What are Tokensets? Automated Crypto management Strategies as an ERC20 Token – DeFi Project that helps you protect your Crypto during Bear markets and benefit during a Bull run

In this Post, 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 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 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
  • 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.

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