Algo Trading:Centralized vs. Decentralized

Dr. Chung Dao

Researcher & Lecturer

Hanoi Univers i ty of Sc ience and Technology

Dr. Chung Dao

•Researcher & Lecturer•Hanoi University of Science and Technology•Ph.D. in CS from The University of Tokyo

•Co-founder of Rikkeisoft•Top 10 biggest IT company in Vietnam

•CEO & Co-founder of Oraichain•Oracle Artificial Intelligence for Blockchains

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MANUAL TRADING VS. ALGO TRADING

Images from Medium, Dolluzz

Psychology control & Decision making Risk management & Discipline decision

Yield farming and its risk

•Yield farming is rocket fuel of DeFi•Generate rewards with cryptocurrency holdings•Deposit cryptocurrency to vaults or provide liquidity to pools

•Vault: it typically moves its funds around a lot between different liquidity pools in search of high yields

•Liquidity pool: there is no fund moving to other pools in search of high yields

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RISK FROM ROI OF VAULTS AND LIQUIDITY POOLS•There are more than 200 vaults and 2000 liquidity pools in the market•Risk from value of native coin reward•Risk from value of deposit tokens•Risk from withdrawal and performance fee

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Manual Farming vs. Algo Farming

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• Choose the best yield by yourself• Farm strategy is decided by

someone or community• Manual risk management

• Data mining & AI-based yield selection• Farm strategy is decided based on

APY, Risk, and Price prediction• Automated risk management

Images from Cointelegraph

Algorithmic Trading

•Using API to order to buy or sell immediately at the current price•BOT can be programmed to make orders•AI-based trading strategies could be•Buy the dip and sell the rip•Support buy and resistance sell•Buy/sell indicators•Price prediction•Risk score

7Images from Medium

Centralized Algorithmic Trading

•API is set by human

•BOT is controlled by human

•Trading strategies is set by human

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Decentralized Algorithmic Trading

•API is set by oracle platform

•BOT is controlled by oracle platform

•Trading strategies is set by oracle platform

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How to achieve Decentralized Algorithmic Trading

•Get data and AI services from oracle platforms•Oracle platform: Link, Band, Tellor, and DIA

•AI-powered oracle platform: Oraichain

•AI platform: Ocean Protocol

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References

•https://medium.com/oraichain/risk-from-roi-of-yield-farms-and-liquidity-pools-176d4f7d39c8•https://orai.io

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