Frequently asked questions

Full Transparency . Hiding Nothing.

Investors in the blockchain space face unique risks that are not present in traditional financial markets. Smart contracts, in particular, are an important part of the blockchain ecosystem. They allow investors to make automated transactions without the need for middlemen. However, the reliability and security of smart contracts are critical, as they can be directly responsible for the management of investors' funds.

That's why a third-party audit is crucial when investors use a smart contract on the blockchain. An independent audit helps to identify and mitigate risks associated with the smart contract's functionality and security. The audit should cover all aspects of the smart contract, including code review, security assessment, and functionality testing.

At Libertify, we take the security and reliability of our smart contracts very seriously. As a result, we had an impartial third party audit our vault smart contract, and we are pleased to report that we received a perfect score of 9.7 out of 10. This score is a testament to our commitment to providing our users the highest level of security and reliability.

You can download and read the 20 pages audit from the reputable HACKEN auditors.

In conclusion, a third-party audit is essential for ensuring the security and reliability of smart contracts on the blockchain. At Libertify, we prioritize the safety and security of our investors, which is why we had our smart contract audited by an independent third party. We're committed to maintaining the highest standards of security and reliability in the blockchain space, and we will continue to take all necessary measures to protect our investors' assets.

The goal of this article is to provide an in-depth understanding of Libertify crypto seatbelt feature.

With the crypto seatbelt, we aim to “reduce the risks associated with crypto investment and securely accompany the investor to build wealth safely.”

We rely on three pillars:

1- A risk scoring engine

The primary goal is to obtain a better knowledge of who the investors are by constantly tailoring the experience to their specific traits. To do this, we create a sophisticated AI with the best interests of the investors in mind.

Customers are subjected to a risk assessment during the onboarding process. That is when their Libertify journey begins. It is their conscious self, or, more accurately, a distorted representation of who they feel they are at that moment.

We believe that realities may alter dependent on market environment as well as other unrelated external variables. Our objective is to adjust our advice depending on the investor’s surrounding environment, which is always changing and is often unique. As a result, we create a custom neural network based on the characteristics of each individual investor, and we keep feeding it with data points produced from their Libertify activities.

We look at the following type of events:

· Investor’s portfolio content

· Investor’s past trades

· Portfolio composition

· Tokens characteristics

· Market context (macro and micro)

· Market sentiments

· Investor’s interactions with Libertify advice

· Lookalike / clustering methods

An investor’s risk score is likely to fluctuate on a regular basis as a consequence of their behavior on Libertify. An investor-specific neural network generates this score change. The Libertify financial algorithm uses this score to figure out how much of each of the investor's assets to put on the market each day.

2- Financial market algorithm

We modeled our recommendation algorithm using three timeless evidence and methodologies that have worked across all asset classes and for more than two thousand years of trading assets.

· Trend following

· Momentum

· Mean reversing — Contrarian strategy

We believe that markets are far from efficient and that prices represent the current reality. Randomness exists because there are a lot of moving parts and a lot of people taking part.

In theory, you could use math to figure out how much all of the parts add up to, but since the number of pieces is infinite, you can't be sure what the price will be in the future.

From this idea, we prefer the probabilistic method for figuring out how likely it is that the next event will happen within a day, which is a good timeframe for small investors.

The market is unpredictable and driven by at least two macro forces:

(1) Rational expectations and (2) Reflexivity (theorized by George Soros), which is not only based on fact (fundamentals), but also on the perception of reality.

This financial market dynamic worsens when leverage and cheap credit come into play. This is because leverage and cheap credit make price action bigger, creating a new reality that changes and affects how market participants see things.

The passage of time produces Boom-Bust cycles that are prevalent in cryptocurrency markets. Trend following is an effective method for harnessing the Boom cycle, which takes time to develop. Trend following is not a kind of forecasting, passive index investing, buy-and-hold, or fundamental research. It uses heuristics, or explicit rules, to benefit from a behavioral perspective. Following trends is straightforward, uncomplicated, and evidence based.

Boom-Bust cycles are established on longer timeframes, although analogous swings on a shorter timescale may be examined as a mean reversing pattern.

Mean reversal capitalizes on large price movements assuming they would return to their original state. It is mostly a statistical market occurrence.

Libertify uses a financial algorithm to look at each asset and then turns the resulting signals into investor-specific recommendations that take risk into account. With the trend-following strategy, our method is based on probabilities. It is stochastic when it comes to measuring the strength of price action, and it is opportunistic when it comes to taking advantage of bounces and letting the market breathe with its mean-reversing technique.

3- An A.I. as the nudging engine

The main part is the "nudging engine," which gets investors to act by getting rid of cognitive biases that lead to inaction and bad economic decisions. Investors are subject to inertia. They'd rather keep doing what they're already doing; unless they're pushed hard to change, they stick with the default choice. Inertia also has to do with our beliefs. We tend to be resistant to changing the way we think. Due to inertia or status quo bias, investors delay making a move (to preserve their portfolio or catch a recovery) even if they know they should.

Today, investors have access to a lot of real-time market data and can get analysis from journalists, experts, and people with a lot of influence. Therefore, a lack of data does not prevent decision-making.

Noise is the primary element stopping investors from making the proper decision. How can an investor who isn't a professional decide what to do when there are so many different, well-supported opinions that may come from different points of view? Or a different risk profile?

Only a mechanical solution, such as an artificial intelligence, can eliminate noise and provide objective and probabilistic advice in a disciplined way, without any desire to manipulate the data.

People's subjective opinions and the noise around them are the two main reasons why their decisions don't do as well as simple, consistent rules that are statistically likely and objectively probable.

Libertify develops its own Natural Language Processing (NLP) model that leverages linguistics and computer science to make human language intelligible to machines. With natural language processing (NLP), Libertify processes pertinent information in a matter of seconds by machine learning and artificial intelligence to automatically examine enormous unstructured data sets.

Hence, writing recommendations can be automated, translating data into precise and actionable language. This makes generating complicated financial advice quicker while maintaining accuracy and consistency.

We are currently compiling a collection of expressions that precisely convey the interpretation of quantitative and technical information derived from various financial indicators.

The solution does not involve adopting a language unique to Libertify, which interprets financial signals. Indeed, our solution considers investors' psychology and risk profile.

The artificial intelligence uses a vocabulary of emotions and a variety of adjectives to add to the richness of the phrases and make the nudges even more specific to the customer's profile.

Using a reinforcement learning method, a loopback mechanism improves the AI by figuring out how often an investor follows a recommendation.

Libertify develops and implements a reinforcement learning system for rewarding positive behaviors (accepting advice) and penalizing undesirable ones (failing to follow the advice when ignoring or dismissing suggestions). This strategy provides positive values to desirable behaviors to encourage investors and negative values to undesirable ones. This instructs the investor to seek the greatest possible long-term return to find the ideal answer.

Conclusion

This article popularizes Libertify’s framework for reducing the cognitive biases that all investors are vulnerable to. Along with a lack of discipline, these biases are one of the main reasons why most investors don't do well with volatile financial assets like stocks and the cryptocurrency market.

After suffering a substantial financial loss, the investor chooses the Buy-and-Hold investment strategy out of spite. Nevertheless, Buy-and-Hold is a suboptimal investing strategy since it considers market losses the same as market rises, leaving the investor completely exposed.

Libertify is a simple solution for all investors that considers human psychology, market volatility, and the discipline that enables over time to outperform the performance of Buy&Hold while drastically decreasing its volatility and falls that may cause investors to panic.

We based our recommendation algorithm on three pieces of evidence and methods that have worked for more than two thousand years and across all asset classes.

· Trend following

· Momentum

· Mean reversing — Contrarian strategy

We believe that markets are far from being efficient and that prices represent just the current reality. Due to the number of moving components and the number of active participants, randomness exists.

Even though the total of the components could be mathematically described in theory, the complexity prohibits the capacity to reliably anticipate the future price since the number of pieces is endless.

From this concept, we prefer the probabilistic method for assessing the likelihood that the next event will occur within a period appropriate for retail investors: a daily timeframe.

The market is unpredictable and driven by at least two macro forces:

(1) Rational expectations and

(2) Reflexivity (theorized by George Soros),

which is not only based on facts (fundamentals), but also on the perception of reality.

This financial market dynamic is exacerbated when leverage and inexpensive credit enter the picture, amplifying price action to create a new reality that alters and influences market participants’ views.

The passage of time produces boom-bust cycles that are prevalent in cryptocurrency markets.

Trend following is an effective method for harnessing the Boom cycle, which takes time to develop. Trend following is not a kind of forecasting, passive index investing, buy-and-hold, or fundamental research. It uses heuristics, or explicit rules, to benefit from a behavioral perspective. Following trends is straightforward, uncomplicated, and evidence-based.

Boom-Bust cycles are established on longer timeframes, although analogous swings on a shorter timescale may be examined as a mean reversing pattern.

Mean reversal capitalizes on large price movements with the assumption that they would return to their original state. It is mostly a statistical market occurrence.

Libertify employs a financial algorithm to examine each asset and converts the resultant signals into risk-adjusted, investor-specific recommendations. Our method is probabilistic with the trend-following strategy, stochastic in measuring the strength of price action, and opportunistic in capturing rebounds and market breath with its mean-reversing technique.

The primary goal is to obtain a better understanding of who you are by constantly tailoring the experience to your specific traits. To accomplish this, we developed a sophisticated artificial intelligence with the best interests of the investors in mind.

You are ask to complete a short but meaningful risk assessment quiz during the onboarding process. That is when your Libertify journey begins. It is your conscious self, or, more accurately, a distorted representation of who you feel you are at that moment.

We believe that realities may alter depending on market environment as well as other unrelated external variables.

Our objective is to adjust our advice depending on your surrounding environment, which is always changing and often unique. As a result, we create a custom neural network based on the characteristics of each individual investor, and we keep feeding it with data points produced from your Libertify activities.

We look at the following types of events:

· Your portfolio content

· Your past trades

· Portfolio composition

· Tokens characteristics

· Market context (macro and micro)

· Market sentiments

· Your interactions with Libertify advice

· Lookalike/clustering methods

Your risk score is likely to fluctuate on a regular basis as a consequence of your behaviors on Libertify. Your neural network generates this score change. The Libertify financial algorithm uses this score to determine daily position sizing in order to expose you to the market for each of his assets.

The risk/reward ratio marks the prospective reward an investor can earn for every dollar they risk on an investment. Many investors use risk/reward ratios to compare the expected returns of an investment with the amount of risk they must undertake under market uncertainty.

Traders often use this approach to plan which trades to take, and the ratio is calculated by dividing the amount a trader stands to lose if the price of an asset moves in an unexpected direction (the risk) by the amount of profit the trader expects to have made when the position is closed (the reward).

The risk/reward ratio is often used as a measure when trading individual stocks and crypto assets.

At Libertify, the risk-reward ratio is calculated in realtime for you and is compared with your risk tolerance to understand if or what advice should be delivered.

All investments involve some degree of risk.

In finance, risk refers to the degree of uncertainty and/or potential financial loss inherent in an investment decision. In general, as investment risks rise, investors "expect" higher returns to compensate themselves for taking such risks. But it does not always work like that.

Every investment product has different risks and returns. Differences depend on: how readily investors can get their money when they need it, how fast their money will grow, and how safe their money will be.

Wrapped Ethereum, or Wrapped ETH for short, is what WETH stands for. It is an ERC-20 token. The ERC-20 protocol is used by all tokens made on Ethereum, except for ETH, which is not part of this protocol.

A smart contract on the Ethereum network lets users wrap ETH into WETH. This makes ETH easier to use. This is called "wrapping," and when it's done, WETH tokens are made.

The main benefit of using WETH is that it lets users hold ETH in a more compatible token format.

WETH can be used on decentralized exchanges and to buy goods and services where WETH is accepted as payment.

Your WETH will always be exchangeable for ETH at a 1:1 ratio.

You can find the token contract for WETH here.

You can't have more or less ETH in the contract than what was put in. The code says that you will be able to withdraw each and every ETH you put into the contract.

You can find a good article here.

Libertify is neither a crypto exchange nor a wallet. Therefore, we do not hold or have access to your funds.

When you sign up with Libertify, we ask you to connect your wallet or exchange where you hold your funds. This verified connection gives Libertify permission to conduct authorized trades on your behalf. However, you don't grant us withdrawal rights. Hence your funds cannot leave your account.

You can only deposit funds to your wallet or crypto exchange account (Binance, Kraken, Coinbase, etc.). Once added, we will sync the updated data with your Libertify account. Afterward, you will see your full portfolio on Libertify.

As soon as the funds appear in your Libertify account, you can protect them. If you already set up 100% protection, Libertify will apply it across all assets at the next daily rebalancing. The time of rebalancing can be modified in your account in the Advice Settings.

Libertify aims to protect your wealth by offering a tailored risk-adjusted strategy based on your risk profile and owned assets.

However, we cannot guarantee the full money recovery. The actual performance depends on:

  • Amount of time you've been using our platform;

  • Market volatility;

  • A number of accepted recommendations. However, if you don't refuse our trades, you may recover your money.

Libertify is designed to protect portfolios from large drawdowns but can also provide returns to users if they follow the platform's recommendations or leverage automated trades.

Investors in the blockchain space face unique risks that are not present in traditional financial markets. Smart contracts, in particular, are an important part of the blockchain ecosystem. They allow investors to make automated transactions without the need for middlemen. However, the reliability and security of smart contracts are critical, as they can be directly responsible for the management of investors' funds.

That's why a third-party audit is crucial when investors use a smart contract on the blockchain. An independent audit helps to identify and mitigate risks associated with the smart contract's functionality and security. The audit should cover all aspects of the smart contract, including code review, security assessment, and functionality testing.

At Libertify, we take the security and reliability of our smart contracts very seriously. As a result, we had an impartial third party audit our vault smart contract, and we are pleased to report that we received a perfect score of 9.7 out of 10. This score is a testament to our commitment to providing our users the highest level of security and reliability.

You can download and read the 20 pages audit from the reputable HACKEN auditors.

In conclusion, a third-party audit is essential for ensuring the security and reliability of smart contracts on the blockchain. At Libertify, we prioritize the safety and security of our investors, which is why we had our smart contract audited by an independent third party. We're committed to maintaining the highest standards of security and reliability in the blockchain space, and we will continue to take all necessary measures to protect our investors' assets.

How to get Gate.io API Key and Secret Key

Login to Libertify and navigate the Accounts tab within the settings page. We need 3 primary pieces of information: the exchange you’ll be using, your API Key, and your API Secret key.

Let's go!

  • Login to Bitfinex

  • Navigate to the top right of your page

  • Click on the Account button as signaled below in the red square

  • Select API Keys in the dropdown menu

Next Step

You will be forwarded to the next page where you need to click on Create API Key as highlighted below by the red square:

Next Steps

  1. Choose name of your API Key in Label that you can find in the down right corner as highlighted by the red square

  2. Manage permission, put the toggle on where necessary

  3. Click Generate API Key

Next Step

Pass 2FA check.

After, you will see your API key and API secret. Copy these values into Libertify:


You will be notified of a successful connection.

Once you have successfully linked your API keys, data should appear in your account dashboard. If it does appear immediately, please wait up to 15 minutes for the info to load. If you still experience issues, please contact us at hi@libertify.com.

How to get Gate.io API Key and Secret Key

Login to Libertify and navigate the Accounts tab within the settings page. We need 3 primary pieces of information: the exchange you’ll be using, your API Key, and your API Secret key.

Let's go!

  • Login to Gate.io

  • Navigate to the top right of your page

  • Click on the Account button as signaled below in the red square

  • Select API Management in the dropdown menu

Next Step

You will be forwarded to the next page where you need to click on Create API Key as highlighted below by the red square:

Now, create a name for your API label in Remark. You can choose any name but it helps to call it Libertify:

The permissions required are:

  • Spot/Margin Trade - Read and Write

  • Wallet - Read Only

In IP Permissions, input Pre Populated IP address provided by Libertify:

Next Step

Complete 2FA Verification:

Next Step

Copy Key and Secret that are highlighted by red square into Libertify:

You will be notified of a successful connection.

Once you have successfully linked your API keys, data should appear in your account dashboard. If it does appear immediately, please wait up to 15 minutes for the info to load. If you still experience issues, please contact us at hi@libertify.com.

How to connect MetaMask

Desktop

You must have the MetaMask extension installed in your browser.

  • select the first option - ‘MetaMask’;

  • confirm connection to Libertify in MetaMask

Now you can operate with Libertify in your desktop browser and confirm transactions through the MetaMask extension.

Internal browser - iOS and Android

The best way to connect the MetaMask app to Libertify on your mobile phone is by using the MetaMask app’s internal browser.

  • Open the MetaMask app on your mobile phone;

  • click on the ‘menu’ button in the upper left corner;

  • select ‘browser’;

  • click on the header and type Libertify in the URL field;

  • on Libertify app choose Connect, then Wallet select ‘MetaMask’.

You can now use the MetaMask internal browser for interaction with Libertify.

WalletConnect

To connect the Metamask app on your mobile phone to a browser on your desktop, use the 'WalletConnect' option.

  • In a desktop browser, go to Libertify app;

  • click on Connect, then Wallet and choose 'WalletConnect'. A QR code will be displayed on the screen;

  • on your mobile phone, open the MetaMask app;

  • click on the "menu" button in the upper left corner;

  • select "wallet";

  • in the upper right corner, click on the ‘QR-code scanner’ icon and point the phone’s camera to the QR code on the screen;

  • confirm connection on your phone.

Interact with Libertify in your desktop browser and confirm transactions from your phone.

To configure API key correctly please follow the instructions outlined below.

How to configure API keys

  1. Incorrectly configured API keys can lead to the loss of all funds at an exchange. Please pay attention to the following points and handle API keys very carefully, just like your passwords;

  2. When creating a new API key, always assign only the required permissions;

  3. Libertify requires keys with read and trade permissions;

  4. Make sure that your keys have withdrawal permission;

  5. Use an API key only with a single service (like Libertify). Using one key for multiple services will always result in errors;

  6. All API secrets stored at Libertify are encrypted and cannot be viewed or decrypted by our employees. We will never ask you for keys with permissions other than 'read’ and ‘trade’;

  7. Some exchanges allow whitelisting of IPs. This increases the security of your key. You can find IPs used by Libertify here;

  8. Do not write down API keys and secrets locally on your computer or in the cloud;

  9. If your browser automatic saves form data and passwords, make sure that your API secrets are not stored;

  10. Never share your keys with services you don't trust;

  11. A few exchanges do not have any API permissions and each key has full access. Avoid such insecure exchanges and switch to trustworthy exchanges.

‘Diamond hands’ is a term coined by traders who were active Reddit users.

What exactly does diamond hands mean?

Commonly depicted in this emoji form (see below), ‘diamond hands’ refers to someone who has a high-risk tolerance and can stomach high volatility of assets that they own.


Diamond hands don’t surrender under pressure and keep the assets no matter what, essentially.

Is there more to diamond hands?

Well, other than the literal explanation of why it’s called diamond hands is because they continue holding on to the assets until they become valuable, like a diamond.

Bear markets are characterized as a period of time where supply is higher than demand. In other words, people sell more than they buy. Traders and investors who are pessimistic and believe the prices will continue to plummet are known as "bears."

Bull market is a market situation when the demand is greater than supply. In other words, people buy more than they sell. Traders and investors who are optimistic about the market and confident the prices will trend upwards are referred to as "bulls."

The difference between the bull market (on the left) and bear market (on the right):

Buy the dip is means purchasing an asset at a much lower price. The belief stands that the new price represents a bargain as the" dip" is only a short- term blip and the asset value will rise again.

Like many other trading strategies, buying the dips does not guarantee profits. An asset can drop for many reasons, including changes to its underlying value. Just because the price is cheaper than before doesn't necessarily mean the asset represents good value. The problem is that the average investor has very little ability to distinguish between a temporary drop in price and a warning signal that prices are about to go much lower.

While there may be unrecognized intrinsic value, buying additional shares simply to lower an average cost of ownership may not be a good reason to increase the percentage of the investor's portfolio exposed to the price action of that one stock.


The goal of this article is to provide an in-depth understanding of Libertify crypto seatbelt feature.

With the crypto seatbelt, we aim to “reduce the risks associated with crypto investment and securely accompany the investor to build wealth safely.”

We rely on three pillars:

1- A risk scoring engine

The primary goal is to obtain a better knowledge of who the investors are by constantly tailoring the experience to their specific traits. To do this, we create a sophisticated AI with the best interests of the investors in mind.

Customers are subjected to a risk assessment during the onboarding process. That is when their Libertify journey begins. It is their conscious self, or, more accurately, a distorted representation of who they feel they are at that moment.

We believe that realities may alter dependent on market environment as well as other unrelated external variables. Our objective is to adjust our advice depending on the investor’s surrounding environment, which is always changing and is often unique. As a result, we create a custom neural network based on the characteristics of each individual investor, and we keep feeding it with data points produced from their Libertify activities.

We look at the following type of events:

· Investor’s portfolio content

· Investor’s past trades

· Portfolio composition

· Tokens characteristics

· Market context (macro and micro)

· Market sentiments

· Investor’s interactions with Libertify advice

· Lookalike / clustering methods

An investor’s risk score is likely to fluctuate on a regular basis as a consequence of their behavior on Libertify. An investor-specific neural network generates this score change. The Libertify financial algorithm uses this score to figure out how much of each of the investor's assets to put on the market each day.

2- Financial market algorithm

We modeled our recommendation algorithm using three timeless evidence and methodologies that have worked across all asset classes and for more than two thousand years of trading assets.

· Trend following

· Momentum

· Mean reversing — Contrarian strategy

We believe that markets are far from efficient and that prices represent the current reality. Randomness exists because there are a lot of moving parts and a lot of people taking part.

In theory, you could use math to figure out how much all of the parts add up to, but since the number of pieces is infinite, you can't be sure what the price will be in the future.

From this idea, we prefer the probabilistic method for figuring out how likely it is that the next event will happen within a day, which is a good timeframe for small investors.

The market is unpredictable and driven by at least two macro forces:

(1) Rational expectations and (2) Reflexivity (theorized by George Soros), which is not only based on fact (fundamentals), but also on the perception of reality.

This financial market dynamic worsens when leverage and cheap credit come into play. This is because leverage and cheap credit make price action bigger, creating a new reality that changes and affects how market participants see things.

The passage of time produces Boom-Bust cycles that are prevalent in cryptocurrency markets. Trend following is an effective method for harnessing the Boom cycle, which takes time to develop. Trend following is not a kind of forecasting, passive index investing, buy-and-hold, or fundamental research. It uses heuristics, or explicit rules, to benefit from a behavioral perspective. Following trends is straightforward, uncomplicated, and evidence based.

Boom-Bust cycles are established on longer timeframes, although analogous swings on a shorter timescale may be examined as a mean reversing pattern.

Mean reversal capitalizes on large price movements assuming they would return to their original state. It is mostly a statistical market occurrence.

Libertify uses a financial algorithm to look at each asset and then turns the resulting signals into investor-specific recommendations that take risk into account. With the trend-following strategy, our method is based on probabilities. It is stochastic when it comes to measuring the strength of price action, and it is opportunistic when it comes to taking advantage of bounces and letting the market breathe with its mean-reversing technique.

3- An A.I. as the nudging engine

The main part is the "nudging engine," which gets investors to act by getting rid of cognitive biases that lead to inaction and bad economic decisions. Investors are subject to inertia. They'd rather keep doing what they're already doing; unless they're pushed hard to change, they stick with the default choice. Inertia also has to do with our beliefs. We tend to be resistant to changing the way we think. Due to inertia or status quo bias, investors delay making a move (to preserve their portfolio or catch a recovery) even if they know they should.

Today, investors have access to a lot of real-time market data and can get analysis from journalists, experts, and people with a lot of influence. Therefore, a lack of data does not prevent decision-making.

Noise is the primary element stopping investors from making the proper decision. How can an investor who isn't a professional decide what to do when there are so many different, well-supported opinions that may come from different points of view? Or a different risk profile?

Only a mechanical solution, such as an artificial intelligence, can eliminate noise and provide objective and probabilistic advice in a disciplined way, without any desire to manipulate the data.

People's subjective opinions and the noise around them are the two main reasons why their decisions don't do as well as simple, consistent rules that are statistically likely and objectively probable.

Libertify develops its own Natural Language Processing (NLP) model that leverages linguistics and computer science to make human language intelligible to machines. With natural language processing (NLP), Libertify processes pertinent information in a matter of seconds by machine learning and artificial intelligence to automatically examine enormous unstructured data sets.

Hence, writing recommendations can be automated, translating data into precise and actionable language. This makes generating complicated financial advice quicker while maintaining accuracy and consistency.

We are currently compiling a collection of expressions that precisely convey the interpretation of quantitative and technical information derived from various financial indicators.

The solution does not involve adopting a language unique to Libertify, which interprets financial signals. Indeed, our solution considers investors' psychology and risk profile.

The artificial intelligence uses a vocabulary of emotions and a variety of adjectives to add to the richness of the phrases and make the nudges even more specific to the customer's profile.

Using a reinforcement learning method, a loopback mechanism improves the AI by figuring out how often an investor follows a recommendation.

Libertify develops and implements a reinforcement learning system for rewarding positive behaviors (accepting advice) and penalizing undesirable ones (failing to follow the advice when ignoring or dismissing suggestions). This strategy provides positive values to desirable behaviors to encourage investors and negative values to undesirable ones. This instructs the investor to seek the greatest possible long-term return to find the ideal answer.

Conclusion

This article popularizes Libertify’s framework for reducing the cognitive biases that all investors are vulnerable to. Along with a lack of discipline, these biases are one of the main reasons why most investors don't do well with volatile financial assets like stocks and the cryptocurrency market.

After suffering a substantial financial loss, the investor chooses the Buy-and-Hold investment strategy out of spite. Nevertheless, Buy-and-Hold is a suboptimal investing strategy since it considers market losses the same as market rises, leaving the investor completely exposed.

Libertify is a simple solution for all investors that considers human psychology, market volatility, and the discipline that enables over time to outperform the performance of Buy&Hold while drastically decreasing its volatility and falls that may cause investors to panic.

What Is a Risk-Adjusted Performance?

Risk-adjusted performance measures the profit from investment by accounting for the degree of risk the user has taken. The goal for risk adjusted performance therefore is to adjust your risk to maximize your every return.

How to Measure Risk-Adjusted Performance

To underdand the full and true value of Libertify's Risk adjustment performance it best to read this article first.

Libertify also uses the Sharpe ratio, one of the most common risk measures used in the investing world.

What is the Sharpe Ratio

The Sharpe ratio is a measure of the excess return (or risk-adjusted return) of an investment relative to its risk. A higher Sharpe ratio indicates that an investment has provided higher returns for the amount of risk taken.

Some of the benefits of having a higher Sharpe ratio are:

  1. Improved risk-adjusted returns: A higher Sharpe ratio means that an investment has generated higher returns per unit of risk. This makes it a more attractive investment option as it offers a better balance of risk and reward.

  2. Better performance evaluation: The Sharpe ratio is a useful tool for evaluating the performance of an investment relative to a benchmark or to other investments. A higher Sharpe ratio means that an investment has outperformed its peers or the benchmark.

  3. Better decision making: A higher Sharpe ratio can help investors make better investment decisions. By comparing the Sharpe ratios of different investments, investors can identify the ones that offer the best risk-adjusted returns.

  4. Better portfolio diversification: The Sharpe ratio can be used to assess the risk-adjusted returns of a portfolio. A higher Sharpe ratio means that the portfolio has generated higher returns per unit of risk, which can help improve overall portfolio performance.

Overall, a higher Sharpe ratio is generally seen as a positive indicator of investment performance, and is a useful tool for investors seeking to maximize risk-adjusted returns.

Sharpe Ratio is calculated by taking the return of the investment, subtracting the risk-free rate, and dividing this result by the investment's standard deviation.

How is the sharp ratio calculated?

What Is Standard Deviation?

Standard deviation refers to the volatility of the portfolio.

For example, top 23 crypto coins can generally rise and fall by about 5% per day over 90-day period. This 5% is their volatility, or standard deviation.

Example of Sharpe Ratio Calculation

Say you invested in cryptocurrency A that has a volatility (standard deviation) of around 20%, risk-free rate of 5%, and average rate of return of 15%.

In this case, your Sharpe ratio will be calculated in the following way:

Sharpe = (0.15 - 0.05)/0.2 = 0.5

Your Sharpe ratio is equal to 0.5 which is considered bad, meaning you are taking too much risk.

Now, you started using Libertify and your volatility was cut in half. Now, volatility is equal to 10%, thus Sharpe ratio will be calculated differently:

Sharpe = (0.15 - 0.05)/0.1 = 1

Your Sharpe ratio is now 1, which is considered good. It means you are taking an appropriate amount of risk.







What is Buy and Hold?

"Buy and Hold" is a strategy that allows investors to buy and hold assets for an extended period, without a specific exit point planned. This is a passive strategy and most efficient during bull cycles. It also implies not selling when markets go down or become volatile.

Hodl'ing!

To HODL is a term originating from a typo of "hold". It is crypto slang meaning to "Hold On for Dear Life", basically buy-and-holding almost indefinitely no matter what.

Buy and Holding is essentially a belief that if the current price of an asset is below your entry price, it will eventually surpass it over time. Warren Buffet and and real-estate investors are good examples of Buy and Holders. They bought assets and held them to this day. Consequently, they take advantage of extended time and less volatile market cycles.

Buy and Holding is not always the best long strategy for the average investor.

Hodl'ing in highly volatile markets such as crypto requires strict discipline. In reality, strict discipline is difficult to maintain. Feelings of worry, anxiety, and capitulation (surrender) appear amongst the drawdowns and bear markets impacting financially sound decisions.

In addition to the emotional stress the buy and hold may place you in, you may need to withdraw your funds at any time. You may suddenly need the capital to live off, for a new car, a down-payment on a house, or for a kid's education. But withdrawing at this point may mean your returns are either at a minus or far less than they could have been.

Almost every crypto holder has been through all the phases of an emotional rollercoaster when HODLing: from thrill and euphoria to anxiety, capitulation, anger and depression.

Libertify has invented the Smart Buy & Hold

Libertify focuses on providing risk-adjustment investment strategies allowing you keep the long term horizon of the buy and hold but without experiencing the often severe volatility and drawdowns of the market.

The Smart Buy and Hold intelligently calculates trades according to your risk tolerance and "actively" advises you on the position you should take. Trades can be placed on your behalf, so you can continue being a passive investor, enjoying your best life, protected and worry free.







Still have questions?
Please reach out through our chat or email our team – hi@libertify.com

Helpful articles