The Future of Trading with Benjamin Duval
As regulators tigten their grip on crypto with more exchanges coming under the scanner of enforcement authorities. I sat down with Benjamin Duval, CEO at Upbots to discuss cryptocurrency regulations and the future of crypto trading.
Ishan Pandey: Hi Ben, welcome to our “Behind the Startup” series. Tell us about yourself and your journey into the blockchain industry?
Hello Ishan, first of all, I would like to thank you for the invitation today. I’ve been reading Hackernoon for quite some time now, and I have always read the interviews, so it’s a pleasure for me to be here!
To make a long story short, I’m Ben, one of the founders of UpBots, an all-in-one trading ecosystem (portfolio management, automated & manual trading, etc.) we’re building for traders of all levels. I’m a graduate in Commercial Engineering with a complementary master’s in Marketing and Finance and an entrepreneur for many years.
At the age of 18, I discovered stock trading, and four years later, cryptos trading in 2012. But it’s only in 2016 that my interest became more serious after having participated in “IOT” and “Blockchain” projects for a telecom company.
In 2017, I opened a Twitter account to share my insights on the market and in only a few weeks, I had reached several hundred followers, some of them asking me if I had a subscription to my services … so I created Crypto-Addicts (which later became 4C-trading), and I brought a brilliant person with me, Julien, to develop this activity. Together we were obsessed with creating and leveraging trading algorithms, deploying bots, and developing better online interfaces. It was a really interesting time because we were always searching and working to find innovation. 2 years and 10 employees later, the idea of UpBots was born.
Actually, the idea simply came from the observation that our community was not finding what they were looking for in the market. In crypto, what is available is very fragmented and it is often very hard to know what is a scam from what is true. The solutions that exist are often very complex to use and designed for an informed user, or overly simplistic, and one size fits all.
That’s why we set out to aggregate in one place everything that could be used to grow a traders capital. CEX, DEX, training, advanced trading, capital management, risk management, staking, trading bot creation, social copy trading, and even in 2021, FOREX trading.
A single, trustworthy, powerful, flexible, and diverse command center for today’s trader…irrespective of wherever they wanted to put their capital and whatever their skill level at trading is and, so we started the development in early 2020 with our MVP released a few days ago.
Ishan Pandey: I read that you are building a platform with a single point of control for trading on CEXs and DEXs with social trading and saving products, etc., all aggregated at one place. When building a platform with so many features, what architectural parameters should developers keep in mind?
It’s a good question as this is a huge challenge. In general, when you launch a platform, you start with a product and gradually improve it. And in general, this approach would be my preferred choice as the simplest, most efficient option, and to some extent, we have taken this route. But in our case, as you pointed out, we have a lot of tools, the aggregation of which makes UpBots really valuable. And so our set of challenges are somewhat unique…
Therefore, it was essential to simplify the complex. For example, to allow different exchanges to be integrated almost plug and play. This means having an agnostic layer that allows the environment to speak the same language, whatever the platform or service used.
This is where the real research and groundwork is. From a micro point of view, a good example is the algorithmic strategies management, which is completely agnostic, that is to say, totally independent of any particular exchange. It adapts itself to the specificities of each exchange.
You could think of it as a kind of business rules engine/intelligence integrated into the strategy engine, and the logical architectural key was, therefore to decorrelate it.
This is also true for all the other functionalities: ensuring the modular and complementary aspect, as well as the overall structure. And this is achieved through high-level and microanalysis, research, and testing.
Ishan Pandey: Recently, the Financial Conduct Authority has banned the sale of cryptocurrency derivative products to retail investors in the UK. According to you, why has the regulator taken this route?
Well, according to the FCA, this would save retail investors £53m a year because let’s not forgotten that this is a ban for retail only. In reality, the decision clearly shows a concern of market understanding on their part, and of the real risk that is located on unregulated products, and it’s a real shame for the UK because while many countries are trying to be more flexible on the issue of crypto, attracting investment, trying to regulate financial products, and favoring entrepreneurship, the UK seems not to want to go in that direction.
And in the end, the problem of a ban is always the same, and not only for the crypto sector: interested people will use other means to access what they want. So, in this case, they will then go to less regulated services, where the protection of users is not under the same jurisdiction and where the risk will be much greater.
Afterward, will this decision have a significant impact? Honestly, I don’t think so. The adoption should not be too impacted because the solutions exist.
For example, one might have thought that services like Revolut would be likely to be affected by this decision, but that’s not the case.
And for us, it doesn’t make much difference either. We are an aggregator above all. We do not offer the service directly but through integrated partners who provide a service accessible to users according to their geographical area.
Ishan Pandey: Traders are currently in a conundrum due to the fall of the BitMex exchange. How is it going to affect the market and investor confidence?
Where some see a risk, I think, on the contrary, that it may be a very good thing, even if saying that BitMex is dead and buried is perhaps speaking a little too quickly.
But the crypto market is still very young. In a market like this, unregulated, companies are facing challenges, and they are looking for their bearings. They are pioneers because there is nothing comparable yet, and they act in “trial-and-error.” This is also what BitMex has done. And now that the regulator is coming, first for them, and probably then for others, we now find ourselves in a situation where improvisation no longer has a place and where we can gradually move towards a market accessible to all, with tools that are fully regulated and therefore accepted.
Other players similar to BitMex are not blind to the situation, and I’m sure they are currently busy regulating their systems, adapting their service so as not to find themselves in the same situation. There is a cleanup that is taking place, and perhaps it is this cleanup that was needed to encourage the SEC to one day accept the creation of an ETF.
Finally, the last point concerning the evolution of the market price, several analysts consider that this is potentially good news for the evolution of the price, considering that the activity on the derivatives market has kept the price at a low level, so the situation could potentially help the market to evolve more bullishly.
So, I am not too worried, neither as an investor nor as a trader in the cryptocurrency market.
Ishan Pandey: Many startups have tried launching successful social trading platforms, but unfortunately, the majority of them have failed. According to you, what has been the reason for this failure?
There are many possible factors resulting in failures, especially in this activity.
Without listing these companies, many were clearly scams, while others had neither the funds nor the contacts to survive in this sector.
There is always a chick and egg situation with social copy trading. You need good traders to attract users, and you need users to attract good traders.
If this is your only service. Well, that’s a real challenge that can easily become a problem.
If I may, I’ll make a comparison with UpBots. The advantage we have is that social trading is just one feature among many. This is not the only attraction of UpBots. It makes it less difficult to attract new users since they will already be active on the interface. Then, as I said, there is the network. And the network is critical here. We are fortunate in a way that not many are to have Alameda research onboard, as well as FTX and many other partners.
And without being able to say too much more, because agreements are still being finalized, we are working on a possible collaboration with a really exciting project, with an awesome team. These guys are forerunners in the social copy trading space.
We are hoping to integrate their service into UpBots. Rather than compete with each other, we believe that collaborating and directly increasing the user base will provide a better experience for all our users.
The market is still small, and working in your own corner is not a good idea, in my opinion. If we join forces, we’ll be stronger. That’s for sure.
Ishan Pandey: Currently, in the market, there are very few cryptocurrency bot trading services. How can traders with no coding experience develop these algorithmic trading strategies?
It is true that there are very few services for retail investors and those that currently exist offer very limited solutions. I know this because I took my wallet out and tried what’s there, and I was left wanting. It was a huge driver for me to create UpBots in the first place.
At the moment, if you want to create a bot to run your own strategy, and you don’t have any knowledge in development, it’s really, really difficult. There are some small tools, often connected to TradingView, that can help with basic strategies, but their limitations make it almost impossible to generate profit.
And yet, the search for profit is a trader’s priority.
But this is a major part of what we set out to build with UpBots. The ability to, without coding knowledge, configure a bot that can make multiple entries and exits, combine several strategies, and operate with safeties are all crucial things to be able to achieve this trader’s priority of being profitable.
And then of course, if we forget the coding side, there is also the search for strategies. Because if the bot executes the trade, the strategy defines the moment to enter the trade. For this, the help in the market is close to zero.
So this is another area we have focused on, and right now, we are working on what we call (for the moment) the Algo Lab, which will allow anyone to build a strategy in a drag & drop interface, or in code if they prefer, then to backtest it with real market data. We hope with the ultimate goal of sharing it (earning performance fees when it performs).
Ishan Pandey: Regulators believe that cryptocurrency exchanges are not doing enough when it comes to explaining retail investors about complex financial instruments. What needs to be done more?
I think that the regulators are probably not wrong even if it is not always ill-will on the part of the exchanges.
Some players, it’s true, prefer to keep this complexity or opacity for the simple reason that it takes away some friction from users getting started without really knowing what they are doing. This situation often leads to retail investors losing money, which in turn leads to pressure on regulators to ban certain products, and that is happening, as we have seen recently.
For other players, it is sometimes simply a lack of understanding of users and a lack of time. In this sector, it is pretty much always a race for innovation, and products are developed quickly by expert level people, who really already understand the tools and financial instruments at their fingertips. When you are wearing that hat, it’s very easy to forget there is a world of people, and even traders, who do not share that depth of knowledge.
This results in little information or no information at all.
And this observation, in the crypto universe, is all around us. We see it everywhere and not only for derivatives. We often address users as experts, forgetting that we all had to start learning somewhere.
And the best way to solve this problem is through supporting trading with training, which is why we have a whole section dedicated to learning on UpBots. Upping your game is essential to avoid getting rekt and to get out of the 90/90/90 pattern we’ve all heard before (90% of traders lose 90% of their capital in 90 days).
It is by learning best practices by learning more about what we do, the products we trade, the strategies to adopt depending on market conditions etc…that we can improve and climb out of that danger zone everyone starts in.
If all the exchanges, providers, and actors understood the importance of learning, they would be the first beneficiaries with users present for the duration rather than just a few short capital burning months. Actually, with gamification and really great design thinking, I think the platforms that survive in the long term will be the ones that integrate learning into the processes of their platforms.
Ishan Pandey: What advice would you give entrepreneurs when it comes to raising funds?
I would like to say two things about that:
The first is that even with the best of project ideas, you may not be able to convince an investor. But every failure must be analyzed because in every challenge is an opportunity to improve.
What is the reason for non-investment? Was the pitch deck clear? Did I give enough energy? Could I have used other words or sold the idea differently? Was my angle of attack the right one? Is the product the right one? Or even, was the investor the right one? These are all questions that should be asked after each interview in order to improve and do the next one better.
The second is never to underestimate a contact. In the beginning, you have to think broadly and go to everyone without distinction, and sometimes it is a contact that seems unlikely that will put you in contact with another person who is the key to unlocking referrals to lots of additional investors. Chance is something that is provoked. Never lose an opportunity to make contact, even if you don’t see the benefits yet.
Ishan Pandey: What trends and challenges do you see for the cryptocurrency industry going forward in 2021?
I probably won’t be very original, but I’m a huge fan of the promise of DeFi. We’re still in the very beginning, and I think the biggest success stories and world-changing tech is still ahead of us.
There are so much development and activity in the space. It’s really the sector to watch, and we at UpBots will be very attentive to the evolutions in this field. We will add the great projects for capital growth to UpBots, and actually, this is something we are already doing.
Projects like Yearn, for example, or Curve, are just incredible in their obviousness and complexity.
But 2021 will also have to be the year of renewal and improvement. The scalability problem with ETH, for example, which prevents efficiency and blocks the development of the sector.
We will have to be clear-sighted about our weaknesses because it is only by solving them that we will be able to convince the traditional players that DeFi is the future.
But 2021 will also be a strong year for the regulators, which, as I was saying earlier, I believe, is a net positive.
We have privileged relationships with the exchanges and many DeFi projects. And I believe regulation is part of their priority, but it is also ours. We are offering crypto tools, and trading environments with maximum security, whether technical or legal, is just going to become more and more crucial.
Finally, if I had to give an overall feeling of market advancement, I am overwhelmingly optimistic!
Optimistic because week after week, we see new concepts and ideas coming in, like DFinance, for example, which has a very innovative approach and with whom we will be collaborating, and which brings a real plus to the market.
The market is getting regulated, matured, and crypto is becoming more and more legitimate and a mainstream market. It’s not just for geeks anymore, and the number of active traders shows us that.
The market is less frightening, and this bodes well for the future.
The purpose of this article is to remove informational asymmetry existing today in our digital markets by performing due diligence by asking the right questions and equipping readers with better opinions to make informed decisions. The material does not constitute any investment, financial, or legal advice. Please do your research before investing in any digital assets or tokens, etc. The writer does not have any vested interest in the company. Interviewer – Ishan Pandey