How to implement an Algo Order in Cybex Dex?Yes, this is one of the challenges for the second Blockchain Hackathon (part of LongHash Cryptocon Vol2) in Berlin on May 18-19 this year. More details here.

As an advantage to all developers, Blockchain enthusiasts and Crypto geeks who are aching to solve this challenge, here is an interview with YanFeng Chen: Co-Founder of Cybex.io where he defines Algo-Trading in detail and its benefits, and shares a few tips that might help in cracking this challenge.

Cybex.io is a blockchain based decentralized exchange that supports crypto trading. When a user has an intention to perform a large trade, it is useful to have an algorithm to split the order into smaller slices and trade it over a longer period. This feature is referred to as ‘Algo Order’ and is widely adopted in regular exchanges. In a decentralized exchange, each sliced order must be signed by the user’s private key. This provides a new challenge to Algo orders. In order the place orders automatically while keeping the private key safe, a user typically has to write its own program and run it in its own machine. This makes it difficult for normal users to use Algo orders due to the lack of programming skills. The challenge expects you to “Design a solution that allows a normal user to execute and manage Algo orders.” Below are edited excerpts from the interview:   

What is an Algo Order and why do you use it? Examples of regular exchanges?

Algorithmic trading uses a computer program that follows a defined set of instructions (an algorithm) to place a trade. The trade, in theory, can generate profits at a speed and frequency that is impossible for a human trader. We call this kind of orders ‘Algo Order’.

Algo-trading provides the following benefits:

  • Trades are executed at the best possible prices.
  • Trade order placement is instant and accurate (there is a high chance of execution at the desired levels).
  • Trades are timed correctly and instantly to avoid significant price changes.
  • Reduced transaction costs.Simultaneous automated checks on multiple market conditions.Reduced risk of manual errors when placing trades.
  • Algo-trading can be backtested using available historical and real-time data to see if it is a viable trading strategy.
  • Reduced possibility of mistakes by human traders based on emotional and psychological factors.

An example for Algo Trading in regular exchange:

Suppose a trader follows these simple trade criteria: 

  • Buy 50 shares of a stock when its 50-day moving average goes above the 200-day moving average. (A moving average is an average of past data points that smooths out day-to-day price fluctuations and thereby identifies trends.)  
  • Sell shares of the stock when its 50-day moving average goes below the 200-day moving average.

Using these two simple instructions, a computer program will automatically monitor the stock price (and the moving average indicators) and place the buy and sell orders when the defined conditions are met. The trader no longer needs to monitor live prices and graphs or put in the orders manually. The algorithmic trading system does this automatically by correctly identifying the trading opportunity.

Why did you choose Cybex.io as the blockchain base?

At present, more and more decentralized exchanges come out. How should a trader choose the trading platform? Normally we should consider about:

  • The security level about assets.
  • If the liquidity is good enough.
  • What kind of reward for the market maker.
  • If there is a set of easy-to-use API.

Cybex is positioned as ‘a highly efficient decentralized trading system’ that provides organizations, teams, and individual users with various easy-to-use trading scenarios and business logic implementation.

Cybex also includes a special realtime-order-matching-engine. It can provide real-time market data, the fastest placement and cancellation of orders and an instant notice of confirmed transactions, making the highest trading performance in the industry, which catches up with that of centralized exchanges.

Why do you want normal users to use Algo orders?

Algo-trading can give users many benefits than they trade manually. If we can provide suitable tools for normal users, we can attract more user into the ecosystem.

Does this challenge requires front-end or back-end developers?

It may need front-end or back-end developers, we may need to provide user-friendly front-end tools, or develop components to implement some typical Algorithm on different developing platforms.

What is the current status quo of Algo trading? Are there no user-friendly solutions?

There is centralized solution, i.e., the centralized exchange takes control of your money (including the private key).  But very few decentralized solutions, hence the challenge.

What programmatic skills are required for Algo orders?

The program skill is not the most important one — any program is fine. The key problem to solve is how to come up with a program that can send order on behalf of the user, while keeping it includes. See the ‘security requirement’ answer below.

Why is Longhash interested in this challenge?

LongHash is a platform for accelerating the development and understanding of blockchain technology. We are interested in all new technologies and solutions in blockchain area. We think if there is a good way to invite normal users into Algo-Trading area, there will extremely push forward the whole industry development. Market will have good liquidity; normal users may gain more profit from the trading process.

What are the security requirements?

We’d like to have a program that is only accessible to the user. As the program owns the private key of the user, it is critical that no one else can access it. E.g., a straightforward solution involves running a program on a linux server, which normally involves a system admin therefore not as ideal.

What is an example of a good Framework Coding quality and why?

Configurability–key params are configurable. Modularity–the separation of sub modules. Extensibility–new modules can be extended with few change of core part. Security–keep private key safe.

Does this challenge interest you? Apply here for the Hackathon before the 12th of May the event is free for all developers who apply. Also, there is more. If you are a developer or aspiring entrepreneur in the blockchain/crypto space and  want to know about the investment perspectives from Top Asian & European Funds in the Blockchain segment or business use cases in real word adoption, get your free tickets for Hash Talk which will be an afternoon-long summit focused on discussions and creating insights on investment, business, and tech in blockchain curated and brought by LongHash Germany. More details here.

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