FAQs

What is an RPC?

All blockchains (AVAX, BSC, ETH, etc) use RPCs to communicate. A Remote Procedure Call (RPC) is the entry point for users to interact with the block chain. You have to set this up in your wallet when you are adding different blockchains, but more than likely that was the last time you thought about it.

Think of an RPC as the address that receives your blockchain requests.

There are public RPCs, the ones you find when you google how to add a blockchain to your wallet, and there are private ones. Private ones are paid for, either by a project that you have invested in or by you personally.

An example of a company that provides private RPCs is Chainlink for AVAX. As to how private it is, it depends generally on how much you pay.

Why would you want a private RPC? Well, “generally” they are faster. This means your transactions go through faster and you compete less, so they should be cheaper in terms of gas fees.

Alchemy Trades does NOT require a custom/private RPC, but if you have one, you can use it, and it is SUGGESTED.

Why? Public RPCs have a limit, a throttle, that is meant to prevent one person using all of the bandwidth, and because Alchemy Trades has to query the blockchain in real time to keep the price feed running and make trades on your behalf, it's possible that a public RPC may slow you down or disconnect you.

What is a Wallet Private Key?

As we briefly touched on in the setup section, a crypto wallet has a passphrase, a password, AND a private key.

The passphrase and private key are generated when you create the wallet, and are actually tied together during the wallet creation process. Think of the private key like a machine’s password.

By adding the private key to Alchemy Trades it can authenticate to the blockchain with your wallet, and therefore it can conduct transactions (buys/sells) on your behalf.

What is a CEX?

Centralized Exchanges (CEX) are a trading crypto platform that allows people to exchange their cryptocurrency. A CEX is built by a centralized organization company acting as a third person to store assets, regulate exchanges, and charge exchange fees.

Typically, conducting trades on a CEX requires higher fees than a DEX.

What is a DEX?

A decentralized exchange (DEX) is a cryptocurrency exchange (like a CEX) which operates in a decentralized way, without a central authority.

You will often find crypto coins available on a DEX long before you find them on a CEX.

If Alchemy Trades doesn't use a CEX, how does it work?

Alchemy Trades interacts directly with the blockchain. That is to say when it initiates Buys/Sells, Price queries, etc, it is communicating directly with the blockchain nodes/infrastructure.

However, that doesn't mean it ignores DEX’s. When you first launch Alchemy Trades you tell it which DEX you want it to work with for the coin/token you are going to select.

Alchemy Trades brings features you normally only see in a CEX, to the DEX you select, and it does so without additional fees.

How much can I earn using Alchemy Trades?

Alchemy Trades is a tool, so this is going to vary depending on how you use it.

That being said, a Grid Trading strategy is a known trading methodology, and can grind out profit when you meet the strategy parameters. However, there are many different strategies that one can use with Grid Trading.

Things you should know and account for:

1. The more you invest, the smaller the token price needs to move for you to realize gains.
2. The more grids you have, the smaller the token needs to move to trigger buys and sells.
3. The token you are trading needs to have volume AND price movement. This is to say that if no one is trading it, OR the price isn't fluctuating up and down, you are not going to be successful in grid trading.

Example:

At the time of writing this I have been running the gridbot strategy on WAVAX/USDC for 48 hours, with an investment of roughly $80, an upper limit of $22.00, lower limit of $20.00, and a grid of 6. On average I am making 1.4% per 12 hour period, or 3% per day.

Why do I see a different price in the price feed vs Dextools or Dexscreener

Tools like Dexscreener estimate their token prices with updates happening less frequently. This is due to bandwidth and API constraints.

With Alchemy Tools we can query the chain easily 30 times a second, but since the block chain only updates every 1-3 seconds, we have throttled it back so that price is validated on every block.

This still puts the price update frequency well above what you will find on Dexscreener or Dextools.

Additionally, we leverage three different mechanisms to get prices, including calculations based on the current token LP, querying price oracles, as well as making price calls from your selected dex.