As the author of this bot, I'd like to point out this bot was originally developed specifically because of how frustrating the FRR is. It's not a "something rather than nothing" philosophy so much as "FRR wall breaks realistic lending rates, and keeping my money lent 100% of the time at least improves my return a little bit". I do very much care about the rate, I just came to accept most investors are lazy and will dump everything into FRR auto renew and never think another thought about it, and I had to figure out a way to combat that as best I could... I would also point out the 30 day returns with this bot are almost always much higher than FRR set and forget lenders returns are...
So, if I add all that and make it compete with you for being active, you will see higher or lower rates? In other words, the more effort you put in (writing a bot), the better your returns. Those who "set and forget", won't make as much, but more importantly, they will not compete with you who do want to actively manage (via bot) your positions.
That would depend in large part on what minimum rates people set. The default minimum rate on MarginBot is 0.05% per day (18.25% per year). The non-configurable minimum rate on FRR loans is 0%. If you were to switch all current FRR auto-lenders over to using an aggressive undercutting bot with a non-configurable 0% minimum rate, then yes, they'd clear out all the swap demands on the book and make it so that no offers above 0% get taken except when there's enough demand to bust the wall.
Of course, gradually the auto-lenders would log in, see that the party is over, and withdraw their funds. This would allow rates to start rising again; possibly quite rapidly, depending on how many fixed-rate lenders called it quits too.
Whatever you guys do about the FRR situation, I would strongly encourage you to require auto-lenders to explicitly choose a minimum rate for their offers. Providing a default risks recreating the wall at that rate, or at least distorting the market towards that rate. You may also want to consider allowing (or requiring) borrowers to explicitly choose their maximum auto-borrow rate (instead of the current fixed %1 per day), so that we better incorporate borrower preferences as well.
Having thought about this some more, I'm going to take my own advice and remove the default minimum rate from my bot, and require users to set it themselves. HowardF, you may want to consider doing the same with yours.
Having thought about this some more, I'm going to take my own advice and remove the default minimum rate from my bot, and require users to set it themselves. HowardF, you may want to consider doing the same with yours.
Taking out a default isn't really practical for my app, and I don't think it will have a big effect anyways, since it's always going to end up lending just a few points below FRR, but I will change it to the minimum I use on the next update .065%. People using bots are not likely to ever get the volume necessary to really create significant competition below the FRR. I'm also going to put some better notifications in to warn users when the FRR is getting so low that theis minimums won't get hit, so people can move their money to higher return investments as needed.
0.05% and 0.065% is higher than we were at some point. A few months ago a 3m FRR wall was sitting tightly above 0.04% iirc.
I just hope that your bot isn't costing me (as someone who isn't using it) money in the end. In one way or another.
Sorry to burst your bubble preemptively but if enough lenders use it the bot will definitely create additional downward pressure in combination with the FRR simply by increasing the supply through ensuring more money is on the book. Without the FRR, well...that might be completely different.
Also, funny how mjr tries to use this recent bot release as a defense for the FRR and then the bot creater himself comes here and scolds mjr for the FRR.
