Quote from: thezerg on July 16, 2014, 12:54:21 AM

Quote from: hollowframe on July 16, 2014, 12:40:16 AM

Quote from: thezerg on July 15, 2014, 05:29:04 PM

Quote from: CEG5952 on July 15, 2014, 05:06:29 PM

Quote from: fonzie on July 15, 2014, 09:11:03 AM

Quote from: urwhatuknow on July 13, 2014, 02:46:58 PM

We might increase leverage in the future if we see our swap market is cooling off a little.
For the time being we believe it's a good idea, for the sake of traders, liquidity providers and the bitcoin market to slow down a little the growth of our swap total market.

I hope this helps.

Have a good day

Giancarlo
Bitfinex Team

"Earlier today, Mt. Gox halted trading, saying the market needed to "cool down""

I knew i heard that phrase somewhere else before... Cheesy

Hehe, I don't know about the validity of that analogy, but this is a pretty clear acknowledgement by Bitfinex that swaps/leverage have gotten out of hand vs. liquidity.

"cool down" is a very common phrase... bitfinex is guaranteeing the lender's principal, AND it schedules the margin calls. In other words, bitfinex can choose to not execute a forced sale if it wants. So clearly they aren't going to do margin calls so fast that they flash crash to the point where principal is lost because that will be suicide. Its therefore unlikely we'll get a deep flash crash on bitfinex alone... but a flash crash (or even something smaller than a crash) on other exchanges could trigger a big flash crash on bitfinex.

I don't think they guarantee the lenders' principle. Do you have a link/quote to back this up? AFAIK lenders are putting their money at risk, although they do have ways that should protect your money.

You used to be able to choose "insured" or "uninsured" swaps. They sent an announcement around a month or so ago increasing their take and saying that they will all be "insured" now. You are right, what exactly that means is perhaps unclear.

Unless the swaps would be "insured" by some 3rd party insurance company that has the ability to pay out an insurance contract in the event that the market were to crash/spike and they were unable to close out the margin positions in time (I would doubt they have this kind of insurance) then you would basically be betting that they have the financial ability to cover any trading losses in excess of 100% and without being able to audit their financial records, this (IMO) means very little.