“Suppose we have an exchange that, due to resource limitations, is limited to 5 decimal places for orders”, or how Kraken is scamming to stay solvent.

Suppose we have an exchange that spams you with pop-up ads. Suppose “we” have an exchange that sends you e-mails like this :

Hi Peter,

If you trade ETH, LTC, XRP, XLM, or XDG on Kraken, please read the following announcements to learn about:

  1. The ETH hard fork
  2. Reversing XBT/LTC, XBT/XRP, XBT/XLM, and XBT/XDG pairs

The ETH hard fork

As you may know, the Ethereum community has elected to do a hard fork in order to resolve the DAO exploit.i The MainNet block on which the hard fork will occur is set at 1920000, which should be reached on Wednesday July 20 (this is only an estimate however).ii

How will Kraken handle the hard fork?

ETH deposits and withdrawals will be disabled approximately 1 hour before the hard fork activates. Trading will continue as normal during the fork. All ETH on Kraken after the fork will be tokens of the winning chain (i.e. the chain with the most work on it).iii ETH deposits and withdrawals will be enabled again once the winning chain has become clearly evident. We expect the hard fork process to be smooth and quick, but there is no certainty of this.

Where to find the latest news on the hard fork?

  • https://www.reddit.com/r/ethereum
  • https://blog.ethereum.org/

Reversing XBT/LTC, XBT/XRP, XBT/XLM, and XBT/XDG pairs

On Tuesday July 19 at approximately 2-4pm UTC we will be reversing some of our bitcoin-altcoin pairs as follows:

  • XBT/LTCiv → LTC/XBT (with 6 decimal place precision)
  • XBT/XRPv → XRP/XBT (with 8 decimal place precision)
  • XBT/XLMvi → XLM/XBT (with 8 decimal place precision)
  • XBT/XDGvii → XDG/XBT (with 8 decimal place precision)

What will happen on July 19?

All trading on XBT/LTC, XBT/XRP, XBT/XLM, and XBT/XDG will be halted. All open orders will be cancelled with the exception of basic limit orders which will be converted to their nearest equivalents in the new reversed markets. This means that buy orders will become sell orders and sell orders will become buy orders (since an order to sell XBT/LTC is equivalent to an order to buy LTC/XBT). Also, prices will be converted to their inverse 1/x equivalents. This price conversion cannot be perfect due to rounding errors and precision limitations. If you are concerned about your orders being converted, please cancel all your open orders prior to July 19 at 2 pm UTC.

Why are these pairs being reversed?

  • Due to strong client demandviii
  • To improve the uniformity of our markets (all altcoins priced in terms of XBT)
  • To align our markets with other exchanges

Why did we originally do it differently from other exchanges?

Explained here: https://bitcointalk.org/index.php?topic=290799.msg5113984#msg5113984ix


Contact Kraken support: support@kraken.com

Thank you for choosing Kraken, the trusted and secure digital assets exchange.

The Kraken Team

Suppose you have a head that’s limited to 5 brain cells. Then what ?

___ ___ ___

  1. Proper link to DAO exploit.
  2. This “estimate” timeline for the hardphork has come and gone before and there’s really no reason to expect that this time will be any different. The community will prevail, it must because reasons!, but that doesn’t mean you’ll be alive to see it. Heaven‘s only a day away, right Annie ?
  3. So Kraken steals all the tokens you would’ve had and could’ve sold from the “losing chain” eh. Nice little scam. For those who don’t know how forks work, two post-fork tokens are created for every pre-fork token. Essentially, when some derps decide to go rogue and create his own altcoin off the main chain (whether said derp is Queen Vitalik or his puppeteer Fat Tony matters not), you’re not in any way obliged to follow them off the cliff and into perdition. You may, as an active agent, decide to follow some other folks, perhaps some who appear to be slightly less derpy in your mind – that’s your prerogative – and whether you’ve chosen the correct shirt of history will be quickly made manifest as the two post-fork tokens compete against each other on the exchanges for supremacy (ie. value). Lest there still be any confusion on this point, there’s no “community say-so” involved in this process, just markets doing what markets do. In essence, you’ll be called upon to sell one post-fork token and with the proceeds buy the other, thus either enriching or bankrupting yourself, depending on the accuracy of your analysis. Unless, of course, you delegate your agency to Kraken… or the state… or your mother and father for all the difference it makes in this cold cruel world, in which case you can’t meaningfully be said to exist, can you ?
  4. LTC = Litecoin, which is down 63% since it was taken around back and shot on these very pages. Sorry for your loss.
  5. XRP = Ripple.
  6. XLM may or may not have anything to do with Microsoft Excel.
  7. XDG may or may not have anything to do with eSports.
  8. “Clients have demanded that we stay solvent so that they don’t have to move over to the trollbox at BTC-e. So we’re obliging them the only way we can!”
  9. Archived, and from whence this blog post title is derived. To quote the relevant bits from “Dargo” :

    I see, your right that seeing a string of zeros denoting a bunch of alt currency/BTC pairs isn’t pretty.On the other hand though, if you do add almost any other alt coin, the exchange rates will be a very large numbers.

    It’s not an issue with how pretty the numbers look.

    We should walk through this with an example to make it really clear what the issue is. Suppose we have an exchange that, due to resource limitations, is limited to 5 decimal places for orders. This exchange wants to add a currency pair so that users can trade between currencies x and y. Should the exchange use pair x/y or y/x?

    Let’s say that given current market prices on other exchanges, the price of x/y is currently around 0.01. But the exchange wants to allow for the possibility that this price could crash by at least a factor of 100. After all, currency x isn’t nearly as well established as currency y and it seems much more likely that currency x might crash relative to currency y than the other way round. So, the exchange wants to allow for the possibility that x/y price might drop to a price of 0.0001.

    But if that happens, the exchange will only have one decimal place left to work with. Since the exchange is limited to 5 decimal places, it can only allow traders to place orders in increments of 0.00001. But there’s only 10 such increments between 0 and 0.0001. This means that if price of x/y dropped to 0.0001, trading would be *severely* limited. To get a sense for how limited it would be, suppose that we limited the order book for XBT/EUR to increments of 50 EUR. So you could place a limit buy or sell for 500 or 550, but nothing in between. It would be mighty inconvenient already to have orders limited to increments of 5 or 1, but 50 would be a disaster – liquidity would be absolutely horrible.

    This problem disappears if the exchange goes with pair y/x instead. The price of pair y/x is currently around 100. If currency x crashes relative to y by a factor of 100, then the price of y/x will go up to 10,000 (congrats y/x longs! Cheesy). But this doesn’t present any problem for trading on the exchange – orders can still be placed with very fine-grained precision.

    Hence, given the scenario the exchange wants to be prepared for (currency x crashing relative to y), pair y/x is the better choice. Now if all the other exchanges are using pair x/y, this makes the choice less clear-cut, but still it’s not unreasonable to think that y/x is the better choice.

    The above is essentially the reasoning that led us to select XBT/LTC rather than LTC/XBT. We’re not LTC bears, but we do figure that LTC is more likely to crash relative to XBT than the other way round.

    The bending over backwards in order to accommodate the idiot scammers and their idiot scamtokens and the scammed idiots who trade them, I tell you. Scamcoins make scammers, indeed.

11 thoughts on ““Suppose we have an exchange that, due to resource limitations, is limited to 5 decimal places for orders”, or how Kraken is scamming to stay solvent.

  1. The one mystery here: why would anybody warn people in advance, prior to robbing them?

    • Pete D. says:

      It’s part of this whole “transparancee” movement sweeping the sovietesque lands whereby governments and their multifarious tentacles read their playbooks aloud in the hopes that the “communitee” will “support” their “honesty” even as they murder baby kittens and drive over kindly grandmothers. Governments announce tax raises and minimum wage increases sometimes years in advance, this is no different.

  2. Pete D. says:

    In continued lolcow milkery : anyone who bought into this Kraken scam and therefore lost out on the Ethereum “Classic” fork must be kicking themselves right now.


    Kick little shoeless cobbler’s son, kick!!

  3. Pete D. says:

    As of about 5 hours ago, bowing to MY indomitable pressure, Kraken has yielded and will now credit pre-fork ETH holders with ETC as well (archived). Don’t spend all your scamcoins in one place now, y’hear ?

  4. […] in the door at a $1… But hey, still better than $660 or whatever the ticker on the “exchanges” is these days. […]

  5. Pete D. says:

    This just in! Krakhead is now mining new shitpits of desperation with zcash, the scamcoin I warned y’all about in January of this year. It’s… it’s… ALIIIIVEEE!!!1

    Now that USG.ETH has been publicly revealed as the festering forkhole we always knew it’d grow up to be, Zooko et al. are being thrown into the line of fire against a vastly superior enemy. Make no mistake, they too will be mown down, as cannon fodder are wont to do, but unfortunately for Bahamas, he’s still nowhere near depleting The Republic’s ammunition stores.

    • shinohai says:

      It’s all too perfect isn’t it? I cannot wait to see how this whole “trusted” setup works out for these morons.

    • Pete D. says:

      Zcash will work out the way the rest of the ersatz cheeses and wanna-be pabulums work out for redditards : slow, delicious poisoning.

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