What does Airbag do?

Airbag is a trading bot for cryptocurrencies that runs on Binance.

It is particularly oriented for people who want a simple solution to invest in crypto reducing risks.

How do you do the trading? Do you hold my funds?

We trade through an API Trading Key. This means that all the operations happen inside your Binance account, and we don't hold your funds. For clarity, you don't need to send us any money, ever.

We also don't have control over those funds, which means we cannot send them elsewhere or withdraw them from your Binance account. The only thing the API Trading Key can do is to trade between cryptocurrencies within your own account.

How do I delete my account?

You can delete your account or your trading key at any time in your Account settings.

Will you buy and sell all my coins?

Airbag will only trade the coins it can currently manage. For now, those are BTC and USDC (these can change).

If you are holding any other cryptocurrencies on Binance, those funds will show up on the Airbag Dashboard, but Airbag will not buy or sell them. They will just remain as they are. If you want Airbag to manage those funds, you need to convert them to Bitcoin first.

Do I need to give you my Binance password?

No, absolutely not.

For Airbag to operate on your behalf, we only need an API trading key, which will only allow Airbag to trade, and will not allow us to withdraw or send funds.

If you don't know a lot about Trading API Keys, you might want to ask a more technical person first, Binance's customer service, or we will be glad to answer your questions too.

Should I invest in crypto?

We are not financial advisors. You should probably talk first to an advisor about your personal situation.

Just remember Crypto is inherently risky and you can lose a significant part of your investment, whether you use Airbag or not.

What is an Efficient portfolio? How does Airbag invest?

In Modern Portfolio Theory, portfolios of assets are used to diversify the idiosyncratic risk of each individual asset (e.g. an industry goes well but a specific company in that industry goes down). What remains is the risk of the market, the systematic risk (e.g. the industry goes down as a whole).

Covariance between assets is used to reduce the risks in a portfolio (e.g. make sure that when Asset-A goes down, Asset-B is going up, reducing portfolio volatility). Covariance optimization creates what is called the Tangency portfolio which has the best Sharpe Ratio (the best relationship of Returns to Risk). Tangents would be called "efficient", and that's what people talk about when they speak of Efficient portfolios.

At Airbag we don't exactly build an Efficient portfolio in the traditional way, because Crypto is so volatile and so correlated that the resulting portfolios don't work well based on covariance. Instead, we build different "trading skills" into different "trading bots", and treat those bots as if they were independent assets with their own covariances and returns. Then we build an efficient portfolio of bot strategies. You can call this an Efficient Botfolio, if you wish, which aims to optimize the risk to return ratios.

How does Airbag calculate past returns?

Because crypto moves so fast, when we speak about portfolios, we are often going to refer to returns as the geometric average return per day over the last 30 or 90 days.

As an example, the return of an asset that returns 25%, -25%, +20%, -5% will be:

(1 + 25%)(1-25%)(1+20%)(1-5%) = (1+r)(1+r)(1+r)(1+r) -> r = 1.6%

How does Airbag estimate Risk / Sharpe Ratio?

We measure risk as the geometric average of the standard deviation of returns measured every 30 minutes for the 7 days, 30 days, etc.

With those returns and risk we measure the Sharpe Ratio (Return/Risk). A higher Sharpe Ratio suggests better returns per unit of risk. This is what we aim to optimize at Airbag.

When will Airbag AI trade?

After you initialize it, Airbag can make a trade any second. The reasons can be diverse. Maybe there is a market opportunity to pickup something undervalued, or might retreat to the base asset (e.g. dollars) if there is too much perceived variance and systematic risk in the market, or to take advantage of momentum. You can expect trades every few minutes or every few hours or even days.

Will Airbag beat the market?

We cannot promise that Airbag will beat the market. In general, we aim to improve Sharpe ratio.

You can expect that in bull markets, buy-and-hodl will often outperform Airbag (because buy-and-hodl is inherently riskier).Airbag is more risk averse.

What happens when I click "Start Trading" in my dashboard?

First you will go through a couple of screens to confirm your actions and make sure you understand what you do.

Once confirmed, an instance of Airbag AI will be initialized and will start to run behind the scenes on your behalf. You can then wait for the first few trades to happen, and review every so often. You don't need to take any more actions.

What is the problem with HODL?

At Airbag you will not just see "returns". That's not the right way to look at investments. If you only care about returns, regardless of risk, you might just want to "HODL" (keep your coins and never trade or sell) some coins and hope they are worth something in a few years. HODL can have the highest returns because you ride all the "up markets", but it also has the biggest falls because you have no protection against them.

A better way to think about investments is in the plane of returns vs risk. As humans, we fundamentally dislike risk, or uncertainty. For example:

  • If you had a chance to choose between a certain $20,000 prize, or a single lottery ticket with a 50/50 chance of getting either $50,000 or $0, most people would select the certain prize, even though the Expected Return of the lottery ticket is $25,000. That's because most people would value the Risk Premium of such a risky asset at more than $5,000.
  • If instead, you had a chance between a certain $1,000 prize, or a single lottery ticket with a 50/50 chance of getting either $50,000 or $0, most people would select the lottery ticket, because the Expected Return premium of $24,000 ($25,000-$1,000) is worth the risk.

We could set many more scenarios and create what is called an "indifference curve" of how risk-loving you are. HODL can give you the highest return at the highest risk. For that reason, in order to compare fairly, Airbag shows you the performance compared to the risk.

What if I lose money?

It is entirely possible that you will lose money when you make investments. Particularly crypto investments. Airbag will do the best to protect funds from volatility, but it is entirely possible that the value of your funds will fall. Remember to only invest what you can afford to lose, particularly in Crypto. Airbag is a tool that helps you manage your portfolio more efficiently, but we cannot be held responsible for your gains and losses.

What is the Stop Trading button?

When you click that button, Airbag will stop trading.

At that point you take control over any trades, on the Binance site (you cannot manually trade directly on Airbag).

Can I choose the "algorithm"?

No. When you let Airbag operate, we are automatically using our most up to date algorithm to trade on your behalf. No complex configurations, just like when you invest in traditional funds.

In the future we might have independent algorithms for different levels of risk where you will select your risk level. In these first versions, there are no additional options.

If you are looking for more configuration and to put your own ideas into an algorithm, there are some online platforms where you can build your own strategies. Airbag is for the other 99% of us who just want to be well taken care of, with a great machine learning behind it, billions of data points, mass simulations and back testing of the strategies, all available with one click and no complications.

How often do you update the algorithm?

Our team is continuously testing new angles and updating new data sources (both technical and fundamental) to improve the current strategy. We backtest and simulate thousands of scenarios and update the algorithm whenever we have a high level of confidence in the performance of the update.

If there is a very significant change in the algorithm (e.g. trading new coins), we will ask you to reinitiate the bot (stop and start).

What if I don't have a Binance account?

At the moment Airbag only works with Binance. We might add other exchanges in due time. So for now if you would like to use Airbag, you will need to register on Binance.

Is your AI really AI?

We use Convolutional Deep Q-Reinforcement Learning. Our algorithms are proprietary.
The inputs that go into the Neural Network are mostly from Technical Analysis, with some Fundamental, Sentiment and Blockchain indicators.
The reasons to use AI is so that we avoid emotional decisions and biases.

We will share regular blog posts with our learnings and approach to deep learning.

Who are you?

We are a small team of enthusiasts who lost money with crypto and have no time for trading. We just wanted to have our own funds taken care of. You can read our About Us page. We are based in Madrid, Spain.

Or contact us through email: hello@airbag.ai

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