Polo/Bitfinex are peer to peer lending, so the exchange isn't taking the risk. I'm not sure about Coinbase but I vaguely remember it was outside institutional m

Polo/Bitfinex are peer to peer lending, so the exchange isn't taking the risk. I'm not sure about Coinbase but I vaguely remember it was outside institutional money funding the margin. Derivative markets like Bitmex use a form of socialized loss to remove the risk.