This series has one goal: To make money.  In the pursuit of making money, however, there are two approaches.  First, you can spend time (labor) to earn money by performing tasks for others.  Second, you can utilize cash (capital) to allow it to earn for you.  This second approach is the goal.  Use money to make money.

One of the more interesting projects on Ethereum is the Set Protocol.  The idea behind this project is that funds are pooled into a smart contract and an algorithm is used to rebalance the funds among different tokens.  When funds are rebalanced, a public auction is used to allow anyone on the network to trade the assets.  This should allow an efficient programmatic portfolio management.

The logic being used to determine rebalances can be either programmatic (Robo Sets) where they are triggered by price fluctuations, or they can be human driven (Social Sets) where someone is actually manually triggering rebalances.

I really got interested in trying to use this when I saw they had a momentum trading set for Ethereum, the ETH 20 MA Crossover Yield Set II.  With this set, it will try and use the Move Average (MA) over the last 20 days to determine whether the funds you invest should be in ETH (actually wrapped ETH, aka WETH) or if it should be in Compound USDC (cUSDC), where it will earn interest.  If the current price of ETH is over the 20 day Moving Average, it assumes there is momentum up and shifts into ETH and if it goes below the average, it assumes momentum is down and shifts into cUSDC.

In a market that has huge moves up and down this seems like an interesting strategy.  For example on last huge move down in the price of ETH in March 2020, the price went from around $200 down to $100, and the roboset was in the stable cUSDC for most of that move.

OK, so let's do this.  For our tracking investment into TokenSets, we will put $5k into ETHMACOAPY.  To do this, I bought $5k of ETH, transferred it to a Ledger, and interacted with the application.

When you go to buy, you can choose which asset you are paying with.  I was able to calculate the $5k worth of ETH and submit the buy.  The transaction cost about $2.50 in gas and the set shows my balance now.

Shortly after, it rebalanced into cUSDC where it has been for the last couple of days.  My cost basis is $5007.55 (conversions and gas) and my current balance shows $4,999.68.  We will see how the robo set performs in the coming months.  Stay tuned.

Date Started Item Cost Current Value Gain/Loss Percentage
6/13/2020 Buy Bitcoin $5,012.80 $4,998.83 -$13.97 -0.28%
6/15/20 TokenSets $5,007.55 $4,999.68 -$7.87 -0.16%

Total: -$21.84 and -0.22%