Quote: (01-22-2018 07:50 PM)Blancpain Wrote:
What type of collateral does Bitfinex demand from the borrowers?
People who borrow your funds on Bitfinex are required to have at least 30% collateral when opening a margin loan from you. So to borrow $3,333 they must have at least $1,000 collateral (3.3X leverage). Once they have borrowed, they must maintain a total value of at least 115% between both what they borrowed from you and their collateral (from which you get your interest payments. So if your borrower borrows $3,333 from you and they buy Bitcoin and the combined value of the Bitcoin and their margin funding falls lower than $3,833 (at this point their collateral is only 15% of what they borrowed) the Bitcoin they bought is sold on the exchange and your funds are returned in full from that sale and their collateral.
Quote: (01-22-2018 07:50 PM)Blancpain Wrote:
Lets say I want to borrow 5k from this system, what type of due diligence is involved? Obviously not everyone can take out a loan from here.
None. I've been on that site for years and they have no idea who I am. The only thing they require verification for is withdrawals and deposits of EUR and USD.
Quote: (01-22-2018 07:50 PM)Blancpain Wrote:
What happens in the event the borrowers default?
As above, the borrower just gets closed out. The system seems pretty watertight to me. Back in the summer of 2015, there was a flash crash in the BTC price that was caused by a lot of losing margin bets on Bitfinex being pancake liquidated on top of each other.
I was loaning out during that period and there were no issues. Never lost any money in about three years of using this.
Quote: (01-22-2018 07:50 PM)Blancpain Wrote:
Obviously this question will be irrelevant to people who loan out small amounts but I'm sure there are many who might be interested in putting up sizeable capital
Right now there is a total of $540M loaned out and about another $400M in crypto. It's been close to double that recently. So even sinking a million into this isn't that much.