Welcome to Cryptonaut’s Medium channel! Over the next few months we will regularly post articles about us, Cryptonaut’s vision and features, what we are up to and other topics we would like to share our thoughts on. Today we want to focus on our story and why we decided to start Cryptonaut.

Back in 2015 we launched UpTick, a virtual but highly realistic stock trading tournament app where people get to know the financial markets in an easily digestible and highly competitive format. In essence, new players on UpTick start with a virtual $ balance and, after a quick tutorial, are motivated to trade against other players in competitions, learn from their behaviour and do as many trades as possible in a safe and risk free environment. It is basically an action based learning approach, which enables anyone to learn about the complex mechanics of the financial markets in a short period of time. To make the trading environment as realistic and engaging as possible, we added real money prizes to our community tournaments, which resulted in surprising trading behaviour. Not only did the average number of trades per participant increase drastically but people also started to incorporate more and more smart trading strategies to minimize losses, maximize profits and stay ahead of the competition.

Fast forward to 2017, more than 2000 tournaments have been held on UpTick and the platform has grown to more than 150 000 users and 2.5 million trades executed. Traders are highly engaged and often do more than 100 trades per week. In addition, the top performing traders show superior virtual returns at the end of tournaments, which can easily be more than 200 %. Looking at such figures we started to wonder whether it is possible build automated trading strategies based on the data of our platform and so we decided to double down on data science.

Six months ago, we started to apply more and more data crunching techniques to our user data. We monitored and analysed a variety of different angles of the trading behaviour on UpTick to identify correlations and patterns, which can be used to build real-time algorithmic and self-learning trading strategies. In the beginning, we tested very simple strategies such as following the top 10 traders in a contest or doing exactly the opposite of the worst traders, which resulted in often very positive but slightly unpredictable results. We knew that we were onto something but had to step up our game and dive into our data way deeper to make it work. Fast forward to today, we can analyse trends, spot potentially promising trades and skilled traders very early by applying a variety of real-time analytics to our trading data. Combined with our own risk and return metrics we were able to deliver virtual returns of 50% + per week on a regular basis. Given that UpTick was not built to generate data for trading strategies, we knew that we can achieve much more with a platform solely engineered for that purpose. The idea of Cryptonaut was born!

As opposed to traditional equity markets, the crypto markets exhibit a notoriously inefficient price finding mechanism, with asset prices predominantly driven by crowd sentiment (hype and fear) and herd behaviour. As a result, the most effective way to forecast crypto prices is to create a system that incentivises a large number of market participants to reveal their true expectation of current and future asset price movements. On Cryptonaut, the world’s most skilled crypto traders and data scientists compete in trading tournaments and data modelling challenges to earn ETH rewards. This will allow the creation of the world’s first competition-powered crypto fund and a trading strategy marketplace. Cryptonaut will become the battleground for the best crypto traders and data scientists. The ones who improve the Cryptonaut trading models the most stand to gain the highest rewards. Powered by the soon-to-be setup proprietary reward fund and other company cash flows we aim to be able to eventually offer up to $20,000 prize pools per contest.

Over the next few months we will dive deeply into all aspects of Cryptonaut and we hope you will be as excited about the project as we are. In case you want to read more right now (which we hope you do…;), please check out our website and whitepaper.

Simon von Poschinger-Bray

Co-Founder @ Cryptonaut