DEX Trading Bots: The Most Profitable Crypto Trading Strategies Are Hiding in Plain Sight

Trading is an incredibly challenging endeavor, demanding emotional mastery, impeccable market timing, effective risk management and extensive practice. The volatile nature of the crypto market exacerbates these hurdles, often leading to significant losses for traders.

However, hidden in the depths of the decentralized finance (DeFi) world is Carbon – a groundbreaking new protocol designed to revolutionize the way you trade. As a trailblazer in the rapidly growing DeFi space, Carbon empowers users to create and execute on-chain, automated trading strategies with reportedly unparalleled efficiency and ease. 

The following article will explore the possibilities and benefits of Carbon’s on-chain trading strategies, providing guidance on how to embark on your journey with this innovative protocol.

What Is Automated DEX Trading?

Carbon’s automated DEX trading strategies are very similar to traditional trading bots – set conditions and the strategy executes when the conditions are met. For example, “buy ETH when its price hits $1,800, and sell ETH when its price hits $2,000”. But Carbon has several key differences compared to traditional trading bots.

Before diving into what sets Carbon apart, it is important to briefly examine the role of decentralized exchanges (DEXs) in this broader context.

DEXs represent a distinct sector within DeFi, serving as peer-to-peer marketplaces that enable cryptocurrency trading in a non-custodial manner, without intermediaries to manage funds or facilitate transfers. Simply put, you can perform trades without having to store tokens on a centralized exchange. In the aftermath of several centralized crypto meltdowns, including FTX and Celsius, DEXs are seeing a surge in activity. This growth is supported by the fact that hot tokens often appear on DEXs before they’re listed on centralized exchanges, allowing users to potentially gain exposure to outsized gains in the early days of a token.    

Despite these advantages, a significant drawback of existing DEXs such as Uniswap or Pancakeswap is the lack of automated trading support. Things like limit orders, dollar-cost-averaging and grid trading bots are still missing on DEXs. Carbon addresses this gap by offering automated trading strategies – programmable orders that stand ready at all times to buy or sell in custom price ranges, eliminating the need for manual limit orders. 

Carbon's Unique Trading Features

Carbon is a fully decentralized protocol for automating on-chain strategies on the Ethereum blockchain. The protocol is designed with a diverse range of advanced trading tools and features which allow for unprecedented levels of trading flexibility and potential. Some features are as follows:

• Automated Strategies: Your orders are automatically executed by third-party traders, 24/7, allowing you to profit from volatility in your sleep. 
• Self-Custody: Users maintain control over funds in their wallets, unlike centralized exchanges.
• Fee-Less Swaps: Arbitrageurs or other traders who trade against your strategies pay the fees on your executed trades.
• Recurring: Set your strategy once and it repeatedly executes until you choose to stop the strategy.
• Rotating Liquidity: No need to pre-fund multiple limit orders – just fund one order with a single deposit, and your tokens are automatically used to buy and sell as the market price enters your predefined price ranges.
• Any ERC-20 token: Carbon strategies can be made for any standard token on Ethereum, the largest blockchain ecosystem.
• MEV Resistant: Carbon natively protects users from the most common form of Maximal Extractable Value (MEV), so-called “sandwich attacks.”

Types of Strategies With Carbon

Undoubtedly, Carbon's most thrilling and potentially rewarding aspect lies in the distinctive strategies enabled by its automated features. Here are several automated strategies that could take your portfolio to the next level:

Trade The Crab:

Crab-like markets refer to conditions in which prices go up and down within a range for a considerable period of time. Recent studies indicate that nearly four in five (79%) professional investors anticipate ongoing choppiness in the crypto market over the next two years. 

Carbon offers a strategy specifically tailored to trading in such markets, enabling traders to capitalize on the natural volatility in sideways markets with recurring ‘buy low, sell high’ strategies. These strategies resemble “grid trading” bots, where users set buy and sell zones above and below a set price based on where they think a given token will range trade.

Ride The Trend:

So far into 2023, the crypto market has seen nothing but fireworks – with Bitcoin BTC/USD up nearly 70% YTD as of this writing. This has made riding the trend a great strategy to capture this upward volatility.

Carbon offers a robust strategy designed to ride the trend by allowing investors to scale in and out of the market by placing orders across a range of prices. For example, if you believe BTC will get close to $30,000, but you’re not sure where exactly, you can set an order to “scale out” (or sell) between $29,000 and $30,000.

Arb Like-Kind Assets:

Various assets in the cryptocurrency world are inherently pegged to one another – for instance, stablecoins that track the price of the US dollar, such as USDC, USDT and DAI. However, pegged assets frequently diverge in price via momentary “depegs” and subsequent “re-pegs.”
You can use Carbon to profit off these frequent events in stablecoins and other pegged assets like Liquid Staking Derivatives (wstETH, rETH, etc). For example, set a DAI/USDC strategy that buys DAI when it de-pegs below USDC and sells the DAI when it re-pegs, or an ETH/rETH strategy that buys ETH when it de-pegs below the price of rETH, and sells the ETH when it re-pegs to the price of rETH. 

How to Use Carbon 

To use carbon, you simply need to go to app.carbondefi.xyz. Connect your wallet, then choose a trading pair, say ETH/USDC. Then choose whether it is a one-time or recurring strategy. Set the buy and sell ranges and amounts. Hit create. You’re done. It’s that simple. See this guide for a step-by-step walkthrough.

Conclusion

Overall, Carbon could offer a valuable opportunity to tap into some of the most profitable yet concealed strategies in the DeFi space. By leveraging automated swing-trading strategies like riding the trend, arbitraging similar assets, or trading the crab, traders could unlock new opportunities and optimize their trading experience.

Interested in creating your own DEX trading bots? Join the Carbon beta and start building.

Featured photo by Viacheslav Bublyk on Unsplash.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice