Decentralized Crypto Trading Bot

Abstract

This paper details a decentralized crypto trading bot that can trade autonomously on blockchain with no reliance on centralized exchanges. While traditional trading bots can offer potential to profit in the digital currency markets, they are constrained by risks related to custody of funds, privacy, and censorship. The approach presented in this paper is based on the use of smart contracts and a React-based front end to execute trades in a fully transparent and trustless way. In the implementation, our bot leverages Ethers.js with compatibility to interact with many blockchain networks while also using IPFS to store trade data and logs solving the problems of immutability and decentralization. The only way into accessing trading functionally is through a membership system validated on-chain, which can provide security for the user and various opportunities for monetization, operating without a centralized custodian or assumption of risk. The system illustrates how technologies associated with decentralization can be integrated to automate the trading process providing user ownership, transparency, and no single point of failure. As demonstrated, the implementation is an interesting alternative to centralized bots and an important addition to the new field of decentralized finance (DeFi).