Proof-of-concept demo of automated trading on the Stellar network with pure client-side JS.
Pre-pre-alpha software — just planning/design at this point
Bitcoin gives us a decentralized, censorship-proof means of storing and transmitting wealth, but its economy is ironically reliant on centralized, for-profit exchanges.
Exchanges are notoriously risky. Early ones absconded with customer deposits, and Mt. Gox ran fraudulently for years after an undisclosed theft in 2011. Honestly run exchanges are still magnets for hackers, as seen in the $72M theft from Bitfinex in which customers lost 39% of their holdings. And when all goes well, traders still indirectly bear the costs of servers, support staff, KYC/AML identity verification, and constant DDoS attacks from market manipulators.
Stellar, started by Jed McCaleb in 2014, is a decentralized payment network and cryptocurrency with a built-in asset exchange. Any user may become an "anchor" and issue their own custom tokens to represent deposits of arbitrary assets, such as Bitcoin or US dollars. Other users can then trade these tokens to speculate both on the value of the underlying asset and the reputation of the anchor. Because this transaction happens on the Stellar network itself, not on a centralized exchange, users do not need to trust an exchange operator with their funds. Users also can't be censored from participating anonymously, easing friction for new traders entering the market.
For all their merits, decentralized exchanges like Stellar's have not caught on. Traders need liquidity, and trivially low volume creates a chicken-and-egg problem: Users stay away because know their trades won't be executed at a fair price, and would-be market makers and arbitrageurs stay away because there are no profit to developing, testing, and hosting trading algorithms for an empty market.
This project aims to fix the deadlock by making it radically simple for absolutely anyone to become a market maker. A Stellar user should be able to point her browser to this Github project, type her secret key, and passively earn a return on her money every hour the tab is open. There's no step three.
© Riley Goodside 2017. MIT-licensed.