A tech company based in San Francisco called Set Labs has recently announced the launch of Ethereum-based trading bots. This new investment instrument uses the volatility of the market in order to benefit the investors by predicting the patterns and trading in order to get profit from the prices going up and down.
The new product will be called “Trend Trading ETH 20 Day Simple Moving Average Crossover Set” and it will use a database that has information from the last two years. This information will be the backbone of the system, which is set to predict most price swings so that the user can limit losses while profiting from sudden price surges.
By using the product, the user will have a bot that will make trades whenever the prices of Ethereum are above an indicator called the 20 Day Simple Moving Average. The creators of the software believe that this can be a powerful indicator in order to determine the future of the market.
Whenever the token is moving below the average, the bot will automatically convert the ETH to USDC. Basically, you will have your funds rebalanced all the time whenever the trends are going up and down.
The CEO of the company, Felix Feng, affirmed that typically momentum trading can be effective in markets such as crypto. While it does not work very well for stocks or bonds, which have very clear valuation models, commodities and crypto-assets can be traded in a profitable way by doing this.
By applying several kinds of technical indicators, this product removes all human decisions and it only uses hard data in order to make the most effective decisions based only on quantitative reasons. The programming of the protocol can be used in order to always rebalance the assets so that the user will have only the minimum risk.
The main difference between this bot and the ones that you use on exchanges are that will use it via ERC20 tokens, which will have their prices rebalanced on trading. This way, you will be making the trades directly, but reaping the profits from them instead.
The Set Protocol
This product was originally created and deployed in April 2019. At the time, it had two strategies: “Buy and Hold” and “Range-Bound”.
The first one works in a very similar way to index funds and the tokens are collateralized by several kinds of assets which are rebalanced constantly with a 75/25 percent split strategy.
Range-Bound strategies, on the other hand, are more akin to holding a portfolio of cash and volatile assets that will be used to represent the token. This option uses the MakerDAO DAI tokens as cash.
According to the CEO of the company, the Set protocol can be configured to other strategies as well and it uses several complex algorithms in order to trade in the most effective way possible and to bring more profit to the users of the platform.
Set Labs, the creator of the Set Protocol, was created back in 2017. The company has recently got $2 million USD from companies such as Craft Ventures and Vy Capital.