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by NhanH 1718 days ago
The difficult part seems to be getting someone lending you $1m in USDT, isn't it? From their POV, you're getting exposed to BTC volatility, and the collateral is likely to be too high to make this practical.
1 comments

You’ve missed something, but I’m not sure what.

Nobody is lending us anything in the above example (well, Binance perps and CME futs have embedded leverage but that’s another story).

> You’ve missed something, but I’m not sure what.

This is what I'm trying to figure out too.

Basically, how do you buy $1m worth of BTC/USDT perps without depositing $1m of USD into Binance? Let's say if we put in $100k USD with a 1:10 leverage, it means the position on Binance is wiped out if BTC drops by more than 10%. So the only way for this to work is to deposit $1mil of USD into Binance and opening the position. But this means we lost a whole $1m when Binance implodes, cancelling our gain in the short position.

Otherwise, we need to borrow $1mil of USDT to open the Binance BTC/USDT position.

What did I miss?

You will need to monitor your positions (both long and short) and transfer the margin accordingly between each account.
On May 19th, Binance froze up and prevented people from adding margin. Lawsuit about it now. The claims are that Binance was insolvent and redid the trades to stabilize themselves. See Frances Kim for info or an FT article about the lawsuit.

Whatever the reason, no guarantee you can deposit collateral.