The present and future of decentralized exchanges — Machine Learning and Artificial Intelligence as seen by MeterQubes

If we start from a hypothesis that cryptocurrency asset trading was a sole reason behind the global rise of the blockchain technology, then it would come as no surprise that cryptocurrency exchange platforms are growing user-base at an unprecedented rate. Nevertheless, just how many times have we attested to the inability of centralized exchanges to withstand security vulnerabilities and got their users’ assets extorted as a result? It has become a common phenomenon that custodial ecosystems cannot encase the loopholes fast or efficient enough to keep the hackers at bay. We will not go insofar as to say that decentralized exchanges are immune to any type of hacks, but the real questions are:

1. How easy it is to do it?

2. How big is the incentive for someone to do it?

A DEX is just a distributed order book. The exchange occurs between two anonymous individuals who agree to trade via a programmatically correct smart contract. The trade is projected to happen one way and cannot deviate from its trajectory. The hackers, therefore, need to exploit the endless pool of data scattered on different servers around the globe to hijack the transactions or tamper participants’ data directly — highly unlikely.

Ethereum — a major platform on which decentralized applications (dapps) are built, have market capitalizations of $15 billion. Whilst it is impressive observing dapps execute functions in a decentralized manner that once required centralized authorities, people are suggesting that it may take years if not decades from seeing their mainstream adoption — we beg to differ.

Let’s dive right into how decentralized exchanges will undergo technical and functional fine-tuning in 2019 to finally yield the “holy grail”, that is, the liquidity.

Machine Learning and Artificial Intelligence as essential computer-assisted trading instruments

If there was ever a “barrier” for crypto traders, both advanced and novice, to venture into the depths of decentralized exchanges, it is about to get lifted. Presently, DEXs are vehemently working on getting the scalability dusted off and put into motion. What better way to tackle that than to incorporate AI and ML.

Automated trading can be defined as the complete automation of the trading process without any human interference. It allows traders to establish specific rules for both trade entries and exits and automatically execute those entries via a computer. DEXs are already preparing to assimilate automated trading onto its platform via two different pathways:

Incorporation of intelligent trading bots

Intelligent trading bots are data-driven automated trading engines that use a well-balanced mix of machine learning algorithms, neural networks, natural language processing, artificial intelligence, technical analysis, on-chain data, and fundamental analysis to identify trading opportunities and execute trades with the maximum probability of success.

Advanced deep learning algorithms coupled with natural language processing and neural networks study the cryptocurrency space via news & blogs, forums, social media, social trading platforms, and research reports to identify artificial intelligence-based market sentiments. The system will then categorize the sentiments of particular assets based on a sentiment score which will indicate bullish, bearish and neutral market conditions.

Concurrently, fundamental and technical data will also be analyzed thoroughly using intelligent tools to observe market directions and price movements. The system will intelligently track and analyze a combination of fundamental research reports including on-chain data, leading & lagging technical indicators, chart patterns & formations, Fibonacci levels, and several other data funnels across masses of cryptocurrency pairs simultaneously to provide exceptionally accurate and reliable predictions for the price movements.

Intelligent trading bots will also track multiple cryptocurrency exchanges, analyzing real-time data such as market & order-book depths, trades, and buy/sell orders, etc. to form an outlook on relevant cryptocurrency pairs. This will facilitate a foreseeable and real-time view of the cryptocurrency space from an overall standpoint trader’s operating in the space.

Equally, bots will be highly augmented to create and execute personalized trading strategies based on above benchmarks and this intelligent trading system will scan, analyze and interpret all available information with its cutting-edge intelligent tools to identify entry and exit points of cryptocurrency pairs according to trader’s individual preference. It is designed to allow traders to configure or customize settings and strategies based on their trading styles. Bots can be personalized to cater to trader’s preference where they can select, mix and match different types of AI-based analysis tools, hundreds of trading instruments, multiple order types, different trading & holding time horizon’s (short, medium and long term), risk levels, indicators, strategies and many more features to create user-specific strategies.

Algorithmic Trading

It is estimated that around 80% of US equities trades are placed by computer algorithms. The number has been expanding rapidly ever since algorithmic trading or algo trading was founded several years ago. Algo trading can be described as a method of trading in securities using intricate mathematical models and formulas to initiate high-speed, automated financial transactions.

The most common algo trading strategy can be identified as the implementation of execution-based algorithms where traders focus on getting the best price for their executions without impacting the market price. Secondly, there are high-frequency strategies which include scalping, market making, and arbitrage. Finally, machine learning and artificial intelligence based on trading algorithms that use market sentiment to execute trades can be identified as another type of algo trading strategy.

What is MeterQubes?

MeterQubes is a state-of-the-art decentralized exchange built on a robust blockchain protocol, providing an ample of trading pairs, secured ecosystem, and a real-time matching system supported by self-learning artificial intelligence.

In the light of the current digital economy market, MeterQubes emerges as a demand for an all-in-one decentralized exchange keeps surging. With our well-developed exchange architecture, we aim to finally bring the sought-after liquidity and volume that the majority of crypto traders are yearning for.