full image - Repost: Professional naked shorting (from Reddit.com, Professional naked shorting)
Mining:
Exchanges:
Donations:
Classic shorting works like this:the shorter borrows Monero coins (usually from an exchange)the shorter sells these coins to some buyersduring the loan period, interest must be paid and a suitable deposit must be providedthe shorter later buy these coins back cheaper and thus repay the loan (and usually earn the difference)The disadvantage of this (for exchanges) is that exchanges must have real coins if they want to provide classic shorting. The price of these coins can fluctuate and these stocks lose value. As we see in many practical examples, exchanges do not like to hold Monero coins. Sometimes they entice investors to provide coins for them and share the profit with them.This is where professional naked shorting comes in:the shorter borrows Monero vouchers (created from nothing at the time of loan)the shorter sells these vouchers to some buyersduring the loan period, interest must be paid and a suitable deposit must be providedthe shorter buy these vouchers (or coins) back and thus repay the loan (and usually earn the difference)This way, the exchange can earn interest without the need for real coins.A slight problem can sometimes occur if there are too many shorts open and there is a shortage of real coins and there are problems with withdrawals. That's when withdrawals are closed. When withdrawals are closed, the price usually drops. Then some shorts are waiting to be closed. This reduces the number of vouchers at the exchange and attracts real coins. Then everything works again.In the past, Kucoin offered nice interest rates on XMR, reaching as high as 100% APY (mainly in turbulent times). Later this all changed and interest rates dropped to ridiculously low percentages.
Social Media Icons