How the Bitfinex Funding Market Works
What Is Bitfinex Funding?
Founded in 2012, Bitfinex is a long-established global crypto exchange with a built-in funding market (Funding). The market matches two sides: fund providers who want to earn interest, and borrowers who need funds for margin trading. Bitfinex is also a sister company of Tether, the issuer of USDT. Both belong to the parent company DigFinex and have long been led by the same core management team.
How Bitfinex Works: How Funds Flow
You can think of the whole funding market like this:
Fund provider (you) --places funding offer--> Funding market <--accepts terms-- Borrower (margin trader)
^ |
+------------ principal returned + interest paid at maturity <---------------+Borrowers must post over-collateralized collateral to borrow, which is the main protection for lenders. See Is Bitfinex Lending Safe?.
Where the Funding Rate Comes From
The funding rate is the price borrowers pay to use funds, and it is set by market supply and demand: when many people want to borrow, the rate is pushed up; when funds are plentiful, it falls. That is why the rate changes every day instead of staying fixed. To see where interest comes from, read How Crypto Lending Works.
How Bitfinex Lending Offers Fill
You place a funding offer by setting the amount, term and minimum acceptable rate. When a borrower accepts your terms, the offer fills, the funds are lent out and start earning interest; at maturity, the principal and interest are returned to your account. If your rate is above the market, the offer stays on the book until someone accepts it.
Auto-Lending with FalconLend.ai
Lending by hand means watching the market and adjusting rates and terms all the time. FalconLend.ai automates your offers and lending strategy so you don’t have to watch the market manually, while your funds stay in your own Bitfinex account the whole time.
Ready? See How to Start Auto-Lending. Lending returns float with the market and are not guaranteed, so please read the risk disclosure before deciding how much to lend.
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