Mimic Professional Traders on DeFi Using Social Trading

DeFi-native Set Protocol, an automated investment platform, has finalized its rollout of social trading, allowing everyday users to benefit from the wisdom and expertise of financially-savvy traders.

Automated investment services have grown into a sizable market for retail investors looking to gain an edge by delegating the hard work to a so-called Robo advisor. 

According to Backend Benchmarking, Robo advisors currently manage close to $440 billion. Back in 2016, Deloitte was convinced that robots would manage upwards of a trillion dollars by 2020. In the latest, crypto enthusiasts now have an equivalent product to manage their digital assets via Set Protocol’s social trading offering. 

It combines the use of Robo advisors as well as experienced human crypto traders to help users make more informed decisions. 

The launch of Set’s social trading feature is the second product in the space after eToro’s Copy Trader announced in October 2019. Like eToro, it allows novice traders to copy the investment portfolio of participating experts.

Set’s offering is, however, the first permissionless variant of copy trading.

At the moment, there are 13 different traders that users can copy on the platform. Aaron Kruger, a swing trader, has attracted the most activity as a social trader thus far, with over $65,000 allocated across three strategies at the time of writing. 

Other notable traders include Richard Burton, an early Ethereum employee and founder of Balance, and Anthony Sassano, Set’s product manager. 

The notion of permissionless financial services is just dawning and the majority of DeFi investors are still those with high-risk appetites.

All of Set’s social trading strategies mainly focus on rebalancing between “wrapped” versions of volatile assets like ETH and BTC, called wETH and wBTC respectively, to stablecoins like DAI and USDC.

The main difference between traders is how and when the rebalancing is executed.

Aaron Kruger’s moonshot strategy, for instance, is a fully-automated bot that makes decisions based on statistical analysis. Conversely, David Hoffman’s strategy relies on his synthesis of information along with the confirmation of other experts he trusts.

Users should also be reminded that even established cryptocurrencies like BTC and ETH are hyper-volatile speculative investments. Due diligence of this sort shouldn’t be limited to just automated investments like Set Protocol, but to the broader crypto ecosystem as well.

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