Introduction
Almanak is an innovative platform focused on the decentralized finance (DeFi) space, aimed at enabling individual users to create and utilize AI-driven financial strategies to earn returns by democratizing quantitative trading technology. The platform is designed to simplify the blockchain simulation process, shorten the time to identify and capture winning strategies, and provide users with an efficient and precise environment for financial strategy development.
The golden age of DeFi
In the early days of DeFi, every day felt like a treasure hunt on Uniswap, with investors seeking out newly deployed tokens and farming high-yield food coins for profit. Although the market was chaotic and risky at the time, it was an exciting period for retail and speculative investors who could quickly react and seize opportunities. However, with the evolution of the market, the entry of institutional investors changed the game.
Market changes and challenges
Over time, the DeFi market has attracted an increasing number of institutional investors. These players possess deep capital and complex strategies, such as MEV arbitrageurs, algorithmic market makers, and liquidity providers. They use institutional-grade tools to gain an advantage in the DeFi market, placing ordinary retail investors at a disadvantage in the competition.
According to research by the Bank for International Settlements (BIS), the current state of the DeFi market is that retail liquidity providers are often outmatched by a few elite institutional participants who control up to 80% of the total locked value (TVL). In most cases, retail participants often incur losses when providing liquidity on Uniswap v3.
Almanak's vision
In the face of these challenges, Almanak has proposed a bold and straightforward vision: to enable anyone to easily create AI agents that can generate income. They are working to democratize institutional-level trading technology, making AI-driven financial strategies accessible to everyone.
At the core of the Almanak platform is a powerful simulator that combines agent-based modeling and blockchain-driven Monte Carlo simulations. These technologies together create a predictive financial strategy sandbox with astonishing accuracy. By utilizing a token incentive ecosystem for participants, particularly strategy contributors, Almanak provides users with an efficient tool for developing and implementing financial strategies.
The importance of quantitative trading
Quantitative trading holds an important position in traditional finance, with 60-75% of trades driven by complex algorithms that process vast data sets to discover market patterns and predict trends. However, achieving this is not simple. First, access to large amounts of data is required. Second, powerful hardware is needed to train machine learning models to generate predictions. Finally, clever mathematicians and engineers are needed to design profitable algorithms.
For most people, these resources are hard to reach. However, Almanak's goal is to provide these resources and tools to a broader user base through its platform, whether for building their own strategies or leveraging others' strategies to earn profits.
Success case of the Medallion Fund
The Medallion Fund is a model of success in quantitative trading. Founded by James Simons, this fund identifies patterns hidden in noise through statistical models and vast amounts of market data, achieving an average annual return of 66% (39% after fees), with only one year of loss in its history. The success of the Medallion Fund demonstrates the immense potential of quantitative trading.
The democratization of quantitative trading
For years, quantitative trading has been the exclusive domain of elite hedge funds with deep capital and proprietary infrastructure. However, this situation is changing, and quantitative trading is entering the mainstream. In the Web 2.0 era, platforms like QuantConnect have made quantitative trading more accessible. Since its launch in 2012, QuantConnect has provided institutional-grade tools to traders and engineers, with over 315,000 global users, publishing 2,500 new algorithms and 1 million lines of code each month.
The situation is similar in the cryptocurrency space. Professional crypto quant firms, including Gauntlet, Quant Matter, and GSR Markets, as well as traditional financial giants like Jump Trading and Citadel Securities, are crossing over into the Web3 world. Independent quantitative traders and small teams are also continuously innovating and developing new strategies.
Optimizing the quantitative trading process
Almanak was launched in 2022 and has established a foundation for the next generation of DeFi infrastructure after two years of development. In this world, the number of agents on the blockchain will exceed that of real humans. Almanak was initially built as a simulator to optimize DeFi yields, but over time, this effort has expanded into a universal, agent-centric infrastructure tailored for DeFi.
Typical quantitative trading hedge fund strategies
Market analysis: Using data analysis and market signals to identify high-potential opportunities.
Strategy building: Designing prototype trading strategies for specific opportunities.
Testing and optimization: Using simulations to evaluate and refine strategies across various market scenarios.
Market deployment: Executing strategies in real financial markets.
Monitoring and adjustment: Continuously tracking performance and adjusting strategies to maintain profitability.
Core components of the Almanak platform
The core of the Almanak platform lies in two important components: the simulator and the execution engine.
Almanak Simulator: Provides a digital sandbox that accurately replicates real-world blockchain conditions, helping traders fine-tune their strategies. By simulating the state machine of the blockchain, core application logic, and user behavior, the Almanak simulator offers traders a fast, scalable, and hyper-realistic environment to optimize their strategies.
Execution engine: Allows users to deploy agents without programming or advanced knowledge. Users can choose from a shared strategy library, and Almanak will handle all complex operations.
Future outlook
Almanak's future plans include providing tools for high-value quantitative traders and gradually expanding to users with lower technical skills and the retail market, fully unleashing the potential of DeFi. The platform will promote the development of new strategies and liquidity entering the Almanak ecosystem through a token incentive mechanism.
In the coming years, Almanak's focus will shift towards preparing AI-driven quantitative trading that can autonomously analyze markets and design strategies. This means building infrastructure integrated with advanced AI models (such as large language models) and providing plug-and-play functionality for future users.
Team and funding
Almanak is led by a team with extensive experience in technology, finance, and operations. The team has raised $6.7 million: $1.2 million in seed pre-round funding in 2022 and $5.5 million in seed round funding in 2023.
Token economics
Almanak's token design aims to address the core issue of sharing quantitative trading strategies. Its design is inspired by Bittensor and Curve, and the Almanak ecosystem aligns incentives between three different roles to ensure high-quality contributions and sustainable growth.
Strategy contributors will receive token incentives, with the distribution ratio depending on the returns (profits) of their strategies. High-performing strategies will receive more token rewards, similar to the performance fee model charged by hedge funds.
Conclusion
Almanak is redefining the rules of the DeFi game. It is expected that in the coming years, 80-90% of blockchain activity will be driven by agents. In such a future, Almanak is well positioned. It will open tools that were once monopolized by hedge fund giants to ordinary traders and small teams. The key is whether this vision can be successfully executed. If successful, Almanak will rewrite the script for AI-driven finance.