given the option to set a minimum, they almost all certainly would (there may be some who would set it to 0%, but not many.)

I also don't understand the resistance to this idea... Its easy to code, and adds a new feature that I'm sure people would appreciate. Default it to 0.0% if you think its manipulative (though I'd say that would be stupid because a 0% loan shouldn't ever go out anyways).  I'd also mention that it is a feature your competitor has.

(I will say I doubt this will have a huge effect on rates, since it wasn't in on day 1 and too many people already have their cash in FRR on set it and forget it mode, but I do think it would be a nice feature for people, and would at least get new users thinking about what they're willing to take, and maybe get them to understand FRR may go WAY BELOW what they actually are willing to accept.  My guess is most of the old money in FRR was from people who never put a second of thought into the rates maybe going this low.)

Good point. We try to avoid directly saying anything about other exchanges. We are happy with what we are offering, and its fine that others offer what they think the market wants. I'm sure there are some niches we aren't filling, and that is ok. I think Bitfinex has come a long way, and that system was probably invaluable to us getting where we are today. We outgrew it, and it is unfortunate that other people are having some issues. I honestly want bitcoin to succeed, and I am really tired of the constant hacking, etc. I don't wish that on anybody, and I think it harms the ecosystem in the short term, and the reputation of bitcoin in general. So, we are not all rejoicing at the news that some people have issues, and really didn't want to draw attention to that. I, personally, really like a good competition, but I don't think anyone should root for the opposing team's quarterback to get paralyzed...

Anyway, we weren't affected at all, we haven't had much interaction directly in quite a while, and we hope that things work out.

Yeah, I am not really interested in it either. We all agree that the FRR can be improved, and we have some possible implementations that I am waiting on. I think that as far as minimums, there is a minimum with the FRR, 0. You can't set it, but if you want to set a minimum, you can by simply not using the FRR. In other words, people who use the FRR are indirectly expressing that anything over 0 is acceptable. If that wasn't acceptable to them, they would not be using the FRR. It is perfectly possible to recreate the FRR using a margin bot...it just happens to be offered via the platform at this time.

Either way, I understand your point of view. I don't agree that it is manipulative, but we can agree to disagree. I do agree that if more people switched to using a lending bot, the things you mentioned would be the case (I don't think rates would rise). That is the key though, every one of those people could use a bot today. They aren't. So, if they have the ability to set a minimum acceptable rate (either using a lending bot, or via fixed rate offers) and yet choose not to, it signifies to me that they have no interest in expending effort on trying to maximize their returns, and that they will go with whatever strategy gets them 'something' for the least amount of effort, in other words, fill me at whatever rate is available.

I have seen some markets which offer execution strategies that implement algorithms, not exactly the same, but then again, I know of no market that also allows the margin to be provided in a p2p manner. So kind of uncharted territory...

Either way, I really respect the contributions you have made to the discussion, and your code. Thanks for being a part of the community, and thanks for using Bitfinex.

If you're going to do things "quietly", don't be too surprised when those of us on the outside don't know for sure what the situation is 

Yeah, this question has been popping up today. I was surprised because I didn't realize people still thought we had funds there. Their issues had no affect on us. We had (past tense) maintained a safety valve, in order to allow more liquidity when our books were thinner. This was quite some time ago, and was a remnant of the time when we offered routing of orders to Bitstamp. That is no longer the case, and we had quietly discontinued that as our volume and our books grew much larger than theirs. In any case, it hasn't affected us at all. We basically offloaded that functionality to market makers who arb the different exchanges books. Once we became big enough, with a deep enough book, there was really no reason for us to have to deal with that anymore.

Yeah, I personally am taking another look at the BTC swap market now...but then you also are long BTC in a bear market...I don't really like trying to predict market moves. I hope your strategy pays off, I think it probably has a lot to do with the overall demand for going long on margin, which I imagine has dried up a little bit as the bulls have gotten burned maybe once too many times now.

That is a perfect response. If you can find a better use of your funds, that is how you "vote" on the rate on the swap market. If enough people feel the way you do, there will be a lack of supply and the rates will rise. If they get attractive enough, perhaps you will offer swaps again. Either way, good for you for making decisions about how you want to use your money, that is the free market in action!

Exactly, if you have a default rate, you just move the wall to whatever that default rate is. None of those people would get filled, as anyone who wanted to get filled would just jump in front of them...very similar to how the FRR is currently acting. It doesn't matter what rate you choose, if it is not the ACTUAL rate (the lowest rate that someone is willing to offer a swap) it will just sit untaken. It seems that there are two different discussions happening. One the one side, force users to have to set a rate that they want, in order to hopefully induce them into picking higher rates, and raising the rates overall. On the other side, when discussing the FRR, it  is simply a calculation. If you wanted to, you could simply average the swaps taken over the last hour and then set your own offers at this price. It happens to be built into our system, but it is still just people choosing a number. What  I mean by this, is that if people wanted to, they could replicate the FRR without it being built into our system. I think it just comes down to what is easiest for people to do.

So, if the discussion is about forcing people to try to choose higher rates, we have no interest in that. We have no horse in the race, and the rates are whatever they should be as dictated by the swap market. There is no "right" rate. The BTC market has again illustrated this. If the rate needs to be higher, in order to attract more offers, it will rise. If it doesn't...it won't.

If people want to discuss a tool like the FRR, and how it could be improved (it is basically just an index), then that is a different discussion. What I am trying to do is separate out the "we want higher rates" discussion, from the "the FRR is not a good tool" discussion, because again, we do not want to set rates, because the market handles that on its own.

Again, YOU, the person offering swaps, get to set the rate that YOU would like to receive. It is up to other people if they are willing to accept less. Whoever is willing to accept the least wins. So, any discussion that centers around "how can we make the rate higher (or lower)?" is basically pointless. There is a method for doing this now. If the rate is too low, either set an offer with a higher rate, or just pull your offers until the rates climb to the level you find acceptable. As an example, if every person who offers swaps decided that they would not accept any offers beneath 1% a day, that would be the rate...so why doesn't that happen? Because many people are willing to accept FAR less than that, in order to get something. They undercut those people who have such high expectations, and those people end up with funds that are not being used at all. I just get frustrated because it seems to me that some people (not all) are using the FRR as a scapegoat for the underlying market forces that they don't like. As I said, a person who offers a swap gets to pick whatever rate they want, but it is up to other people to offer a better rate. The complaint boils down to "other people are willing to accept less than I am!", and I just don't have any answer for people who think this way. If some people want  to discuss how to create a BETTER index, as a value for autolenders, that is useful and constructive. We are more than happy to discuss and consider any such suggestions.

I agree, but the same could be said of any market. The bitcoin market has long suffered from the inability to move fiat funds rapidly.

We are maintaining full backwards compatibility. Nothing will change as far as this API, and the reports will remain the same. We are trying very hard to make this transition seamless. If we do introduce changes, we will make them optional, and hopefully, just enable more customization by the users.

While the swaps operate as a market, there are also transaction costs that make it harder to get USD in or out of the exchange.  By contrast BTC moves around fluidly but also has much fewer competing investments - so less reason to move.

Transaction costs include time (cannot use the money for several days - ex. if you have to do a wire transfer and then bank transfer to transfer the money to your preferred investment) and fees (wire transfer fees are hardest on small players, like me, who may be better off using Circle and a bank transfer).

These transaction costs reduce the speed at which the swap market rates increase or decrease to reflect market demand.

mjr is a joke. Only response is to say lenders are greedy and want better rates. At best, it's laziness. The simple fact is, I'm pulling my money back from lending. Not because of low interest rates, but because of low interest from BFX. They would rather run from a problem than admit it. There will undoubtedly be more volatility and shortages of liquidity.

This community has put forth some great ideas. I'm looking forward to Bitfinex reacting (not really, I expect nothing more than further ignorant insulting from mjr). In the meantime, the equity markets are far more interesting. Additionally, my stock broker actually answers my emails, so I'm content giving my money to them instead. They also know something about fixed interest lending.

Good to hear, but can some sort of official confirmation there be prioritised?

All I've seen is some deliberately-vague Reddit posts from Raphael (from some time ago) talking about how you used to have a reasonable quantity of funds on Bitstamp to implement mirroring their orderbook onto 'Finex (effectively arbitrage between the two to add some depth to the books here), and that they were intending to "reduce" the amount of that they did.

That was offered as an explanation for the price on Stamp and Finex starting to diverge and when someone asked for details of how that reduction was going to happen they were turned down with words to the effect of "I can't tell you that". I'd been assuming that, with that link severed, you would have no need to keep funds with a 3rd party and would have withdrawn them out since then, but it would be calming to hear it officially and definitively.

As for FRR...


Became tired of the effort of manually placing offers for the current returns, placed high offers to wait for better rates... so I guess I'll be able to report back soon eventually, as to whether this strategy pays off.

I like that idea.

Arguably a good improvement with absolutely no downside for anyone.
Super-easy to implement, just add a new box "minimum acceptable rate" or something similar, can even be checked client-side with simple javascript code. Allow "0" for the lenders which will take anything, according to mjr. But provide no default value and require the box to be filled, so that whatever they enter is a conscious decision.
Only re-offer their BTC or USD if the FRR > their minimum rate. Sit on the sidelines if not, and maybe check once an hour if the FRR raised to an acceptable level and re-offer then.

A question about the new backend: Will the History CSV reports (https://www.bitfinex.com/account/ledger/usd, https://www.bitfinex.com/account/ledger/btc etc.) still look the same? I've written some extensive tools to parse them and enter them into my bookkeeping system, it would be good to know if I have to rewrite everything from scratch or not.

Another question: It's been nearly a year now since https://www.bitfinex.com/account/audit happened - any plans for another one? Maybe also including LTC + DRK as well as auditing USD amounts too (via an auditing firm, not via block chain I guess)?

Remove the FRR option from UI and API, and just let existing FRR offers run their course.

You could either turn off autorenew on those offers, or just wait for lenders to gradually do it themselves.