Bitfinex Borrow is a peer-to-peer (P2P) funding platform that allows you to borrow funds from other users by using your cryptocurrency or fiat assets as collateral.
Note: This addition to our funding market allows you to borrow against your existing assets.
How to request a loan on Bitfinex Borrow?
1. To begin, log in to your Bitfinex account or create one if you do not already have one.
Important: Bitfinex Borrow is available to Basic Plus and higher verified users, and your verification level determines the borrowing choices available to you.
For example, you must have a full verification level to borrow fiat currencies.
If you have not verified yourself above Basic Plus, please submit your application here.
2. Next, you can move or deposit funds to your margin wallet to use them as collateral for the funds you want to borrow.
What currencies can be used as collateral on Bitfinex Borrow:
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Note: The amount of funds you borrow differs according to the collateral type and the currency type you are borrowing, depending on several factors, such as their quality and liquidity. Read more about collateral further down.
3. Then, visit Bitfinex Borrow and customise your borrow request according to your needs. As shown in the image below, enter the desired loan duration and amount:
Note: The minimum amount you’re permitted to borrow is $175 equivalent; the system will reject any amount less than that.
4. You can then select the currency to be used as collateral, and the needed collateral amount will adjust automatically in accordance with the amount borrowed.
Note: If you want to utilise all of your funds as collateral, click the green dot next to You can use X.XXXX BTC below the collateral amount form to automatically fill that area with all of your available funds. You can also use this section to see the maximum amount you can borrow.
5. Finally, to confirm the request, click Borrow.
Your collateral will be locked, and the requested fund (if you meet all of the criteria) will be available for withdrawal immediately in your margin wallet.
At this step, if you visit your Bitfinex main trading page, you will see a newly created margin position for your loan that you can increase if you decide to borrow more.
Note: To return the loan, you need to claim the position.
If you choose to close your position, you would be trading against the current open position and therefore be using your collateral to make a trade for your borrowed funds.
Important: For more details on your borrowed funds, you can check your Ledger Entries (available by clicking on your balances box on the main trading page, as seen in the screenshot below) or your Reports > Ledgers.
Note: Because Bitfinex Borrow displays an updated price typically every 15 seconds (as opposed to in real-time) to optimise the user experience, the credit amount visible on the Ledger Entries may slightly differ from the amount shown Bitfinex Borrow. Bitfinex Borrow works with the exchange's most recent matched price (current to 15 seconds). Depending on market movement, the amount indicated on Bitfinex Borrow could be higher or lower than the actual price used for the loan transaction.
What are the available interest rates on Bitfinex Borrow?
You may choose to borrow at a rate that is appropriate for your needs:
- Variable interest rate; or
- Fixed interest rate basis.
What is the purpose of a variable interest rate?
If you are borrowing on a variable interest rate loan, your loan interest fee does not start until you move funds out of your margin wallet. So, until you remove funds from your margin wallet, the balance you see is a hypothetical amount that you could potentially borrow based on the collateral you've provided. Therefore, it is not guaranteed to be the same as, or reflective of, the actual amount you can borrow when you try to initiate a loan transaction by removing funds from your margin wallet.
When your loan begins, Bitfinex Borrow will automatically route and execute one or more market order loan transactions on your behalf to receive the amounts you need from lenders in the Bitfinex financing order book. Each of those loans will have a set term; however, Bitfinex Borrow will repeat the automatic routing and execution transaction described above on your behalf as those loans expire until you repay the loan.
What is the purpose of a fixed interest rate?
If you are borrowing on a fixed interest rate loan, your loan starts as soon as you accept the offer and receive the borrowed funds. You’ll start paying interest right away, whether you leave your funds in your margin wallet or take them out. Your interest rate is fixed for the term of the loan you agree upon with one of the lenders in the Bitfinex financing order book.
Note: If you do not repay the fixed-rate loan before it expires, Bitfinex Borrow will enter into a variable rate loan on your behalf to repay the fixed-rate loan when it expires.
How to set up Borrow rates on Bitfinex?
As mentioned, the system will automatically renew any funding loan when the period ends at the best rate available within a specific time frame. Nonetheless, we recommend that you adjust the rates according to your needs and circumstances to suit your trading objectives better.
There’s no additional fee in doing so, and you can find the steps below using an example with BTC as collateral to borrow USD:
1. First, find the currency you are currently borrowing on the Funding page.
For example, it could be USD funding page;
2. In the Taken: Using a widget, you should see the amount, rate and expiration date of your current funding loan;
3. Then, use the Funding Form to get a new loan with a new interest rate. You can view the current funding market rates using the funding order book;
4. Once your funding bid has been matched and executed, you will find it in Taken: Unused, meaning that it has not been used in a position yet;
5. You can now close your previous utilised loan in Taken: Using, and your Unused loan will automatically replace it, allowing you to set up a new borrow rate manually.
How does collateral work on Bitfinex Borrow?
The successful creation of the loan would open a long or a short margin position, with the position size determined based on the quality and liquidity of the collateral and the borrowed currency.
If you are using cryptocurrency as collateral, you would then be opening a long position. Conversely, if you are using fiat as collateral, you would be opening a short position.
You'd be starting a BTC/USD short position using Borrow if you wanted to borrow BTC and use USD as collateral. To avoid being liquidated, you, as the borrower, must keep the collateral above the minimum maintenance margin requirement. PnL (Profit and Loss) will apply to this position, as well as borrowing fees and interest.
The amount of borrowed funds varies depending on the type of collateral and the borrowed funds themselves, and other considerations such as quality and liquidity. This amount is calculated using the initial margin requirement of the underlying margin pair.
For example, If you use Bitcoin as collateral, you must meet the initial margin requirement of 111.11%. So, for example, if you're borrowing $900, you'd put $1,000 worth of BTC into your margin wallet as collateral.
Each collateral and borrowed currency is subject to a minimum loan amount of $175 equivalent.
How to repay borrowed funds on Bitfinex Borrow?
You can return the funds by depositing the tokens or fiat currency you borrowed to your margin wallet. Once you put the funds back into the margin wallet, the funding allocated to the position will stop. If you would like to get your collateral back, you may claim your position. You can repay the loan, in whole or in part, at any time.
There is no early payment fee associated with repaying borrowed funds; however, if you use the loan for less than 1 hour, you have to pay the interest for a minimum of one hour.
Suppose you initially borrowed funds using a fixed-rate loan, and you do not repay that loan before it expires. In that case, Bitfinex Borrow will convert it to a variable rate loan by securing a loan at the best available rate. This rate will continue to change as each loan expires and a new one is acquired.
What are the Fees on Bitfinex Borrow?
Borrowers will pay a loan creation charge equal to the maker fees that would apply if the loan transaction was an order on the exchange, as well as interest.
Lenders will pay a fee on the interest they collect through lending in the peer to peer funding market.
The interest charged for a variable rate loan will change throughout the term of the loan. When you start borrowing under a variable rate loan, Bitfinex Borrow will automatically route and execute one or more market order loan transactions on your behalf to obtain the funds you wish to borrow from lenders in the Bitfinex financing order book. Each of those loans will have a set term; however, Bitfinex Borrow will repeat the automatic routing and execution transaction described above on your behalf as those loans expire until you repay the loan.
Note: Rates, payment information, and other information represented on Bitfinex for a variable interest rate loan are estimates based on current market conditions. Those figures are speculative and are not guaranteed to be the same as, or representative of, the real interest rate, payment requirements, or other information applicable to a loan you may obtain. Those values are provided primarily for informational reasons and as a personal reference tool.
The interest charged for a fixed-rate loan is fixed for the term of the loan. You will agree on a rate and duration for the loan with the lender through Bitfinex Borrow. Suppose you do not repay the fixed-rate loan before it expires. In that case, Bitfinex Borrow will convert it to a variable rate loan by acquiring a new loan at the best available market rate.
For further information, please visit our fees page at https://www.bitfinex.com/fees/.
If you have any questions about your loan or Bitfinex Borrow feature, please contact Bitfinex Support. We’ll be glad to assist!
