Leveraging the wisdom of the quants for crypto-trading

The market for crypto-assets is quickly expanding and becoming an asset-class in its own right. That Aha! moment that each and every one us experienced when we entered the space strikes new adopters every day. Buckle up everybody — Crypto is here to stay and the day when crypto hits mainstream adoption seems closer now than ever. At Enigma, we are passionate about the role of crypto-currencies in defining personal financial freedom. We want to play our part in driving their mainstream adoption.

Crypto-assets market cap as they cross $100B in value for the first time today (source: http://coinmarketcap.com)

This kind of exposure brings new funds and new investors into the fold (and nice quick returns for the time being). To accommodate this demand, many financial tools are being built these days to keep up and help users invest in this emerging asset class, but these do not cater to developers, who are interested in using AI and quantitative tools for doing more sophisticated trading. Even building a simple mean reversion strategy, or writing a script that automatically buys into ICOs based on some technical metrics or the current price of Ether, requires a significant amount of effort.

This is a problem we experienced first-hand. As we were building the technology behind Enigma — first in a research environment at MIT, and in the past year — as a Silicon Valley company, some members of our team became interested in creating sophisticated trading strategies, and decided to work on this in their spare-time. We quickly found out that this is a challenging problem — the tools for back-testing algorithms, then moving them into paper and live trading were seriously lacking. Another significant bottleneck was the need to manually curate, digest and transform crypto-market data for use as input to AI models. This kind of sisyphic work was especially frustrating to our engineers. As a result, we decided to build tools that empower the community to develop and invest in winning strategies.

And this is why we’re announcing Catalyst today — a platform that empowers anyone to build their own crypto hedge fund and participate in the coming Renaissance of the financial ecosystem. Our vision is to enable developers to build winning investment strategies, a strong track record and attract investment from community investors. Catalyst is a playground where developers, quants, and experienced traders can easily build, simulate, and eventually live trade cryptocurrencies using sophisticated programmatic strategies. Regular investors can then invest directly in winning strategies through our system. With this, we’re hoping to make smart-investing in this new emerging asset class accessible to everyone.

We are also creating a data marketplace to drive better crypto-investment decisions. Algorithmic trading, and in particular, strategies based on AI models, are only as good as the input data fed to them. The ecosystem surrounding crypto-markets is still in its early days and relevant data sources are scarce and fragmented. In order to level the playing field with mature financial markets, we will create a data marketplace for the blockchain ecosystem driven both by our team and the community.

Catalyst is also a protocol to bridge existing and future exchanges into a single, decentralized system that is fast, scalable and most importantly — keeps users in control of their funds. Our goal is to disrupt the technology driving exchanges (and crypto-trading in general) in much the same way that the Lightning/Raiden networks are set to disrupt payments. This is a necessary step, as current centralized exchanges have a history of halting payments and worse — losing assets under their custody. Similarly, recently introduced decentralized on-chain exchange protocols lack the low-latency characteristics to support any practical trading infrastructure — let alone a high frequency one. Our protocol design, as well as a detailed account of the features of our platform can be found in the Catalyst whitepaper we are releasing today.

If you’re as excited about this as we are — then please join the discussion. On Slack, Twitter, Reddit or here in the comments — we would appreciate any feedback and welcome any help from the community in driving this effort.