Episode #12: Atoma

Listen to our latest episode featuring Atoma Vault and learn why points on perp DEXs should come on top of profit, not at the cost of bleeding your capital.

In this episode, Nertila from Trading Strategy discusses with Anton from Atoma. Atoma is a delta-neutral USDC yield vault that opens long and short positions across perpetual DEXs at the same time, neutralizing price exposure while capturing funding-rate spreads.

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Transcript:

TradingStrategy.ai Podcast — Episode #12: Atoma Vault
Host: Nertila | Guest: Tony (Atoma Vault)

Intro: Welcome to TradingStrategy.ai, the podcast where you can learn more about the essentials of DeFi trading in the new world. This is your go-to show for automated trading strategies and market insights. Welcome to the conversation. This is your host, Nertila.

Nertila: Hello, everybody. Welcome to today's TradingStrategy.ai podcast. We have a new guest, Tony from Atoma Vault. Hello, Tony, and welcome.

Tony: Thank you for inviting us. It's a pleasure to join the podcast and share some insights about the project: what's going on, what's next, and how we got here.

Nertila: We'd like to know a little bit more about you. How did you end up working in the crypto industry?

Tony: I got into crypto in a pretty natural way, back in 2018. At the time I was starting university, studying computer science, and I got excited about crypto, both as an investment and as technology, since I was taking cryptography courses. So it came naturally.

For the last three years I've been working in fintech at capital.com. I wasn't working directly with crypto, but I was working with the MetaTrader server, trading infrastructure, and trading systems. I've also been investing and trading myself since around 2018.

Initially we started with Flowbot, an automated trading system that let users run algorithmic trading bots, such as market-making bots and funding arbitrage bots, across multiple perpetual DEXs. We had eleven integrations and did $11.5 billion in total volume.

After about half a year, we realized it wasn't fair to users. The meta shifted, users started bleeding capital, and the rewards weren't great. They weren't even covering what users were spending. We wanted to build something profitable, so we switched from market-making bots to funding arbitrage. You hold your position longer and earn yield on the funding spreads between different venues, while still earning points at the same time.

You don't earn as many points as with market-making bots, because those push volume and exchanges mostly pay for volume. But there are downsides: the costs can run to 200 to 300 basis points, and if you add a builder fee on top, it can be even more.

That's why we pivoted to Atoma Vault, where we can run funding arbitrage efficiently and earn yield constantly. Because we had a lot of data, we could see what mistakes users made, what could go wrong, and how to make the strategy as efficient as possible.

So we built a vault where the user simply makes a deposit. The vault runs the funding arbitrage, or pushes volume, for example on Lighter, on both exchanges, and everything stays in profit. It removes friction: the user deposits capital, and we run the strategy and share the points with them.

We also earn points on our own accounts and split them among users based on their average Atoma Vault shareholding during the week. The system is fair and rewards you for keeping deposits bigger and longer.

Nertila: What kind of risk management system do you have in place for Atoma Vault?

Tony: There are two parts to risk management. The first is keeping the system secure at the smart contract level. When a user deposits money, it has to go into the smart contract securely, and the contract itself has to be secure.

The second layer is how we manage risk in the trading system. We have internal algorithms actively monitoring both venues at the same time: margin health, position health, and the difference between isolated and cross margin.

For example, on Nado some markets use isolated margin. The same applies to Trade.xyz, built on Hyperliquid. Those positions have to be managed differently, since risk is limited per position. On other exchanges, like Extended, it's simpler: they use cross margin on every market, so we just monitor overall account margin health.

We also have an active monitoring system we call Guardian. It monitors margin health on both exchanges, and when it reaches warning levels, around 50 to 75%, it sends notifications so we can observe what's happening. There are also actions for critical margin levels: once it reaches 75 to 80%, we start unwinding positions so the account doesn't get liquidated.

This is the most common question we get. A lot of people ask how we would handle an event like the one where all the altcoins dropped in half an hour and everything went down 80%. I was actively trading during that time and monitoring live. It didn't drop 80% in twenty seconds, as everyone says. It dropped 20%, then another 20%. We did some backtesting and tested our Guardian engine on it, and it would have closed all positions before everything dropped 80%. So we're pretty confident on that level.

On the smart contract side, we're actively seeking an audit. It's costly nowadays. Most recently we reached out to Lighter, and they offered us some Lighter accelerator benefits. I believe it's a program for all builders who choose to build on Lighter, and they offer some solutions we'd like to use.

Security is a hot topic right now. A lot of exchanges are getting hacked, Ostium recently and a couple of others. We truly believe funds should be safe, and we do everything possible, from the infrastructure level to the account management level, to keep things secure and keep improving.

So far, during about a year of Flowbot and about a month of Atoma, we haven't had any issues. I believe we're doing something right, and I want to believe it will stay that way.

Nertila: What are some of the hardest lessons you have learned so far?

Tony: One of the hard lessons is that you should move fast, keep building, and keep the momentum going. At our all-time high, during some weeks back in December, we were pushing around $250 million a week in volume on perpetual DEXs.

Nertila: What do you think about the security issues that have plagued the DeFi ecosystem, like bridging hacks and similar problems?

Tony: Recently a lot of perp DEXs, and especially vaults, got hacked, so users are a little scared right now. But if you look at how these hacks happened, sometimes you can't believe the projects allowed those mistakes.

Some projects simply kept their private keys in a GitHub repository, meaning anyone could have done the hack at any point in the last two years. Some exchanges didn't use Safe or multi-sig wallets for their most critical smart contract functions.

We believe projects should do audits in the first place, but after the audit they shouldn't relax and hope for the best. They should keep following security best practices, keep their secrets secure, rotate them, and try to prevent problems. And if something does go wrong, they should act openly. Anyone can make a mistake; what matters is how you handle the situation afterwards. You should be open with your community and with the people who believe in you and trust you with their money.

Nertila: So what's next for you and Atoma?

Tony: We'll publish our roadmap soon. The first and most important step is the security audit of the smart contract, so users have additional confidence in the project. After that, we plan to scale the deposit caps.

We've also applied to multiple accelerators, including Alliance, and have been interviewing. If it works out, it will give the project a great boost, more people will learn about Atoma, and it will help us bring in more TVL, which is the most important metric for a vault, along with APY.

Then we plan to enter the growth stage. Most likely we'll launch a points system; our internal infrastructure already supports it. We've launched a referral system and are accumulating points internally, so our earliest and most loyal users will be rewarded.

After that, one of the most important things is launching a vault for Variational. I believe it's one of the strongest projects out there right now. They just haven't released their API yet, which is why we couldn't make it work officially.

Further out, we'll think about a future token and its utility. And that will still be just the beginning, because we have more plans, maybe moving toward a more natural stablecoin, something like what Ethena is doing, whether at a bigger or smaller scale. That's for the future. Short term, we have the plan and we're working to accomplish it.

Nertila: Anything else you'd like to tell our listeners?

Tony: From my experience and the overall market situation, we truly believe users shouldn't bleed their capital on points to push volume. Most of it depends on market conditions and how projects handle their TGE. As we've seen recently, a lot of perpetual DEXs have sunset their services, like Ancient and DreamCash. I remember how many people were farming DreamCash, and all of them left without any airdrop.

We believe points on these exchanges and perp DEXs should come on top of profit. They should be a bonus, maybe not a small one if market conditions allow. But you shouldn't farm or trade on these exchanges by bleeding your capital, because there's a high chance you won't make it back.

Nertila: Tony, thank you so much for your insights, and thank you again for joining me in this conversation. I hope to have you back on the podcast in the future.

Tony: Great, thank you for the invitation. I believe next time we'll have more progress and more details to share.