Quote from: HowardF on January 05, 2015, 04:49:55 PM

Quote from: mjr on January 05, 2015, 04:07:05 PM

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.

So, I'll keep this short, since the rates are too low for me to find interest in discussing margin lending anymore, but you did specifically mention MarginBot, so I'll respond.

If everyone who was currently using FRR switched to a bot, I can pretty much guarantee rates would be more responsive, and in all likelihood, higher, for a couple of reasons.

1) Minimum rates - you can't set this with FRR. You claim people are happy to take what they can, and to some extent that's true, but part of this is because they CAN'T choose the minimum they'll take with FRR... This option alone would have a HUGE effect on rates, even if people literally installed the bot, added their API Key and walked away, the rates would be floating closer to .065% (default minimum). One way or the other, this would at least make people spend just a few seconds thinking about what they're willing to take.
2) Spread Lending - right now all the money going to FRR is one big ass lump. Spread it out, and the "wall effect" would go away, or at least be reduced. Each upward step would have a smaller wall to climb, small runs would still move us up, not sideways.
3) Reactive lending - loan targets would be constantly moving, looking for new targets every few minutes, instead of every hour. Rates would adapt quicker.

I could go into detail on lots of other, far more complex reasons as well, but honestly, I'm not particularly interested in this discussion. I never was, but somehow got sucked in. FRR is broken. You talk about wanting a free market, but then manipulate the hell out of it with the FRR. Honestly, have you ever seen a financial market anywhere else in the world with an auto-averaging system like this?

Yeah, I am not really interested in it either. We all agree that the FRR can be improved, and we have some possible implementations that I am waiting on. I think that as far as minimums, there is a minimum with the FRR, 0. You can't set it, but if you want to set a minimum, you can by simply not using the FRR. In other words, people who use the FRR are indirectly expressing that anything over 0 is acceptable. If that wasn't acceptable to them, they would not be using the FRR. It is perfectly possible to recreate the FRR using a margin bot...it just happens to be offered via the platform at this time.

Either way, I understand your point of view. I don't agree that it is manipulative, but we can agree to disagree. I do agree that if more people switched to using a lending bot, the things you mentioned would be the case (I don't think rates would rise). That is the key though, every one of those people could use a bot today. They aren't. So, if they have the ability to set a minimum acceptable rate (either using a lending bot, or via fixed rate offers) and yet choose not to, it signifies to me that they have no interest in expending effort on trying to maximize their returns, and that they will go with whatever strategy gets them 'something' for the least amount of effort, in other words, fill me at whatever rate is available.

I have seen some markets which offer execution strategies that implement algorithms, not exactly the same, but then again, I know of no market that also allows the margin to be provided in a p2p manner. So kind of uncharted territory...

Either way, I really respect the contributions you have made to the discussion, and your code. Thanks for being a part of the community, and thanks for using Bitfinex.