Trading Clam Coins

CLAM coins are a cryptocurrency based on a proof-of-stake mining method. One new CLAM coin is generated each minute and awarded to users by proportional lottery based on the number of CLAMs they have working on their miner. This means there will be 60 new CLAMs created per hour, 1,440 created per day, and 525,600 CLAMs created each year.

The value of each CLAM simply depends on the interaction of supply and demand; there is no central authority that controls the value of CLAMs and their price is completely up to markets. Since their inception, the value of CLAMs has generally been rising against the US & Canadian dollars much like most other crypto currencies. CLAM users can consult blockchain explorers to check addresses, monitor transactions, etc, and can view the market cap of CLAMs on sites such as CoinMarketCap. At the time of writing, there are about 2.7 million CLAMs outstanding worth about $20,000,000 US dollars.

To get into the CLAM economy, the first thing you should do is buy some CLAMS; since CLAMs are based on proof-of-stake, you can’t mine any CLAMs without first having some CLAMs to stake.

To buy CLAMs, the first step is to get some bitcoins. If you’re Canadian or American, use QuadrigaCX since you can make Canadian dollar deposits using Interac online and then exchange Canadian dollars for bitcoins. For Americans, try a service such as Coinbase.

Once you have your bitcoins, you have a few choices. If you want to trade your bitcoins for CLAMs, you can find 77% of the volume for CLAMs on Poloniex and the balance of volume on Bittrex.  If you are a little wary about using exchanges, you can also use a service such as ShapeShift. At the time of writing Changelly does not offer CLAMs.

If you really want to mine CLAMs, check out my friend’s post on github describing how to set up your own miner.

In my opinion, Poloniex is the best place to trade CLAMs. The market is fairly liquid, but it jumps around enough (this is CLAM coins after-all) that there are opportunities for traders. But keep in mind that you can really only trade the CLAM/BTC pair: there is no other markets for CLAMs to fiat other than private sales between friends, so unless your friends are really into trading CLAMs, it’s probably best to trade on Poloniex.

The nice feature about trading CLAMs on Poloniex is you can both borrow and lend CLAMs. This means you can jack up your leverage at pretty cheap rates. At the time of writing, you can borrow bitcoins against CLAMs for less than 0.001% per day, and you can borrow CLAMs for less than 0.001%. You can also get some pretty cheap leverage on Poloniex.

At the time of writing, here is the current bid/ask spread on both Poloniex and Bittrex:

Poloniex 0.00047464 bid / 0.00047500 ask

Bittrex 0.00047483 bid / 0.00048195 ask

So you can see the bid/ask spread is much tighter on Poloniex, representing their greater volume/liquidity, but interestingly, there is more than a 1% gap between the bid/offer for CLAM/BTC on Bittrex. This presents an opportunity for traders who can arbitrage the different prices between exchanges. The fees on Bittrex are 0.25% per trade, so there is certainly an opportunity for some market making using a bot. Here is a link to Bittrex API documentation.

One funny thing to be aware of when trading CLAMs: since the market is only worth about $20 mil USD in total, and more than half of those CLAMs are tied up on just-dice, the trading for CLAMs can be cornered in an old fashioned way. This happened a few months ago on Poloniex. My friend and I noticed the lending/borrowing rate for CLAMs on Poloniex jumped very high, over 1% per day, much higher than the mining rate, so we moved a few CLAMs to the exchange to lend them out. It looked bullish for CLAMs at the time as the market was well bid. A few weeks went by, and the price of CLAMs kept rising. All of a sudden the market fell out, and the price crashed by half in a few hours. We suspect a small number of traders were borrowing CLAMs at high rates (thereby getting short CLAMs in the process) and feeding the order book with stink bids, and then as they pulled their bids and started selling their CLAMs, the bottom fell out (into air pocket).

The lesson from this experience is to beware when margin interest rates move dramatically: when you wonder what is happening, and you don’t have what you believe is the answer, take it slow. Move with caution, or, if you’re super bold, take the opposite position and help bring the market back in line.

Trading Bitcoin Price Spreads Bitfinex, Poloniex, QuadrigaCX

As bitcoin gains popularity, more exchanges are emerging globally, each with its own pros and cons. With so many exchanges to trade on, deciding which one is right for you will depend on your trading strategy, and one strategy I’d like to highlight is spread trading. This means profiting from the different prices for bitcoins between various exchanges. In the example below I’ll use examples for Bitfinex, Poloniex, and QuadrigaCX.  I use QuadrigaCX as an example because this is the best place for Canadians to buy and sell bitcoins, and QuadrigaCX also offers a bitcoin/US dollar pair. Also keep in mind that Bitfinex & Poloniex use USD “tether” which is a representative token and not actual US dollars.

The strategies described below are probably best done using the API from each exchange. If you are not familiar with using web APIs, then the strategies below can still be used by entering your orders manually, but you can execute orders (and manage order books) much better using a program to enter orders for you instead of entering orders manually. Here are links to web API documentation for each exchange: Bitfinex API, Poloniex API, QuadrigaCX API.

Let’s take a look at the market on each of these three exchanges to see what the current spreads are. When I refer to the “spread”, I’m referring to the difference between the bid and ask prices posted to the exchange, and then I will compare the “spread” between each exchange to see if there are any profit opportunities.

At the time of writing, here are the current markets:

Poloniex 15,529 / 15,560

Bitfinex 15,526 / 15,538

QuadrigaCX 15,505 / 15,999

The first thing we should notice as we look at these bids and offers is the markets on Bitfinex and Poloniex are much tighter than the market on QuadrigaCX. There is a small difference (a fraction of 1%) between the bids and offers on both Bitfinex and Poloniex, but a few percent difference between bids and offers on QuadrigaCX. This is where the opportunity lies. Even though QuadrigaCX is based in Canada and largely deals with Canadian payment methods, they still post a USD market, but since moving USD in and out of QuadrigaCX is much less common than Canadian dollars, their USD markets are also much more shallow.

When evaluating these markets, we should also keep trading costs in mind. Explicit trading fees are the biggest expense, the only other expense being the implied cost of carrying the float of money required to make trades. Poloniex will cost about 0.25% per transaction (depending on your volume), Bitfinex will cost 0.20%, and QuadrigaCX charges 0.50% per transaction. So in order to make a profit, we need to at least cover these trading costs.

The lowest bid based on the price quoted above is QuadrigaCX @ 15,526 and the highest offer is QuadrigaCX @ 15,999. If you bought 1 bitcoin at 15,526 and sold at 15,999, your profit before commissions would be 473 (the difference between the buy and sell). But what are the fees? 77.63 on the buy side, and 80 on the sell side for a total of 157.63. So if you can make a market with a spread of 473 and incur 157.63 of costs, then your profit will be 315.37.

Is it this simple?  Well, yes and no. In one sense, anyone is free to post markets and wait for traders to take their bid or offer. But on the other hand, the market is wide for reason. Looking at the volume of trades on the BTC/USD market on QuadrigaCX, it can sometimes take more than an hour to go by between transactions. This light liquidity is the risk that you need to take in order to get the reward.

Another way to bridge this liquidity is to post bids and offers on QuadrigaCX, recognizing that the spread is the widest on this market, and when you do get filled on one leg of the trade, you can offset your risk by taking the opposite side of the trade on a more liquid exchange (such as Poloniex and Bitfinex). For example, if we post a bid of 15,510 and an offer of 15,900 on QuadrigaCX, and the 15,510 bid gets filled, we can still work our sell order on QuadrigaCX at 15,900, while we also work duplicate orders on other exchanges. We can work OCO orders (“order cancels other”) so that when one of our sales gets filled on one exchange, we cancel the other working orders. You can see how using a computer program (a “bot”) to do this type of trading is much better than doing it manually (unless you want to stare at a trading screen all day).

The program (or trading strategy) that you use must make the necessary calculations for you, so that your program (or you) can know where to place buys and sells. If you are writing a program to do this type of trading, you need to have the program run checks and make calculations, adjust orders according to formulas. You can either set cron jobs to refresh orders and calculations on specific time intervals, or have the program place buys and sells based on other triggers, or both. Once you understand how to price these types of markets, its really up to your imagination how to let the program run your trading strategy. You can take more or less market price risk, you can tie up more or less capital, you can have the strategy take a bullish or bearish strategy, and you can use other exchanges (such as Deribit) to hedge your risk.

If you are a programmer and you know how to use JavaScript, Nodejs, python, or other such languages to build these programs, but you don’t want to risk your own capital, I am happy to put up the money in exchange for your work, please feel free to contact me on this site, I’m always looking for more competent developers.

Making Poloniex Interest Rates

Poloniex is an exchange for crypto currencies such as bitcoin. The exchange lists a bunch of crypto currencies that users can trade, and they also offer users the ability to trade a smaller number of currencies on margin. The exchange allows users to fund their own margin loans using an open market. There are some standard exchange rules that determine leverage and collateral required.  The margin market works well and the current margin requirements (although blunt) encourages a very low (almost non-existent) loan default rate.

For more detailed information on the specifics of how the Poloniex margin lending market works, see this link.

Margin lending is pretty straight forward. If you transfer funds into your lending account at Poloniex, you can choose to lend out your balance on your own terms. Poloniex provides the retail user with an easy interface, and advanced users can use an API to run bots.  Borrowing funds is pretty easy too. In a nutshell, if you’d like to make a margin trade, transfer cash to your margin account. Once you have a margin balance, you can place an order. Your order will set a limit for the maximum rate you are willing to borrow and the price you are willing to buy/sell the coins against your loan. The cash you have in your margin account simply serves as collateral.

Borrowers can set a max rate they are willing to borrow for. As an example, if you want to borrow clam coins, but the rate at which the market if offering you clams is 0.0355% per day, and maybe you are only willing to borrow for a maximum of 0.01% per day, you can set this limit. Your order goes to the lending book market and waits until it gets a taker. Once you get funding, your margin order goes into the market and works the limit you set to either buy or sell.

Using the Poloniex margin market, its possible hedge the price of your clams sitting in a clam mining client. Deposit btc in the margin account at Poloniex. Then borrow clams to buy more btc at a rate that is less than the mining interest rate you are getting and earn a spread.

Another strategy that could be used is borrowing a currency with a low margin rate to buy an alternative currency that is not available for margin trading. For example, say it costs 0.01% per day to borrow ether. The user can deposit x btc in their margin account, borrow ether at 0.01% per day and then deposit x btc in their exchange account and exchange x btc for an amount of rep. This would have the effect of putting on a rep/eth trade at the eth funding rate