The Invisible Alpha Sitting Out In Public.

The Invisible Alpha Sitting Out In Public.

In the vast universe of Web3, everyone is in a frantic hunt for that elusive ‘alpha’ - the information edge that promises trading success. From copy-trading to chasing free mints, the game continually shifts. But, what if the secret to unlocking consistent alpha was right under your nose? And what if it's available for free?

The Opportunity

In today's environment, there is one place that you can go to find exactly what a person truly thinks and supports: The social graph. A person’s social graph is essentially their network of connections and interactions across social platforms. Think of it as a treasure map, detailing where they've been, whom they engage with, and most intriguingly, what they might do next. In an age where digital footprints are more profound than ever, leveraging this data becomes crucial.

With tools like NFT Inspect at our fingertips, tracking high-influencer members of the NFT community is no Herculean task. The challenge is discerning the noise from the signal in this data-rich environment. Ask yourself: does the prospect of consistent, repeatable profit intrigue you?

Does the prospect of consistent, repeatable profit intrigue you?

The crypto seas are teeming with dominant figures or 'main characters' with the influence to shift market dynamics. These figures, intentionally or not, often leave breadcrumbs that can hint at future market movements. Instead of merely reacting, what if we could anticipate? By keeping a tab on their social interactions, from whom they start following to who begins following them, we tap into a real-time pulse of the market.

Remember those 'aha' moments when an influencer suddenly starts discussing an emerging project? There's a backstory to every such shout-out. By changing the dynamics, you could be part of the narrative rather than a mere spectator. With the ever-increasing growth of the facade that digital identity is, finding demographic-defining information sitting out in the public has become incredibly simple.

  • How often do you see an influencer talking about a project that is launching soon?
  • How often do you see an influencer fudding a project only to wind up with a massive bag?

Yet, just like you, every influencer had their moment of 'finding' the project or opportunity. So, instead of sitting on our hands attempting to react to lightning-fast actions, let's change the dynamic and make sure you are in before the rest of their audience.

Setting the Bait

This approach starts by acknowledging that there are several sociopathic main characters that have the capability to move the market at any given time. We will spotlight them ensuring we are never truly blind to the exit-liquidity shilling taking place and make sure we keep a close eye on the disconnect between their capital and social activity.

With a bit of short-frame backtesting, you can immediately find all collections/entities that have profit-generating members, but the individuals you want to spotlight will, of course, depend on you.

Due to the massive level of personal bias, I won't go into my guideline or the type of individuals that I spotlight beyond the mention of: Personally, I use a classification of: Past, present and future thinkers that classifies each trader by the way they talk about temporal nature of the outcomes they manifest. At all times, there exist several individuals within the market that have the social consensus to massively manipulate market rates. Trades surrounding this model are rarely a good long-term investment, and for that, I will refrain from mentioning any of the current ones directly.

With your targets identified, all we need to do is watch the top members of that movement and keep track of when they follow a new accountexternal link or receive a new followerexternal link.

Immediately, we can step into the social graph of this person without needing to spend a second of time. With a constant watch on the social graph of each key person we can determine the interesting overlap. This means that if secret alpha is making its way through a community, you will be among the first to know, generally knowing long before the majority of the community.

Unlocking The Power

To work within this model, I built an open-source repository that contains a few longtail strategies. Aptly named Longtailsexternal link, all strategies are designed to be combined and serve as a consistent faucet of alpha using long-tail advantages.

Managing a raw stream of Twitter data is extremely difficult due to the API architecture. However, by adjusting our thinking, we can roll with the punches and make sure everything runs as smoothly as possible. So, before we can build a solution around data intake, we should first really consider how up-to-date the data needs to be.

  • Do we need to catch changes live?
  • Is it realistically okay as long as we capture the live data when we do sync the database?

Alpha is rarely so fleeting that you miss the arrival and departure of an opportunity. If it is so fast that you miss it because of a few hour delay, then it was probably going to move too fast for you to be comfortable anyways. Generally, an opportunity will form over the course of months, giving you plenty of time to best position yourself. A ship only takes one leak to sink, and that is precisely how one can gain the most exposure when applying this model. A recent example of this is the rumored partnership between Moonbirds and Tablelandexternal link, a metadata protocol that enables dynamic, verifiable, and queryable metadata.

The opportunity for the retail trader in Tableland came through a network of follow-backs that was immediately obvious. The newly created Tableland account had only recently started following Moonbird representatives. Paired with the oh-so-much teased dynamic metadata of Moonbirdsexternal link, many solutions have been explored, and Tableland is potentially the most remarkable solution that exists.

Whether or not any person knew if Moonbirds "would" announce a partnership, the odds were near the point of being a certainty. For months, one could learn about Tableland, be part of the community and find themselves very well positioned for an extraordinarily cheap entry into the trade. When the partnership was finally teased, it was only a matter of minutes before the exit liquidity came in and swept everyone that had been planning their move for months. If you go back in the Tableland Discord around the start of the marketing ramp-up, you will see just a few familiar faces. I wonder why?

This is not a one-off experience. In any given industry, there are approximately ~3 significant announcements/partnerships that provide an opportunity for price action. Just frequent enough to keep your eye on the ball and position yourself in a place that allows you to flip the traditional roles of the crypto market without having to worry about things being so rare this approach is not sustainable.

Your Size is Not Size

The thing that many forget is that rarely are whales or institutions, minting. They are buying off the secondary market. This means all you have to do to win in this market is beat them at their own game. This is especially true for for a top-tier project as it is often mathematically impossible for a large holder mint their entire position; some must be acquired through the secondary market.

This means, the winning strategy is rarely as simple as buying the same projects as your favorite shiller. Instead, place yourself in a position that allows you to sell to them; we all know they will be the top and do everything in their power to push it to new highs.

Holding blue chips will always be the most profitable market strategy that one can play. Yet, to gain access to that opportunity, it is an absolute requirement that you know about the project early enough to build a sizable bag. This once again illustrates how important it is that you are have built your position in size before they are willing to talk about it.

The maximum impact one can find in the social graph largely depends on ones own ability to decipher noise from signal. There is opportunity because not everyone has this skill, but taking your time and going through the compiled lists will quickly reveal the current market meta.

The Web3 world moves at lightning speed, with opportunities appearing and vanishing in a heartbeat. By understanding the nuances of the social graph and becoming a proactive player rather than a mere observer, you can position yourself ahead of the wave. Remember, it’s not just about spotting the trends but also discerning the patterns behind those driving them. The game is changing; are you ready to evolve with it?