In this video,
you will learn everything you need
to know about how you can manage your
portfolio with algorithmic
trading. Using a token set.
I think it's a very exciting decentralized
finance platform. Based on ethereum.
We will look at what it is, what
are set tokens, what is set,
how does it work which cryptocurrencies
are used in token sets.
What can you do with token sets, the
different options, the types of robo sets,
the types of trading strategies
that are available to buy,
how a moving average set
is created, how it works,
the advantages of token sets,
the disadvantages and the tax
implications of token sets.
In my last video talks a lot about
decentralized finance and in this video I
want to bring to you a very exciting
platform that will help you enhance your
portfolio,
get a better return on investment on
the longterm by leveraging different
trading strategies that work behind
the scenes and you do not have to do
anything apart from buying the single
ERC 20 tokens at the beginning.
Set was created in November,
2017 as a set protocol and
it's an emerging decentralized
finance platform based
on ethereum.
So the tokens are ERC20 tokens
and basically the set protocol
allows you to buy different baskets
of tokens that performs a different
function.
Set protocol is a tool to automate
algorithmic trading strategies by buying a
single ERC20 token.
So you only have to choose the strategy
that you want to use and you buy that
strategies ERC20 token.
So each trading strategy is represented
as a unique ERC20 token a code,
a set,
and the cryptocurrencies within that set
are fully collateralized with different
cryptocurrencies. The
cryptocurrencies are, ethereum,
then you've got wrapped ethereum,
which is an erc20 token back
to one by one by ethereum.
Then you've got the USDC,
which is a stable coin.
Then you've got compounded USCC,
which is basically USDC but you get
interest when you hold that particular
stable coin and you've
got a single collateral
Sai and you've got wrapped Bitcoin,
which is an ERC20 token
backed one by one by Bitcoin.
An interesting part it's got the
advantages of having an ERC 20 token,
which you can use on
the ethereum blockchain,
but it's backed one by one by bitcoin.
It's got the store of value of Bitcoin.
So the solutions on set
protocol as following,
you've got the social trading sets,
basically traders create their own sets
based on different indicators and you
can buy the different trading
strategies as an ERC20 token.
Then you've got robo sets,
which are predefined algorithmic trading
sets such as moving average RSI and so
on. And then you've got traders who you
can copy trade and see what kind of sets
they're buying. So you get an
impression of what you can buy.
These are the four options and
we'll be looking at robo sets first.
Different robo sets available are.
you've got smart rebalancing
where you've got for example,
75% ETH and 25% USDC in your set and
should the price of ethereum rise,
then a little bit of the ethereum will
be sold so that the balance is again 75%
and 25% USDC and the same
as if if ethereum falls then
a bit more ethereum will be bought
by the available USDC stablecoin in
that set. Now with trend trading,
you're using an exponential moving
averages and moving averages and you can
maybe have ethereum
and another stablecoin or BTC and another
stable coin and that will sell and buy
based on these indicators.
We'll look at an example of a moving
average set later on in the video.
Now range-bound uses RSI and RSI is
relative strength index indicator,
which highlights when an
asset is overbought or
oversold and the same with the
moving average you've got here.
The asset here will be bought or sold
depending on what their relative strength
index is showing on the charts.
Then you've got buy and hold sets,
which for example 50% wrapped
BTC and 50% wrapped eth,
and this is very similar to the smart
rebalancing where basically should the
price of BTC rise exponentially and the
balance 50% 50% is not there anymore.
Then a little bit of BTC is sold so that
the weighting is again 50% and 50% but
you've got many different options and
you can select from those to choose the
set that you think is going to
outperform the market the best.
This is an example of an ethereum 20
day moving average across over set so on
the left you've got wrapped ethereum,
which is an erc20 token which is backed
one by one by a ethereum plus the USDC
stable coin and plus the 20 day moving
average indicator and all of this
together is then the ethereum 20 day
moving average crossover set ERC20 token
and this is one token that you can buy.
You'll only have to buy this token and
you've got this trading strategy and with
this trading strategy,
when the price goes above the
20 day moving average, wrapped,
ethereum gets bought with the available
USDC and when the price falls below the
20 day moving average,
a wrapped ethereum gets sold for a USDC.
I think this is very interesting approach
having such trading strategy ERC20 token
in your portfolio because it allows you
to hedge against the risk
of the price falling down.
So we are on the ethereum 20 day
moving average crossover set,
as I mentioned before,
this is the content of this ERC20 token
ETH 20 day moving average crossover set.
So you've got the wrapped
ethereum at the moment,
the rebalance in such that all the money
is in the wrapped ethereum and none of
the money is in USDC stable coin.
With this chart.
If we start back here
on the 8th of August,
as you can see the dotted blue line
on the chart is the price of a wrapped
ethereum.
And as you can see when
the price is falling,
as soon as it falls below the simple
moving average at 20 day simple moving
average, it gets sold for the stable coin.
And when the token set has
its value in the stable coin,
the price remains constant as the stable
coin always has the same price and that
means that you can hedge
against the falling ethereum.
And on the 8th of September there's
another rebalance because the price of a
ethereum is going above the
20 day simple moving average.
So ethereum gets bought back
and it can profit from
the price increasing.
Now as you can see here,
the total value of the
set increased to $322.
Here we had another rebalance
on the 24th of September.
As you can see with the ETH20 MACO.
You only had -20% had kept
ethereum during that time,
you would have had -44% return on
investment, which is not very good.
Well ,the advantages of token sets
are it can save you a lot of time.
And effort. It's automated.
The rebalancing is automated.
This 24 monitoring of your portfolio
and there's no commitment on your part
apart from selecting the certain
sets you want to invest in.
It's basically an automated strategy.
It reduces the emotional
risk involved in the market,
reduced missed opportunities and
there's instant diversification,
you can stay in control of your portfolio
without having to do anything because
everything happens behind the scenes.
So if you're interesting in learning
how you can buy one of these ERC20 token
set strategies,
then hit that subscribe button as I'll
been releasing a video showing you
exactly how you can do
that in the next few weeks.
The only thing that you need to have
to begin with the ERC 20 token set
strategies is a ethereum capable wallet.
But I'll keep that for the next video.
I want to point out a few downsides of
token sets because I think that's very
important.
One of the biggest downsides is token
sets are very good for neutral and bearish
markets,
meaning that in the longterm you have
a return investment by a won't be the
highest return on investment possible.
Since the token sets are not sold at the
top when the price is at its highest,
but very often when it
crosses an indicator,
which means a little bit of lost profit,
but if you're looking for a
moon Lambo and 10x investment,
then you might be better off buying some
random altcoin but the chances of that
performing well over the next
10 years is slim to none.
Another point I want to address,
and that's not very sure,
and that's a taxation when
these rebalances happen,
it's not very sure what
the taxation regulation is.
If for example,
if wrapped ethereum is rebalanced for a
stable coin or bought back from a stable
coin.
So there are no clear guidelines about
these rebalancing which are happening
automatically in the token set.
This might be something that someone
that's living in America might have to
think about because you've got much
higher tax regulations as maybe people
living in other countries for
example, European countries.
So that was it for this video. Hope
you learned something valuable.
I think these token sets are a
fantastic tool to use as a hedge against
different bear markets and also very
interesting as a decentralized finance
platform.
And it just shows the opportunities that
retail investors have in this space and
that they can already benefit from using
different algorithmic strategies that
help them manage their portfolio passively
without the retail investor having to
do anything. So you wouldn't
have to do anything.
You can just buy these ERC20 tokens and
benefit over a longer period of time,
have a higher return on investment.
So that was today's video.
Hope you enjoyed it.
Feel free to hit that red subscribe
button to be part of the team and I'll be
releasing a lot more fun and exciting
videos of the decentralized finance space.
A lot more how to guides,
how to become more invested,
how to use these tools and yeah,
improve your trading strategies, your
investment portfolios, and so on.
So I'll catch you on the
next video. Bye. Bye.
