Set Protocol — Automated Trading Using Smart Contracts
By: Moj Kripto
Tags: Trading, Blockchain Technology, Smart Contracts, Ethereum, Blockchain

Familiarize yourself with the TokenSets — Exchange and User Interface for Using Set Protocol

Since 2017, the California based company Set Labs Inc. has been developing the Set Protocol — a smart contract system on the Ethereum blockchain that can be used to trade cryptocurrencies in a fully automated way, using ERC20 tokens that execute specific trading strategies.

In 2018, the company raised $ 2 million from venture capital firms in order to develop and scale its operations. Constant improvement of the platform and the introduction of new products are solid evidence that the raised capital is used efficiently.

What does the Set Protocol do?

Set protocol simplifies cryptocurrency trading and allows you to expose yourself to a trading strategy of your choice in just a few simple steps.

For each of the trading strategies, the platform offers a corresponding ERC20 token. This token rebalances itself in accordance with the default parameters of each strategy. In other words, it buys and sells tokens when they reach predefined values.

The platform that offers automated cryptocurrency trading using the Set Protocol is called TokenSets. A described tokens are collectively called Sets.

Set tokens are fully collateralized in the crypto assets that are the basis of each particular strategy. The smart contract that regulates the collateralisation process is called the Set Protocol vault contract and is available here.

The platform currently supports the purchase of Set tokens with ETH, USDC, DAI and WBTC.

Buying a Token Set

It is very easy to use the TokenSets platform. Once you choose one of the available strategies, everything you need to do is to buy the corresponding token. And that’s it, the rest of the job is done by the automated protocol.

For each of the available strategies there is a detailed description. If a strategy is created by the specific author, then there is also additional information about the author and its work.

All of the Set tokens available are displayed on a variable-graph control panel similar to ones that we see on crypto exchanges. Because of that, it is easy to compare the performance of a particular strategy over different timeframes.

In addition to Metamask, other supported wallets are Fortmatic, Coinbase, Trust, imToken and Opera.

Usage of the platform is available through two main modules: Social Trading and Robo Sets.

Social Trading is a newly introduced advanced trading variant in which predefined strategies are created by respectable traders based on their knowledge and experience using different indicators. Therefore, something known as a copy trading is accomplished by buying a Set Token that represents a strategy of a particular trader. Traders who offer their strategies on the TokenSets platform are proven experts in the cryptocurrency market with extensive trading experience.

At the time of writing, there are 15 tokens available in the Social Trading module offered by 15 traders with a total of 22 different strategies. Within the Traders tab, each trader has a page with their personal information, the amount of capital they manage through their Set tokens as well as posts, links to external profiles, graphs and other technical parameters of the respective Set tokens.

Social Trading has enabled almost everyone in the world to expose themselves to successful trading strategies in just a few clicks by copying experienced traders.

Awards for traders

Traders that participate on the platform are awarded through fees. When configuring each individual Set of tokens, the trader himself decides on the amount of the entry fee which ranges from 0% to 5% for each individual Set. Since Set Tokens are actually ERC20 tokens, you can transfer them like any other tokens outside the TokenSets platform. Once purchased, they will be stored in the wallet that is part of your profile. You can freely send and receive your tokens and exchange them back to any of the cryptocurrencies you used to buy them on the platform at any given time.

You can also send Set tokens to one of the crypto exchanges and trade them without boundaries. Set tokens can be purchased with ETH, USDC, DAI, or SAI tokens.

Transparent user interface

The user interface of the TokenSets platform is very simple and transparent, free from unnecessary details and you will quickly get used to it. When purchasing a single Set Token, you will be able to turn on email notifications indicating any changes to the Set Token you own. You can opt-out the notification option.

When using the TokenSets platform, you won’t need to provide any personal information.

In addition to Social Trading, investing in Set Tokens is also available through Robo Sets.

Robo Sets are Set tokens based on strategies related to certain well-known trading indicators such as RSI, MA, EMA, Range-Bound, etc. In addition to trading indicators, there are also baskets made up of two cryptocurrencies, i.e. ETH/BTC 75%/25%.

For both groups of tokens, the control interfaces are identical. Currently, the Robo Sets module offers you to invest in 23 Set tokens.

All the Sets are available in a single control panel divided into cards for each set group and a separate trading chart.

TokenSets is constantly increasing the number of traders available and if you have developed an effective method yourself, feel free to sign up and become one of TokenSets traders and start earning money from users who will choose your strategy and pay you a fee. To get started, fill out the access form you will find here.

Rebalancing of the Set tokens

Rebalancing is a process in which the relations within a particular Set of tokens change. For example, with the ETH 20 Day MA Crossover a token set that uses WETH and USDC tokens along with the 20 Day MA indicator will be rebalanced when the price of ETH exceeds the 20 Day MA line. The smart contract will then buy WETH for the available USDC, thereby benefiting from the rise in the ETH price.

The opposite will happen when the price of ETH falls below the indicator level.

At that point, this Set will keep its owners safe from the fall in the ETH price by relocating to the USDC. Within each Set of tokens it is possible to monitor the status of rebalancing.

On this page you will find links to each individual rebalancing.

The rebalancing also provides additional revenue opportunities. The rebalancing is organized as an open auction which offers everyone with the opportunity to increase the system’s liquidity by participating while at the same time earning a profit. Read the details of how to participate in the rebalancing here and here.

Security

In addition to internal testing of their smart contracts, security audits were also conducted by reputable companies Chain Security and Trail of Bits. You can see the audit findings at the links below.

1 https://www.setprotocol.com/pdf/chain_security_set_protocol_report.pdf

2. https://www.setprotocol.com/pdf/trail_of_bits_set_protocol_report.pdf

All smart contracts are open-source. Contracts can be found on the GitHub Set Protocol profile: https://github.com/SetProtocol/set-protocol-contracts. To further encourage developers to use the Set Protocol to develop new Sets and applications, Set Labs has created a dedicated page with instructions for easier usage of the platform. The site is available here: https://docs.setprotocol.com/#/tutorials#create-a-rebalancing-set

If you want to step into the world of cryptocurrency trading and do not have enough knowledge about indicators, technical analysis or do not have time to track the movements on crypto exchanges, TokenSets platform might be interesting for you.

It’s good to know that you can start with small amounts. As with the purchase of other tokens, you can only buy a portion of the Set Token and only later increase the stakes.

As with all smart contracts, regardless of the audits and tests performed, you need to be aware that the usage of smart contracts carries a risk, and be sure to keep yourself well informed before you start investing.

You can find answers to frequently asked questions on the FAQ page, and you can follow TokenSets on Twitter, Discord and the Medium blog.