Following 2.5 years of meticulous development, the Trading Strategy protocol has entered a new phase, launching its first set of live Open Strategies at the beginning of April 2024. These beta-stage strategies begin a new era for algorithmic trading on decentralized exchanges (DEXes) and DeFi protocols. Initially designed as long-only directional strategies, they are built to capture upward price breakouts without shorting at this stage.
For strategy developers
The Trading Strategy protocol is the world's best open protocol for self-custodial algorithmic trading on DEXes and DeFi protocols, offering unique advantages for quant traders and DeFi users alike. With the ability to develop, backtest, and deploy Python-based algorithms without mastering blockchain technologies, quants can focus on what they do best—trading.
For DeFi users
For regular DeFi users, Open Strategies give access to professional-grade trading strategies simply by connecting their self-custodial crypto wallets to the strategy and making a deposit.
Performance Analysis: April 1, 2024 – August 5, 2024
Now, let’s delve into our current Open Strategies performance from April 1, 2024, to August 5, 2024. During this timeframe, the broader cryptocurrency market faced significant challenges. Bitcoin (BTC) saw a decline of -18.4%, dropping from $71,280 to $58,161, while Ether (ETH) experienced an even steeper drop of -26.24%, falling from $3,645 to $2,688. These downturns created a tough environment for long-only strategies, yet Trading Strategy’s Open Strategies results reveal a positive story.
Despite the bearish market conditions, our "ETH-BTC-USDC momentum" strategy delivered a commendable performance, yielding a positive return of +7.87%. This strategy's ability to generate gains in a declining market demonstrates its robustness and effectiveness. On the other hand, the "ETH-MATIC-USDC momentum" strategy posted a modest loss of -4.63%, but even this result is notable when contrasted with the steeper declines in MATIC and ETH. In essence, both strategies outperformed their benchmark, underscoring the potential of the Trading Strategy protocol to navigate volatile conditions effectively.
Several new strategies are in the pipeline from the protocol's early user quants, offering a variety of strategies for different market conditions. For example, mean reversion strategies for ranging markets and an innovative sentiment analysis-based strategy that utilised AI to capture positive signals from social media and sentiment analysis.
Strategy highlight: MATIC-only breakout
The oldest currently running open strategy is the MATIC long breakout strategy. It has been running for more than a year. The strategy hunts long breakouts in the MATIC price. It is "MATIC maxi" as it only trades MATIC and up.
We launched this strategy because the Trading Strategy was first deployed on the Polygon blockchain, and its native MATIC token has deep liquidity on Quickswap and Uniswap there. This strategy was more of a bed test of infrastructure, like JSON-RPC and blockchain. Less focus was placed on profitability. The strategy is still ticking, so nothing has broken down.
Unfortunately, the same cannot be said for the MATIC price itself. MATIC price is 50% down over the summer and ~70% down since the strategy was launched. A long-only strategy struggles if its underlying assets do not perform. Taking a 15% haircut on the strategy is still better than taking a 50% haircut on the MATIC buy-and-old. Even though the strategy had some good moments, with positions making 5% and 12% gains, a long-only single-asset strategy cannot make miracles out of a downward spiral.
We will continue running this strategy until the MATIC-POLY token migration occurs. This event might be a good catalyst for the MATIC price, as the underlying Polygon blockchain technology is still very viable.
Looking Ahead
As we continue to refine the protocol and develop more advanced capabilities for trading strategy developers, we are also expanding our close collaboration with quants worldwide. By leveraging their market knowledge and our protocol’s advanced tooling and AI-driven capabilities, we aim to bring a diverse range of automated strategies to the protocol, enabling regular DeFi users and trading firms to enjoy the solution's benefits.
For those interested in more tailored trading solutions, the protocol also offers quants the option to run their strategies privately, supporting proprietary trading needs and added privacy.
If you want to explore the possibilities of launching your strategies on the Trading Strategy protocol, now is the time to get involved. We offer attractive incentives for early users and look forward to partnering with innovative minds to shape the future of algorithmic trading on DeFi protocols and DEXes. If you are not a strategy developer, join our community Discord to discuss trading and investing.