I have read some information in earlier post, but I am unclear on several aspects of the platform.
I am primarily interested in being a liquidity provider and have the following questions:
1. One of the slides on the homepage advertises "Put up your swap offers. Enjoy great and insured return rates on dollars, BTC or LTC paid by other traders willing to short or leverage BTC or LTC." Insured by whom?
2. Does this 'insurance' protect against a flash crash?
3. Is market data available for what % of leveraged funds are used in long vs short positions?
4. How is client money handled, what sort of separate accounts (if any) are used?
5. Have they had any sort of 3rd party audits? If so are they publicly available?
Hi climbguy,
These are all very good questions. I can provide some information, but I am working on a comprehensive answer that will serve as a definitive stance on this subject.
Here are some things I can tell you about the lending market. We provide statistics about the total size of the swap market, and we monitor that number very carefully. Ideally, any lender should not be able to lose more than his collateral. We have some pretty cutting edge systems in place to try and liquidate positions that look like they will result in the loss of any money that is not theirs to lose. That could be looked at as the first line of defense. If the market moves too quickly, and we can't react to it in time, we have always so far, covered the losses of the lenders. I am getting more information on exactly what our customers can expect. So far, we have been able to absorb any market turbulence, and lenders have not lost money, to my knowledge. While, as far as I know, there are some doomsday scenarios, we have been working hard to do the best we can.
One thing that I have found interesting, is that since all people trading on margin have to have collateral, when their collateral is decreasing in value, it can be quite difficult to know exactly when to liquidate positions. There is a mix of bitcoins as collateral, as well as dollars. So in a "flash crash", bitcoins would decrease, while dollars stay the same. We are trying to make sure we keep a good ratio of those two assets, so we maintain our exposure at a reasonable level.
The most interesting question you have asked, and one that I am happy to be able to somewhat answer, is whether we have had any 3rd party audits.
From a security perspective, our FAQ says the following:
"Our platform is regularly tested by the company Arcui to detect and prevent any intrusion."
I would like to point out that we are paranoid when it comes to security. In the bitcoin world, it is far too common to hear of "hacks", etc. We take security seriously, and have never lost customer's funds.
We also have undergone a proof of solvency audit by Stephan Thomas. If you login to our platform, and click on the gear icon where your username is, you will see a drop down menu, you can click on "Audit" in order to view the information about our proof of having the funds.
If you would like more information about the audit process, feel free to read over this thread.
https://bitcointalksearch.org/topic/ann-bitfinex-passes-proof-of-solvency-audit-560457I hope that I have been able to provide some answers, trust me, I am working on getting all of this information into one easy to find place.
Let me know if I can help with anything else.
thank you for your follow up and attention to my questions. I did review your audit by Stefan Thomas, while this is helpful, I have to be honest in that I have no idea who that person is. As I understand the the cryptocurrency auditing process is new and still in development, but some higher authority on the matter would be great.
I too am very interested in how you handle your USD accounts, are client funds kept in a separate accounts from your operational accounts? Also from what I read the fee on swaps has gone up 50% to 15%, what % of the fee is going towards a segregated 'insurance fund' vs your exchanges bottom line? How is that separate fund handled, is it invested in anything?
On the flash crash question, you can only cover a position if you have a willing buyer, how many other exchanges are you connected with if there is a need to quickly cover a position?
I reviewed the stats page, and maybe I don't fully understand it, but how is the swap money used? What % buy vs sell each of the three cryptocurrency you offer?
Finally, I noticed there is a referral code box on your signup page, where can I get the referral code out of my account and what am I offered for referring business to the exchange?
