The rise of algorithmic trading has transformed the financial landscape, yet it comes with significant risks that can deter potential investors. Concerns about technological glitches, data inaccuracies, and regulatory compliance create a climate of distrust. These risks can lead to substantial financial losses due to the speed at which most algorithmic trading takes place. The infamous example of Knight Capital, which lost $440 million in a 45-minute period due to a faulty algorithm. This makes it crucial for traders to understand better the implications of relying on automated systems.
UpBots.com aims to address these fears by offering a secure platform specializing in centralized exchange (CEX) trading algorithms. By providing advanced trading bots designed to minimize risks, it actively confronts scepticism surrounding the algorithmic trading space. UpBots unique selling proposition includes using APIs without withdrawal rights, ensuring user assets remain secure. This commitment to safety, combined with educational resources, empowers users to trade with confidence.
Recent updates highlight their new product SuperBots, which brings UpBots’ cutting-edge trading engine to the DeFi space, allowing users to automate their trading strategies in innovative decentralized exchange (DEX) trading environment while maintaining full control over their assets. By fostering transparency and security, UpBots is reshaping the narrative around automated trading, linking industry challenges with their next-generation solutions.
Welcome to our conversation with CEO of UpBots Marco Lavanna
1. Why do you have two different platforms and how are they different?
Great question! Essentially UpBots and SuperBots are similar products in that they are designed to achieve the same goal: to offer the best algo trading solutions to retail investors through our marketplace that essentially puts institutional grade traders/quants together with retail investors. Algos already power much of the stock market and we believe crypto is headed the same way. We want to give retail investors a chance in that landscape because after all crypto does nothing if not democratise finance.
The difference between UpBots and SuperBots is fundamentally whether you as a user want to trade on centralised exchanges like Binance, Huboi, OKX, Coinbase Pro, etc, OR if you would rather trade in a non custodial way on DEX like PancakeSwap, 1inch etc.
UpBots has some additional features such as portfolio tracking and social copy trading, whereas SuperBots is built in a way a lot of yield farmers would identify with using vaults.
2. What specific measures do you have in place to prevent technological glitches and ensure the accuracy of data used by your trading bots?
Both of our platforms use audited smart contracts where appropriate, and leading edge technology that has had millions of dollars invested in its development over the last 6 years. As far as technology glitches go, our releases are thoroughly tested by our beta test team and community, and our trading engine is mature and proven at this point.
Additionally all of the algos on our platforms are low frequency and operate on longer time frames. Further they trade only one crypto asset against USDC, so the worst case scenario is that a position doesn’t get opened, or it gets opened a little bit later than the ideal moment so the profit is slightly less.
However this raises a good point that people may not realise – we don’t own/build algos ourselves. We’re not an algo company, we’re a FINTECH/software company.
We’ve built a market place where external algo developers can profit a lot by helping retail investors/traders. It’s a win:win:win arrangement where if our users are not making profits then neither is our platform, nor the Master Trader who built the algo. So there is financial incentive baked in at all levels of the platform for all participants. When algos are submitted to our team they are extensively tested and checked out to ensure user safety. Only after passing those checks are they put live on our Algo marketplace.
3. How do you address the potential risks of regulatory compliance issues that may arise from automated trading?
Our parent company Monetum has a legal, regulatory and compliance team and most of the companies in our group are in fact regulated. We view regulation as a necessary, albeit arduous measure and we do everything we can to ensure we are colouring inside of the lines as far as regulatory guidelines go.
4. Can you provide concrete evidence of the profitability and risk-adjusted returns of your algorithmic trading strategies, particularly with SuperBots?
Yes. SuperBots is entirely on-chain. Every transaction, deposit, buy and sell by an algo on it’svault is there for the world to see 100% transparently. We provide a user interface to make that easy for each vault as well as for the platform but if anyone wants to check it’slegitimacy they can simply check BSCScan.
5. How do you ensure that your trading bots are not susceptible to manipulation or exploitation by bad actors in the decentralized finance space?
Upfront I want to say that it is not possible to manipulate the algo bots. They are effectively programmed with a set of rules based on technical indicators when they are given to our safety team to analyse for anything that would put our users’ funds in jeopardy. After that the only thing an algo developer can do is release an update to the logic/rule set of their algo. This once again goes through the same rigorous testing by our safety team.
Of course in any financial market there is manipulation by whales, and every market actor is subject to the consequences of that. However this is actually one of the benefits of using an algo: namely when the larger crypto market is being manipulated by whale games the algo’s are much quicker to see and react to that because they are constantly monitoring hundreds or even sometimes thousands of different indicators.
6. What happens if there is a system failure or outage on your platform during critical market events?
Due to our redundant cloud architecture that is extremely unlikely but of course with technology system failures are always a non zero % possibility. In the case of SuperBots and UpBots, we have analysed the places that failure is possible and as much as possible have introduced redundancies.
7. How transparent are you about the underlying algorithms and decision-making processes used by your trading bots?
We don’t develop algo’s in house, for want of a better way to put it, we just provide a bot chassis for algo developers to plug their algos into.
The secret sauce of our algo developers code, machine learning and algo logic, is not something we share publicly. It’s part of our NDA agreement with them when they sign on as an algo development partner with us and that’s a commitment we take very seriously because we have to be able to assess the quality of the algo to keep our users safe.
However we do share backtest data in the case of brand new algos so users can see how the algo would have performed and we also make sure that that backtest data is legitimate and generated by our own safety team as a final part of the safety process. I feel that this strikes the best balance between user safety and IP rights.
As a company we have a policy of being extremely transparent and as helpful as possible with our community on Telegram so anyone considering trying out algo trading is encouraged to join our community there. The link is https:/t.me/upbots
8. What happens if a user experiences losses due to the performance of an algo bot on your platform?
The goal for any trader is never to win every trade. That’s not possible with the ability to see the future. The goal is to win more than you lose so your capital grows. So our users will lose some trades. That is why we encourage users to take a 12-36 month view when putting capital into a SuperBots Vault or before renting an algo from our UpBots Algo Marketplace.
To make sure that all participants in the ecosystem are financially incentivized to ensure users win more than they lose we have a fairness system where we only charge performance fees when the algo is in profit (or above it’s previous high using a high watermark system).
If there are no performance fees charged the algo dev doesn’t get any profit share, and neither do we. So essentially if our users are not winning, then neither is anyone else.
This is BY FAR the fairest algo trading system in the market place. We don’t charge any fees up front like all of our competitors so anyone can try for themselves with very limited risk.
9. Can you provide independent, third-party audits or certifications that validate the security and reliability of both UpBots and SuperBots?
Yes. All of our Smart Contracts have been audited multiple times and have active bug bounty campaigns running all the time.
10. What specific steps are you taking to educate and empower users to make informed decisions about algorithmic trading?
That’s a great question actually because we don’t think about it that way. Our goal is to create a platform that empowers our users without them needing an education in trading, which would be required to fully understand how algo trading works.
My belief, and one of our goals, is that if we build great software that gives users the essential data points they need (previous performance, level of risk in a particular algo, for example) then they will be able to put their capital somewhere it will grow. To draw a comparison with the stock exchange, you don’t need to know everything about the S&P500 to put your capital into a Vanguard fund.
Additionally in the event an algo that has been performing historically well, stops performing to our minimum standards, our safety team can and would close out open trades on the algo and take it offline.
Another way we insulate users from risk with our SuperVault offering on SuperBots because as well as being able to see every transaction on the blockchain, users can rest assured that their risk is as mitigated as possible by the fact that their capital is split over the top5 performing algo vaults. This is reassessed and rebalanced every month by smart contract.
11. If your platform experiences a major security breach or loss of user funds, what is your plan for recovery and compensation?
That’s not possible. UpBots doesn’t hold any user funds. Users’ funds are kept in their exchange account and the API access used to make trades does not permit withdrawals. On SuperBots, all of the capital is held in smart contracts that have been audited multiple times. The only way a user could lose funds there is if their wallet becomes compromised which is a constant danger in DeFi and also not something we have any control over.
In other words using both UpBots and SuperBots are extremely safe methods of growing your capital and I think you can see that we have gone to great lengths to create products that are designed to help people, particularly retail investors who do not have a lot of trading experience and are most likely to lose 90% of their capital in their first 90 days in crypto.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
Source: https://cryptodaily.co.uk/2024/09/navigating-the-risks-of-algorithmic-trading-how-upbotscom-and-superbots-finance-are-pioneering-next-generation-solutions