So I have a few thousand XMR I am thinking about lending out on Polo.
I understand the risk is pretty low for a fairly guaranteed return. What rate do you think I should lend out at? I'm still a little confused on how the lending rates work.
I understand the risk is pretty low for a fairly guaranteed return. What rate do you think I should lend out at? I'm still a little confused on how the lending rates work.
The risk is that in an explosive price increase short sellers make take so much of a loss that they can't pay back the loan and you will lose principal. That and (compared to keeping coins in your own wallet) the risk getting Goxed. I'll let you decide for yourself whether or when that is a good deal.
As far as the mechanics of how the loans work medusa13 had it right. You set the rate (daily) and the maximum term (2-60 days). If someone borrows from you they can pay back early. Otherwise you continue to get the agreed rate of interest credited to your account quite often (every minute or few minutes).
No one can tell you what rate to set, since it depends entirely on market conditions. Sometimes even 0.0002% may not ever get taken by a borrower. Other times it can be 1% or higher.
People devote entire careers and dedicate supercomputers to the voodoo magic of option pricing.
If you enjoy solving Navier–Stokes equations in your head, you might be able to create a better optimization of the Black–Scholes model than the rest of the market
Here's where to start: https://en.wikipedia.org/wiki/Black%E2%80%93Scholes_equation
GLHF
