I still don’t trust HodlBot with my API Keys
I'm not upset though, I think this is actually pretty cool. Good job for putting this together. I'm happy with people using this if they want to run it locally.
Over the Christmas break I realized I was spending close to 5 hours a month manually rebalancing my portfolio of ~20 cryptocurrencies weighted by market cap.
I got sick of that pretty quickly so I decided to make a bot that uses Binance’s API to automatically handle that. For the memes, it’s called HodlBot.
A few months later, I’m releasing the hosted version of the bot. Now anyone can put their trade-only API keys into HodlBot, and it will automatically trade into the top 20 cryptos. It will also handle monthly rebalancing automatically.
What does the algorithm do?
The algorithm take the top 20 coins and assign each coin a % allocation based on their weighted market capitalization.
Then it caps every coin to be at most 10% of the total portfolio value. Anything above 10% gets redistributed to all the coins below by weighted market capitalization until the entire sum of the portfolio adds up to 100%.
What do I need to get started?
1.Binance Account
2.Binance Trade-only API Keys
3.$200 in cryptocurrencies
I simulated monthly rebalancing on a 3 year period, and found that the average transaction fees were 0.26%.
This can be higher or lower based on how volatile the market is in the future. The theoretical max is 1.2% (if every coin in the top 20 turned over every month).
How much does it cost?
For the first month it’s $1. Afterwards it’s $10 per month. No % fees.
How can I trust HodlBot with my API keys?
We encrypt the keys on our end. Also we don't require withdrawal permissions, just trade-only.
I still don’t trust HodlBot with my API Keys
In the next month we’re releasing a version of the app that never stores API keys server-side and only executes trades in the browser. After that, we’ll be releasing an electron app so you can store your API keys on your local computer.
How is this different than projects like Crypto20?
Users hold their own assets as opposed to a tokenized guarantee of some underlying assets. Tokenized assets like C20 often times trade above and below the net asset value of the assets they claim to hold. In my opinion, this adds a layer of speculation and complexity on top of the index that makes it marginally worse than holding the assets yourself.
How do I report tax on HodlBot trades?
Export your Binance transactions as a csv. Plug it into a tool like cointracking.info and get a tax-friendly report.
More Info:
I dig into the portfolio construction and share the algorithm in this blog I wrote here:
https://medium.com/@AnthonytXie/hodlbot-cryptocurrency-inves...