A few changes have been made to daily loans:
The loan rate has been raised to 2% per day.
The max cumulative loan you can receive on any single market has been lowered to 2% of your net worth.
̶Y̶o̶u̶ ̶m̶u̶s̶t̶ ̶h̶a̶v̶e̶ ̶a̶ ̶b̶a̶l̶a̶n̶c̶e̶ ̶o̶f̶ ̶l̶e̶s̶s̶ ̶t̶h̶a̶n̶ ̶1̶,̶0̶0̶0̶ ̶m̶a̶n̶a̶ ̶t̶o̶ ̶c̶l̶a̶i̶m̶ ̶a̶ ̶l̶o̶a̶n̶.̶
The terms of previous loans are unaffected by these changes.
We are still very far from the final iteration of loans. Further changes are likely. Suggestions welcome.
The max cumulative loan you can receive on any single market has been lowered to 2% of your net worth.
Someone's gonna make 50 identical markets then
@JeromeHPowell spreading a bet over multiple identical markets effectively bypasses the per-market max loan
Is it easy for a user to find out their current leverage factor? I click the loan button when I remember to because more liquidity is more better, but in the back of my mind I do worry about being overleveraged.
@Eliza Can you use your moderator privileges to push this up the features list ike you did for MC liquidity issues......please.... I'm begging
@JeromeHPowell I have much less influence on such things than you might guess. These are things I have wanted for years.
@Eliza haha.....I mean i appreciate @SG the team and the team for the recent changes (the new game is very fun!!!! thanks), and this is probably about trial and error, but loans could have so many better features/improvements.
All of this kind of why @realDonaldTrump and I created @ManiFed in the first place, so that soon people will not have to choose between a rock and a hard place to deal with the convoluted loans system built-into the site, or have to rely on personal connections, or have to go to a niche discord chat to leverage up, they can go to a website where people can give and recive credit, anyways, rant about loans over.
@AhronMaline currently it is in development, we have shown what the website looks like if you go on the Discord. Also, we have beta testers so lmk or @realDonaldTrump if you would want to join
Long term markets will always still be terrible, as the market becomes a KBC in the meantime. Loans don't solve this fundamental problem
Some general observations:
I've never been a big fan of the word "loan" in this case, I kinda wish there was a different name for the system.
Everyone who has any opinion at all on this needs to also understand at least a little bit about the motivation -- that means all of "why do we have loans at all", "why are they set up like they are", and "why are we making a change to the loans today".
The current system does a poor job of showing users important things like "What markets am I getting a lot of loans from", "What markets am I already maxed out on", etc.
Due to inertia, anyone who wants to propose something radically different will need to substantiate it with clear and compelling reasoning.
There are still many easy small wins with the current system that have never been attempted.
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On this specific change:
The proposed idea where your previous loans under the 5% cap continue paying up to 5% is a reasonable compromise between the two systems, I like that.
Doing it as an instant thing rather than pre-announced is a little jarring for users, probably could have had a smoother landing if it was "starting Friday...." -- then those updates could be folded in before it is actually implemented.
At this point it's worth waiting to see the effect of changing the loan rate before adjusting it again.
Users who are interested in this should collect data on whether the 2% Net Worth cap has a measurable effect in markets compared to the previous 5% limit.
+1 about not showing which markets have maxxed out their loans! I literally need to hit "sell", input all my shares to see what the loan repayment would be, and compute whether it's 5% of net worth.
@Eliza You can also see your current loan amount in two other places:
Your user portfolio page, trades tab, expand the market you're interested in
The "Your Trades" box on a market page (hit the button to expand, it's at the bottom)
@ian can we add a column on the user portfolio Trades tab for "current loan amount" so users can easily sort markets by loan size? I think this would be an extremely valuable feature compared to the amount of time I envision it would take to implement.
@Eliza Oh nice, I never knew that the rows under the trades tab can be expanded! You need to scroll to the right to even see the tiny down arrow...
And my lists of trades of each market tends to be very long, so yeah, I don't generally see the bottom
@Eliza At 2% net worth cap, you'd need to find ONE HUNDRED markets to spread your bets across before hitting 2x leverage. That's an extremely diversified portfolio. Manifold doesn't have the markets to support that, and traders don't have the time. It seems excessive.
IMO 5% is probably fine, but I haven't done math. I think any proposal to fiddle with that number should include at least a tiny bit of math. 1% seems too low, 20% too high, and I'd need math to have strong opinions in between those.
I think in general people will have bigger bets on fewer markets, scaling down from there... a soft cap that had a higher percentage on the first couple markets might be more mathematically sound, but maybe the fact it's harder to understand makes it not worth it.
@SimonWestlake hurts accuracy of long term markets, hurts liquidity of users that have sunk a lot of mana into markets with an expectation of the 5% cap
I'm not sure of the constraints on loans. I'm guessing the main one is that it's bad to let users send their net worth deep into the negative?
@retr0id yeah, took me quite a few months to underdtand them. There definitely should be a detaled explainer post for them. But effectively, they let you bet the same mana on several different markets. Too good to turn down...
Please revert max cumulative loan change. 2% makes long-term markets far worse
I can see why you've done it, but that 2% cap is going to bite hard for me. 5% was already a challenge.
Btw, I really appreciate these announcements. I used to find it disorienting when things were changed and I didn't know what. :)
@Fion Oh man these announcements make such a highly positive difference compared to how it felt when changes were rolled out before
@Tumbles yeah. Advance warning would still be better, but compared to silent changes this is night & day
fwiw, i think a better long-term would be paying 5%/yr interest on all positions and then make loan rate very generous but with the house charging a sizeable fee embedded with the loan
@SG you should do the math on that. Even at 1%, loans are 365%/y unless the fee is something like 1% of the loan amount, 5%/y would not be nearly enough to make things worthwhile. I think at 2% one-time fee, loans would still be slightly beneficial for me, but if it's higher than that, my trading would significantly slow down. If loans fee is structured like an interest - not quite sure where the break-even point might be,,,
@AnonUser I think he's saying 5% as actual interest - mana that you gain and don't pay back. This in parallel with much larger Loans, that you do pay back plus a fee
@SG I would avail myself of the loans even with a reasonable fee, but wouldn't that reduce mana purchases?
Whatever method is implemented, this loan mechanic would be competing with all of the Manifolders who act as creditors for peer to peer loans.
We will find a way to make mana have the "time value of money". It's just economics.
@SG I haven't thought much about this, but I always found it odd that the loans are done market-by-market rather than based on the whole portfolio.
For instance you could lend up to 70% of a user's invested portfolio (based on current prices and lower the threshold for undiversified portfolios). If they go above 70% you garnish their trade/resolution payouts until they drop back below.
@travis Manifold doesn't know how to track correlation risk and the root of the problem is probably because markets are user generated. If they knew how to calculate this type of risk, the loan system would be more sophisticated.
These schemes mostly end up just dictating "how much leverage do we give this guy, and how fast".
@Eliza wait what? Where does this rule appear? I mean, you'd need 160 markets each with positions 5% of net worth, but I would have gotten there eventually...
I am tempted to just revert this change right now. The vast majority of feedback in the last couple of hours has been negative, and I don't have a strong prior conviction in these changes.
@SG What was the previous system? The new one seems similar to what I remembered, except the leverage cap, which makes sense to me.
@SG I actually think this is overall good, if combined with grandfathering for existing investments. I didn't like the way that large Loans "hollow out" my positions
This thread is a strong advocate for making more frequent changes. When nothing changes for too long a time, we get users who don't even know that Manifold makes random changes with no warning as their default mode of action.
Things have been set in stone too long 🫠
@Eliza it's an advocate for something, but I'm not sure if "more frequent changes" is it. If Manifold wants to be a steady player in the prediction market game, you're going to have to move from "move fast and break things" as the default mode to "reliable and predictable" at some point. Uncertainty is very bad for markets.
All of the above is general observation - I don't have any strong feelings on this change in particular, personally.
Why was this done overnight with no advanced warning? No way for people to offset any costs or disadvantages on their current loans?
@ChurlishGambit Loan rate changes don't affect previous loans that have been made. Other than annoying all of you (which I promise I'm not trying to do!), there is not much harm with fiddling with loan rates.
If you all truly hate this change, we can go back to the previous rates.
@ChurlishGambit you got a bigger loan today than on Jan 5, (2days ago) I’m not so sure of the problem?
@Jack1 I'm talking about the issues other people are having—& asking why it was done in the middle of the night, is a question everyone should ask. Why are you trying to brush me off? You don't even work here
@ChurlishGambit I’m not, I’m trying to understand the problem, I thought if you got a higher loan it would be better.
@SG his complaint was about lack of advance warning; I think he's right about that
@SG I personally think the issue is with how markets are served to users in the first place.
For example, when I'm coming in with the mindset of finding stale markets with good alpha, I literally type 2 random letters into the search bar, look for a topic I find interesting, then poke around for a market that hasn't been traded on in a month or so.
Currently, the front page is a winner-takes-all of the eyeballs game. It's a snowball effect. Winning engagement begets more engagement.
Maybe there could be a Tik-Tok-like feed for users, except instead of shortform videos, it serves up markets?
I just know from experience that, if you're willing to explore in places where nobody is looking, there are some untouched markets that have a lot of easy mana ripe for the taking. I've kept quiet about how I do this and kept it a trade secret until now.
@Eliza @SG Trying stuff is good. Announcing that you're trying stuff is also good. You have to accept that at least 90% of the people who care enough to comment on the change are people who think it's bad for them, and a good chunk of those people will be wrong about that. To do experiments well, you have to commit to them long enough to see how behavior changes, communicate those behavior changes, and also never forget that any measurement of behavior change is a proxy. Where product teams often fail is looking only at behavior and disregarding comments, but the behaviors they can express given the affordances of the platform aren't necessarily what they want to do. High-signal comments illuminate the delta between the proxy measurement and what people actually want to do. So doing experiments well feels like being told constantly and loudly that you aren't listening while also listening very carefully.
Feels weird to drop this stuff as a second-level comment, but whatever. I have a lot of experience here and if you want to discuss more, feel free to reach out.
@Quroe Yep. There's a random sort option on the browse page that makes it very easy to find mispriced markets.
The most profitable trading strategies are the ones nobody else is doing, yet the majority of trading activity is concentrated on a few basic trading strategies on a small subset of markets.
@Quroe what I personally did was go through the leagues, starting from bronze up, user by user.
@SG @Eliza on the subject of trying stuff: I'm mostly in favor.
However, I think that loan system is one of the subtlest parts of the site, and should probably get the highest bar for careful thought, review, math, and evidence of almost any change you might consider.
I've made several proposals on the topic over the years; it has never been my intent that those be considered ready for immediate implementation without discussion.
This is very unfortunate change - for a while now I was very carefully limiting my positions to not significantly exceed 5% (and finding opportunities to sell positions where I had invested more than that), and now I am going to get stuck not being able to get much in the way of loans, because majority of my money are invested in multi-year markets, where I already have > 2% loan taken :( Any chance those could be grandfathered? My total loans are currently about 1.2x my total net worth, so 2% of total net worth is < 1% of my total investment...
Also. for multiple choices markets, is the limit per market, or per position? (I assumed it was per position, not per market, but perhaps I was wrong)...
@AnonUser "total investment" is defined after subtracting loans. It can never be more than "net worth"
@AnonUser I agree that some form of grandfathering would be appropriate here.
I suppose the Loan could be set to the max between what it is according to the new policy, vs (the old policy but not counting shares purchased after Jan 6)
@AhronMaline I meant actual total net investments (total value of all shares owned), not investments - loans.
@AhronMaline everything is grandfathered! only new loans are affected. the terms of previous loans do not change
@SG we mean grandfathering in the sense that we'd still get Loans that we were "promised". We made long-term investments on the assumption that we'll eventually get the mana back, up to 5% of net worth. Now that won't happen, so we're stuck with large investments that are no longer worthwhile.
@SG hopefully you can see how this is a problem for people suddenly finding themselves with a significant fraction of their investments "locked up" for the next few years, unable to take loans on them, and hesitant to invest into long-term markets in fear of further unfavorable rule changes. For me, the likely effect would be that I would become less active because many of the markets I want to trade I am already above 2% in (again, 2% of net worth is < 1% of total shares owned). And according to Achievements page, I am currently #19 in "Total number of trades executed (excludes API trades)" (although it does look like the actual number of trades has not been updated in a while).
What's the motivation for reducing max cumulative loan? I think this will hurt the accuracy of long-term markets, one of Manifold's unique selling points. Rational traders may still spread smaller bets across them, but for the more popular ones, the reduced capital will probably mean that prices become even less accurate.
@Simon74fe I think the worst part is you could have taken a 5% position expecting long term loan payback but now you're dead in the water suddenly and might not be able to sell off the excess for a long time.
Without seeing how it actually affects markets in the next period of time I feel like it's too hard to "model" this behavior with anything beyond a guess. Manifold is way lacking in capital efficiency across the whole site, this is just a small bit.
@Quroe yeah, markets like that one will be very constrained now. But okay, they were always kind of an anomaly....
@AhronMaline Mathematically, would it make sense to bet up to 99% for a market that asked, "Will the sun rise on any day in 2050?"?
@EvanDaniel It feels really silly to bet NO on that market, but I am convinced. I actually did it.
On the one hand this addresses a real problem: the large loans per market made it very hard to sell out from long-term positions, which in turn made their prices sticky and unresponsive.
OTOH, this change means that large long-term investments again have huge opportunity cost. People will still make small ones; will that be enough for price discovery?
@ChurlishGambit The balance requirement is gone, It seems like it could be good for activity? More mana to use to make more trades
@Jack1 Except the part where you can only get a loan if you have under $1k
EDIT: OK well the balance requirement was there when I made my comment
Paradoxically my best move is to liquidate out of as many positions as possible.
@JussiVilleHeiskanen Existing loans are still oustanding, right? Liquidating would mean paying those now, which may not be worth it. And that's ignoring the losses from price slippage
@AhronMaline Yes, those would be the ones where it wouldn't be possible
But there is no incentive to stay in ones that won't move. But I would profit take more aggressively where I thought I was vulnerable. Of course this is moot.
Any chance you could implement the 1000 mana max as a percentage of your net worth rather than an absolute number? Perhaps you must have 10% or less of your net worth in mana to be loan eligible?
What someone just starting out can do with 1000 mana and what Bayesian can do with it are very different.