Thread by @CryptoParent

1/ As someone trading small positions in ETH, BTC derivatives, I've been fascinated by @SetProtocol + @tokensets.

Today, I finally went into beast mode to fully understand this #DeFi magic!

I am convinced most do not understand Set. So here's my dumb explanation in a thread.

2/ Despite all the brilliant peeps building on #Ethereum, most never do more than HODL ETH. While many dollar-cost-average into ETH, they fail to put their ETH to work.

The most obvious example of "money put to work" is using
@compoundfinance to earn interest, lending ETH, DAI

3/ Now, if you've never traded, all you need to know is less than 1% of FT traders are profitable. If you trust that common stat, you only need to know that many successful traders use bots.

Something like 70-80% of daily trade volume in crypto markets is estimated to be bots.

4/ So if you understand that one of the many factors that separates the most successful professional traders from your average retail investor/trader is automated trading strategies, you can now appreciate what @SetProtocol enables is: democratized access to automated trading.

5/ Now there are tons of trading bots available so it's not that bots are inaccessible but the learning curve is steep. If you set up your bot incorrectly, you could lose your money very quickly.

Whats worse is you must trust a third-partynand hope it's not a scam.

6/ Enter @SetProtocol + @tokensets! A simple #DeFi alternative for amateurs.
- Purchase a tokenized derivative of trading strategies (Sets)
- No middle man to trust
- It costs you nothing but the gas to execute the txn
- Pay and cash out in ETH, USDC, or DAI

7/ You have 3 categories of Sets depending on your investment/trading ideas:
1) Trend Trading uses popular technical trading indicators (my favorite)
2) Buy And Hold if you're bullish but also want to diversify risk over multiple tokens
3) Range Bound for neutral/bearish markets

8/ The simplest example and most popular Set is the ETH20SMACO (ETH 20-day Simple Moving Average Crossover). A popular trend trading strategy is to watch for the price to cross above (buy) or go below (sell) the 20MA.

tokensets.com/set/eth20smaco

9/ If you backtest this strategy of buying/selling according to when the price of ETHUSD moves above (buy) or below (sell) the 20MA, you'll be amazed how well it works. Or even more popular is the 10MA crossing above/below the 20MA.

Anyways, the key here is automation.

10/ Prices don't predictably move and so when you use a bot or Set, you can start to capture additional profits at highs, and avoid holding ETH on larger drawdowns to local lows.

For example, ETHUSD hit a high of $363 back on June 26th this year and has since hit a low of $154.

/11 If you buy the ETH20SMACO on setprotocol.com, you simply use your Metamask Wallet to pay in USDC, DAI, or ETH. Once you buy this token, you now only need to think about the price of this token going up or down because it represents all WETH or all USDC at any one time

/12 As the price of ETHUSD goes above or below the 20MA, as long as there's been 4 days since the last "rebalance," Set protocol will automatically buy WETH or sell WETH depending on the treasury of total value pooled together from everyone buying/selling of ETH20SMACO.

/13 Put simply, you only choose a strategy (Set) that suits your assumptions about the market--kinda like choosing a hedge fund to manage your money.

Then, Ms/Mr @tokensets who manages the fund (or Set), is obligated (thanks to smart contracts) to execute on this strategy!

/14 But, unlike a legacy hedge fund:
-You can pull money whenever you like (just sell ETH20SMACO tokens in you Metamask wallet)
-Theres little to no fees (just gas which was $1.20 when I purchased $1000 of ETH20SMACO)

/15 In the end, we all just want results! Now in fairness, many Sets are no more than 1-2 months old so performance is difficult to judge.

But one thats been around longer and is IMO built for the market conditions we're in, is the ETH20SMACO.

/16 Since the origin of ETH20SMACO on July 9th to today, ETH/USD is down ~38.5%.

What's impressive is the ETH20SMACO price is only down ~22.4% over the same timeframe!

That means you'd have not lost almost 16% in the value of ETH/USD if you had bought this Set vs. holding ETH!

/17 This difference above is huge!

Still, you should measure performance over longer periods and so we'll eagerly watch the annual performance of @tokensets over the next 12 months.

/18 Don't get me wrong--HODLing works for the masses while trying to buy bottoms / sell tops is impossible for most.

It's because of this I asked myself why would I turn down a free DeFi automated trading tool with a backtested trading strategy, to help accumulate more ETH?

/19 Ofc I do have one reason and its the same one we all hesitate with new DeFi tools offering seemingly amazing opportunities: I could lose every cent I put in.😂#YOLO

However, excluding a catastrophic smart contract bug (see audits in FAQs below), I'm ready to ride some Sets!

/20 If you made it this far, watch @ChrisBlec do an excellent video overview explaining @SetProtocol!

@ChrisBlec @SetProtocol /21 Btws, if this wasn't obvious, head over to tokensets.com to learn more. They offer easy to understand descriptions of Sets and show past performance so you can consider which Sets might suit you.

You can also use @metamask_io to buy/sell Sets w/ ETH, DAI, or USDC.