Solid returns with LIQUID Tech
Tuesday 21 April 2015
Disclaimer: I have a small amount invested in Liquid Tech. In my defence, if I could have afforded it at the time, it would have been more.
Crypto is still a fledgling market and its exchanges are not as mature and liquid as they might be. That brings opportunities for arbitrage, which is both beneficial to the market (increasing liquidity) and to investors (generating returns). The problem is that in the crypto world, ‘arbitrage’ has come to mean two things:
1) The practice of taking advantages of price differentials in two markets, profiting from simultaneously buying on one and selling on the other.
2) A code word for opaque practices used to generate profits for investors by shady businesses that invariably turn out to be ponzi schemes.
A string of dodgy crypto-assets and funds too long to list here is what prompted Jonathan P, founder of LIQUID Tech, to built an arbitrage service on the Nxt platform that was both profitable and fully transparent - showing his automated trades in real-time. I was fortunate enough to learn about the project before it launched, and was able to invest a small amount of money in it. It's an impressively-performing asset, yielding 1.68% in the first full month of operation, with very low risk. Jonathan was kind enough to answer a few questions about what he’s been up to.
Read also: Dynacoins: First Bitcoin Mutual Fund
How long have you been involved in cryptocurrency?
I've been involved in cryptocurrency since December 2013 when the big BTC bubble hit. I initially got into BTC, like most, moved to LTC for a while and then settled on NXT. I found NXT more compelling than the other coins because of its proof of stake blockchain and burgeoning community. Once the asset exchange hit, it was a no brainer that NXT is top tier.
What made you decide to start arbitraging?
The arbitraging idea came to me when I noticed, through trading, the frequent inconsistencies of trading pair prices across the crypto exchanges - especially NXT/BTC. At first, I manually arbitraged for a while, but it was time consuming and exhausting. After a few days of this and because I'm programmer, I realized that I could program the logic I'd been using.
There are other arbitrage assets: what's different about Liquid?
I had two main goals in developing LIQUID. First, I felt NXT needed more liquidity especially in the secondary markets (ie. Bittrex, Poloniex). Since I really want NXT to be successful, adding liquidity is very important to its success. Second, is transparency. There are so many assets with little to no transparency, that it's no surprise a monthly scam is revealed. What really sets LIQUID apart from the rest is the real-time statistics pages that shows balance sheet, trades and profit summary. I want this to be successful and people to love it so much that it forces other assets to also reveal their financial health or if not, serve as a loud warning to other investors. The more scams we can get out of our community, the better chance of the success of NXT.
What conditions are necessary or favourable for you?
As long as markets I choose to trade in, have volume and hold their value (aren't pump-and-dumps) then trading will be successful. That's why I carefully choose which markets to trade. If I make a lot of money trading a certain coin, but it completely loses its value, I've actually gained nothing.
How successful have you been?
LIQUID has been overwhelming successful so far. I released the software two weeks ahead of schedule and provided dividends one month ahead of schedule. In month two, I beat my business plan profit estimates by 84%. The software is running great and I expect this week to be the most profitable week yet.
How did you raise money for the project?
LIQUID started out as a conversation with a few people in the Nxt community. I drafted the business plan and we spent many days hammering it out, with constant feedback. After we felt we had a good plan, we reached out to a few other community members to garner interest. On February 1, I announced on the forum and listed the LIQUID shares. The support/response was overwhelming and the initial block of shares at 100 NXT were sold out in 12 hours.
How has the situation with BTER and other hacked exchanges recently affected you?
BTER was frustrating. I had just got going when they reported the hack and shut down. I had 250k NXT and 6 BTC locked up there. Thankfully, i was able to get all the NXT off, but still have 5.5 BTC stuck on the site. Also, that was especially frustrating to my profit plans as BTER's volume was by far the largest at the time. Fortunately, there were a lot of positives that came out of this. It forced the community to move to Poloniex which is a far better exchange and also BTER's API was so poor that not having to deal with it anymore, personally saved me a lot of stress.
Do you see this as a sustainable model, and what are you plans for the future?
I do believe automated trading will always be profitable (if done right) and market making will always be needed/desired. Developing trading software is one of my favorite things to do. I look forward to completing my other work in order to continue to improve the software. So, yes, I believe LIQUID will be around long term and will be profitable.
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