Upcoming Patache Digital Steady ETH/BTC Cellar Proposals
Goal
The goal of this forum post is to discuss the upcoming proposals asking Governance to accept the Cellar smart contracts for Patache Digital strategies:
- SteadyETH
- SteadyBTC
The two proposals will be submitted simultaneously next week. Both of the two strategies will use the same smart contract source code.
Context
Patache is a strategy development team with a background in traditional finance and risk management. For more background on Patache, see this post: Strategy Provider Spotlight: Patache Digital
Patache’s strategies are built on proprietary quantitative algorithms as a base and combined with layers of risk analysis. Our research and products emphasize principal protection and steady, consistent returns while pursuing occasional “home runs”. In addition, our efforts are focused on creating algorithms that are autodidactic that will drive better adherence to individual risk preferences.
The algorithm provides a trading edge by predicting large changes in prices a day in advance. It will also generate corresponding entry thresholds preceding such a “price break out”. For trade action on the following day the algorithm will utilize the above-mentioned entry thresholds to initiate the “Workhorse” trade order and “Racehorse” trade order. Each trade order comes with a pre-defined trade risk and capital allocation of e.g. 1.25% (each) which is used to determine the trade order quantity.
We wanted to take the opportunity to discuss these upcoming proposals with the community before the vote formally takes place next week. We are happy to answer any questions the community may have.
The two strategies will be executed on-chain by 7Seas on behalf of Patache as part of 7Seas’ strategy integration services. See the two proposals below for more information.
1. Proposal for cellar authorization for strategy SteadyETH
This proposal is for the authorization of the SteadyETH Cellar. The strategy for the cellar is provided by Patache.
SteadyETH is a long-only strategy that aims to predict large price changes in ETH, and capitalize on those predictions while ensuring long-term capital preservation. It accomplishes this by only risking a small percentage of the portfolio on any given trade. Backtesting results for SteadyETH are given in the table below. Note that backtesting results represent hypothetical performance, and historical performance is not necessarily indicative of future results.
Backtesting Results
| Beginning Cellar Value | 500,000 |
|---|---|
| Period | Period Tested: May 2021 - September 2022. |
| First Trade | 5/7/2021 |
| Last Trade | 9/10/2022 |
| No. of Trades | 72 |
| Winning Trades/Losing Trades | 40 wins/32 losses (55%/45%) |
| Best Month | 8% |
| Worst Month | -2.5% |
| Worst Loss (Single Trade) | -6,838 on 3/31/2022 |
| Worst Drawdown (Peak to trough) | 7.55% |
| Cumulative Profit | 46.6% |
| Annualized Mean Return | 27.8% |
| Annualized Std.Dev of Return | 10.4% |
| Annualized Sharpe Ratio | 267% |
For more details on the mechanics of the SteadyETH strategy, see the post: Patache Steady Strategy Light Dive | by Sommelier Finance | Nov, 2022 | Medium
We are planning on publishing further details and descriptions of the strategy over the coming weeks and through the launch.
If approved, the chain will accept signed function calls submitted to the cellar contract from the cellar manager.
Name: Steady ETH
Cellar share token: SteadyETH
Platform fee: 2% (1.5% for strategy provider + 0.5% for protocol)
Performance fee: 10% (7.5% for strategy provider + 2.5% for protocol)
Strategy provider: Patache Digital (https://twitter.com/PatacheDigital)
Cellar managed by: 7Seas https://www.7seas.capital/)
Cellar address: 0x3F07A84eCdf494310D397d24c1C78B041D2fa622
Etherscan: Cellar | Address 0x3F07A84eCdf494310D397d24c1C78B041D2fa622 | Etherscan
Source: cellar-contracts/Cellar.sol at main · PeggyJV/cellar-contracts · GitHub 1
Audits (Macro): Sommelier A-3 | Macro Audits | The 0xMacro Library 2
The strategy for the cellar is provided by Patache, including strategy development, continuous maintenance, and signal generation. 7Seas Capital has developed tooling and infrastructure as per Governance proposal SIPS-012 and will manage the proposed Cellar. Management of the Cellar means that 7Seas will act as an intermediary institution by providing strategy integration services to Patache, including forwarding strategy signals generated by Patache to be submitted on-chain for execution.
2. Proposal for cellar authorization for strategy SteadyBTC
This proposal is for the authorization of the SteadyBTC Cellar. The strategy for the cellar is provided by Patache.
SteadyBTC is a long-only strategy that aims to predict large price changes in BTC, and capitalize on those predictions while ensuring long-term capital preservation. It accomplishes this by only risking a small percentage of the portfolio on any given trade. Backtesting results for SteadyBTC are given in the table below. Note that backtesting results represent hypothetical performance, and historical performance is not necessarily indicative of future results.
Backtesting Results
| Beginning Cellar Value | 500,000 |
|---|---|
| Period | Period Tested: May 2021 -September 2022. |
| First Trade | 6/11/2021 |
| Last Trade | 9/29/2022 |
| No. of Trades | 58 |
| Winning Trades/Losing Trades | 34 wins/24 losses (58%/42%) |
| Best Month | 6.3% |
| Worst Month | -2.6% |
| Worst Loss (Single Trade) | -7,523on 6/21/2022 |
| Worst Drawdown (Peak to trough) | 5.21% |
| Cumulative Profit | 38.1% |
| Annualized Mean Return | 23.4% |
| Annualized Std.Dev of Return | 10.4% |
| Annualized Sharpe Ratio | 226% |
For more details on the mechanics of the SteadyBTC strategy, see the post: Patache Steady Strategy Light Dive | by Sommelier Finance | Nov, 2022 | Medium
We are planning on publishing further details and descriptions of the strategy over the coming weeks and through the launch.
If approved, the chain will accept signed function calls submitted to the cellar contract from the cellar manager.
Name: Steady BTC
Cellar share token: SteadyBTC
Platform fee: 2% (1.5% for strategy provider + 0.5% for protocol)
Performance fee: 10% (7.5% for strategy provider + 2.5% for protocol)
Strategy provider: Patache Digital (https://twitter.com/PatacheDigital)
Cellar managed by: 7Seas https://www.7seas.capital/)
Cellar address: 0x4986fD36b6b16f49b43282Ee2e24C5cF90ed166d
Etherscan: Cellar | Address 0x4986fD36b6b16f49b43282Ee2e24C5cF90ed166d | Etherscan
Source: cellar-contracts/Cellar.sol at main · PeggyJV/cellar-contracts · GitHub 1
Audits (Macro): Sommelier A-3 | Macro Audits | The 0xMacro Library 2
The strategy for the cellar is provided by Patache, including strategy development, continuous maintenance, and signal generation. 7Seas Capital has developed tooling and infrastructure as per Governance proposal SIPS-012 and will manage the proposed Cellar. Management of the Cellar means that 7Seas will act as an intermediary institution by providing strategy integration services to Patache, including forwarding strategy signals generated by Patache to be submitted on-chain for execution.