Bitfinex has announced a new financial instrument on its platform in response to the upcoming hard fork of the Bitcoin Cash blockchain.
Noting a sizable increase in short bets on BCH – traders apparently believing that the split will have a negative impact on the per-coin price of Bitcoin Cash – Bitfinex has created something called the Chain Split Token.
To prevent any risk of manipulation and hence to maintain a healthy market we have decided to use the Chain Split Tokens (CST) approach to govern this particular event.
This is a slightly different approach to the situation than Poloniex has taken – Poloniex has simply listed all three coins, Bitcoin Cash, Bitcoin Cash ABC, and Bitcoin Cash SV – and it is born of Bitfinex’s conclusion that there will be two chains left standing. There is, in fact, the possibility of three chains continuing on, with Bitcoin Unlimited’s implementation of Bitcoin Cash making it possible for folks to maintain the status quo.
However, similar tot the Poloniex approach, there are two versions of CST – BAB stands for Bitcoin Cash ABC and BSV stands for Bitcoin Cash SV. Both are tradeable against USD and BTC but neither has margin trading.
Traders Will Be Charged BAB and BSV
Traders who have opened shorts on Bitcoin Cash will be charged identical amounts on both new tokens on November 15th. Apparently Bitfinex does not intend to continue listing the Bitcoin Cash (BCH) proper. Balances will not be “snaphotted” until the hard fork actually occurs. This gives users a couple days yet to acquire some BCH in order to have a position in both new tokens.
Positions To Be Liquidated
Notably, and importantly to Bitfinex users, positions in BCH margins will be liquidated both ways. Those who are short will be debited and those who are long will be credited, depending on the results at the time of the actual hard fork.
If there is not enough BAB and BSV in the account, these users will have a negative balance of BAB and BSV. Anyone who is long BCH during the Snapshot Event will then have BAB and BSV credited to their account. In other words, outstanding positions (including margin positions) will be “claimed” and converted to currency balances. This will have the effect of margin funding being canceled and borrowers will need to restore their account to positive wallet balances in order to continue using the platform.
The exact date and time will be UNIX time 1542300000, i.e. 4:40:00 PM UTC, November 15th. Unix time is probably the most precise measurement of time used in the modern world, measuring the number of seconds from 00:00:00.0000 on January 1 in 1970.
Importantly, users who wind up with a negative balance in either token will have to correct their balance by December 31st, or Bitfinex will automatically do it for them.
Finally, Bitfinex notes that they are not taking sides in the fork:
“While we want to make such forks available to our customers, our limited and temporary support for them is not and should not be construed as support for any particular project.”