Contributor, Benzinga
July 26, 2023
Carbon DeFi
Overall Rating:
securely through Carbon DeFi's website

Whether you’re a beginner or an experienced crypto trader, you’ve likely heard of crypto trading bots. In the highly volatile crypto market, these computer programs help you automate trades, execute strategies and navigate ever-changing market movements efficiently and effectively, ultimately maximizing profits and minimizing losses. However, most crypto trading bots operate strictly on centralized exchanges (CEX) like Binance, preventing traders from embracing the fundamental principles of cryptocurrency — decentralization and self-custody.

Carbon DeFi offers a revolutionary approach, enabling traders to seamlessly create custom trading bots on the Ethereum blockchain, facilitating non-custodial, decentralized and fully transparent automated trading strategies. Carbon is a decentralized exchange (DEX) trading protocol facilitating customizable automated crypto trading strategies with on-chain limit and range orders. You can place single orders or combine them to create a recurring strategy that automatically buys within a specific price range and sells in a higher price range using a single source of rotating liquidity (similar to grid trading).

Unlike other on-chain liquidity solutions, orders move in one direction: once you buy within your desired range, liquidity is either removed from active trading or directed to a paired sell order if you have one set up. Unlike centralized trading platforms like Binance, Carbon fully leverages blockchain technology. It brings the comfort of CEX trading to a DEX while adhering to decentralized and non-custodial principles. Read on for a comprehensive breakdown of Carbon DeFi, its core offering, pros and cons and how it compares with competitors.

Best For
  • Crypto enthusiasts seeking decentralized and transparent automated trading solutions
  • Active cryptocurrency traders who utilize trading bots and other automated trading strategies
  • Traders who prefer non-custodial platforms for added security and control over their funds
  • Strategy-based crypto traders who don't want to keep a constant eye on prices and charts
  • Those interested in customizing their trading strategies to fit their specific needs
  • Users who wish to take advantage of on-chain liquidity and limit orders for their automated trading strategies
  • Individuals looking to explore new and innovative decentralized finance (DeFi) platforms for automated trading
  • Those who spot trade or perform token swaps
Pros
  • Fully decentralized, non-custodial and permissionless
  • Customizable and automated crypto trading strategies
  • No counterparty risks
  • Users pay zero fees on their trades and only pay a small Ethereum gas fee to open/close their strategy.
  • Resistant to miner extractable value (MEV) sandwich attacks
  • Orders are easily adjustable directly on-chain at no high ETH gas cost
  • Clean, intuitive and user-friendly interface
  • Supports every standard ERC-20 token — ETH, MATIC, LINK, USDC, DAI & more
  • Instant token availability for linked orders as markets reach the desired price range — known as “rotating liquidity”
  • Carbon’s “linked orders” mimic traditional grid trading, except fully on-chain
  • Ability to scale in and out of trending markets via Carbon’s DCA bots
Cons
  • May require an understanding of DeFi protocols and strategies to optimize trading performance effectively
  • Exposure to smart contract vulnerabilities and potential security risks associated with using decentralized applications (dApps)
  • Incompatible with “rebasing” or “fees-on-transfer” tokens

Carbon DeFi Ratings at a Glance

Product Offering
Customer Service
Security
Minimum Investment and Pricing
User Experience
Overall

Carbon DeFi Product Offering

Carbon DeFi allows users to create customized trading and market-making strategies using Asymmetric Liquidity — a relatively new form of on-chain liquidity. Users can effortlessly design personalized automated crypto trading strategies, including limit and range orders, "buy low, sell high" grid trading strategies, and  "average-in" or "DCA" bots. Carbon requires zero coding, and strategies can be created in just a few clicks. 

You can input any standard ERC-20 token, specify a buy and sell range, fund your strategy with one or two tokens and let the trading bots do the work. Your strategy is automatically executed once the token price enters your chosen buy or sell ranges. The beauty of this is that it allows you to take advantage of the notorious volatility of the crypto market by automatically buying more tokens when the market dips (buy low) and selling at a higher price as the market reaches your target price (sell high). You don't need to manage your account actively. Carbon does that for you.

You can set your strategy to be recurring or disposable. Users pay zero trading or gas fees on their trades and only pay a small Ethereum gas fee to open/close their strategy. A recurring strategy comprises two linked orders trading perpetually until you terminate the strategy. You determine the strategy and have it executed repeatedly. It can be two limit orders, two range orders or a custom type comprising a limit and a range order. The recurring strategy helps you capitalize on volatility and optimize profit in varying market conditions. A disposable strategy includes a single-use order that removes tokens from active trading after execution. It could be a single limit order, e.g., sell ETH at 1,500 or a single range order, such as sell ETH between 1,450-1,500. 

Depending on your goals and risk tolerance, you can create diverse automated trading strategies with a couple of clicks and adjust them according to the market conditions. For instance, you can create a scalping trade or momentum trade that enables you to buy into rising crypto assets and gradually sell as it continues to rise. However, limit and range orders and grid trading (automated range trading) are the most popular. A limit order allows one-time irreversible trades at specific prices, while a range order enables one-time irreversible trades within specific price ranges. 

Grid trading involves buying at one price range and selling at higher price ranges repeatedly until you decide to end the strategy. You can also create automated arbitrage trading strategies. You can execute these strategies with any standard ERC-20 token and even new tokens during their most volatile periods or when they are brand new and primarily listed on DEXs. Carbon DeFi operates in a fully decentralized and non-custodial manner, eliminating the need for sign-ups and ensuring you retain complete control over your assets and have transparent access to trading activities.

Carbon DeFi Customer Service

Carbon DeFi didn't provide a formal customer service channel, which is unsurprising because it's a DeFi platform. In DeFi, no central authority or intermediary manages user accounts or transactions, meaning no customer service team handles inquiries or issues. You're responsible for managing your trades and must rely on the blockchain's transparency and security for trust and verification. 

However, you can access round-the-clock community support via instant messaging platforms like Telegram and Discord as well as social networking platforms Twitter, LinkedIn and YouTube. You can get information about the offering via the FAQ page. Carbon DeFi offers an excellent reservoir of educational and research resources via its technical documentation, GitHub repository, whitepaper, blog, litepaper and trading simulators, providing a conducive learning environment for potential traders, which is essential in cryptocurrency. 

Carbon DeFi Security

Like all DEX platforms, Carbon DeFi operates in a fully decentralized and non-custodial model, meaning you have complete control over your assets, funds and personal data. With no sign-up or sign-in required for trading activities, Carbon ensures a secure and private trading environment, eliminating the risks of data theft or fund loss. Being Bancor's flagship offering, the Carbon DeFi protocol is governed by BancorDAO via staked BNT.

Carbon DeFi Minimum Investment and Pricing

Carbon DeFi doesn't charge you for using the platform to create automated trading strategies — it is free. However, when you open and close your strategy, you must pay a small gas fee to the Ethereum network. All trades you execute within your strategy are free once your strategy is active. The reason is that users who spot trade against your strategy pay gas and trading fees for each trade execution and so bear the cost. The Carbon DeFi protocol charges a 0.2% fee on all spot trades collected by the protocol to purchase and burn the protocol's token, BNT.

Carbon DeFi User Experience

Carbon provides a user-friendly DEX website for creating and executing trading using custom and automated trading bots. Setting up a strategy requires zero coding and can be done within minutes, even if you're a newbie. All you need is a non-custodial wallet like MetaMask. For instance, say you want to set up a recurring strategy that buys ETH between 1,800 and 2,000 USDT and sells it between 2,100 and 2,300 USDT. You'll take five simple steps to set up and execute this strategy. First, you select the "Token Pair," which can be any standard ERC-20 token pair. 

The "Buy or Sell" token, also known as the "Base token," refers to the token (in this case, ETH) that you aim to buy at a low price and sell at a higher price. The "With token," also known as the "Quote token" (in this case, USDT), is the token used to denominate rates within your strategy. Once you've selected your "Token Pair," choose the "Recurring" strategy type and next, enter a Buy Range and Buy Budget. Your Buy Range is 1,800-2,000, meaning your strategy will start buying ETH at a maximum price of 2,000 and stop at a minimum price of 1,800.

You then fund your 'Buy Budget' with, say, 1,200 USDT — this will automatically convert to ETH once the ETH market price enters your buy range. Next, you enter your Sell Range and Sell Budget. Your Sell Range is 2,100-2,300, meaning your strategy will begin selling ETH at a minimum price of 2,100 and stop selling at a maximum price of 2,300. You can fund your Sell Budget with 0 ETH. It's now time to create your strategy, but before that, you must approve the Carbon contract to spend tokens on your behalf. Once approved, click "Create Strategy," and your wallet will trigger the transaction. Your strategy is now live on the Strategies page. 

You can interact with your strategy by clicking "Manage". This process enables you to perform various actions, including pausing or deleting your strategies and editing price ranges. Like all DEX platforms, Carbon DeFi doesn't require sign-up before you can get started — it is fully decentralized, non-custodial and permissionless, making it highly appealing.

Carbon DeFi vs. Competitors

Carbon DeFi has a few competitors like Uniswap and PancakeSwap, which use similar liquidity pool dynamics. Carbon DeFi distinguishes itself from these platforms in a few ways. With Carbon DeFi, user liquidity trades in a single direction, and the spot trading mechanism resists MEV. However, the most significant difference between Carbon DeFi and these platforms lies in the adopted trading strategy.  

In Uniswap and PancakeSwap, liquidity providers aim to earn trading fees higher than the cost of impermanent loss but must follow the strategy prescribed by the protocol, limiting their flexibility or autonomy. Carbon DeFi takes a radically opposite approach, offering users the freedom to customize their own buy and sell ranges based strictly on their predictions without adhering to AMM's strategy. In short, Uniswap and Pancakeswap offer protocol trading strategies, whereas in Carbon DeFi, strategies are user-defined and fully customizable. This approach makes for versatile swing trading options, enabling traders to adapt to the fast-paced market conditions of the crypto market.

  • Carbon DeFi
    Best For:
    Decentralized Automated Trading Solutions
    securely through Carbon DeFi's website
  • BlockFi
    Best For:
    No or Low Fees
    securely through BlockFi's website
  • Coinbase
    Best For:
    Active Crypto Traders
    securely through Coinbase's website

    Sum of median estimated savings and rewards earned, per user in 2021 across multiple Coinbase programs (excluding sweepstakes). This amount includes fee waivers from Coinbase One (excluding the subscription cost), rewards from Coinbase Card, and staking rewards. ³Crypto rewards is an optional Coinbase offer. Upon purchase of USDC, you will be automatically opted in to rewards. If you’d like to opt out or learn more about rewards, you can click here. The rewards rate is subject to change and can vary by region. Customers will be able to see the latest applicable rates directly within their accounts.

Overall

Carbon DeFi is a decentralized trading protocol that operates on the Ethereum blockchain, allowing users to create a wide range of custom trading strategies, including limit and range orders, grid trading, arbitrage and scalping strategies. Unlike traditional AMMs, Carbon allows users to personalize their buy and sell ranges based on their own predictions, providing traders with versatile trading options to adapt to fast-paced crypto market conditions. 

The protocol is fully decentralized and non-custodial, ensuring users maintain complete control over their assets and transparency in trading. It requires no sign-ups to get started. Carbon DeFi provides a unique and user-centric approach to decentralized trading, empowering traders with more control and flexibility. However, crypto newbies may find the platform and its concept overwhelming.

Frequently Asked Questions

Q

What is Carbon DeFi?

A

Carbon DeFi is a decentralized trading protocol on the Ethereum blockchain, empowering users to create personalized trading strategies with native on-chain limit and range orders.

Q

What is the meaning of DeFi?

A

DeFi stands for decentralized finance, a financial ecosystem built on blockchain technology that operates without traditional intermediaries like banks.

Q

Is DeFi different from crypto?

A

DeFi is a subset of the broader cryptocurrency sector, specifically focusing on decentralized financial applications and services.

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