Robot bitcoin funding
Default rates in this scenario are high, especially in the cryptocurrency space where the lender has little recourse if the borrower defaults. As soon as the borrower closes their trade, the funds are automatically returned to the lender. Additionally, Poloniex is able to implement strict risk controls for borrowers, where the borrower's loan is auto-liquidated if their available collateral drops below a certain threshold. As of this writing, our lending bot has completed , loans, with 0 defaults.
The cryptocurrency space has been plagued with exchange hacks and failures, such as the now infamous Mt. If an exchange becomes insolvent or otherwise loses customer funds, there is a high probability of a substantial or total loss for the lender.
Exchange outages, and periods of high volatility are highly correlated because the increased trading volume caused by volatility taxes the exchange's servers. A temporary exchange outage during a period of high volatility could lead to margin traders losing all of the collateral in their accounts as well as some of their borrowed funds.
In this situation, the trader would be unable to repay the entirety of their margin loan. When funds are on loan to margin traders, they are not available to be exchanged until the margin loan has matured.
Because the borrower will be making money from the crashing price, they will not want to close the loan, and you as the lender could be left holding the bag. While it is not without risk, peer to peer margin lending can be an effective way to earn a significant amount of interest on idle cryptocurrency.
It carries significantly less risk than trading, and should carry a substantially lower default rate than peer to peer lending on platforms where users have full custody of their borrowed funds. Do your diligence, never invest or lend more than you can afford to lose, and consider automating your lending for higher returns with less effort! This was really helpful. I just searched google for lending on poloniex and your article came up among others. It is the best. I invested in Ether and as soon as I tripled my money I took out my original investment.
Now I consider all my gains to be the house's money. So I'm looking to loan some out. Glad I found your post! The Long and the Short of Lending on Poloniex. Overview At its core, lending on Poloniex is peer-to-peer margin lending. Mechanics The mechanics of lending on Poloniex are straightforward. Supply and Demand In the lending market, demand originates with margin traders who want to borrow a specific cryptocurrency for the purpose of speculation.
Risks Lending to margin traders on Poloniex carries three main risks for the lender. Conclusion While it is not without risk, peer to peer margin lending can be an effective way to earn a significant amount of interest on idle cryptocurrency.
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