[gework]

This is a brief introduction to lending out dollars and crypto on Bitfinex and includes a bot to automatically manage your lending for ¡yuge profits!

Bitfinex has a facility which allows you to lend out dollars, euros, BTC, LTC, ETH, ETC, ZEC, XMR, Dash, XRP, IOTA, EOS, SAN, OMG, BCH, NEO, ETP, EDO and BTG. They will probably add more later. These loans are utilised by other traders to make bets. They pay daily interest for your loan, which they use in an attempt to make profitable bets for which they keep the profit of and then return your loan.

Funds are lent out for a rate of daily interest for a period of up 2-30 days. The person you lend to can return your loan at any time or they can be closed out of their position. So long as your funds are borrowed for an hour or more, you will get interest. You get interest even if they don't use your funds. Once the person who borrows your funds gets into a position where they only have 115% of the funds able to pay you back, they get closed out and your funds are returned. So your funds are safe from this aspect. However, there is, of course, the risk the exchange gets hacked or otherwise loose your funds or they are shut down. Bitfinex has been hacked twice in the past. The second time was for $37M, which they were able to cover within about 6 months.

The fee to lend out is 15% of your profits. The profit you get is in the currency you are lending. So if you are lending USD, you get a daily USD interest payment. If you're lending SAN your interest payment is in SAN.

Bitfinex provide a facility to auto-lend your funds, but it's primitive and doesn't enable you to keep your funds lent out at the best rate for the longest amount of time. So I've made a bot to lend out any currency on the exchange with some rules that allow you to push for the best compromise between percent of funds lent out at one time and the rate your lending at.

I've lent out USD extensively using this bot at what would be an annual return of about 27.5%. I've not lent out other currencies much, but here are some rough guesses at annual returns:

BTC, LTC, ETH, ETC, Dash, SAN: 7-15%
NEO: 10%
ZEC-XMR: 5%
Everything else: <1%

You can find the bot for lending these out here, with instructions for installation and configuration.

The USD lending settings included have been tweaked to increase interest earned. Though as I mention at the bottom of the Github page, it needs an update to get better rates when funding is really hotly sought.

The bot produces an hourly report of lending showing you what percent of your funds are lent out at what interest rate, how much you are making each day and some general statistics.



This allows you to see how you can best tweak your lending.

Unfortunately it's not something that will run as an executable with no tech knowledge. It requires PHP and is best run on a remote server, unless you leave a computer on all night.

If you use Windows:

Install PHP (you can ignore installation of MySQL, Apache, PHPMyAdmin)
Enable CURL
Enable XML
How to add cronjobs in Windows

If you're on Mac, Linux you can probably sort it out.

You can also use these sites: Coinlend and Cryptolend to auto-lend from a web interface. However, they have significantly lower interest rates. If you do use them ensure the API keys you use only have write permission for margin lending, like here as you are giving a 3rd party access to certain facilities of your account.

[Blancpain]

Very interesting datasheet
I have a important question though

1. What type of collateral does Bitfinex demand from the borrowers?

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.
What happens in the event the borrowers default? How do you go about trying to get your money back? 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

[gework]

(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.

(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.

(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.

(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.

[The Beast1]

I love Bitfinex's platform, but i'm annoyed by the $10k minimum. You aren't a bloody stock exchange and you don't need to worry about settlement rules FFS. They're just there to annoy the small timers.

[stefpdt]

Very cool datasheet. Thanks brah. 27.5% returns are excellent when you take into consideration that this is almost entirely a passive source of investment income.

[Giacomo Casanova]

This reminds me of the scam of bitconnect. It seems exactly the same system, landing crypto for someone else to do trading. Being done in an exchange platform moreover. Always be careful when it comes to "crypto lending" and "high guaranteed returns"...I would stay miles away from that.

[qwertyuiop]

(01-23-2018 04:33 AM)Giacomo Casanova Wrote:  

This reminds me of the scam of bitconnect. It seems exactly the same system, landing crypto for someone else to do trading. Being done in an exchange platform moreover. Always be careful when it comes to "crypto lending" and "high guaranteed returns"...I would stay miles away from that.

Bitconnect was a straight up ponzi scheme lol.

This is pretty much what banks do when they let you borrow for margin, except here you're borrowing it from another user.

If its as seen here it's legit.

[gework]

Bitfinex (BFX) have been offering this facility for over four years and it's never had issues in terms of not being able to return margin funding or make interest payments. Right now they have around $200M / day in new funding.

Margin is a typical feature of any brokerage platform. The difference with BFX is they have pioneered P2P lending while brokerages let people borrow up to $100 for every $1 and usually allow people to go into 50% negative. You can't go below 15% positive on BFX.

The main risk is their solvency and security.

[Blancpain]

Correct me if I'm wrong but wasnt bitconnect offering 1% interest every day?

%27.5 can be sustainable without having to resort to a ponzi scam. Obviously there will be added risks like bitfinex doing an exit scam or getting hacked, this is all priced probably.

I don't know think its a ponzi, but Bitconnect was an obvious ponzi from the beginning.

[Heightcel]

Thinking of doing this, just waiting for crypto to rise a bit before cashing

[SamuelBRoberts]

(01-23-2018 04:33 AM)Giacomo Casanova Wrote:  

This reminds me of the scam of bitconnect. It seems exactly the same system, landing crypto for someone else to do trading. Being done in an exchange platform moreover. Always be careful when it comes to "crypto lending" and "high guaranteed returns"...I would stay miles away from that.

No, it's no the exact same system at all. Its just plain old margin lending, with an optimization tool.
27.5% returns annually is nothing special for crypto, this is a safe way to make some side cash. (Provided you're willing to entrust an API key to a program you didn't write.)

[Savage]

(01-23-2018 08:21 PM)SamuelBRoberts Wrote:  

Provided you're willing to entrust an API key to a program you didn't write.

Bitfinex has a good system for the api keys where you can control the permissions. If set up properly the worst the program could do with the api key is loan your funds out at a bad rate.

[FrenchCanadian]

interesting. can you take those loans and use to buy hash rates? cuz the effective interest rate on hash is 130% right now

[Orson]

How can a lender regulate risk (other than adjusting sums available to lend)?

I suppose one could do options against Blockchain stocks...or at least take on short sales positions.

THIS has wonderful possibilities I have never considered before.

THANKS for the primer! But can you point us noobs to the select info sources you used to get into crypto lending?

[whiteknightrises]

I hope the bot wasn't written by the same Karpeles who was former CEO of Mt. Gox

https://en.wikipedia.org/wiki/Mark_Karpel%C3%A8s

https://en.wikipedia.org/wiki/Mt._Gox

Guessing it's a joke but that name, Mt. Gox, and Bitfinex in one sentence makes me uncomfortable

https://en.wikipedia.org/wiki/Bitfinex_hack

http://www.tetherreport.com

[Gas]

(01-22-2018 09:05 PM)The Beast1 Wrote:  

I love Bitfinex's platform, but i'm annoyed by the $10k minimum. You aren't a bloody stock exchange and you don't need to worry about settlement rules FFS. They're just there to annoy the small timers.

Where does it say the min is 10k? Says here it's $50: https://support.bitfinex.com/hc/en-us/ar...g-funding-

[Gas]

I'm hodling a bunch of BTC in my Ledger, was tempted to put it all on Bitfinex and lend it out, but I'm nervous storing that amount of coin on an exchange. When crypto gets hacked/stolen, there's no coming back.

[Nima]

I'm trying to come up with faults with this to see if I want to invest or not. If what I'm about to say sounds super dumb, pardon my ignorance about crypto.

Say Bitfinex gets hacked and at the same time the crypto market crashes hard, resulting in people moving out of crypto. How will Bitfinex be able to recoup the losses from the hack (because in this scenario people are moving out of the crypto market due to falling prices, resulting in lower and and lower commissions to Bitfinex at a time in need).

[Savage]

(01-28-2018 07:58 PM)Nima Wrote:  

Say Bitfinex gets hacked and at the same time the crypto market crashes hard, resulting in people moving out of crypto. How will Bitfinex be able to recoup the losses from the hack (because in this scenario people are moving out of the crypto market due to falling prices, resulting in lower and and lower commissions to Bitfinex at a time in need).

This has already happened. They lost 70 million in a hack and replaced 30% of all balances with a token that they promised to redeem for $1USD over time. People could trade this for real USD and at once point it was as low as 0.25c. Every month they redeemed a percentage of the tokens and after 6 months all tokens were redeemed in full.

If the market is crashing there should be a huge amount of volume so they would actually be earning more commissions. If volume was low for a long period of time it would probably just mean they take longer to pay everyone back.

Of course there is still a risk involved, otherwise you wouldn't be getting close to 30% returns.

[KYT88]

Did they take the full 6-8 weeks to verify your account or was it more lax when you opened yours?

[gework]

(02-06-2018 10:41 AM)KYT88 Wrote:  

Did they take the full 6-8 weeks to verify your account or was it more lax when you opened yours?

It must have been more lax, as my account is not verified.

Lending rates have gone down really low. You're looking at $25 per $100,000 per day at the moment.

Also there is a lot of FUD about Tether and BFX not having enough cash. They've screencasted their $3B bank balance on Whalepool.io Teamspeak.

[Blancpain]

(02-06-2018 10:48 AM)gework Wrote:  

(02-06-2018 10:41 AM)KYT88 Wrote:  

Did they take the full 6-8 weeks to verify your account or was it more lax when you opened yours?

It must have been more lax, as my account is not verified.

Lending rates have gone down really low. You're looking at $25 per $100,000 per day at the moment.

Also there is a lot of FUD about Tether and BFX not having enough cash. They've screencasted their $3B bank balance on Whalepool.io Teamspeak.

25 per 100,000 is 9% a year : ) Really a joke with something this risky. Ukranian CD's are paying 17.5-20%

[lookslikeit]

(02-06-2018 10:48 AM)gework Wrote:  

(02-06-2018 10:41 AM)KYT88 Wrote:  

Did they take the full 6-8 weeks to verify your account or was it more lax when you opened yours?

It must have been more lax, as my account is not verified.

Lending rates have gone down really low. You're looking at $25 per $100,000 per day at the moment.

Also there is a lot of FUD about Tether and BFX not having enough cash. They've screencasted their $3B bank balance on Whalepool.io Teamspeak.

they really did? any links to that?

[gework]

(02-06-2018 11:31 AM)lookslikeit Wrote:  

they really did? any links to that?

https://twitter.com/flibbr/status/958273166320730112

[KYT88]

(02-06-2018 10:57 AM)Blancpain Wrote:  

25 per 100,000 is 9% a year : ) Really a joke with something this risky. Ukranian CD's are paying 17.5-20%

Shame, P2P here I'm getting range between 15-30%.

Are the CD's hryvnia?