Bitfinex Swap Lending Tutorial

0
916
Bitfinex

Bitfinex Bitcoin Exchange

Bitfinex is the leading Bitcoin exchange. You can can trade between USD, Bitcoin, Litecoin and Darkcoin. It also has functionality for leveraged trading. This means traders need to borrow your USD or Bitcoins to build leveraged positions. These loans pay an interest…

Bitfinex USD Loans:

Why lend USD? You avoid the price fluctuations of Bitcoin, and lend out your USD at your chosen daily interest rate to traders who are doing leveraged trading.


 

Getting Started:
1. First things first. Make an account at bitfinex.com (you can use this bitfinex referral code: dCDa7Rr36g for a 10% discount). You can now fill out step 2 on the sign up page or use https://www.bitfinex.com/?refcode=dCDa7Rr36g for the discount instead.

2. Go to Account Settings (https://www.bitfinex.com/user/edit) and make sure it is set to “Deposit” or “Trader”. Set your fees to USD, as it’s easier for accounting purposes.Bitfinex Account Type

3.  Go to manage wallets tab: www.bitfinex.com/managewallets Basically, this separates your funds between each of the three exchange types. Transfer some USD into your “Deposit account”
Bitfinex Wallet Transfer

4. Ok, now that you transferred $ to your “deposit” account, lets create a swap. Pick the “Total Return Swaps” tab at the top, and choose USD.
Total Return Swaps


 

Total Return Swaps:

This section is about funds that are used to make leveraged positions. Lately, swaps have gotten very popular on Bitfinex, with the sum of USD swap loaned out reaching over 30 million USD, and rates typically hover between 0.02% and 0.7% per day. That’s a pretty good return per year, expect 7% at a minimum, but you can also easily achieve 20%, or even 30%.

You can bid/offer liquidity in the Total Return Swap tab.
The right tab is all quite self explanatory.
Deposit Summary

USD: Your total balance
USD Swap total: How much you are currently lending.
USD Swappable balance: How much you have left to lend.

 

It is important that you get good rates for your USD loans, as this will give you a better return, helping you hit 20% yearly and up. It makes less sense to loan out BTC, since the daily interest rates are so much lower.
This can be very lucrative if you want to profit off the high rates without being exposed to BTC price movements. It certainly gives a better return than keeping your money in the bank.

Setting up the loan:
1. You enter the number of periods in days (default is 2 days), choose the % rate per day and enter the dollar amount you want to loan out and click offer swap.
Rate % per day: Look on the right side, and try to get the highest rate you can, without being unrealistic, the Flash Return Rate is usually a good indicator of what rate to expect. if your rate is too high, no one will borrow your USD, and you will not get any interest. Having a rate too low, is a lost opportunity of having the potential to having it loaned out for a higher rate.
Lending USD(In this example, I am lending out $100 at a rate of 0.0202% interest per day.)

2. Click “Unfilled swap demand/offers” subtab to check any of your loans that haven’t been filled by the leveraged traders.
Swap Placed

3. Click “Swaps currently provided” subtab to check what you are currently loaning out.
Bitfinex Swap Executed(In this example, we are currently lending out 3 orders, totalling $100 at a rate of 0.0202% per day, for 2 days, or until the loan is repaid by the user who borrowed the USD.)

4. Interest is paid daily at about 1am GMT. Check the History tab to see how much you made.
Bitfinex History

5 Click “Autorenew” subtab to set a rate at which you are happy to automatically lend out any USD in your Deposit balance. This allows you to get compound interest.
Bitfinex Autorenew(In this example, I have chosen to auto lend at a rate of 0.1% per day for 30 days.)

Flash Return Rate: This is a dynamic rate that usually reflects the rate you get when you take a leveraged position without reserving funds. If you are the borrower and funds are scarce, you will likely receive swaps with a much higher interest rate than what you could get at market.

Autorenew: The autorenew tab reinvests your interest earnings into loaning more swaps. This method allows you to earn compound, rather than additive interest on your principal. Be warned though that this means any USD you move to that account with immediately get sucked into the loan ecosystem.

Swaps are calculated by the hour. This means that when someone closes a swap after say 20 minutes, they have to pay at least for an hour.

You cannot close swaps that you loan out until they expire or the borrower closes them or gets margin called. So you want to try to not loan out your funds on a very low rate, they could get stuck earning very little for 30 days.

You can check swap rates and sums historical data at this site:
http://bfxdata.com/swaphistory/usd.php
or simply by going to:
https://www.bitfinex.com/pages/stats

Don’t forget you can use this bitfinex referral code: dCDa7Rr36g for a 10% discount on any fees for your first month.

Thanks

 

Disclaimer: It goes without saying, but don’t invest more than you can afford to lose. Having your funds held by a third party always carries an element of risk. Bitfinex to date, has not lost any customer funds that I am aware of. But neither did Bitstamp until they got hacked.

If you do hold a considerable amount of of BTC or USD on Bitfinex then always use 2 Factor Authentication. You also need to keep your email secure, preferably also with 2FA.

NO COMMENTS

LEAVE A REPLY