Topic: Poloniex ETH Lending Problem (Read 1530 times)

I agree with that. I have quite a few Ethereum lent on the Poloniex before the hard fork, and the ETC disappeared.

Of course you would feel that way, and the borrower would feel the opposite. There is only one way that books balance and the terms of the loan remain unchanged though. It's no coincidence that both exchanges chose the same method.

A friend told me he lended on bitfinex during the fork and got everything back.
I even asked in the comments but bitfinex somehow didn't answer.

Can someone confirm how bitfinex handled this, please ?

Nonetheless i think the correct way would be different and "force" the borrower to buy the ETH(postfork) + ETC to give it back.
And prolly rename the chains to ETHHF and ETC so there is no confusion. But noone could ever know that there would be two forks, but hey thats why i would wait as an exchange in such case.

Don't you realize that this is exactly what Poloniex did?

Yes that would be correct if they acted like this.
But i understand that it is very complicated.
Nontheless Poloniex is a huge exchange now and has to act professionally in this case and so not implement ETC trading in a rush without looking deeper into this.

I understand you schnib.

It's a tough one, as there really is no other situation where this might arise.

But I would say this.

If after the fork Poloniex says, OK there are now 2 coins, 2 chains, 2 parallel universes, we're just going to double everything. And they then give everyone who holds ETH the same amount in ETC, they should also give anyone who they owe ETH to, a note saying they owe you ETC as well.

Otherwise, when you get your ETH back, it's really only half of what it was / is now, and the person you lent ETH to, just made a load of ETC for free.

this is a wrong analogy.
i don't want any extra money back, just my ETH(prefork).

Say you loan a friend some money with interest and he's going to gamble and say he wins a million. Are you gonna demand the million now? Don't be silly and don't try to smear Poloniex when this is all your fault. Man up dude.

so whats the point here ?

Borrower sells and gets ETH(prefork) value. And this value he has to be returned after lending time ends.
Basically in this case every borrower just got free money, by just having to pay back the ETHHF part and not the ETH Classic part.


@gotomoon

the ETC are in Borrowers pocket, because they could sell their ETH(prefork) at higher value and buy back ETH(postfork) at lower level after fork, because the EThereum Classic value was cut off.



Maybe Poloniex even had some insider trading there. They offered ETC trading at first as well, without any good communication.

So where are the missing ETC? Does the Poloniex keep it. We should ask the Ploniex to return to lenders.

Of course not.  It is a split.  A fork.  Every old coin is now both the new coins, and its value is the sum of the values of the new coins.  Ideally, the market cap splits too (but given the volatility, and the event itself, that's difficult to observe).

new-ETH is roughly about 90% of a pre-fork ETH and ETC is roughly about 10% of the pre-fork ETH at this moment, give or take it 5-10%.  That's true in market value, and in hash rate.

An old ETH is hence for about 90% a new ETH, and for about 10% an ETC.


Of course, but the pre-fork ETH is not the same as the post-fork ETH.  The pre-fork ETH was 90% post-fork ETH and 10% post-fork ETC.

Forking is not the creation of a new currency, it is splitting the old currency in two parts (which have different market valuations, but whose sum market valuation is more or less the continuity of the former market valuation of the pre-fork coin).

You can compare this best with something like shares in a company.  If you have shares in company XYZ, and then this company splits in two, namely new company X-new, and new company YZ-new, then your former shares are now shares of both companies.  So if you borrowed someone shares XYZ before the split, then they owe you BOTH shares in X and in YZ after the split.

Yes? I would say that now two bicycles exist. The borrower pedaled away with one and is now expected to bring back two.

The point is: what happens with a short? It is bought by someone. Yes, he buys the ETH the lender loaned out. He withdraws the ETH to his MIST wallet and walks away. He bought the actual prefork ETH and he will receive the included ETC.

Now the original borrower, counting his profits or losses from the short, receives a call: Hey bud, please buy some ETC and send it to the original lender. His reply will be: Wut? what ETC? I never saw any ETC! I borrowed and shorted ETH and returned those, + interest. Go away, leave me alone!

Not a native speaker so I hope it comes across where this is going.


PS: just to clarify: If you give away any currency for shorting it is the same as if you would sell it on the market, only that someone else sells it for you.

It doesn't matter whether he is aware or not, it is a fact that he agreed on ETH(prefork) so he has to give me back ETH(prefork).
And by the way , he didn't loose anything by that, because ETH(postfork) is less valueable exact the same amount ETC is worth.

I didnt get back ETH, i got back ETH2.0




This is not correct. The value DID exist for him, because he is able to use his lended coins on both chains or as many chains as are going to split.
So by shorting he also GOT THIS value transfered in BTC or whatever he shorted against.

He shorted ETH(prefork), which then was split to ETH + ETC. ETH(Prefork) has the value of both chains, otherwise you wouldn't be able to get coins on both chains at all?

funny that you had the same example like i used in the german forum

The whole bicycle was the pre-fork ETH.  Now only front wheels exist (ETC) and bicycle frames without a front wheel (post-fork ETH).

Ok let me rephrase. It did "exist" (questionable) but the borrower could not have been aware at the time of borrowing. This means he also couldn't agree to having borrowed both.


You did, you loaned out ETH, you received ETH + interest.


You can only borrow an altcoin when simultaneously entering a short order. What you describe (waiting with borrowed funds) doesn't work.
Unless you mean that he entered a post hard fork short, in this case he will also not receive any ETC.


he shorted ETH not ETC. When he borrowed, that additional value did not exist (for him). he agreed to borrow ETH and he returned ETH + interest. That was the deal.


if you are conscious and aware of borrowing a complete bicycle then of course you need to return it whole.
False analogy, sorry.

The point is that the pre-fork ETH is AS WELL the new ETH as ETC.     If after the fork, you agree that they only have to return ETH, why don't they return only ETC then ?  (that's even closer to the original chain).

Normally, during a fork, the market cap also splits over the daughter coins.  If you were doing things on-chain, then the lending was a pre-fork signature for pre-fork eth, and the returning should have been a post-fork signature of exactly those same coins, which would give you a valid transaction both on the ETC and on the ETH chain (because they originated from a signature of a pre-fork coin, which is of course valid on both chains too).

If I lend you a bicycle, then you shouldn't return just the front wheel or the rest, but both.

ETH after the fork is only part of ETH before the fork.

@shrikez
The token did exist, because it is included in the ETH(prefork) token. Nothing new was created, that's what most missunderstand with ETC.
There is NO NEW Money, it is just ETH(prefork) split up into two chains, two communities, two values etc.


sure is the difference yours, but i have to get back the same product, don't i?

I don't care what he does inbetween, but we agreed on lets say adress XY(prefork) so he has to give me back the same value as XY(prefork) is ?



What happens when a borrower didn't short ETH before the fork and just waited until now, so he has ETH+ETC in his balance right now, should just give back the ETH as well ? So he just made ETC profit for lending ETH(prefork) ?
I mean why should someone who SHORTS Something be the receiver of a value of the product he just shorted.

It is just ridicolous the more i think about it.

Bitfinex just stated this, which is correct :

We will be settling ETH margin long positions as of 13:20:40 UTC 20/07/2016. Those who had margin long positions will be receiving an equivalent to the size of their position in ETH credited to their account in ETC. Those who provided ETH for margin funding will receive an equivalent to their available ETH balance in their deposit wallet as of the aforementioned time.

If you have any questions, please feel free to let us know, [email protected].

if, you lend me some money for(example) 1%/month interest, and i have a friend who i will lend this money for 2%/month.
the difference is mine or yours? mine, of course...

my point is: if you lend some eth to someone, the eth is not yours anymore, the only thing you have is the credit.
IMO, they did the right thing.

No she didn't. At the moment of the HF the token didn't exist, she couldn't possibly be aware of its existence and thus not agree to borrowing it with the ETH she borrowed for shorting.

I agree with your stand on this.If u lend out ETH prefork then u must be returned ETH + ETC instead of just ETH.Regarding rebranding,it's entirely upon the ethereum founders because they were the one who coined the named 'Ethereum'.

I want to discuss some issue and see hear opinon on this:


I lend out ETH on Poloniex during the HF.

After the Hardfork i just got back ETH(postfork) which was the new name of the major fork.

In my opinion this is just wrong, since the borrower agreed to lend ETH(prefork) and so hast to give me back ETH(prefork) which is now basically ETH(postfork) + Ethereum Classic.

I think they handled it wrong and gave the ETC to the borrower who just had to give back ETH(postfork) instead.



Their math example : https://poloniex.com/press-releases/2016.07.26-responses-to-common-etc-questions/ is wrong as well imo :

Alice shorts ETH(prefork) by borrowing 200 ETH(prefork) from Bob and selling it to Carol. Carol, who used her own BTC to buy 200 ETH(prefork) in the spot market, withdraws all 200 ETH(prefork) to her Mist wallet ETH Hard Fork occurs Carol receives 200 ETC in her Mist wallet Because the 200 ETH(prefork) Bob lent out is no longer on Poloniex, there is no ETC to give him The only option is to create an additional loan contract that neither party agreed to, wherein Alice owes Bob 200 ETC in addition to 200 ETH Alice is forced to buy 200 ETC in a market she never entered to settle a debt she never agreed to.

This is wrong : Alice agreed to the debt of 200 ETC , because she loaned 200ETH(prefork) which is divided to 200ETH and 200ETC after fork. In your calculation the lender basically could loose up to 49% of value depending on how his ETH(prefork) divides based on the community deciscion, which is just wrong!!! Alice shorted the value of ETH(prefork), so she is responsible for the loss prefork not postfork. She has to get the ETH(prefork) back, which is afterwards ETH+ETC. It could be also ETC being the winning chain, what about that ? so ETH is basically just the winning chain after a fork with lets say 80%, what about the other part of the original ETH ?

When you borrow, you receive an asset and a debt. But in this scenario, Alice is forced to “repay” a principle she never received, and the terms of the loan are changed without the consent of either party.

Alice for sure received the ETC, because it was priced in the ETH(prefork) already so she makes in this case no extra loss btw, because ETH(prefork) value will be divided up in ETH(postfork) + ETC so he can easyly buy with his prefork ETH ETH(postfork) + ETC.
There is nothing added , it is just split and usually after the split ETH+ETC < ETH(prefork) because communities use engery to battle each other first.
You could see this on the market as well, as soon as ETC starts trading, ETH(postfork) lost value.

Maybe this example will help. I lend someone a google stock, now the lender sells the google stock. Afterwards there happens a rebranding, google is now divided up to alphabet and gamma. So on the exchange gamma is rebranded in google , because it makes 80% of original google stock and alphabet only 20%, he only have to give back the google(gamma) part and not alphabet part?

Just because ETH after fork is called ETH, it is not the same like ETH ( prefork) IT is even completely different. It should be renamed to ETHF and ETHC. If you take this serious you could even say, that ETC has more right to be ETH now , because the code didn't change. So however you take it, the lender should definitely get his ETH(prefork) back which he can divide in ETH+ ETC as he wishes.



I think bitfinex handled it correct and gave the lenders back the ETH(prefork) which they can divide in ETH + ETC as their wish.

How do you think about this and is anyone else affected by this ?