DeFi Trading Bots: Navigating the Decentralized Finance Landscape in 2024



The world of cryptocurrencies is hard to navigate. Even experts tips and lengthy articles about different tokens and their use cases do not help newcomers to familiarize themselves with hundreds of DeFi coins that saturate the market making it hard for users to focus on a single asset. On the other hand, the current landscape of the decentralized finance ecosystem suggests that retail traders should not focus on a single asset and instead trade a variety of tokens.

Recently, many providers of trading instruments started offering unique tools to work with a wide range of assets simultaneously. For example, WunderTrading rolled out its AI trading bot that runs a diversified portfolio using the statistical arbitrage approach to regulate the composition of assets based on your preferences and capital size.

Other interesting products allow users to make small profits consistently by running grid bots for assets with fluctuating prices. You can also run a custom automated trading system to benefit from the diversity of options presented in the crypto ecosystem. The only problem is that you cannot run bots on decentralized exchanges (DEX), but using them for retail trading is not convenient anyway.

The perfect time to use automated DeFi strategies

The approval of Bitcoin ETFs by the US government is a controversial step regardless of which stance you have on the cryptocurrency issue. Many BTC enthusiasts do not like the idea of additional regulation and the influx of large financial institutions in the ecosystem even if it means wider adoption and higher liquidity. On the other hand, people who distrust the idea of decentralized currencies also don’t feel safe investing in these new ETFs.

The arrival of investment funds made it clear that Bitcoin can be hoarded by large capital holders and scarcity is something that indeed may affect the ecosystem in the future. However, the tightening of the Bitcoin market means that other tokens have a chance to shine and present an alternative for those who do not want to deal with centralized regulation and potential price manipulation in a heavily institutionalized BTC market.

DeFi trading bots will be quite popular in an ecosystem that has a plenty of choices and high trader activity. With the potential for many DeFi markets to explode in popularity due to the reshaping of the crypto industry landscape, you should keep an eye on a variety of automated trading systems that can be very profitable.

Here are some of the ways you can employ automation in the decentralized finance ecosystem:

  • Yield farming bots in 2024. Lending your assets to various DeFi platforms is a valid strategy if you believe in the utility offered by a certain platform that offers you returns on investments. Automated systems can find the best yields and most lucrative deals.
  • Liquidity farming bots in 2024. Supplying your assets to liquidity providers or providing it yourself is another good way of making profits in the crypto ecosystem. Again, automation can be quite useful to facilitate market making and liquidity supplying.
  • AI-powered DeFi trading and arbitrage bots for DeFi. Expert AI systems with advanced machine learning algorithms are making themselves heard loud and clear with many companies rolling out new products allowing retail traders to build dynamic portfolios automatically adjusted based on the current market situation.
  • Custom DeFi trading bots. If you want to engage in “traditional” automated trading and work with a large variety of altcoins, you will be able to do so effortlessly thanks to the overall improvements in UX/UI made by many automation vendors. Setting up and running a complex ATS has never been easier.

The influx of cash brought by a wave of new large institutional investors in the market for Bitcoin is something that will have a ripple effect in the larger crypto ecosystem. The Bitcoin dominance should soon encourage many retail traders and DeFi enthusiasts to engage with other tokens with a reinvigorated passion.

It should also be noted that new DeFi protocols are introduced every month allowing some adventurous retail traders to make good money on trading new tokens even if they do not promise to have any legs and may vanish in a couple of weeks. Trading such coins is a huge risk that comes with a nice potential reward.

Which tokens should you trade?

Many newcomers and unconvinced potential investors do not fully understand the idea behind smart contracts and tokens. A smart contract is a tiny program that works within a certain network powered by the blockchain technology to provide some utility like transferring funds and assets, securing certain contractual obligations, or providing immutable records to virtual ledgers. Depending on its use case, a token can be very popular or have limited applications.

While it does not seem overly complicated at first, many retail traders soon realize that the variety of tokens with different functionalities and the simultaneous saturation of the market with multiple DeFi platforms that offer similar utility can be overwhelming. Choosing the right token for trading is a challenge and presents unique risks of DeFi bot trading since the level of local economic uncertainty is so high.

Nevertheless, you can trade some tokens quite successfully as they proved to be very robust and stable after years of existence in the vast crypto ecosystem.

Monero (XMR) for people who want anonymity

One of the biggest thematic opponents of the portion of the crypto community that would not mind some regulation, Monero is often used on the gray and black market due to its complete anonymity and ability to launder money quickly and effortlessly. While many investors do not support this particular token due to ethical reasons, it is still a very lucrative coin to trade for people who want to engage in speculative trading.

The development team behind Monero has taken a stern stance and won’t stray from the core idea behind this decentralized, fully anonymous cryptocurrency allowing users to take full control over their finances.

The price of the asset has been quite stable with an acceptable level of volatility and visible attention from all kinds of investors.

Ripple (XRP) is still fighting for its spot in the ecosystem

Despite many setbacks and a controversial battle against the SEC, Ripple is doing just fine with price going up slightly throughout the whole 2023. Ripple is a real-time gross settlement financial service working with all sorts of financial institutions and DeFi protocols to deliver a seamless experience to people interested in using their tokens alongside fiat currencies.

XRP is a very interesting asset to work with. It has short periods of volatility, but prices usually do not fluctuate too much except moments when they do. Avoiding moments of unpredictability and trading with grid bots and similar algorithmic approaches is a good strategy for trading Ripple tokens. However, the long term perspective of this particular protocol is uncertain.

Cardano (ADA) is riding a new wave of popularity

After a period of reinvigorated growth caused by the Ethereum merge in the end of 2022, Cardano has been slowly disappearing from the public discourse until the news about the Bitcoin ETF approval hit the crypto community. As expected by many, the effect of the event was quite positive for many altcoins including $ADA which saw a 76% bump that occurred in just a week following the news.

Despite falling a bit from the peak, it is still going strong with many people hoping that it can regain its former glory. While relying on optimistic chattering of the community is never a good idea, you don’t have to hold the bag indefinitely like in case with Bitcoin and Ethereum. If you are interested in speculative trading, Cardano is a perfect target for your investment activities.

Many other tokens are also doing fine after the Bitcoin ETF approval. The list of altcoins that benefited from the influx of new capital to the industry includes Solana, TRON, Dogecoin, Litecoin, and many others. You can certainly find something that will work for you.

Finding the best DeFi trading platforms

Unfortunately, you won’t be able to utilize bots efficiently on decentralized exchanges. It is possible to automate trading even on P2P marketplaces, but the speed and reaction time will be significantly lower compared to what can be achieved when trading on centralized exchanges like Binance, Kraken, KuCoin, or Coinbase.

Many CEX platforms carry a wide range of altcoins that you can trade. Here are some exchanges that you may check out:

  • Coinbase is one of the most reliable US-based crypto exchanges that serves clients exclusively from North America. It is a great destination for retail traders interested in working with approved altcoins. The exchange has some strict listing rules making it hard for irresponsible developers to launch an ICO here. The company is working toward finding a good balance between implementing KYC and AML practices while maintaining crucial features of a DeFi-adjacent platform.
  • Binance has been doing well despite having some controversial issues with its management and solvency. It is still the biggest international centralized exchange by a large margin. It is unlikely that something will change in the nearest future. It appears that Binance is a great place to trade if you are interested in using a rich catalog of investment instruments and alternative ways to allocate your capital in the crypto industry.
  • Kraken is another reliable trading platform that allows third-party providers to directly connect via API which is awesome for retail traders who focus on using automation and advanced trading instruments in their financial activities. The company offers all the necessary features regarding DeFi security for bots to ensure that clients can engage with the platform and its features safely. It is recommended to use trustworthy automation vendors like WunderTrading to trade on Kraken.

Employing standard risk management practices like using delayed orders (stop loss and take profit) strategically and limiting the exposure of your portfolio to risks by reducing position sizes is quite important. Simultaneously, you should focus on other asset protection methods.

How to keep your investments safe using DeFi protocols

Automation is used not only for speculative trading, yield farming, and other forms of active investments. You can engage in DCA buying to acquire assets and build a large portfolio. However, you should know how to protect it from various technological risks.

Here are some rules to follow if you do not want to lose your tokens:

  • Use two wallet addresses for each altcoin. One is for cold storage. You want it fully separated from the world with the only connection being your second wallet address used as a temporary storage or to actively engage with DeFi protocols, exchanges, and other wallet addresses.
  • It is a good idea to hold all your long-term altcoins in cold storages. Purchasing a hardware wallet like Trezor or Ledger is a good way of securely holding your assets. Alternatively, you can simply write down your keys and keep them in a safe space where they cannot be accessed by unauthorized people.
  • Carefully check wallet addresses and website names. You don’t want to be a victim of a phishing attack or send money to a wrong wallet address. Remember that self-custody implies a level of responsibility with finances that many inexperienced investors are not familiar with.

Many centralized crypto exchanges are quite safe and won’t cause any security issues, but outside of their protection you may find yourself unable to handle DeFi tokens.

Use reliable automation providers to run an automated trading system for DeFi tokens

It is important to choose companies that offer a wide range of different services at an acceptable price and without any technical issues. Many top automation providers fit this description nicely. However, you should also look for vendors that invest in R&D to deliver new exciting products and roll out features that help investors to deal with the complexity of the cryptocurrency industry.

For example, some companies like WunderTrading employ machine learning for DeFi trading systems and create exciting products. The AI-assisted statistical arbitrage bot offered by WunderTrading is an excellent example of a groundbreaking solution for retail traders who want to stay ahead of the competition.

When selecting your trading bot platform to run automated trading systems that will be used to trade various altcoins, pay attention to how many different instances of robots you can run simultaneously without paying extra.


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