Market Caps: everything you need to know
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Onboarding
Market Caps: everything you need to know
Onboarding
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Market Caps: everything you need to know

Every trading bot in the BOTS app has a limited market cap. This means that there is only a certain amount of space for investments from BOTS users. How does it work?

Market Caps: everything you need to know

BOTS wants to make sure that everyone in the world has the opportunity to build a second, passive income through investing. To do so, we need the help of our bot creators. But what can you expect from us, what do we expect from you, and how do things work? Let’s tell you all there is to know.

Every trading bot in the BOTS app has a limited market cap. This means that there is only a certain amount of space for investments from BOTS users. So how is the maximum market cap determined, and why is it so low when you start as a bot creator?

Why is there a limited market cap?

When you develop a new trading bot, your bot will first trade with fake money. During this “quarantine,” we determine if your bot can generate a profit by way of paper trading. Once it has proven itself, your bot can enter the world of real automated trading using real funds. However, your bot won’t be able to go all out right from the start.

BOTS will limit the market cap of trading bots developed by new bot creators by €5.000. In other words, your bot won’t be able to accept more than €5.000 in users’ funds to trade with. This relatively low limit ensures that the bot also performs well with real investments, as paper trading can differ quite a bit from live trading. Your market cap limit will be increased once it also shows it can perform well in a live trading environment.

Increasing the market cap

The market cap limit of €5.000 will last for five weeks. After that, if your algorithm indeed performs as it did on paper, we will start increasing your market cap. As you’re still a new bot creator to the team, we will need time to assess the risks and see how well you can manage your positions. So the first step is to increase your market cap to €100.000.

After another two months, we’ll evaluate how your bot has been performing. Does your algorithm still perform well? Then the market cap will be increased to the maximum — which is based on the liquidity. The liquidity can go up to the millions, but this entirely depends on how your bot distributes its trades and what coins it trades in.

For experienced bot creators: life gets a lot easier

Bot creators who have developed and published multiple successful trading bots can skip the first test period and start with a market cap limit of €100.000. Also, you don’t have to sit through the whole two-month quarantine period. Your bot’s market cap limit will be increased to its max in a shorter period.

What you want is to be a top-tier bot creator. In this situation, your bots may skip the whole test period and start with a higher market cap of, in some cases €500.000, which means you’ll reach the maximum market cap limit even faster.

Why does BOTS maintain a market cap limit?

The process of getting your bots to reach the maximum market cap limit may seem long. However, it has a good reason: we want to prevent overreaching the maximum liquidity with our assets under management (AUM). We’d be unable to use or market anything above this.

But, how do we handle the growth of the AUM? The users will put money in your bot, and their funds will grow. Say they invest €100 in your bot and leave it running for months or even years. As your bot creates profit, the total amount of money in your bot will continue to increase. The result? At some point, it will reach the maximum market cap.

So to prevent this from happening, we lower the market cap limit once we see that the growth of the investments is nearing the market cap limit. If the new limit is below the current AUM, users will still be able to sell their positions, but no one can enter your bot anymore. Money can only flow out, which is the best way to control the flow.

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