Episode 158- First AI-Driven Crypto Assets Trading

Welcome to Crypto Knights. Will we help you finally make sense of the trending world of cryptocurrencies? So gather your virtual piggy bank and let's get started. Hello, Anatoli. Welcome to Crypto Knights Podcast. We are excited to have you as our guest speaker today. Hello, Kant. It's a pleasure to be with you and thank you for having me. Very excited. I have been reading up on you

and on Elkis investments and AI and blockchain investments and so forth. So I just wanted to get into this because this is good stuff. So tell me about yourself, Anatoli. Vera, I'm in Dallas, Texas. Where are you located? Oh, actually I'm located in Europe right now in London, UK, but I'm half Ukrainian, half Italian. So I came along with this mixed with this mixed nationality and

now I'm in London. So what to say? I'm the I'm a local founder of Elkis investments. So but before talking about the project itself, I have prior to that five years of work, working experience, your real estate and especially construction fields by copying manager roles. Also the trading activity that I done by myself. So during my college years, I met another, the other co founder, which

is Andrea. And together we started looking at financial services as a whole and all the problems that might have in the traditional side. So together, we started planning a cutting edge hybrid investment company that uses artificial intelligence as its core technology to trade both traditional markets and cryptocurrencies. About two years ago, we started to look into detail, the Bitcoin and the blockchain technology as well. Then

our third co founder, we joined the team and he's actually our investment manager with over 15 years of experience as a quantitative trader. And together we managed to assemble a great team with expertise, Yav and common will to pursue innovation. So we realized the massive opportunity to change the asset management industry not only by applying AI, but taking advantage of the token itself and the blockchain

technology. And the possibility to unlock as I will explain later the doors to retail traders and let them invest like professionals. So we started to develop different quantitative models and strategies. And now we are trading privately with a great track record giving us a solid belief that AI can drastically improve the efficiency of trading strategies. So that's how we came out with the ICO and the

project as a whole. But till now, who has been funding you? Are you self funded or has somebody like an angel or a VC invested in you? Well, initially we proceed without funding. So it was more the following our passion about the market, about building new models, about exploring as a research and development of new models. Later on, another investor gave us a seed investment because

he said, okay, you're doing something really interesting. It's a hybrid fund. Building a makes per hybrid portfolio. So that's when we started to realize that, okay, probably we should bring this project publicly and stop trading by ourselves. So this friend of yours invested in the equity of the company. Are you also going to give him tokens now? He invested in equity, yes, as well. We're going

to give him tokens. Sure. Okay. Good. Good. Good. So the other question that I had was your track record. You said you had a good track record. Do you have any numbers? Do you have some data? Something that you can tell us? That our business can understand how well we have done in the past on your own? Yes. So we've been working with AI trading since

2008, 2009. That's how when we started. We tested strategies year over year on US equity, futures and more recently, of course, cryptocurrencies. So our traditional side is very solid. For example, US equity models, we've been using it since 2008. So the main goal of this strategy is to track the SP performance, so slightly overperform the benchmark. So with much lower level risk, which is one of

the pillars of our fund, the risk management. So just to give you two quick metrics, the maximum equity monthly drawdown compared to the SP 500 has been 25 times smaller or and the volatility of returns compared to risk has been 3.5 times smaller. So this is important data that gives us the solidity to make profits, but also to protect yourself from the volatility of the market.

And the other strategies, we are very strong on futures, where, especially in the last period, we're killing the market. We're killing it because we achieved over 100% of return on a yearly basis, on average, with almost 70% of success trades. More recently, we started with cryptocurrencies. It's a bit tricky with cryptocurrencies because, as you know, data is very incomplete right now. The exchanges, the crypto exchanges

don't give us solid data sets and they tend to even manipulate a lot of prices, of course, book orders. And so it has been quite hard to gather all the information. But we are, we've been able to develop a model, which is implemented with the goal to decrease the volatility and improve the control on risk. Based on the belief that market conditions on Bitcoin and Ether

have changed. And just holding or buying on corrections will not be as profitable as in the past. So LPs uses quantitative long and short strategies with the logic to pure forecasting that are improving genetic algorithms. And later on, I can tell you more about how we use AI. Great, great. So I understand the team that has come together. I understand what we have done historically. And

now let's talk about this whole idea of combining blockchain and AI with the methods that you've been using. What made you think about blockchain as a way of raising money? Well, you know, the blockchain is, I think it's, it became more of a BUDS word to raise funds when it comes to ICOs. The development of the blockchain technology has massive potential to redefine the operations and

economics of the financial services industry. As is the trade electronically in the blink of an eye, right now, can still take days to settle, for example, and blockchain able distributed ledgers could change all of that. So how are we going to use that? In the first year, LPs will use blockchain to publicly show every trade to customers and regulators. So it will be a form of

self auditing service and to store transactions that have been cost of non-infrastructures, of course. The management structure will be more transparent and safe so that investors will know exactly where the money is really going on a daily basis. So with dividend structures and costs calculated automatically and with no room for errors. So must more especially in the mid to long term, LPs will set plans to

use the blockchain in an open source environment, which means that by allowing developers, engineers, and final researchers around the world to innovate and improve trading algorithms. In test environment of our container secure platform. So this transparency validation enables by enabled by the blockchain will allow to reward directly the work of the community using the LPs token. Got it. So we're going to start off by doing

this yourself in some sense, but then you want to create an environment so that you want to provide to other people, such as simulation, maybe proper good data that you hope to have. You're collected with paints takingly and make it available for them to run simulations test and maybe refine their algorithms and then roll them out in your ecosystem. Exactly. So that's why I said from

me to long term, because first of all, right now blockchain infrastructures are still very raw. I think overall is ecosystem. We have to work much harder to make them more scalable, more efficient. But it's something definitely we're looking into. Right. Of course, the ICO, the success of the ICO could bootstrap us by 1000 times we can achieve these results much quicker. That's very exciting. So can

you tell us how so who is in your ecosystem? So there is of course, the most help us and your management team and your execution development team and all of that. Then there are people who are investing, then, then there are people who develop these algorithms, maybe for AI trading, I don't know. So who are the groups of people in your ecosystem? And then talk to

us about examples of our use cases for each one of these. So we understand exactly how this environment will work in future. Yeah, sure. First of all, the talking about as soon as the ICO is over, we'll have two main customers. So there is first, first, the institutional clients, of course, because after the ICO will open the fund. And institutional clients and professional investors will get

direct access to our regulated fund at the constitution of the ICO. So the real innovation on community side comes from the retail market. Which is our second branch. So non institutional clients and everyday traders with holding ranging from, let's say, $5,000 to $100,000. cannot usually become clients of regulated fund. Right. So now, thanks to LPS total transparency, even the retail trader will have the opportunity to

trade like a professional. So by subscribing, for example, to our algorithmic signals, traders will be able to copy our trading and perform like we do. And this will be possible only through our token. So your token is a way for somebody like me to get in and say, hey, I'll give you one token. Can you copy this set of trades and implement the same thing on

my money? And it will probably do that. Of course, our belief is to implement automatically for an API. And we are ready to talking with a third party providers, which are liquidity providers and brokers. Regulated and good strong track record. And what we will give is the AI technology. So then the whole settlement will go through our broker. So in this sense, even the capital of

the clients, etc. It will be protected. Yeah. Yeah. So I understand. So can you now walk us through the use cases for each of these entities? Especially the user, somebody like me, I have like you said $10,000. I'm a retail investor. And let's imagine till now, if I was not an accredited investor, I would not have had the opportunities to invest into these institutional type of

capital or private equity or whatever else. So suddenly, with $10,000, I'm excited about the real peace because you're giving me the same opportunity as a high net worth individual. So what do I do next? What do I do with my $10,000? So as soon as the ICO will end, we will open our platform. So since I told you we're building this share values of trust transparency

and efficiency, our on the main dashboard of the platform directly, there will be a way to monitor our private area, artificial intelligence. algorithms and trade real-time market signals in the background. So I think the client itself, he's not trading. Yeah, wait, let me reorganize. So we're talking about the, I was talking about the platform. Yes, keep going. Yeah. Yeah. Go ahead, please. Okay. So around those

core principles, we are opening this main dashboard, the main platform for our investors. So basically, how is going to work? On the platform, the client will have a basic overview of the trading activity with the account portfolio, with the light performance, with the auditing ledger, and all the information in real time. So this will reveal in depth, statistical, the current portfolio performance, bench marks, if marketing,

this is such as the C-500 or coin market gap or good currencies. So, by in the platform, clients will be able to match their API of the broker with our API, and then we will be able to give the algorithmic signals directly, automatically. So our clients don't have to worry about entering manually all the data we're giving them. So for now, for example, we are, we

have a telegram channel where we are giving away signals. And this will be for the entire ISOO. We'll give them for free the group will be closed after the ICO closes. But this is a perfect example on how we give signals. And where we actually doing very good, especially in the futures and crypto and Bitcoin, we got the latest short. So for the client will be

very, very straightforward. So tell me how, what is the telegram group so that our listeners can follow you? Yeah. So the main group is t.me slash.LP's. So this is our general telegram. And the LPS is spelled ELPIS. OK. EL be is exactly. So this is where we will release most important information's will be our main communication channel. And in the next days, we'll release as well,

the new website and the new documentation. Very good. So I can go there and follow your signals right now, for example, and I can mimic them. You're saying I can copy them? Exactly. So there are free for everyone, both on traditional market and on crypto market. So whoever goes there can copy them as much as he wants. OK. And this whole ICO and blockchain that you're

building, is it for investment only into cryptocurrencies? Or is it also going to be into stocks? It will be mixed. See, I mentioned before how we want to build a hybrid type of month. So we are actually want to build a broad portfolio, which is the best choice when you mix that traditional sites. So you have stocks, you have futures, you have derivatives, you have cryptocurrencies,

different sets for now, only Bitcoin, ETER because they're more stable, but in future we will release more. So in this way, investors will not focus only on a quick return, which leads to a very high risk. But we can build a big portfolio will be managed by deep learning neural networks. So it will balance automatically in a more sufficient way. Every position, we will have a

lot of money. So we will reduce over time the risk exposure and hopefully maximizing returns. Very interesting. So what are all the things that somebody can do as a retail investor with the helpless platform that they could not do before? What are the new things they can do? How are you empowering the retail investor? Well, the retail investor is not empowered more of a platform itself

because it's just a way to monitor the trades. So I think that's a great idea. But it's empowered by the technology. It's empowered by AI technology behind it. So we are not another trading guru on the market that gives trading signals. We are using a very extensive knowledge and very profitable technology right now, which is getting better and better. And this is the real value in

this product. The dashboard itself will just show the activity. But the real value is that something that only for now 10% of funds are using in the world, it's not accessible to the public and we want to bring it to everyone. Let's take the next few minutes. I don't want to completely geek out, but I'm a PhD in Comparasite. I have to do a little bit

of this. So can we unwrap your AI algorithm? Can you talk a little bit about what kind of technology is built into your system? Yeah, sure. So as I mentioned, just to brief introduction, around 10% of all funds are relying on large statistical models right now. This is relatively a new technology for this market, even though most of the biggest fund are using it since decades,

like let's say, Renaissance technologies were just one example. So this technology can process the normals amounts of data to learn about the world and make predictions on stocks, bonds, et cetera, et cetera. So the way, you know, we're going to be able to see how much technology is going to do. So isn't this technology to develop profitable algorithms to trade financial instruments? Is our core? So

that uses some theoretical models, a starting point then to apply to AI, AI, is building and improving infrastructure based on machine learning with a branch of deep learning neural networks and genetic algorithms. We follow your algorithms based on the warm intelligence that intervenes to integrate neural networks and genetic algorithms in the asset allocation strategy and the continuous irrebalancing of portfolios. So there are many different neural

network structures, deep learning neural network had proved to be able to make reliable, consistent and stable predictions on financial time series behavior. So we also decided to combine deep learning neural networks predictive power with, as I said, with genetic algorithms to optimize parameters in a most effective way. Our algorithms based on this combination of elements will constantly learn, enable with the program logic to find the

models with the best accuracy to always rebound portfolios in the interest of investors. So, and as I mentioned before, this warm intelligence as well, our portfolio will be also automatically balanced by algorithms that will adjust portfolio composition according to the specific market conditions. So in the broad field of artificial intelligence, we found a great potential values warm intelligence. This technology that takes its name from nature,

you specific algorithms to find order and extract useful sets of information out of data sets. This is pretty much the how our AI is wrapped. Okay. So is it what kind of learning is it doing? Is it doing supervised learning? Is it doing unsupervised learning? How are you training it on data sets when do you know it has reached a level of learning that you can

now apply to real transactions? How do you do all of that? Well, for now, for example, to apply to application cryptocurrencies is still very raw as data doesn't allow us to train better and faster. So it's a matter of trial and error with behind the sets, let's say. So before releasing any strategy, we of course are looking forward to make sure that it's it's valuable. That's

that's what I can say for now. So the difficulty is, you know, the data is very important. The final part that you're solving not just for the investors, but most of the techies out there as well is, I think over time, you're building better data sets yourself, maybe you're cleaning data. And you're also testing out your algorithms and making sure they're working not just well on

historical data, but they're working well on real data before your convince that these things are good and they will make money. Exactly. So we are currently focused on trading, for example, SFDs, CFDs, sorry, because we noticed many problems trading on crypto exchanges for now on the quantitative side of the business, because for example, I can give you, so running the same model on the same day

on the same exchange on the same coin leads to two different results. So this what tells us, it tells us that there is an congruent data in every exchange. So in order to protect our investors, we have to be sure that what we're trading is actually reliable. So before trading directly cryptos, we want to wait, want to see how exchanges going to solve the problem, or

maybe how regulators going to intervene in this case. Have you been evaluating the various exchanges? Is there... I don't know if this is information that is a secret or something that you cannot reveal, but do you have preferences for some exchanges over the others? Actually, not that much, not that much preference. More or less, we see in every exchange as it's pros and cons when it

comes to data, when it comes to pricing, and as well the velocity of the whole process. So for now, they're very row. And let's see how they're going to be. So you'll be doing this trading and what? CBOE? Exactly. Well, it will depend mostly on the market, but it's not that much. So we'll be on our broker, since I will explain you quickly how the whole

process is working. So the investors, for example, in the institutional side, are giving us assets under management. So we will put those assets under management in the victor, in a vault. So by collaborating with a broker and a third party provider, we will use our capital, our assets under management as a collateral. Save, secure in a vault, and our third party will give the ability to

give us the liquidity that we need to trade the markets. So, of course, it will depend directly on our third party provider. Got it. Got it. So this is all great. So what's next for somebody who's interested in your project? What's next? So I'm assuming like, till now, you're all internally funded, and you had one person come in and do some investment, you said. And now

you're ready to raise money through an ICO. I'm imagining. So can you talk a little bit about how much money you're raising? And when are you raising? And then what will the people get for the tokens they purchase? Yeah. So, uh, we are looking to raise $20 million in ether. So the token distribution will be to fund the project in its operations. So the funds will

raise, will be allocated over the span of two years. So how are we going to do 80% of the funds will go under assets under management? So why so? Because our final goal is to buy back the right moment our tokens from the market. So by doing in the right moment, we can increase scarcity and we can increase the price of our token. So the other

funds will be split. We will hire new engineers that will hopefully help us to success on this company. And of course opening the fund. And for marketing. So giving the, we are currently in a private allocation. So, uh, and we'll start from the first of July with the pre sale. So the initial price will be $0.11 cents of a dollar in ether. So we're going to

start with the first sale. So the initial price will be $0.11 cents of a dollar in ether. So we're going to start with the first sale. So the initial price will be $0.11 cents of a dollar in ether. And but we'll vary depending on a geometrical appreciation of the token. So the more we sell, the more price will geometrically increase. So all, as I said, we

are raising funds directly into assigned categories. And we use a third party as a smart contract provider. So they will be our, it is our escrow. And we'll take care of the money. So the technological side. So we'll not be directly involved until the end of the ICO. And, uh, the token itself is, as I said, is an utility token. So holding help is token means

being part of the first radically transparent fund that uses AI in this market. So our core idea is to use 20% of our trading profits to periodically buy back those tokens. So we're going to start with the first sale. So the first sale of the token is the token. So the biggest innovation is what at every ICO investor will have a one year free subscription plan

to our algorithmic signals, for example. And even by using our IPI to integrate with existing trading platforms. So another way, just when you buy our algorithmic signals, you can spend even fiat or if you have the tokens, you have a 50% discount on every package. So we're going to start with the token. So it's actually depending on your trading volume. So every, every step is also

in case regulation is going to change in the future. Let's say there is a worst case scenario that the regulator says all ICOs are securities. So what happened. So we decided that in case something like that happens. We are really taking part 2.5% of our equity. In case, I'm going to start with the first sale. So I'm going to start with the second sale. So I'm

going to start with the second sale. In case this is a new reality, we are willing to convert token holders to reward them in case it becomes security for everyone. This is obviously the worst case scenario, but let's see what's happening. Got it. So you're raising 20 million, 16 million about 20, you said 80% of that, which is $16 million will be assets of a bad

expect. The remaining you will be using to actually fund the people, the payroll, the growth, etc. etc. And that's probably a loss of person endation As I mentioned earlier, in case of overdue insurance failure, the interest is a risk from aura. The signal I'm talking about, so I was thinking about shoe. So in case of loss, or profit, or profit. Ok, that's pretty much the end

of it. Drink or log, drink or so electric car juice. The count was, once you say, if you've 2 after then, let's be precise, see you're applying. Shading you call it? Yeah, free subscription plan to any of our trading algorithmic signal service. So yes. So one year free, that's already a great reason why people should buy into that. And so after they buy into that, what

else can I do with the tokens? So I know that the other thing you mentioned is you're going to constantly use 20% of your profits and buy them back. So there's an inherent increase in the demand and then there's reduction in supply. So you're expecting the price to be positive and beneficial to somebody like me who will hold on to those tokens. So I understand that.

So and what else can I do with the token? Anything else? Well, for now, in the short term, we'll be used only for algorithmic signals. And let me mention the meat to long-term strategy when we want to open to developers and open to external researchers. Then we want to implement the token itself as a way to implement the token. So there are two things that are

happening. The money itself is just coming in. You're accepting investors' money in Ethereum, for example. So the money is coming in in one format. And then I'm buying Alpys tokens so that I can use that to operate what happens on my money. The operation is going to be a good thing. So that's all the transactions that happen on my money. Is that kind of, am I

kind of correct or is it fully automated? Well, it's correct in a certain way. It means that yes, you are funding the project itself. Yeah, of course. But then the way we want to give back to the market is actually to buying back the tokens. So that's true. You are funding. But in the medium to long term, we would like to give it back not only

in terms of monetary terms, but also on the trading side. So you can trade your funds with it. Got it. And what are your transactional fees for the various transactions that you will have? Transaction fees, you mean? You make sure for the algorithmic signals. Yeah, for the algorithmic signals. So we will have, you will be fixed, but it will be based on the trading volume of

your account. So we can know the trading volume because we'll operate directly. We'll have the broker, of course. So if, let's say, if it's between $5,000, which is the minimum, we allow to $20,000. For the crypto signals, the price will be $200 per month. But with the LPs token, it will be 50% discount. When it comes to traditional markets, it will be $250 with discount as

well if you have the token. The same will be for the second phase, which is between $20,000. And $50,000. In this case, the crypto signals will cost $400 per month with a 50% discount if you use the token. And the traditional will be $500 with the same discount. And with an investment, with a trading volume between $50,000 and $100,000 will be $600 per month. And with

a 50% discount, traditional markets, $750 with the same discount. And, well, if you have more than $100,000 seen Bitcoin Eater, you are qualified to invest directly in the fund. So, the long-term strategies actually grow our community as well. And when they're ready to trade for them completely. So I've defined investing more than $100,000 and completely hand-soft. It's totally managed. Yeah, it will be totally managed. Yes.

Perfect. That's what I would love to have is, but you are kind of, if I were to pay who your target segment would be, it is somebody that's interested in having some kind of a do-it-yourself type of a thing. They want to be a little bit hands-on, but they don't know exactly what to do. And they're able to copy the masters because you have not only

the help-s, but eventually you'll bring in experts that will be creating their algorithms. And probably there will be ratings and there will be reviews and there will be historical data on how well they perform. So I can kind of pick and choose who I want to copy on my portfolio. Or if I'm my kind of a lazy guy that says, okay, I'll just invest $100,000, you

guys take care of it. Send me an annual report or something like that. So you do the public. The reason we are offering this annual report is because I'm not going to be able to do it. Also I'm just very lucky to have that huge, maybe not only for me, but I think the update is big. And I honestly don't like smartness that as a whole,

I would really have someone who gives the steps on stability to smart. So our value proposition is actually targeting those who have crypto holdings, but they don't know how to trade. Got it. Got it. Okay, that's, yeah, they call them crypto whales. I think that's terminology. So there might be somebody who, maybe by luck or by design or by some ability, they have made a lot

of money, but then they may or may not be experts in managing their money and trading it and all of that. So you are providing an approach where they can utilize other people's intelligence and algorithms. And hopefully in that process, maybe they can learn how to do something. And then we can experts. I like to bring also more and educational programming in the future. So we

can educate people on how everything works and how we are operating. Okay. So our listeners, by this time, I'm super excited. They want to know from you, Anatoly. So what do they do next? Where do they go? How do they participate? How do they support your community? Yes. So as I mentioned before, Telegram channel, it will be our first source of information for now. And please

visit helpisinvestments.com as well. And in the next days, we'll be doing a whole new website with whole new information. And we are officially planning to do a serious pre-sale. And we are continuing private allocation. So please visit the website. If you have more questions, visit Telegram Group. We are always in. And we are more than happy to give you more information about it. Great. Have you

covered everything that you wanted to tell our listeners or other other points that I might have missed? I think we covered pretty much everything on when it comes to your helpis. Wow. Then let me request our listeners. If you like this episode, definitely head over to the Telegram Group that Anatoly has talked about. But also, I think this is exciting stuff. This is the first time

I'm hearing of something like this. So I think people, you should, if you're interested, go try it out. But we engaged also share it with your other friends that you have that might be interested in this kind of work. Most importantly, I want you to head over to iTunes or Google Play and Rators. So I want to thank Anatoly for joining us today and wish you

the very best with Elvis. Thank you, Kahn. It has been a pleasure. Thanks for listening to the Crypto Knights. Never miss an episode. Subscribe now at www.crypto Knights.io.