...so to draw some conclusions.

I think, it is fine that we have a market for loans here, an when there is high demand e.g. for USD lenders should be able to make a profit, since at such times the price is going up and they would loose out if just sitting on their USD.

But as it stands now, I see some weaknesses in the mechanics, which allow to game the engine and harm other traders.

• for one, the VIR rates. I still think it is dangerous to prefer those automatically. We discussed that some weeks ago. I still keep my stance that there should be some damping factor and some cap built into the automatically determined variable rate. Earlier this day, during the rally, we had the situation that a large fraction of the overall offered money was in VIR loans. This allowed a smaller amount of fixed rates to drive up the overall rates. I know for sure, because I was burnt by it. I was one of them accidentally taking one of those insane offers, thereby promoting it into the effective average rate. The VIR rates shoot up to over 6000% during that rally
• an important effect to consider are automatic orders. This is what happened to me. Since there was not only a huge wall, but a lot of additional Asks below 27.5, I actually didn't expect that rally to set in so soon. So I had some automatic offers right above the wall. I guess other people did the same. Before the rally, there were way enough "sane" offers in the pipeline. When I came back, all of them were taken (or more likely just retracted) and instead there was a whole pile of exaggerated offers. This way, lenders manage to "sneak" into getting accepted. No one would deliberately open a position when the loan rate is 300% per day! But the orders execute automatically.

I think these two circumstances greatly reinforce the effect. "Free market" would mean that there are offers, and that these offers are actually taken. But in this case the high rates get into effect indirecly (either through the VIR rate shooting up, or though automatic offers grabbing overpriced offers).

Now I'm not sure what could be the best way to address such problems. One possibility would be some kind of cap / damping. Another possibility would be to allow the trader to limit his rates somehow. Personally, I consider the second approach problematic, since it complicates the handling of the platform and bears the danger of overlooking this limiting capability. Any thoughts?