The 1800 BTC loss made up 20.96% of clams, if they were bought at the high. In other words, you could spend 1800 btc to buy 20.96% of clams outstanding at the high price. At 2.5x leverage, Poloniex's customers need to have collateral valued at 40% of margin loans outstanding, calculated by x = 1/2.5. 40% of 20.96 is 8.38, so an additional 8.38% of clams outstanding would need to be used as collateral for an 1800 BTC margin loan, bringing the total to 29.34% of clams.
I believe the above is actually how the margin system still works on Poloniex, and this actually results in traders being able to get 3.5x leverage, because they can use 1 BTC to buy 3.5 BTC worth of a position if the collateral is the same as the trading pair. I was able to replicate my mistake in saying that 35% of clams outstanding were used in margin loans plus collateral by incorrectly assuming a total of 2.5x leverage, or borrowing 1.5x the value of the clam collateral, or having equity of 60% of the margin loan.
Thanks. I see from your calculations that Clam would be treated as having zero value. That would tie in with my equation where 1939 is replaced by 0.
It is possible there was a higher percentage of clam in margin long positions and serving as collateral. I think most likely, Poloniex initially automatically market sold some margin long positions, stopped this, and sold the remaining clam held in customer accounts in margin long positions via an OTC trade.
I'm surprised that Polo isn't offering to at least compensate in some way, though, given the fault is probably partially on them for offering margin trading on illiquid markets anyways...
...especially when their positions should have automatically closed in the first place.
I'm getting legal advice, and I've received confirmation that pooling losses is illegal.
The default is 100% due to Poloniex's negligence. If the other trading platforms didn't allow margin trading on CLAM, that's because they were smarter.
Please see this:
<>
15. MARGIN TRADING
<>When you lend Digital Assets to other Users, you risk the loss of an unpaid principal if the borrower defaults on a loan and liquidation of the borrowers Account fails to raise sufficient Digital Assets to cover the borrowers debt. Although Poloniex takes several precautions to prevent borrowing Users from defaulting on loans, the high volatility and substantial risk of illiquidity in markets means that Poloniex cannot make any guarantees to any Users using the Services against default.
<>
29. GOVERNING LAW; VENUE AND ARBITRATION
<>
Except for claims for injunctive or equitable relief or claims regarding intellectual property rights (which may be brought, in an individual capacity only, and not on a class-wide or representative basis, in the courts specified above), any dispute between you and Poloniex related in any way to, or arising in any way from, our Services or this Agreement (Dispute) shall be finally settled on an individual, non-representative basis in binding arbitration in accordance with the American Arbitration Association (AAA) rules for arbitration of consumer-related disputes (available from AAA on its website at
www.adr.org), as modified by this Agreement or in accordance with rules on which we may mutually agree; provided, however, that to the extent a Dispute is within the scope of a small claims courts jurisdiction, either you or Poloniex may commence an action in small claims court, in the county (or equivalent) of your most recent physical address, to resolve the Dispute.
Any arbitration will be conducted by a single, neutral arbitrator and shall take place in Boston, Massachusetts, USA. The arbitrator may award any relief that a court of competent jurisdiction could award, including attorneys fees when authorized by law. The arbitral decision may be enforced in any court of competent jurisdiction. You hereby agree that this Agreement evidences a transaction involving interstate commerce, and therefore, the Federal Arbitration Act (FAA) applies to this Agreement, including the agreement to arbitrate set forth in this Section 29. We each agree that the FAA, and not state law, shall govern whether a Dispute is subject to arbitration.
<>