Margin lending bitcoin

The unknown unknowns are the reason why it is less important to think in terms exact numbers, and more reasonable to think in the directon of a cushion of profit that will make you comfortable enough with the idea of losing it all.

To get a mental image , you can work with the assumption that your exchange or your account on it gets hacked once a year , and you lose all of your lending deposit. We need to convert the daily interest rate provided by the exchange to a yearly return with compounding , that is including the profits from lending out your lending profits as well, and after the fees your exchange will charge you for providing funding.

Bitfinex will give your yearly return rate directly in the overview of lending rates - the APR column:. Nevertheless, you will still need to look at some spreadsheet math I will do for you in the next section to decide on your minimum acceptable lending rate. The fee is higher if you post hidden lending offers. Traders get used to seeing certain interest rate levels as normal. These levels become something like a support level, as you would say in a technical analysis speak.

Lenders are reluctant to keep their money locked in lending when the rates are lower than that. On the contrary, the upside is much less limited. The neighborhood of 0. It is a reasonable strategy to refrain from lending if the rates keep low, or to lend smaller amount, and to keep money in reserve for when the markets start moving abruptly. The upside potential there is big enough to justify that. The last thing to show is the way to establish your minimum acceptable rate, and why the popular minimum rate is not good high enough. You see that the popular mental threshold of 0.

That is six hundred dollars earned on twenty thousand dollars left exposed to constant risk for days straight. But if you really feel like this profit is high enough to justify giving away the custody of your crypto to a platform that you have no reason to trust, there is something wrong with you. As in trading, the worst mistake here is to lend more money when the rates go down, because you want to fill your monthly profit target.

If the rates are down there is simply not the opportunity for lending at the moment. It is perhaps more convenient to borrow, actually. Or maybe to stay out of the market. If you really want to be careless about your money, please, get off Polo and Finex. This is something that has been cropping out on Reddit, particularly on subreddits related to newer altcoins.

The problem was an unbelievable one: Where do I send my coins?! Turns out IOTA early holders would lend their holdings on Bitfinex, even though the rates were stable at literal next to nothing - 0.

This is a mistake. Maybe it will not end up in terrible disaster this time, but if you keep handling your crypto like this, eventually the inevitable will strike. On Poloniex, we provide a peer-to-peer margin lending and borrowing system for our customers outside of the United States. Below, we explain losses that recently occurred in the margin lending pool.

Lending Completes the Margin Ecosystem

All BTC loans on Poloniex are lent in a common pool that is shared across all markets and borrowers. Today, we recognized the generalized loss across lenders in the BTC margin lending pool. This action impacted 0. Lenders impacted will see the reduction in their accounts when they next log in.

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The losses to the lending pool occurred for several reasons. First, the velocity of the crash and the lack of liquidity in the CLAM market made it impossible for all of the automatic liquidations of CLAM margin positions to process as they normally would in a liquid market. Note that, in addition to requiring margin, negative spot positions also decrease your account collateral value. So the short ETH position both requires collateral, and decreases your total account value and thus total account collateral. This is the same collateral number that futures use!

The max leverage you can achieve if exclusively borrowing stocks is 5x. Every hour, lenders are paid and borrowers are charged. This is determined as follows:. You can monitor the borrow rates you're paying here. If this loan ends up being borrowed i. By default your specified parameters amount to try to lend, minimum interest rate will persist from hour to hour. Lenders bear no counterparty risk: FTX guarantees interest payments for however long your funds are borrowed, even if the borrower gets liquidated.

However, they can be used as maintenance margin to prevent liquidations.

Invictus Margin Lending: Everything You Need to Know

If you choose to stop lending your coins and they were in fact being borrowed, you will stop earning interest on them at the end of the hour and they will be unlocked in 1 hours. If you were offering to lend your coins but they were not actually borrowed because there was not sufficient demand at your minimum interest rate , you are free to use the coins and stop trying to lend at any point. You can manage your loans at ftx.

FTX charges a fee on interest payments made. Outside of that, there are no fees beyond the typical FTX trading fees. The net fee on loans is already built into the interest rates you see so lenders and borrowers see slightly different rates ; there is no fee on top of that. FTX's risk engine will attempt to liquidate any users before they could get negative net account balance; using spot margin opens you up to liquidation risk.