Crypto Interest Rates Soar

A big spike in the rate of interest being paid to Ethereum and Litecoin lenders is being shown on Bitfinex this morning. At the time of writing, rates have jumped up to 0.05% per day on ETH and 0.0443% per day on LTC. This translates into simple annual rates of 18.25% for ETH and 16% for LTC. BTC lending rates on Bitfinex remain lower, but have also moved up over the past several days, now reaching 0.0174% per day (6.35% annualized).

Crypto market watchers should notice that investors lending out their crypto balances as margin on exchanges are demanding higher rates as the price of crypto currencies has been declining. This makes sense since I’d want a higher rate to lend my crypto as I expect the value of that crypto to be lower in the future since I want to be compensated for the risk of declining crypto prices.

On Poloniex, the rate for BTC loans remains near 0.0061% per day, but the interest rate for DOGE (which has been the best performing major crypto currency over the past month) is commanding interest rates of 0.60% per day, which translates into over 250% annualized.

These wild rates might not last very long, but its informative to see how markets are reacting to the expectation of lower crypto currency prices. Borrowers (speculators) seem willing to pay higher rates for cryptos they expect to decline in value, and lenders seem willing to facilitate these loans as long as rates rise to compensate.

For more information on crypto margin lending, see my previous post.

 

 

Crypto-Games.net Bankroll Investment Update

Crypto-Games.net in a cryptocurrency casino where users can invest in the bankroll of the casino. Its a fun investment for crypto enthusiasts who want to “be the house”. I’ve been investing in the Crypto-Games.net bankroll for a few years, and below is a summary of my current holdings with associated rates of return. Investing in casino bankrolls is a high risk potentially high reward proposition, so take the numbers below with a “grain of salt”. At some periods in the past I had been earning more than 40% annualized, but now as crypto markets have matured (and some would say the bubble has burst) rates of returns from bankroll investing has decreased.

 

Starting Date Starting Value Gain/Loss % Return Total % Return Annualized
Ethereum 2018-01-16 27.51447173 6.01331517 21.86% 33.60%
Monero 2017-01-05 31.92246242 4.26750090 13.37% 7.95%
Current Date 2018-09-10

 

Clam Coin Interest Rates Soaring

Usually, the mining yield for Clam Coins, a proof of stake cryptocurrency, is high enough that I don’t use Poloniex to lend my clams, but over the past few days as the price of clam coins has been rising, the interest rate to lend/borrow clams has gone through the roof. At the time of writing, the lending/borrowing rate for clams on Poloniex is over 2% per day!

What are the reasons why the rate on clams is so high? Obviously there are far more users willing to borrow clams then are willing to lend them, the liquidity on clams is less than many other cryptos, and there are probably less clam users paying attention to the lending rates on Poloniex and so there is a lag of time between when the capital flows to Poloniex from the miners.

Generally, I’m bullish on the price of clam coins. For what its worth, they have recently broke out to the upside after trading in a tight range for several weeks on the Poloniex clam/btc market. Users who are interested in clams have a few ways to get in on this market, they can use Poloniex to exchange btc for clams, or they can bypass the exchange and use ShapeShift to send the clams to a miner like Just-Dice.

Deribit Suffers Loss – Remains Solvent

Deribit recently announced they have suffered losses due to liquidations triggered by margin calls. Essentially what happened was as the market prices changed, margin calls and forced liquidations were triggered, and the market did not have enough liquidity to fill all the orders in an orderly manner, so as positions were blown out, there was a big gap in fill prices to where theoretical prices might be. The beneficiaries were the market makers who let the market gap down, then filled margin liquidation orders at prices well below expected prices. The exchange made up the difference (since the liquidated positions were the result of margin calls), and then asked major market makers to eat some of the loss, which it sounds like they did.  Below is a copy of the text provided by Deribit.

The case highlights another situation where market participants are at risk since crypto financial intermediaries such as exchanges provide users with too little information about their financial position. With the absence of clearinghouses or independent rating agencies, users are left bearing a lot of risk, and its difficult for users to guage the magnitude of this risk.

Yesterday around 14.00 UTC we had liquidation algorithms of portfolio margin users creation a chaos in the 29 December future. This resulted finally in bankruptcies of more than 105 BTC. Further various client accounts had unjust losses due to liquidations as well.

 

We had to halt trading yesterday for a while to fix the issue before we could continue again. We are sorry for the downtime.

 

We solved the issue of the losses by contacting our biggest market makers and traders that have been making profits trading against the malicious algorithm at prices far above the market. We are grateful for their understanding of the incident and for their direct support of our exchange.

 

Further we decided to refill the insurance fund further such that all other traders will remain completely unaffected and no profits will be socialized among other traders in this session at all.

 

The total final loss left for the exchange amounts to around 60 BTC (or USD 235.000 at the time of writing). Please note that all users’ funds are safe and we as an exchange can, of course, handle a loss of 60 BTC. The exchange will continue operating as normal.

 

This was our first major incident since we opened doors for trading in the summer of 2016. We will work hard now to improve various liquidation algorithms such that this could never occur again. This might further delay the launch of new products like Ethereum futures and our upcoming Spot Exchange.

The insurance fund will also be replenished again with 25 BTC.

How to Buy Clam Coins

The price if CLAM coins has been rising rapidly lately, and I’ve been getting asked by friends, how they can buy clam coins? Clam coins are a type of crpyto currency, like bitcoins, but instead of being mined by proof of work, clam coins are mined by proof of stake. This means that miners who help update the blockchain are provided with mining rewards based on the amount of clam coins they have on the mining client. This incentive is 1 new clam coin per minute rewarded proportionately based on stake.

The easiest way to buy clams is to find a friend who already has some, and then offer to buy clams from them. They can also store your clams if you are new to blockchain wallets. Most of us don’t know anyone with clam coins, so below is a description of how a Canadian can buy clam coins.

Since there is no direct market between Canadian dollars and clams, Canadians who want to buy clam coins have to first buy bitcoins and then exchange them for clams. There are two main ways Canadians can exchange their dollars for bitcoins, one way is to use QuickBT. This method works if you want to buy a small amount of bitcoins (under 0.05 btc) and you have an account with a bank that’s part of the Interac Online network.

For all other Canadian users, QuadrigaCX is the best exchange. I’ve written a blog post on how to use QuadrigaCX, please use my link so I earn some affiliate revenue.

Once you’ve figured out how to use QuadrigaCX, and you’ve purchased some bitcoins, you’ll need to open an account at Poloniex which is one of the largest crypto currency exchanges. The market for btc/clam on poloniex is the most liquid. When you’ve transferred your bitcoins to your Poloniex exchange account, you can trade them for clams.

Once you have your clams, you have a few other options. Clam coins have very limited use as a medium of exchange since there are very few places to spend your clams. Leaving your clams sitting on a Poloniex address is fine, but you won’t receive any interest this way, and with the way the clam blockchain is built, your clams should be worth slightly less as time goes by (because of the way mining rewards are provided).

I think the best/easiest way to use your clams is to open an account with just-dice.com. This is a dice site that is the main place for users to keep their clams. Just-Dice will provide depositors with the mining reward and you can also be part of the site bankroll and be an investor in the ups and downs of this gambling bankroll. The returns from gambling are small, but the returns from mining clams are still large. So I think the best place to put your clams is at Just-Dice if you are a new user.

Another choice is to lend your clams to other users on Poloniex. You can do this manually or run a bot if you’re good with a little programming. There are open source Poloniex bots available on Github. The challenge with lending your clams on Poloniex is the rate of return is currently low. Mining your clams is a more profitable right now

If you want to make mining profit of your own, the best thing to do is setup and run the mining client. A friend of mine wrote a Gist that describes how to setup the mining client. If you can use a linux terminal, its pretty straight forward.