What is it and how does it work?
One of the core services that Dropil offers is the automated smart trading platform, internally and externally referred to as Dex. The Dex trading system is not a single bot or strategy, but rather a carefully curated set of automated bots that use different logic stacks that are monitored by our team.
Logic stacks are connected to pools
Dex uses a pooling approach for each logic server stack, this means that all users of a like mode, or risk type, contribute to and receive returns from that mode’s pool. This provides a massive advantage to all participants, especially in regards to the safety of returns. With the pooling model, there is sufficient capital to allow maximum diversification – no need to wait for a particular position to open or close to a net profit and no need for the use of margin, eliminating liquidation danger and position funding costs. This strategy also allows for the hedging of not only currencies but also positions. Users can either join the safe, moderate or aggressive pool. For details, read our Dex risk levels article.
Each risk mode uses different switching logic servers. This allows for automatically switching to a different set of strategies in reaction to market changes. The modes of the individual instances operate independently of each other with no cross communication; however, all performance is recorded in the main Dex System repository for continued analysis of all trading.
Each instance of the Dex System trades only one pair, on one exchange, on one account at a time. Each instance is independent, however, multiple numbers of instances, structures, and logic are always running and this overall strategy is set using the main Dex System. Certain aspects of the group logic are constantly monitored and managed by human oversight to ensure the best possible overall portfolio performance and diversification.
There are comprehensive security measures overseeing the safety of Dex and the trading carried out by the bot. There are automatic and manual protections in place to account for connectivity, exchange, and operating system issues.
Low Volume Trading
All logic was tweaked to return the best possible combination of characteristics past simply the largest paper return. A common downfall of bot design is allowing it to make many small trades, anywhere from 10,000 to 800,000 trades per month on a single coin which on backtest data may show a great return. In live trading, this volume of trades will net a loss when slippage, fees, volume, and scale are present. Better data will always allow for better results – another major downside of back data testing is the quality of the data itself. Historical data often shows prices based on time intervals such as 1 minute or 5 minutes which leaves a lot of true trades missing from the testing.
The versatility of smart learning, logic, and quick swapping automation allow Dex System to make returns in nearly any market condition. Each risk mode of Dex works with certain predefined currencies and exchanges. The makeup of each group was cultivated to include as much diversification as possible, matching currencies that historically track separately each other. This hedging allows Dex to lock in profitable trades on some assets while others may not be performing. There is further diversification for each mode across a number of trading exchanges to ensure protection from volatility, technical, legal, or political issues that anyone exchange may experience.
Not a Lending Platform
Dropil is not a lending platform and shares no common grounds with these models. There is no hold period on your funds – you may withdraw them at any time, and incur no fees. We do not guarantee any specific returns. This is, after all, trading and it cannot ever be 100% certain. A strong full-time trader will be able to beat an algorithm trader most of the time, and any bot claimed to always be better is suspect. Dex System is not for the top 5% of traders, they don’t need it, our product is for the rest of the population that does not have time, skills, or interest in full-time trading but still wants the benefits of active, profitable trading.
What are Drops and why do I need them?
Drops are the currency of Dropil. All transactions into and out of the Dex system require the use of Drop Tokens exclusively to maintain a number of beneficial features of the infrastructure. The first opportunity for people to own Drops was during our ICO (now finished). Drops can be purchased and sold on exchanges or purchased directly through Dropil Direct in your portal. For more information on Dropil Direct, see our article here. There are additional plans in the future to offer selling and trading directly via the user portal including support for fiat. The Drop Token creation was capped at 30 billion coins, this amount of coins reflected strategic calculations to support first and foremost the ideal scale of our trading platform tool. This amount was needed for it to perform optimally with respect to the volume of managed assets. The number of tokens also included calculations to achieve the dispersal to what we consider an ideal sized user base, allowing for the coins to be traded at exchanges and kept in circulation with an initial value that would promote widespread and adoption of the token. The low cost of entry along with the necessity of the coin to participate in the features of our tools is intended to drive large user base implementation. This also maintains initial and expanding demand for our token. Additionally, Drop Tokens will be needed in future tools that we will develop.
Withdraw anytime with no penalties
The Drop Tokens are yours. That means you can withdraw them at any time through our portal, even if they are currently inside Dex System. Withdrawing from Dex prior to the end of any given 15-day period will result in forfeiting any unrealized profit for that period. Our system supports automatic profit withdrawal to an address of your choice as well as auto re-contribution back into Dex. Read more on Dex maturity period
Funding of the Trades
To fund Dex System, your initial deposited amount is converted at the time of deposit to USD and then internally to BTC value. USD is used for display (later on we will support other fiat currency for display). The USD value may be an approximation, BTC and a few other cryptocurrencies are then used for trading. Your deposit is then sent to its respective pool and size of contribution is notated. All BTC funding for exchanges and or trading is funded by the Dropil vault sometimes referred to as ‘the bank.’ At all times, the vault maintains surplus funds to support the liquidity of trading capital primarily via ETH and BTC as well as a supply of Drops. Additionally, to maintain liquidity, “the bank” also buys Drops on the market to fund profit payouts.