Quote from: DoubleSwapper on January 05, 2015, 03:31:24 PM

So now, Bitfinex, tell us, that Bitstamp is down and possibly hacked: Do you have meaningful funds left on Bitstamp that could cause liquidity problems for your operation?

Quote from: Barabbas0 on January 05, 2015, 02:38:26 PM

Wow, we've gone full swing to traders wanting outright manipulation and market fixing to protect their rates. The solution is quite simple, first, remove FRR. With the number of autolending bots, there's no need for it.

Second, put lend durations on their own books. Have, say, four lend books total, 2 day, 7 day, 14 day, and 30 day. This more accurately reflects how true fixed interest markets work. It would also prevent bid/ask from crossing. Additionally, because the lends are callable (the borrower can end the loan and return the funds at any time) borrowers can automatically take the best rate from any book they want. All the time duration risk lies on the lender and can be reflected in yield curve.

+++++
Barabbas is making some clever and useful proposals for changing the swap market and making it more efficient. I've already given up on BFX changing anything fundamental though and now it's merely a question for me whether keeping the funds on the platform is worth it or not.

Quote from: Mythoughts on January 05, 2015, 01:23:07 PM

Did the algorithm change already, somehow?

Yesterday, while there was HUGE demand for BTC-swaps in the selloff to ~$260, the BTC-FRR sharply DROPPED from about 0.11% to 0.07%.

The only way this could possibly explain that imo is:
- FRR calculation model changed or
- someone accidently lent out a big amount of BTC for 0.01 instead of 0.1, or some similar mistake.

Funny thing is that now that BTC swaps have risen in interest rate they seem to suffer from the exact same FRR related problems USD swaps have been plagued with. I'm wondering whether BTC swaps have only been so low the entire time because of the FRR related mechanics as even mjr seemed to be wondering about the normally super low rate of BTC swaps.

Not sure about Bitstamp, when I read that story, I didn't even think about that, because it has been so long since we really did much over there. I will get back to you, but I don't believe that it has any effect on us.

So, lets talk about the FRR stuff (again).

So, if the FRR is broken, and with an increase in demand, the rates responded and now the FRR for BTC is twice that of the FRR for USD. That is exactly what I would have expected to happen, with or without FRR. Oh, a lot of people want to short, the rates for shorting went up. I think that the FRR probably acts as a counterbalance against large swings, dampening effect either way, but with autolending bots all over the place, I really think it is completely backwards to want to get rid of it. You are literally asking for the people who are not managing their funds, content to sit on the sideline, to be forced to jump into the market. In other words, those people are NOT competing, and it is preferable for them to start competing. I don't see how that would possibly help people who want rates to go up. All of a sudden, they have to pick their own rates, and don't really care that much, as evidenced by the fact they use the FRR...so they should download any marginbot, set it to "as long as i get something", and that would get rid of the downward pressure? I understand you don't like FRR, but how do you account for ALL the offers IN FRONT of the FRR...those people are CHOOSING a lower rate. If you pick whatever rate you like, I don't think that most people are going to say, oh, well if his rate isn't the FRR then I don't want to beat it...anyway, coming from the perspective of someone who doesn't care at all what the rate is, I don't see how that is better. I think the fact that the rates have risen, basically shows, definitively, that with enough demand to overtake the supply, the FRR won't stop rates from rising. The rates can rise, if demand is high enough, as demand for longs sagged, they just weren't enough to raise the USD rate...the USD rate would have fallen either way. I'm not sure why rates dropped (have to look into that), but in the short term, yes, rates are erratic, over the longer term, they make more sense.

Short answer: Demand for BTC grew, rates rose. Demand for USD dropped, rates dropped. That is what I would expect.

The other thing you mentioned. Which is separate from the FRR. I think that is a GREAT idea. Very useful and constructive. I think separating out the books makes sense (somewhat), and in theory, would be great. I am not sure if it is that easy to do, however. Either way, it is definitely worth talking about, and looking into. I don't really see a problem with it, but I have just started thinking about it this morning. These are the kind of ideas I would really like to hear more of. I have wondered if there was a time premium placed on longer length swaps, and what exactly it was. This would be very helpful in getting more data, and probably help price discovery (how much of the rate is specifically because I am willing to give up use of funds for 30 days vs 2). The thing though, is that if a person seeking a swap is going to simply take the best rate possible from any of the books (per the example), then aren't we really just talking about a different view of the same book that exists now? I can choose which offer I want to take, and I specify the time. So, if people automatically take whatever is lowest on any of the separated books, all the individuals are still competing with each other. I am just starting to think about this, so I could be wrong, lets talk more about this though.