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The rise of algorithmic trading has transformed the financial landscape, but it also carries significant risks that can deter potential investors. Technical flaws, data inaccuracies, and concerns about regulatory compliance create an atmosphere of distrust. These risks can lead to significant financial losses, largely due to the speed at which algorithmic trading occurs. The infamous case of Knight Capital lost $440 million was lost in 45 minutes due to an algorithmic error, which means it is very important for traders to better understand the implications of relying on automated systems.
upbot.com We aim to address these fears by providing a secure platform specializing in centralized exchange (CEX) trading algorithms. We actively combat the skepticism surrounding the algorithmic trading space by offering advanced trading bots designed to minimize risk. UpBots’ unique selling proposition includes using the API without withdrawal privileges to ensure that user assets remain safe. This commitment to safety, combined with educational resources, allows users to trade with confidence.
The latest update highlights a new product, SuperBots, which brings UpBots’ cutting-edge trading engine to the DeFi space, allowing users to automate their trading strategies in an innovative decentralized exchange (DEX) trading environment while maintaining full control over their assets. By increasing transparency and security, UpBots is rewriting the narrative around automated trading and connecting industry challenges with next-generation solutions.
Welcome to a conversation with Marco Lavanna, CEO of UpBots.
1. Why do you use two different platforms? And how do they differ?
Good question! Fundamentally, UpBots and SuperBots are similar products designed to achieve the same goal: to provide retail investors with the best algo trading solution through a marketplace that essentially brings together institutional-grade traders/quants and retail investors. Algos are already driving most of the stock market, and we believe crypto is headed in the same direction. We want to give retail investors a chance in that environment. After all, crypto is nothing if it doesn’t democratize finance.
The difference between UpBots and SuperBots is basically whether the user wants to trade on a centralized exchange like Binance, Huboi, OKX, Coinbase Pro, or a non-custodial DEX like PancakeSwap, 1inch, etc.
UpBots offer additional features like portfolio tracking and social copy trading, while SuperBots are built in a way that many yield farmers can identify with using their bolts.
2. What specific measures do you take to prevent technical glitches and ensure the accuracy of data used by your trading bot?
Both platforms use audited smart contracts where appropriate, and use cutting-edge technology that has seen millions of dollars invested in development over the past six years. As far as technical flaws go, our releases have been thoroughly tested by our beta testing team and the community, and our trading engine is mature and proven at this point.
Also, all the algorithms on our platform are low frequency and operate on longer time frames. Also, since we only trade one crypto asset against USDC, the worst case scenario is that the position is not opened or is opened slightly later than the ideal moment, which reduces the profit slightly.
But this brings up a good point that people may not realize. We do not own or build Algo ourselves. We are a FINTECH/software company, not an Algo company.
We have built a marketplace where external algo developers can benefit greatly by helping retail investors/traders. It is a win-win-win approach, if the user does not make a profit, neither the platform nor the master traders who built the algos make a profit. Therefore, there is a financial incentive for all participants at all levels of the platform. Once an algo is submitted to our team, it is extensively tested and verified to ensure user safety. Only after passing these checks is it published on the algo marketplace.
3. How do you address the potential risks of regulatory compliance issues that may arise from automated trading?
Our parent company, Monetum, has a legal, regulatory and compliance team, and most of our group companies are actually regulated. We see regulation as a necessary but difficult step, and we do our best to make sure we are painting within the boundaries when it comes to regulatory guidelines.
4. Can you provide specific evidence on the profitability and risk-adjusted returns of your algorithmic trading strategy, especially when using SuperBots?
Yes. SuperBots are entirely on-chain. All trades, deposits, buys and sells made by the algo in it's vault are 100% transparent and visible to the world. We provide a user interface for each vault and platform to make this easy, but if someone wants to verify legitimacy, they can simply check BSCScan.
5. How do you ensure that trading bots in decentralized finance are not vulnerable to manipulation or exploitation by malicious actors?
First, I would like to say that it is impossible to manipulate the Algo bot. The Algo bot is effectively programmed with a set of rules based on technical indicators and provided to the safety team to analyze anything that could put the user's funds at risk. After that, all the Algo developers can do is release updates to the Algo's logic/rule set, which are again subject to rigorous testing by the safety team.
Of course, there is manipulation by whales in all financial markets, and all market players are exposed to the consequences. However, this is actually one of the advantages of using Algo. Namely, when the larger cryptocurrency markets are being manipulated by whales, Algo can see and react much faster because it constantly monitors hundreds or sometimes thousands of different indicators.
6. What happens if the platform experiences a system failure or outage during a significant market event?
Of course, technical system failures are always a non-zero probability, although the likelihood is extremely low due to our redundant cloud architecture. For SuperBots and UpBots, we analyzed where failures could occur and implemented redundancy wherever possible.
7. How transparent are you about the underlying algorithms and decision-making processes used by your trading bot?
For lack of a better term, we don't develop Algos internally. We simply provide a bot chassis that Algo developers can plug their Algos into.
The secret sauce of our algorithm developer code, machine learning and algorithm logic, is not something we share publicly. This is part of the NDA agreement you sign when you sign up as an algorithm development partner, and it is a promise we take very seriously because we need to be able to evaluate the quality of our algorithms to keep our users safe.
However, for completely new algorithms, we share backtest data so that users can see how the algorithms performed, and also make sure that the backtest data is legitimate and created by our own security team as the final part of the security process. I think this is the best balance between user security and IP rights.
As a company, we have a policy of being as transparent and helpful as possible about our community on Telegram, so anyone who wants to try algo trading is encouraged to join the community. The link is https://Timmy/Upbot
8. What happens if a user experiences a loss due to the performance of Algobot on the platform?
The goal of every trader is never to win every trade. It is impossible to do so with the ability to see the future. The goal is to win more than you lose, so that your capital grows. Therefore, our users lose some trades. That is why we recommend that users take a 12-36 month perspective before investing capital in the SuperBots Vault or renting algos on the UpBots Algo Marketplace.
To ensure that all participants in the ecosystem are financially incentivized to gain more than users lose, we have a fairness system in place that charges performance fees only when an algo is profitable (or above its previous high using a high-water mark system).
If there were no performance fees, the algorithm developers would not get a share of the profits and neither would we. So essentially, if our users don't win, no one else wins.
This is the fairest Algo Trading System on the market. Unlike all our competitors, we do not charge any fees up front, so anyone can try it out for themselves with very limited risk.
9. Can you provide an independent third-party audit or certification to verify the security and stability of UpBots and SuperBots?
Yes, all of our smart contracts have been audited multiple times and we have an active bug bounty campaign going on at all times.
10. What specific steps are you taking to educate and empower users to make informed decisions about algorithmic trading?
That's actually a good question. We don't think that way. Our goal is to create a platform that empowers users without requiring any trading education to fully understand how algo trading works.
My belief and one of our goals is that if we build great software that gives users the essential data points they need (e.g., past performance, risk level of a particular algorithm), they can invest their capital where it can grow. Compared to the stock market, you don't need to know everything about the S&P500 to invest your capital in a Vanguard fund.
Additionally, if an algo that has historically performed well falls below the minimum standards, our security team may close any pending transactions on the algo and take it offline.
Another way that SuperBots protects users from risk is through SuperVault, which not only allows you to see every transaction on the blockchain, but also allows users to be confident that their capital is distributed across the top 5 performing algorithm vaults, mitigating risk as much as possible. These are re-evaluated and rebalanced monthly by smart contracts.
11. What is your plan for recovery and compensation in the event of a major security breach or loss of user funds on your platform?
It is impossible. UpBots does not hold user funds. User funds are stored in exchange accounts, and API access used for trading does not allow withdrawals. In SuperBots, all capital is stored in smart contracts that have been audited multiple times. The only way a user can lose funds is if their wallet is compromised, which is a constant risk in DeFi and something we cannot control.
In other words, using both UpBots and SuperBots is a very safe way to increase your capital, and you can see that a lot of effort has been put into creating a product that is specifically designed to help individual investors who do not have much trading experience and who have a high chance of losing 90% of their capital in their first 90 days in crypto.
Disclaimer: This article is provided for informational purposes only. It is not provided or intended to be legal, tax, investment, financial or other advice.
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