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What are DynaSets?

Greetings Singularitarians,

It’s December 1st, day one of our Advent Calendar. It seems only right that we kick things off with some DynaSet info, so here we go!
What is a DynaSet?
A DynaSet is a dynamically managed set of assets. You can think of it somewhat like a basket of tokens. For this example, let’s consider a DynaSet composed of USDC and BTC. If the indicators that our trading and AI team have set suggest to them that BTC is showing signs of an uptrend, the trading team ‘DAM’ (Dynamic Asset Manager) of Humans and/or Artificial Intelligences then exchanges USDC for BTC. They then wait for BTC to go up in value, before swapping it back into USDC thereby generating “Alpha”.
The above example is based on what is called a “long only” strategy. DynaSets may be run using multiple types of strategies including “short only”, “long/short”, “neutral” and also variations where our DAM automatically swaps between strategies based on market conditions.
This article will give a high level overview of what DynaSets are and how they work. Then, over the course of the next 2 weeks we will release deep dive articles breaking down each layer of what makes up a DynaSet.
The Launch Phase
Not unlike our current bonded staking, this phase will involve a window of time where users can submit their funds to the Forge in preparation for the DynaSet to begin. After the launch window closes, all the submitted tokens will be “forged” together into the correctly weighted assets and the DynaSet will begin trading.
The Trade Execution Layer
The DAM will monitor price movements and if certain criteria and signals are met, place buy orders with specified take profit points. A complex layer of smart contracts will then analyze multiple DEX and Liquidity Pools, taking into account things like GAS fees, Slippage and market depth. If all the criteria are met, a trade (or multiple smaller trades) will be executed.
The Contribution Phase
Of course after a DynaSet is launched it is highly likely more people will want to join. To allow this, there will be a rolling entry window where users can stake their tokens within the Forge and wait for the next entry point. Performance and Management fees are also taken at the end of this phase.
Performance and Management Fees
While the exact rate of fees has yet to be finalized, the mechanics of them are fairly simple to explain. A ‘hurdle rate’ is set based on the performance of the underlying asset. In our earlier example that would be Bitcoin. If Bitcoin had gone up 10% over the given time period but the DynaSet had increased 15% the difference would be 5%. Of that 5% we would take a % of fees. If there had been no profit over that time frame, then fees would be 0.
All fees taken are split between the DAM and Incentives for the DAO Community Members.
DAO Community Members consist of SDAO Token Holders.
The Forge
During the contribution phase tokens are deposited in the forge. Initially this will be specified assets but in the future we could potentially open it up to any easily liquidated asset. When the forge is ready to add to a DynaSet it swaps all assets for whichever tokens necessary, correctly weighted based on the requirements of the DAM.
Withdrawal
Users will be able to withdraw at any time, although there will be additional fees associated if the withdrawal happens outside allocated withdrawal windows. This is necessary to discourage whales from pulling a large amount of liquidity out of a DynaSet randomly, which could potentially interfere with trades that it has planned. Withdrawal criteria will be explained in depth in a future article.
That’s it!
There you have it…. DynaSets.
Do not let the above explanations fool you, this article only scratches the surface of all the hard work that has gone into building these systems. It doesn’t even touch on all the signal generation algorithms and AI’s that are being tested/trained/built to run on the SingularityNET Marketplace and NuNet that will generate countless API calls to AGIX on ADA every day.
Stay tuned for much, much more in the coming days and weeks!