Cryptocurrency exchange Bitfinex has announced today that in regards to the Bitcoin network fork on August 1st to create a new chain and token called Bitcoin Cash, all Bitfinex user Bitcoin addresses holding a settled balance will automatically own equivalent balances in Bitcoin Cash.
The decision was made by Bitfinex after a significant show of interest from customers to take steps to facilitate this distribution.
Bitfinex also reported they may list markets for this new token, but that decision will be made after the fork event.
Bitcoin Cash is being listed as BCC on most other platforms, but, that ticker symbol is already in use on the Bitfinex platform by the chain-split token representing Bitcoin Core. As such, Bitfinex plans to use BCH as the ticker symbol and “Bcash” as the descriptive name to avoid confusion with Bitcoin.
The Bitfinex team said:
“Although several months ago, we developed a methodology for handling contentious hardforks, we will be applying a different methodology for what we regard as a spurious forking of the Bitcoin project with little mining support. Although we have not supported such Bitcoin UTXO-based distributions in the past (Stellar Lumens, Clams, etc.), we will support the distribution of Bitcoin Cash due to significant customer interest.”
“We want to reassure our customers that your bitcoin is safe and this event will not affect your bitcoin balances, positions, or loans – you will simply be receiving an additional token balance based upon the following methodology.”
Bitfinex Distribution Policy
BCH will be distributed to settled bitcoin wallet balances as of the UTC timestamp of the first forking block, which is expected to occur on August 1st, 2017.
The token distribution methodology will be:
- All BTC wallet balances will receive BCH
- Margin longs in BTC/USD and margin shorts in XXX/BTC will not receive BCH
- Margin shorts in BTC/USD and margin longs in XXX/BTC will not pay BCH
- BTC Lenders will receive BCH
Due to the net amount of BTC committed in margin positions at the time of the fork, the above methodology may result in Bitfinex seeing a surplus or deficit of BCH. As such, the company announced they will be resolving this discrepancy in the form of a socialized distribution coefficient.
For example, currently, there are more longs than shorts on the platform, causing a distribution coefficient of ~1.091 (Meaning that for each qualifying BTC a user will receive 1.091 BCH). The actual coefficient will be calculated at the moment of the distribution. Bitfinex noted that if there are more shorts than longs at the fork event, this coefficient will be less than one. This coefficient can be roughly computed from publicly available information from the Bitfinex API (longs & shorts) and the Blockchain (cold storage).
Bitfinex stated that they recognize this model is not perfect, but given the short time frames imposed, better choices were simply not available. It would be an undue burden to create negative BCH balances for BTC/USD shorts and XXX/BTC longs. Furthermore, lenders may be locked in for up to 30 days and would be adversely impacted. In the end, Bitfinex stated they believe that this solution created the least amount of disruption and facilitates a timely distribution of BCH.
Margin longs who wish to receive BCH should consider either claiming some or all of their position or exchanging and holding BTC collateral in their margin wallet as opposed to other assets. Bitfinex is hoping to make withdrawals available soon after the fork, assuming everything is fine with the BCH blockchain.
