The Future of Automated Investing
There are two main types of products available on the market today: those that rely on third-party custodians and those that utilize on-chain transactions. Both have pros and cons, but increasingly, investors are gravitating towards products that offer more transparency and security by keeping all transactions on the blockchain.
With custodial products, investors must trust that the third party will manage their assets responsibly and safeguard them from theft or loss. On-chain solutions eliminate this dependency by allowing users to maintain control of their funds. In addition, all trades are recorded on the blockchain, providing a complete audit trail that can be used to track assets and verify ownership.
Our company has had mixed results in the past when using automated, centralized investment products. Many investors prefer the security of having a single password and two-factor authentication (2FA), as well as the potential for customer support if anything goes wrong with their account.
However, the downside is that automated trading can be a different experience from one exchange to another. For example, when we track a strategy on FTX Exchange, the same strategy might be off by 20% or more in absolute terms when we port it over to Bitfinex.
Why We Tokenized
Tokenization has many benefits for both investors and issuers of structured products. For investors, the main benefit is that there is no minimum or maximum investment amount. This means more people can invest in these products, and there are no upfront fees as barriers to entry. For issuers, tokenization also opens up a larger pool of potential investors and can help reduce costs. Additionally, tokenization can help to speed up the process of issuing new products and make it easier to track and manage these products.
With our tokenized strategies, what you see is what you get; you never have to worry about the fee structure on your exchange or the liquidity depth of your personally chosen exchange. As a result, tokenized strategies offer investors a more consistent and transparent experience that eliminates many headaches associated with traditional retail-centric automated investment products.
The Benefits of Polygon and SetProtocol
At SW DAO, we believe that automated investing is the future. Using fast, secure, but inexpensive blockchains like Polygon, and battle-tested asset protocols like SetProcol, we can provide the same levels of products in tokenized form as on centralized platforms.
As long as the asset is available on a decentralized exchange like Sushiswap or Uniswap, we can trade and hold the underlying assets. This means we can take advantage of Inverse Tokens or Levered Tokens.
Using a webhook, our quant trading team can set up automated parameters for mean reversion, momentum-driven, or macro trend strategies without any human interference required. The only dependency is the time to execution from the webhook into a blockchain transaction.
With this infrastructure in place, we are confident that we can provide our clients with the best possible automated investing experience.