15 November 2024
I’ve worked on Superalgos — an open-source project — for the last five years. We built a beast of a trading automation platform, first on GitHub for the “trading” search term. Huge!
The platform in and of itself is not profitable. It’s just a tool. An extremely powerful one, but its just a tool at the end of the day.
It takes years of hard work to become consistently profitable at trading. It’s a very complex game. Trying to automate strategies adds a whole new layer of complexity on top.
We knew that when we started, and that’s precisely why we chose to go open source. We knew that such a titanic endeavor wasn’t suitable for a typical start up. Had we picked the start-up route, we would have ended up with a bullshit business model and a bullshit platform.
The issue is that, if you build a trading bots platform and expect users to pay for using it, then you’ll end up optimizing for variables that maximize the business potential, not users’ needs. For instance, you’ll try to make it easy to use so as to broaden your niche market and have tons of people subscribing… even those who can’t trade!
And that is, of course, a recipe for disaster.
No one can consistently make money trading with simplistic tools. That’s a fact.
The business model of commercial trading bot platforms is extracting value from users. They offer a subscription model to access basic features and introduce premium tiers to get more elaborate ones, charge you extra for deploying more bots, trade in more markets, run longer backtests, and so on.
And even if you pay for all the bells and whistles, you won’t get the level of flexibility and power required to compete against the apex predators in hedge funds and trading firms simply because the platform is not designed to compete at that level. It’s optimized to sell subscriptions.
That is why we went open-source.
We knew that building a mission-critical money-handling platform that would integrate all crucial aspects of trading intelligence was not a task for a small team. It required a collaboration of people in multiple fields: developers, traders, data scientists, ML engineers, designers, etc.
The first three years went building, stabilizing, and polishing the infrastructure.
Then, we spent a couple more years building a community and a user base.
Today, we have multiple teams of people collaborating, using the same set of tools, improving them over time, sharing knowledge and ideas, building a wealth of shared resources in the form of indicators, technical studies, demo strategies, ML models, etc.
In other words, through organic cooperation, great minds have been learning and playing together for years, trying to solve the puzzle to achieve consistent profitability.
And the collective effort has finally paid off!
The project’s Data Mining Team recently came up with an elaborate trading system that has confirmed in live trading the amazing results obtained in backtesting!
Now the question is, what do we do with it?
This particular trading system is the outcome of a titanic effort by a small group of people. It’s their intellectual property, and they are not giving it away for free or selling it.
They are not revealing how it works either, for obvious reasons.
See, the question this article tackles is not a stupid one. Why would they share or sell it, or reveal how it works?
They won’t!
That is, they will not share, sell, or reveal the intellectual property that makes up the strategy.
However, they are willing to let others benefit from it!
Why?
Well, I can’t speak for them, but knowing these guys for years, I believe I can guess why.
I guess that they buy into the ideas that nurture the Superalgos Project. They believe that humans should collaborate to achieve great things. They understand that the project has devised an effective incentives scheme that has driven us to where we are today. They know they have benefited from a collective effort and a free, open-source tool that has made all of this possible. So they’re willing to give back, help drive the project forwards and, at the same time… increase their profitability!
Let me explain how the Superalgos Project works.
The founders, a group I count myself in, are bitcoiners and understand the power of incentives.
The project has a native crypto token used to incentivize contributions to the open-source project. People that contribute to the project in any meaningful way get Superalgos (SA) Tokens as rewards for the value they create, via a distributed governance system in which all token holders participate.
Think of it as an open-source project on steroids!
Beyond the typical motivations to contribute to open-source, there is the added benefit of a reward in tokens that may have a monetary value and represents the reputation of contributors within the ecosystem.
Traders, and teams like our own Data Mining Team, are also incentivized to share the produce of their strategies.
If a successful trader or team lets others follow their strategies, they get an additional revenue stream on top of the profits generated by their trading!
Because the Superalgos Project is all about collaboration, we knew from the start that we would need some tech infrastructure to foster that highly desirable social behavior. The ability to work together with other users is built into the platform. For instance, the platform client may directly connect with other clients via a peer-to-peer network.
And that is precisely how the Data Mining Team allows access to their trading systems. They broadcast a signal that other users may listen to and act upon with their trading bots in an automated fashion.
Notice that these signals indicate actions that the signal provider’s trading bot has already taken. It doesn’t reveal the analysis or logic behind the event. That is how we protect users’ intellectual property.
In simpler words:
With Superalgos, you may copy trade profitable trading bots automatically, from your premises, trading from within your account at the exchange, without trusting anyone with your exchange keys, identity, private info, or trading activity — free of charge!
Let that sink in for a minute.
Are you starting to feel like I’m answering the original question?
Still, if you’re into crypto, I’m sure you’ll have a few follow-up questions, for instance:
Why would traders want to earn token rewards?
What drives value to the token?
The intrinsic value of a token lies in its utility.
Unlike the typical crypto project, Superalgos doesn’t sell tokens. We are a bootstrapped, community-owned project. We haven’t sold tokens to VCs or any other privileged actor. Instead, we distribute 100% of the supply among contributors for specific value added to the project.
That means that the token’s value is backed by the value created by contributors: a powerful platform with many layers of intelligence on top, and a flourishing ecosystem.
Still, Superalgos is free and open-source! So, how does the intrinsic value translate into monetary value? Who gets to buy the token for cash?
This is how it works:
The tech infrastructure Superalgos builds is free for everyone, forever. You may download the platform from GitHub, no questions asked, and use it to design, build, test, and deploy your bots. You don’t even need to create an account or identify yourself!
Why is it free for everyone? Because that favors adoption, contributions, and the emergence of trading intelligence!
On the other hand, premium community services, like the signals I just described, are available exclusively to contributors.
How do we identify contributors in a permissionless peer-to-peer network?
The software checks if the user connecting to the network holds tokens and how many because, by definition, contributors hold tokens.
And here’s the answer to the question of what drives the monetary value to the token:
Many people don’t have the time or means to actively contribute to the project, so they buy tokens instead. Buying tokens is a great way to support those who do have the time and means to improve the project — a contribution in and of itself.
You don’t have to spend your tokens; you just need to hold them. If for whatever reason you don’t like what you get, you can always sell them back in the market.
People sometimes raise yet another question that is worth exploring…
Strategies that become popular lose their edge, don’t they?
The short answer is yes. All strategies lose their edge, eventually, as the market evolves.
Superalgos incentivizes everyone to broadcast signals of their profitable strategies. I’m sure more signal providers will emerge with time. In fact, the Data Mining Team has several more trading systems in the pipeline that will soon become available for copy trading. What we have now is just a promising start and there’s more to come!
Also, there’s always the option to limit the number of users following any given strategy, and those holding more tokens will be first in line. Why? Because those are the ones who have contributed the most.
Isn’t that kind of an elitist system?
It’s not by any means! It’s a hardcore meritocracy, open to everyone that wishes to participate.
Don’t have the cash to buy tokens? No worries! Come and contribute work instead, like everyone else!
Bear in mind that Superalgos is a technical platform. Still, for the lightweight copy trading use case, feedback from non-technical people indicates that it takes about five hours to learn all the basics and get up and running following the first signal.
Here’s a quick list of resources to get you up to speed in the shortest possible time.
That’s it!
You’ll discover the rest of the project as you move along!
And sure enough, take a look at the website too!
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