Invest in algorithmic trading
Waves.Exchange’s new investment product enables users to earn about 100% annually from investing USDT in algorithmic trading strategies.
Waves.Exchange is glad to announce a new, unique investment product that combines the reliability of the Waves blockchain’s decentralized tech with advantages of centralized services. This product allows users to earn by providing liquidity for algorithmic trading.
Algorithmic trading (algo-trading) is an automated system for executing market orders, based on pre-programmed trading commands or specifications. The Waves.Exchange team developed a system of trading bots that has done well over the past year, generating an annual profit of about 100%. Now, Waves.Exchange users can also take advantage of this strategy, investing in USDT tokens. Later, investment in other assets will be made available, as well.
How it works
Investment in algorithmic trading is similar to investment in USDT and USDC, which is already available on Waves.Exchange. A user provides liquidity to a smart contract in the Waves network in exchange for ALP (Algorithmic Trading Liquidity Provider) tokens, which are backed by assets in the smart contract. The amount of a user’s ALP tokens corresponds to their share in the algorithmic trading pool. Users’ assets are proxied to algorithmic trading strategies across multiple decentralized exchanges, including BitMEX, Binance, OKEx and others. Part of this liquidity is also used by trading bots on Waves.Exchange.
Every 24 hours, between 11 am and 12 pm UTC (upd. April 29, 2021), a trading day’s results are finalized: algorithmic trading bots lock in profits or losses in a smart contract by a transaction. For instance, if the bots were able to earn 100,000 USDT in 24 hours, that amount will be added to the smart contract, increasing the value of the liquidity providers’ ALP tokens.
Similarly to providing liquidity to USDC/USDT, rewards are not paid directly to liquidity providers, but accumulated in a smart contract. The difference is that the value of ALP tokens could not only increase, but also decrease. Somewhat higher short-term risks facilitate substantially higher potential profits in a period of one year or more.
To withdraw funds, a user has to return their ALP tokens to the smart contract and initiate the withdrawal process. The actual withdrawal will take place after the trading day results’ finalization, that is between 11 am and 12 pm UTC (upd. April 29, 2021).
Investment strategies
Two strategies for investment in algorithmic trade exist, based on potential risks and profits: moderate and aggressive. For each of the two strategies, separate types of ALP tokens exist. The ALP token for a moderate-risk strategy is called AUSDTLPM and that for aggressive-risk investment is AUSDTLPA. The final letter in the asset’s name stands for the risk level: M for moderate and A for aggressive. At the time of launch, only the moderate risk strategy will be available.
Risks
Investment in algorithmic trading entails two kinds of risks:
1. Counterparty risks. Algorithmic trading strategies could suffer from centralized exchanges’ down time, asset withdrawal issues or an account’s suspension. Although over the last three years, Waves.Exchange hasn’t faced problems of that kind, these potential risks exist.
2. Drawdown risks. The investment strategies are different in their maximum drawdown value. For instance, for the moderate strategy, the default maximum drawdown is 30%. This means there is a risk that the ALP token’s price could fall by 30%, but no more than that.
How to invest in algorithmic trading
To invest in algorithmic trading, perform these simple steps:
1. Carefully study the risks that investment in algorithmic trading entails.
2. Deposit USDT to Waves.Exchange.
3. Go to the Algorithmic trading page in the Investment section. Select a risk level (moderate or aggressive). At the time of publication, only the moderate-risk strategy is available.
4. Specify the amount of investment.
5. After the end of a trading period, your ALP assets will be unlocked in a smart contract. You’ll be able to withdraw them on the algorithmic trading page in the transaction section by hitting the Withdraw button.
More information about the product is available in our FAQ.
