Post
Topic
Board Exchanges
Re: [OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading
by
MustMan
on 27/03/2014, 11:21:05 UTC

Yes, in the long term, if rates drop dramatically, the lenders will pull out their money and move them somewhere else. But, for the money that are in BFX at any point in time, the optimal financial strategy is to lend them out at whatever rate you can. Thus the reason for "auto lend" option and the prevailing use of the Flash Rate rate to auto-lend the money on a recurring basis.

If you take all that i've said before into consideration, you will see why very low lending rates are possible and even probable, and such a situation can only improve/reverse if BFX takes active steps in limiting the minimum rate.


My guess is that if most of the lenders take the same strategy of lending out their money at whatever rate they can, seems it is the case gradually happening right now, then in the long term, lending rates would be becoming more and more competing and that will inevitably lead to a very very low lending rate beyond anybody could think of.