Bots play a vital role in crypto trading. In fact, some experts estimate that as much as 86 percent of total cryptocurrency trading volume is the result of machines placing orders. The reason for this is pretty simple: machines are much better at trading than humans.
With so much influence on the markets, it is no surprise that there is a virtually infinite number of trading bots, executing an equally high number of trading strategies. However, while most trading bots leverage strategies that have existed since the earliest days of trading, some bot developers are taking a new approach to out-trade the competition.
The Next Generation of Crypto Trading Bots
For example, Precog.finance is currently working on a new approach to automated crypto trading. Its Basis Aggregator Protocol, for instance, helps automate the arbitrage between a crypto pair’s current pricing and its futures pricing. The success of this service largely depends on the extensiveness of the platform’s network. Precog has established robust connections with several well-known, high-liquidity crypto exchanges to take advantage of market inefficiencies.
The platform efficiently leverages AI and machine learning to evaluate the spot and carrying of a crypto asset. By comparing these two indicators, the AI can quickly ascertain the standing of the cost element against a future value premium. If the future value premium is higher than the spot and carrying cost, the platform executes the order to acquire the forward sell and net a profit.
This automation of the trading operations and the resulting trade optimization is where the platform scores over its peers. Further, Precog.finance has Polygon and Fringe as its partners, which helps it facilitate a healthy ecosystem.
The Precog platform has a native token that fuels its economy and helps make further provisions for the platform’s development. The company has allocated about 6.5 percent of its total tokens to the development of the platform, with another nearly 18 percent of them going toward meeting strategic needs. In addition, Precog has assigned around 15.5 percent towards the team.
The Bot-Induced Benefits of Precog
As mentioned earlier, Precog’s trading bot leverages an improved version of the traditional cash and carry arbitrage investment strategy. However, its AI-powered algorithm does not only enable automatic futures and arbitrage trading, but it also purchases tokens automatically, which creates buying pressure and delivers value to the larger token market. This, in turn, helps the community.
The platform’s automated investment manager is designed to make investors’ lives easier. It identifies opportunities, decides on the most optimal position size for that opportunity and ascertains the right entry-time, all by itself. Since the crypto trading bot hardly requires any human intervention in this process apart from setting up initial parameters, it is convenient for investors who are unable to spend a lot of time researching and tracking the market.
However, data plays a key role in optimizing such processes and making them transparent as well as efficient. So, Precog ensures that users of its platform have sufficient data to engage in decision-making pertaining to all aspects of their investments if they choose to do so. The AI merely makes the process easier by providing investors with various metrics on market activities.
Another crucial aspect of Precog’s service is that its crypto trading bot is able to adapt. The bot keeps evolving and learning new strategies by leveraging both internal and external datasets. A host of performance metrics are used to analyze outcomes and make the next strategy more nuanced. The platform’s AI-powered algorithm is capable of weighing the performance of various trading strategies and implementing corrections based on different systems as and when deemed fit.
The Future Trajectory of Precog
Innovation and the development of new strategies are what Precog is built on, so it shouldn’t come as a surprise that it is continuing on that path. The company will soon release Sentient V.2, which will enable savvy investors with access to capital or leverage to significantly scale their profits while maintaining low risk. Sentient V.2 will have the capability to ascertain market opportunities and compare them among the decentralized lending markets to aggregate the best rates, which will be valuable when the futures premium is high.
The company is also looking to introduce a service called Cerebral, which will be a decentralized futures and options marketplace. The automated service will help investors buy and sell options on almost every ERC20 token on the market. Next month, on April 18, Precog is expected to hold an IDO on the jigstack-based launchpad, Lemonade, with the goal of raising up to $1 million in funding. For those interested in profiting from the volatility of the market without any effort of their own, this could be an interesting opportunity to get involved.
