If you have been around crypto for a while, you probably noticed that most crypto exchanges go through hire-and-fire cycles in sync with the market. When crypto prices go up, the exchanges go on a hiring spree, only to shed the workforce when a market downturn forces them to do some belt-tightening.
This comes as no surprise — most revenue for crypto exchanges comes from trading fees, which tend to plummet during the bear market as customers wind down their trading activity. Such dependence on market trends poses unique challenges to the companies, which are forced to either trim their expenditure or set aside a sizable war chest for possible market storms.
Fortunately, DemaTrading.ai offers a solution that can help crypto firms stabilize their revenue streams: crypto indices and market-neutral portfolios that platforms can offer to their clients for a mutual benefit at lower costs.
The power of managed portfolios
While stock indices such as the S&P 500 have a long history and would hardly surprise anyone with at least a basic understanding of financial markets, their crypto counterparts still remain a novelty. Much like stock indices, crypto indices provide a snapshot of the overall state of the market they represent by tracking the price movements of a basket of cryptocurrencies within a certain segment of the industry, such as Proof-of-Stake, metaverse, Layer 2, NFTs, or DeFi.
DemaTrading.ai offers exchanges its infrastructure that runs index strategies (Top 10, Green bundle, DeFi bundle, etc.) or market-neutral strategies. While this approach is similar to the popular ETFs, it has one considerable advantage: in this case, investors own the basket of cryptocurrencies directly.
After a one-time integration, these managed portfolios are ready to be offered to the exchanges’ clients. The in-house trading engine developed by DemaTrading.ai spreads out orders to increase liquidity for the platform, while machine learning models optimize for better price execution.
Through DemaTrading.ai, crypto exchanges and asset managers can offer their clients automatically rebalanced portfolios that are accessible, cost-effective, and time-saving. For investors, crypto indices bring greater diversification, more predictable revenue, improved risk profile, and less sleepless nights spent on active management. Thanks to DemaTrading.ai, they can simply buy an index — or even set up a dollar-cost averaging — then sit back and enjoy passive returns on their investment.
"The majority of private investors are in the market without the time it realistically takes to make profits for crypto. Also, tools such as trading bots are not always easy to kick off without the technical knowledge. That creates an accessibility gap that we aim to bridge," said Demian Voorhagen, co-founder and CEO of DemaTrading.ai.
Founded in 2021 with a mission to democratize access to crypto, DemaTrading.ai chases an even more ambitious goal: to become the world’s leading index provider in the crypto space. According to the company’s projections, capturing approximately 1.2% of the $950 billion worth of passive buy-and-hold crypto investments by 2028 would translate into roughly $10 billion of assets invested in DemaTrading.ai portfolios.
To date, DemaTrading.ai has raised €350,000 in a pre-seed round from private investors and angels and is currently raising its next funding round. The startup has already scored an exclusive partnership with MarketVector (acquired by VanEck).
”Through the deployment of DemaTrading.ai’s technology, we see a catalyst towards providing individual investors easy access to MarketVector’s institutional quality indexes,” stated Steven Schoenfeld, CEO of MarketVector. “We consider this partnership to be an important evolution toward expanding the digital asset ecosystem.”
DemaTrading.ai’s pricing includes a 50/50 revenue split and a €2,500 license fee that comes with its sophisticated ML model. The company covers all software and hardware costs for the agreement, including infrastructure, hosting, and maintenance
In the fast-paced, ever-evolving world of cryptocurrencies, DemaTrading.ai's solutions offer a unique blend of accessibility, sophistication, and risk management — a must-have for any platform that wants to stay ahead of the curve and expand its user base. If you are curious about any of the products offered by DemaTrading and would like to chat about your use case and the needs of your customers, contact them for a demo or book a noncommittal introductory call.