Topic: [OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading - page 168. (Read 723861 times)

speculators 

I think this has to do with the depth of the swap demands (very high). Unless there is a big change in either demand or open swap it will likely stay stuck there for some time.

WHo doesnt love stability

Raphael

It is surprising that the USD swap rates keep constantly at around 0.16% for more than a week.

If somebody is losing something then it is bitcoin which loses all of its functionality with this kind of harsh regulation. Seriously if this regulation is in place using cryptocurrencies like they are supposed to is more or less a crime. I'm asking this because the regulation states that even oversea exchanges have register or block access for NY citizens. I know bfx is sailing under some some obscure flag but whether they like it or not THIS WILL BE OF IMPORTANCE TO THEM.

That sums it up perfectly.

I can't comment on it though

It's far cheaper to run their current model, but at the same time they might lose a lot of customers to regulated US exchanges if they come to fruition. Interesting to see how things will develop.

Hello guys,

I was just reading this and it actually made me smile But I'd like to address some of the speculation here: I am not very active on forums and reddit (its been quite some months like this actually), because I love working 24/7 as much as the next guy but I also need some time off and enjoy a bit of free time with my wife (nothing extraordinary ). So there is not much room left for reading forum and stuffs.
Furthermore as Giancarlo said we now have a new PR person that will be the person to talk to now.


Regarding the "repeated litecoin withdrawal problem", it is simply false. Let me explain (again) how it works: we store litecoins and bitcoins in a hot wallet, for no more than 0.5% of our total assets. When the hot wallet is empty, we will have to replenish it MANUALLY (do I need to explain why?). When this happens, withdrawals are delayed in "processing" state, up to 12 hours generally.
It is not a problem, we even state on the withdrawal email that withdrawals processing is subject to hot wallet availability.

While 0.5% of our BTC assets is big enough to allow us to rarely have to replenish the hot wallet, 0.5% of our litecoin assets is, lets say, a smaller number and as such we have to this operation quite often.






Thank you for your detailed analysis. This change will indeed not change the liquidation risk as we don't change the liquidation price calculation.

However it will not lower the swap demand by 40 to 100%. It would currently lower it by a very small % (because most of our long users don't hold any USD as collateral). But even this small decrease in demand is nothing compared to the increase of demand resulting from the other change: the need to backup unrealized swap or pay it every day. The amount of unrealized swap is really high enough to outweight the amount of USD in trading wallet by a fair amount. However this will be smoothed out over the first days after the change to avoid spike as much as possible.
So long story short: our changes will initially lower a bit the swap demand, then in 2 to 3 days increase it by more.
Then of course there is the normal fluctuation of margin longs and the options that traders will chose for their unrealized swap which makes predictions only approximate.


Thank you for the auto-lend bot, it is a very good idea. I think initially it will just be based on the current asks with maximum and/or minimum rate to lend to.


Best regards
Raphael
Bitfinex team

https://pay.reddit.com/r/Bitcoin/comments/2aycxs/hi_this_is_ben_lawsky_at_nydfs_here_are_the/

Ben Lawsky has published a first draft for the US legislation and regulation of bitcoin exchanges. Will bitfinex attempt to register for such a license? If so please make this clear in advance!

Now that sounds like a good addition.

Set a minimum acceptable rate, maybe also a maximum acceptable rate (so you don't end up setting unlikely-to-fill offers at 2%+ in those times of rare madness), and a preferred rate determined by a delta away from either (a) A fixed rate you set, (b) the FRR, (c) the lowest rate on offer at a particular depth into the book (i.e. set depth to 0 to set a rate relative to the lowest offer) or (d) the highest rate demanded at a particular depth on the other side of the book.

Even better if the 'depth' parameter could be set relative to the quantity of funds going into the offer - if I have a $100 swap close then I'm less picky about the rate it gets re-lent at than when it's a bigger chunk. Better still if the duration offered could be determined by some system that, for example, tries to spread the expected repayment dates out equally over the coming week. But those might be a stretch beyond what's possible to create an intuitive interface for.

Thanks for the help

Yes US citizens can trade.
No you don't need a certain type of bank account. USA accounts are fine. As long as you can wire transfer, you are fine. Or fund your account with BTC.

Other info:
https://www.bitfinex.com/pages/tos

"Other Regions and Jurisdictions

    Registered members of whom transactions only involve virtual currencies are not required to have their identities verified (subject to change in the future).
    Registered members from all regions and jurisdictions are required to verify their identities, prior to being authorized to perform any transaction involving fiat currency. This includes the submission of certified copies of both ID and proof of address. Valid ID includes a passport (or in some cases an ID card, subject to our approval). Valid proof of address includes utility and tax bills not older than 3 months. Other forms of ID and Address verification will not be accepted. Your account will have limited functionality (viewing only) until account verification has been completed.
    Suspicious transactions will result in a Suspicious Activity Report being submitted to the relevant regulatory and compliance bodies applicable in the registered members' verified country of origin.
"

I've looked around and cant find the answer to this, but are US citizens allowed to trade on BFX?  And is the only way to fund our account with an international bank account?  I'm only posting here because they dont answer their emails.

Jean Louis van der Velde CEO

urwhatuknow = Giancarlo Devasini, CFO of Bitfinex
unclescrooge = Raphael Nicolle, CTO of Bitfinex

BFX do not appear to have a CEO.

Thanks I had this one but couldn't find the raw data to download in a zip and try to implement in my bot. I guess that's pretty much the only place where they have it at least in a chart. Have been lookingfor a couple hours.

The reps in this thread are urwhatuknow & unclescrooge.  Not sure who exactly is the ceo.

edit: and it seems mjr is also a rep

Who is the ceo or bitfinex official representative?

TL;DR - The change to not needing swap until you exceed your trading wallet USD balance will actually reduce risk for lenders, but only if the calculation for liquidation prices remains unchanged (and if lenders are paid before traders in case of liquidation). It will however do this at the cost of reducing the demand for swaps by anywhere between 40% to 100%.

BFX, can you also please clarify what effect the changes will have on liquidation prices? I'm going to run through an example to clarify my understanding of all the changes, please correct.

Let's say we have a trader, with the 1000USD and 1BTC in their trading account. BTC is trading for 600 say, so their margin balance is $1600.
They have 2.5:1 leverage switched on, so their liquidation price is when their effective margin reaches 13% of their margin.

Their tradeable balance is (note that swap interest is a negative value):

Pre-July 21 calc:

Post-July 21 calc:
(The BTC value of the margin balance is subtracted from tradable balance because this is treated essentially like taking a BTC 'position' with some of your tradeable balance)

What I call 'effective margin' is margin balance plus unrealized profit plus unrealized swap. At the moment a position is opened it is always = margin balance as there is not yet any profit or swap. When the margin ratio = effective margin/margin balance hits the trigger, (in this case 13%) the trader is liquidated. This is how we calculate liquidation price.

If we assume a simple position of n bitcoins bought at price P_buy and C_USD USD plus C_BTC BTC in the trading account, then Margin ratio equals:
( n*P - n*P_buy + I_swap + C_USD + P*C_BTC) / (C_USD + P*C_BTC)

Liquidation price is when this equals 0.13, so
P_liq = (n*P_buy - 0.87*C_USD - I_swap) / (n + 0.87*C_BTC)

Lets say the trader opens a position by buying 5BTC at $600. Their tradeable balance and liquidation prices at the moment the position is opened look like the following:

Pre-July 21 calculation:

Post-July 21 calculation:

(BFX - Is this new liquidation price calc correct ie it remains the same? Does anything change?)

OK, that's all good, but if the liquidation prices are the same, where does the reduced risk come from? The answer is that this change probably doesn't reduce the risk of a cascading liquidation by much, (assuming that I'm right and the liq. price calc doesn't change) but if it works the way I am assuming then lenders will be more protected because even in the case of a forced liquidation, it will be the trader's money that is put at risk first. Let's see what I mean.

Under the pre July-21 system, a liquidation causing a loss to lenders will occur when the effective margin drops below zero. This is when the loss is equal to the total margin balance, so when

P_losing = (n*P_buy - (C_USD - I_swap) / (n + C_BTC)

This will occur at (5*600 - 1000 - 0)/(5+1) = $333.33.
We can see that liquidating the position by selling the 5 bitcoins, plus the 1 bitcoin collateral, will yield 6 * 333.33 = 2000. This plus the 1000 in the trader's wallet will be just enough to pay back the lender their $3000 swap.

OK, what about after July 21? Say price goes to $333.33 and we liquidate. We get the same $2000, and the trader also has the $1000 in his wallet. The lender gets paid back the $2000, and the trader at least still has his $1000 USD collateral too. There's an 'extra' $1000 USD of margin in play here!

In the case that the liquidation price is below this amount, I would assume that the lender takes priority (again BFX need to clarify here!). So this means that the actual price that will cause a loss to lenders post July 21 is when effective margin = negative USD collateral, so:
P_losing = (n*P_buy - (2*C_USD - I_swap) / (n + C_BTC)

So yes this change will result in reduced risk for lenders, but it will also mean that demand for swaps to cover the portion of the position that otherwise would be bought with the trading wallet USD balance will vanish. Given that for each individual, their current leverage is bounded between 1 (they are borrowing less than their margin balance) and 2.5, this drop in demand is bounded between 100% and 40%. Obviously most people using the margin trading feature have leverage above 1, so it's unlikely that the drop will be near to 100, but it's also unlikely to be near to 40% either. I would guess between 50 - 60%.

It's also worth noting that this part of the change doesn't affect the likelihood of a cascading flash crash very much. However the change in the treatment of BTC/LTC collateral will have an effect there, by reducing the effective leverage possible for these traders.

I think this change by BFX is as much a PR move as it is a move truly intended to avert systemic risk. The headline 'swaps active' number is going to drop by a huge amount; this is all BFX management really want, cos they hope that then people will stop whinging about it in the forums and making them look bad. Given Giancarlo's response to the completely reasonable thread about there being a BFX credit bubble (he called it FUD and was childishly abusive) I think the real motivations here are clear.

Lender beware.

Bitfinex,

I think your design for the swap bot could be improved in a few ways. As it is currently, it is very one sided to borrowers. If you are going to implement 'refinance' automation, I think you also need to offer a bot for lenders that implements the following, very simple logic:

 - Autolend bot, which instead of a fixed rate, autolends at max(fixed rate, current best swap offer +/- delta), and let users set delta and fixed rate.

 - Another slightly more complicated approach might be to let lenders decide how 'deep' into the order book they want their offer to go, ie the lender wants their offer to appear in the 'first' 50,000 USD of offers, or they want their offer to appear in the first 200,000 of offers.

Note that this bot would not run periodically and change offers, as in the case of most people using negative deltas (undercutting prices) this would lead to a race to the bottom. It would only set the price of the offer when unused deposit funds are being auto-lent. This stops the current phenomenon of one's swapping closing out and the autolend bot re-lending it at (say) .1% despite the current best offer being at (say) .2%!

I am also curious as to how your refinance bot will decide who gets priority for the best offers - short of randomizing the order of priority each execution I don;t see how you can make it fair.

Also, I want to express my displeasure that you are implementing these changes with less than 30 days notice. This means that I will not have time to allow all of my swaps to close and remove my money from the platform, or at least from the margin/lending part of it, prior to the changes coming into force. This is unacceptable to me, as any change comes with risks - we need the option of responding to those risks.

 I understand that your priority is to reduce risk and to do so promptly but I think a policy of at least 30 days notice for platform (and/or T&C) changes is a must. In many countries such a thing is a legal requirement (actually often 90 days) and even where it is not it is a fairly standard T&C clause.

Hello everyone,

Thanks so much, Giancarlo. I am really excited to be a part of this team. I plan on trying to make information much easier for you all to access, and hopefully, if I can, much clearer.

I think that Bitfinex is the best bitcoin exchange around, technologically speaking, and we are only continuing to improve. One area where we may be able to improve more, is in our communication with you, our loyal customers. I am available, here, on reddit (official_bitfinex), on twitter (@joshrossi), and many other ways. I look forward to hearing your suggestions and doing my best to implement them. Under the hood, bitfinex has some of the best technology, and some of the smartest financial minds in the bitcoin space, I hope to add to that, and hopefully make sure that our communication is as good as our technology.

Regards,
Josh