Here's a story about a time it felt like I had basically found a money printing machine. It was a method of consistently earning money with very little effort.It happened sometime 2017 or 2018, during the height of the last crypto craze. And no, although I did make money riding the rally, that's not what I'm talking about. I was profiting not only in terms of fiat, but also in terms of crypto.This was during the height of the EtherDelta decentralized exchange, and that exchange was the key to the method. The special thing about EtherDelta was that you could place several orders using the same balance. For example, if you had 1 ETH in the smart contract, you could in theory place a buy order worth 1 ETH on every single token on the exchange. The only thing that happened if two orders were filled at the same time, was that one of them would fail.So I figured I could use that feature to just place a bunch of lowball buy offers on various coins. I cast a wide net, but targeted trading pairs with decent activity (orders being made every day or so at least), but also high spread, so that I could place a buy order that was the best offer available even though it was still lowballing. And after doing this to a number of pairs, many of the orders were soon filled. Then, I just did the same thing but with a sell order instead. I had the best sell order on the book, but because of the spread it was still 10-20% higher than what I had just bought the tokens for.And then I just did it again. And again. I was constantly on the lookout for suitable trading pairs with enough spread. Soon I wrote a script that regularly checked the etherdelta API to automatically report such pairs to me. It almost seemed to good to be true, because it just kept working. My balance was growing, and it didn't feel like luck because the growth was so steady and consistent.Of course there were some botched trades, where after I had bought the price sunk so that my sell order didn't hit for a long time. But in surprisingly many cases, even those tokens did eventually come back up and my sell order was hit at a profit after all. Sometimes not though. I remember one token, Windy (WND). The etherdelta page looked perfect, good spread but good volume. So I made a buy order and it was filled. But my sell order just wouldn't fill, even though plenty of similar sell orders were. And the price kept falling. Eventually I realized that I had been had. It was a scammer that had faked the entire orderbook, creating volume by selling to himself in order to lure people like me into buying for real. But I didn't even mind much, because the steady flow of successful trades drowned out cases like that.Unfortunately, Etherdelta was having trouble. The website was loading very slowly, sometimes not at all, as some of you may remember. And at one point, the original creator sold the site to a third party, who took the website down for weeks IIRC. There was a forked frontend, Forkdelta, but it was already too late: The exchange was slowly but surely abandoned by its users and the volume dried up. So of course the strategy stopped working, only a month or two after I had discovered it. During that time, I had profited about 17.5 ETH. That's not so much today, but at that time it was worth around 17k USD. I sometimes wonder what would have happened if Etherdelta didn't die. Could this strategy have continued to be viable indefinitely? If we extrapolate, that would have given me a yearly wage of like $100k, not bad for what only took an hour or so of work per day.
Submitted December 29, 2019 at 03:16AM
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