Here is a comparison of the Trading Strategy protocol to different entities that provide similar, automated and algorithmic trading services.

Hedge funds#

Hedge funds, bank trading desks, and such engage in algorithmic trading as well. Some famous funds that are engaged in algorithmic trading include Alameda Reseearch, CMS, 3AC, Galois Capital, and the giants like Reneissance Technology, Jane Street and Jump Trading.

The major differences are

  • Hedge funds open for accredited investors only and are marketed privately.

  • Hedge funds do not have community or open source ecosystem around them.

  • When investing in a fund, you lose control over your money. Trading Strategy DeFi protocol is non-custodial.

  • Hedge funds can employ market neutral strategies or high-frequency trading strategies. Trading Strategy is not designed for these strategies, but focuses more on directional strategies.

  • Both hedge funds and Trading Strategy can offer private strategies. In this case, the strategy source code is not open to the public, but they can still enjoy the protocol benefits like trade execution, reward distribution and fee distribution. Private strategies can choose to whitelist their investors if they wish.

Yield farming protocols#

With the advent of Defi Summer of 2020, a various yield farming services came to the existing. Famous yield farming services include Yearn Finance, CREAM and SushiSwap.

Yield farming services are almost always passive interest based. They pool assets to receive liquidity mining rewards, which they immediately sell or auto compound. This is because, yield farming services are purely smart contract based and the on-chain processing power does not allow any active strategies or it would be prohibitively expensive.

Yield farming protocol collect fees, often withdrawal fees. Some of these fees can be credited to the strategy creators.

  • Trading Strategy employs active trading strategies.

  • Trading Strategy has specialised off-chain oracle network to make decisions based on large datasets, trading signals and machine learning that cannot be done on-chain.

  • Both yield farms and Trading Strategy have community and open source ecosystem around them.

  • Both yield farms and Trading Strategy reward strategy creators from the fees their strategy makes over the lifetime.

  • Both yield farms and Trading Strategy have a governance token where the token holders can decide various risk an reward parameters. The most important decisions usually focus around the income stream distribution between the token holders and other ecosystem participants, like strategy creators.

Crypto trading bot services#

Crypto trading bot services allow you to connect your cryptocurrency exchange account with their trading signal and execution service. Because the connection happens via the cryptocurrency exchange API key, not through a deposit, these services are not hedge funds.

Some of the popular crypto trading bot services include 3Commas, Crypto Hopper and TradeSanta.

  • Crypto trading bot services are monthly fee based, which is often steep. Whereas Trading Strategy has a transactional fee based business model and is more flexible on how it can charge the users (fee on profits only).

  • Crypto trading bot services are centralised, there is no visibility how they operate inside and how secure they are. Giving an exchange API key to any service makes it possible to steal all your money on your cryptocurrency exchange account.

  • The centralised exchanges themselves are prone to insider hacks (see another incident).

  • There is no visibility if these centralised services sell their order flow data to traders to trade against you, or trade against you themselves.

  • Anyone can verify that Trading Strategy protocol acts fairly and honestly due to on-chain transparency.

  • Trading Strategy has a community and an open source ecosystem built around it.