Whitepaper 800x600 Rise DOWNLOAD

whitepaper
R i s e Wh i te pap e r Tab l e of C o n te n ts 2
Table of Contents
Abstract................................................... 4 Why Rise – the current state The art of trading and
of crypto trading.................................... 15 artificial intelligence................................... 30
STO Details.............................................. 5 Democratizing advanced trading with Rise............. 18 Motivation....................................................................... 30
Rise is what the crypto community AI is the solution............................................................. 30
What is Rise?................................................. 6 & markets need........................................................... 18 Rise Trading Robots & Algorithms
(RIBOs & RITAs)............................................................ 31
Rise’s mission........................................... 7 Rise revenue streams in brief..................... 20 An antiquated approach: human-only trading.......... 32
Values............................................................................. 7 Generate returns on Rise Human / Machine hybrid trading strategies............... 32
Vision.............................................................................. 7 algorithms� performance............................................ 21 Fully-automated trading strategies............................ 33
Objective........................................................................ 7 Generate and reinvest revenue Predictive and Prescriptive Models
from license fees......................................................... 21 for AI in Trading............................................................. 34
Rise background, history & timeline............ 8 Generate returns from Crypto-Traded Funds.......... 21 Implementing neural networks for trading................ 34
A brief overview of Rise milestones ........................... 9 Fuel demand for the RISE token through Validating the Quality of Trading Bots........................ 37
Testimonials from current corporate partners, Crypto-Traded Funds.................................................. 22 Backtesting example..................................................... 37
investors and advisors .............................................. 11 Trading strategy development.................................. 38
The Rise STO.......................................... 23 Challenges and Solutions............................................. 39
Key Advantages of Rise.............................. 12 STO Objective ............................................................. 23 Data: a pillar of Rise’s trading strategies.................... 39
Rise is already established......................................... 12 The RISE token............................................................ 23 Portfolio Optimization................................................... 41
Rise is made to outperform....................................... 12 Token distribution...................................................... 24 The importance of risk management ...................... 42
Rise is reducing risk and performs during crises .... 12 STO timeline................................................................ 25 A real-life example: The art of
Rise is tomorrow’s tech.............................................. 13 Post STO product improvement commodity trading..................................................... 42
Rise is rich in experience............................................ 13 and roll-out plan......................................................... 25
RSE will be a BaFin-compliant security token......... 14
Rise is perfect for crypto............................................ 14 Overview: The Rise ecosystem ................. 26
The RISE (RSE) ERC20 token...................................... 27
Participation in algorithm performance.................. 27
Trading systems — third-party licensing.................. 27
Crypto-Traded Funds (CTFs)...................................... 27
The Rise Trading & Investment Platform.................. 29
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R i s e Wh i te pap e r Tab l e of C o n te n ts 3
The Rise application – the app Summary............................................... 80

that connects it all...................................... 46 Senior leadership team.............................................. 80
A brief history.............................................................. 46
Use Rise AI trading algorithms.................................. 47 The team behind Rise................................. 80
A quick app walkthrough........................................... 47 Fully committed team of industry experts.............. 81
Brief overview of the key functions.......................... 49 Senior advisors........................................................... 83
Rise wallet functionality............................................... 49
Trading wallet functionality......................................... 50 Legal disclaimers.................................... 85
Example user flow – buying Bitcoin on
any connected exchange.............................................. 51 Appendix.................................................... 86
Example user flow 2 – Setting up the Autopilot......... 53
Example user flow 3 – managing
Crypto-Traded Funds (CTFs)......................................... 55
Licensed Rise API for institutional investors

(RAPI) ......................................................... 56
A brief technology overview of Rise API................... 56
A few examples of Rise API licensing ....................... 58
BayWa............................................................................. 58
Liechtenstein Life........................................................... 58
Other solutions............................................................... 59
The science and background of Rise........ 62

Introduction................................................................ 62
Leveraging a new data paradigm............................... 62
The basics of machine learning
for trading systems..................................................... 64
Decision Trees and Random Forests........................ 64
Gradient boosting....................................................... 66
Neural networks......................................................... 68
Dynamics of complex networks................................ 71
Processing and evaluating information sources..... 73
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R i s e Wh i te pape r A bst ract 4
Abstract
Rise is a Germany-based software company developing sophisticated algorithmic trading Rise’s algorithms are already trading markets like stocks, gold, currencies and various
technology using the latest artificial intelligence (AI) and machine learning (ML) systems. commodities. They have proven to outperform markets and shown significantly lower
Its algorithms have proven to outperform major markets in recent years. Investors typically maximum drawdowns. In 2018, Rise started to adapt the algorithm approach to cryptocurrency
excluded from the consistent profits multi-billion-dollar funds made by using algorithmic markets, with initial performances ranging as high as 50-80%.
trading will now be able to access the same cutting-edge technology regardless of their
investment level – via the Rise Security Token Offering (STO). The Rise STO will be issued in Germany, in full compliance of strict German regulation.
Rise’s STO will introduce the RISE (RSE) security token, which will provide a long-term passive
income stream for token-holders, derived from various revenue sources. Investors will be
entitled to a 20% share of all algorithm licensing revenues. They will also receive regular
returns from Rise trading algorithms. A further boost will be seen in the form of profits
earned by leveraging RISE tokens with third-party lenders. All holders of RISE (RSE) will
receive quarterly dividends from each of these revenue sources, resulting in a well-balanced,
long-lasting regular payout via the Ethereum blockchain.
STO capital will finance the improvement of existing trading systems and development of new
technologies to address additional market opportunities. STO funds will also support the
public global launch of the Rise trading platform via the Rise mobile app, and provide seed
capital for the Rise STO Fund. It will also be used to finance ongoing R&D and global expansion.
The history of Rise technology dates to 2012 as part of the German boutique hedge fund
QUANTUMROCK Capital GmbH, which is licensed by Germany’s financial authority, BaFin.
Rise is the evolution and democratization of those trading strategies and technology, now
making them available to everyone. Rise is an established product with an existing userbase
(e.g. >50 million USD committed asset-under-management) and already serves large hedge
funds, financial institutions and insurance companies like LiechtensteinLife – one of Europe’s
fastest growing insurance companies. Rise CEO Stefan Tittel leads a team that possesses
over a century of combined experience in finance. Tittel’s previous companies have been
acquired by tech giant SAP, Commerzbank, and NASDAQ-listed Net1 group.
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R i s e Wh i te pap er STO D etai l s 5
STO Details
Token Name Token type Supply

RISE (RSE) ERC20 Security Token 170,000,000 RISE
Token Distribution
STO Date All times UTC
Private Pre-sale September 1, 2018 1pm - September 30th, 2018 11:59:59 Public Sales 70%
Public Pre-sale October 1st, 2018 12am – October 31th, 2018 11:59:59 Pre-sale 20%
Public Sale November 1st, 2018 12am – November 30th, 2018 11:59:59 Team, Advisors, Company 7,5%
Seed Investors 2,5%
Payment Website Exchanges
ETH, BTC, Visa, www.Rise.eco Purchase directly from Rise
MasterCard during the STO. Top exchanges
to be announced after STO ends.
Pricing
Public sale phase 1 $0.70 — November 1st – November 7th Allocation of Funds
Public sale phase 2 $0.80 — November 8th – November 14th
Public sale phase 3 $0.90 — November 15th – November 21st 69% — RISE STO Fund
Public sale phase 4 $1.00 — November 22nd – November 30th 17% — Investment into Rise Algorithms
14% — Financing (Seed, STO, etc.)
Jurisdictions / Restrictions
Investors of all nations are free to invest with the following restrictions: USA
(only accredited investors are allowed), China (only Hong Kong, Macau, and
Taiwan are allowed), Democratic People‘s Republic of Korea, Iran, and Yemen.
Some countries may require minimum investments.
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R i s e Wh i te pap e r W h at i s R i s e? 6
What is Rise?
The Rise business model can be summarized as the development and monetization of
Token-Holder Benefits:
software that generates money in financial markets. There is virtually no limit to market
Benefit from algorithms that outperformed major indices demand for financial products capable of producing substantial uncorrelated returns on
Access award-winning trading technology investments regardless of market conditions—precisely what Rise’s trading systems have
Earn substantial uncorrelated returns regardless of market demonstrated for the last seven years. Rise targets a $84.9 trillion global asset management
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conditions industry 1 , but without the massive 3.17% fund fees 2 normally charged on traditional fund
accounts. The Rise algorithms, Rise app, and RISE (RSE) token will offer the most advanced
high-tech trading technologies (normally only available to billionaires 3) to investors usually
Rise is an innovator of scientific trading systems with a vision to not only adapt and optimize excluded from these profits and advancements. Rise will offer this all with less fees and
advanced algorithmic trading systems to cryptocurrency markets, but also to make this type more transparency than traditional funds run by giant corporations.
of highly-profitable trading accessible to crypto investors via the RISE (RSE) token.
Rise’s automated trading technology targets some of the most efficient markets in the world
and has outperformed stock indices like the DAX, the Dow Jones and the MSCI World since
“Top 20 Performing CTA over 5 years”
its inception in 2012 under the name QUANTUMROCK. These trading systems are now being
Barclay Hedge 2017
specifically adapted to target cryptocurrency markets with even better results.
The RISE (RSE) token will be the entrance point for the Rise ecosystem, which will include algorithmic “The most innovative P
rofessional
trading systems, a trading platform, investment funds, and the mechanism for licensing and usage Investment Product – Germany” 2016
of trading systems by third parties. RISE (RSE) token-holders will participate in the profits of Rise‘s
algorithms, will receive a share of all licensing fees from banks and third-party funds that use Rise
technology. The RISE (RSE) token will be a completely new asset class that can be leveraged as
Best European FinTech
collateral in margin trading schemes that extend token-holders’ investing power by 50% or more.
Asset Manager of 2016
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The Rise mobile app will provide a comprehensive and user-friendly interface for the trading
platform where users will be able to manage investments in funds, make trades on dozens
of connected crypto exchanges, and monitor the accrual of dividends. App users will be able 1 set to rise to $145.4 trillion by 2025: https://www.cnbc.com/2017/10/30/global-assets-under-management-to-double-
by-2025-as-the-world-population-ages-study-says.html
to invest and divest directly and transparently without incurring fees to middlemen as is 2 https://www.forbes.com/2011/04/04/real-cost-mutual-fund-taxes-fees-retirement-bernicke.html#151afe383244
3 For example, the world‘s largest hedge fund Bridgewater Associates requires new members to have a net worth of $ 5
typically required in traditional trading. billion and an initial investment of $ 100 million.
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R i s e Wh i te pap e r R i s e’s m i s s i o n 7
Rise’s mission
Objective
Leverage high-tech, Wall Street-caliber tools available to everyone – Rise will continue to develop exceptional trading algorithms and use best-of-breed
no more 150K USD minimum investments investment strategies to identify and profit from the inefficiencies and trends in
Participate in automated high-yield trading of crypto and other cryptocurrency markets. Rise trading technologies will be available to retail investors via a
assets full-featured trading platform and mobile application, as well as institutional investors via a
Manage your crypto portfolios more easily than ever before – all in licensed API. Rise algorithms and strategies will trade cryptocurrencies, futures, and other
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one app securities for token-holders‘ benefit. RISE (RSE) token-holders ultimately will be rewarded
with a share of the eligible funds and licensing revenue via the RISE (RSE) token.
Values
Rise believes that every investor should be able to access the best and most efficient
technology to maximize the profit from their capital investments, regardless of how much
capital they are able or willing to invest. The playing field is being leveled for all who join Rise,
as well as bolstering the cryptocurrency market itself with data-driven investment strategies
that are free of emotional human bias, ignore hype, and avoid the pump-and-dump marketing
or boom-and-bust cycles that inevitably bring unnecessary risk to the market.
Vision
The Rise concept is fully-realized as an exclusive trading platform powered by the most sophisticated
algorithmic trading technology, exemplified by an algorithmically-traded fund that maximizes profits
and pays back to token-holders. Participation in the fund and additional financial instruments using
RISE (RSE) tokens as collateral for margin trading will be democratized via a digital token. This model
creates greater value for token-holders while supercharging the Rise ecosystem
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R i s e Wh i te pap e r R i s e ba c kg ro u n d , h i sto r y & t i m e l i n e 8
Rise background, history & timeline

former professional traders, hedge fund industry thought-leaders, industry experts, AI
specialists, and crypto experts and programmers.
Share in the profitability of Rise’s ‘ÜBER AI,’ which automatically
generates profitable investment strategies Now, it is time to grow and scale the license and SaaS business and to apply the ÜBER AI’s
Join Rise’s track record of consistent, increasing gains power to the volatile and ever-changing cryptocurrency markets. Rise is targeting the $66.8
Benefit from more than 6 years of proven history and development trillion global asset management industry, with Europe ranked as the second largest market
globally, managing 28% of all assets.
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Rise was founded in 2012 and has come a long way thanks to years of research, countless Apart from sheer size, financial markets are a good arena for high-tech-based business
development hours and several million Euros of investment in a quest to create what Rise models such as Rise. The domination of large, slow-moving players in those markets, a
calls its ÜBER AI a self-learning machine that develops autonomous trading machines for certain lack of high-tech adoption and limited power of innovation makes them prone to
exceptional returns in financial markets. disruption. At the same time, high regulatory entry barriers for newcomers make it difficult
for follow-up runners trying to copy models. Rise believes it offers the best possible business
The first phase of the company’s development saw the technological foundation of Rise’s model: owning and monetizing a software that sustainably delivers two-digit annual returns
ÜBER AI thoroughly developed, time-tested, and licensed to the independent boutique on assets deployed. Such software offers many opportunities for monetization (e.g. running
hedge fund QUANTUMROCK Capital, which continues to trade with these Rise trading funds, licensing the software, investing in its own funds) and meets an almost unlimited
models. In this period, several years of substantial returns with private and institutional market demand. Such a business model will always be relevant, since uncorrelated
clients developed a proven profit track record, and established a business model of licensing substantial returns on assets are always wanted. The Rise business model is poised for
the Rise trading technology to hedge funds, banks and institutions. tremendous growth with every sequential year of proven performance.
Rise was founded with a belief that high-tech and science are the only reliable means to
generate sustainable profits in today’s financial markets. Rise’s strategies are either pure
quantitative or quantamental, combining science and statistics with fundamental data points
and industry insights. Rise’s longest running proprietary systematic trading strategy has a
real profit-generating track record of more than 20 years, and proven to deliver substantial
absolute returns during that time.
At Rise, the experts think, research and invent; trading will be done with cutting-edge artificial
intelligence systems. The long-term team at Rise consists of highly skilled mathematicians,
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A brief overview of Rise 2015 2016

milestones
Enters the market as a new conglomerate Michael Morsch, fellow serial entrepreneur of Stefan
under the brand QUANTUMROCK (QR). E2C Tittel, invests in both QR companies. Eventually
Vermögensverwaltungs GmbH is renamed to becomes the second largest shareholder after
2012
QUANTUMROCK Capital (QRC), and MXV Trading to Tittel.
Tittel begins investing money into the small, newly QUANTUMROCK Research & Trading (QRRT).With
formed German trading thought leader MXV Trading a unified vision, the companies share, resources Robert Gold, now the CTO of Rise, joins QRRT.
GmbH, co-founded by Rise Chief Investment Officer and branding. QRRT’s lab develops and owns IP
Victor Bremer, to develop an automated arbitrage and provides technology and trading systems. QR receives the Hedge Fund Award for Best
trading system for crude oil. Tittel manages live QRC packages the strategies into fully regulated European FinTech Asset Manager of 2016 and is
launch of first fully automated, high-frequency investment products for sale to investors. voted Germany’s “Most Innovative Professional
trading system, trading simultaneously on various Investment Product” in.
geographical markets. New proprietary order management system is
completed and goes live.
2017
QR implements trading servers in proximity to
2013
exchanges in New York, Chicago and London. Nikolay Nadirashvili, now Head of Algorithmic
Increases share position and investments in MXV Trading at Rise, joins QR.
Trading and is able to expand the scientific and Renowned German hedge fund pioneer Sy Stanley
development team. Schlueter becomes QR advisory board member Sy Stanley Schlueter becomes shareholder in
among other high-profile board members. QRC and integrates one of the longest-running
long / short equity trading models, Copernicus, in
the QR trading engines.
2014
2016
Tittel purchases majority stake of German BaFin- BayWa AG, an international agricultural and
licensed asset manager E2C Vermögensverwaltungs QR breaks with tradition of managing only its own commodity trading company listed in Germany’s
GmbH. Development of new trading models and and shareholders’ funds to take on the first high- stock exchange, becomes an institutional client of
strategies begins, along with research on machine net-worth private and small institutional clients. QR and starts a strategic co-development project
learning and artificial intelligence for trading. with QR.
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2017 2018 2018
QR’s ÜBER AI and ML system that creates its own Liechtenstein Life, a life-insurance company, Trading strategies on agricultural commodities co-
trading strategies leaves beta and produces first becomes a strategic institutional client of developed by BayWa go live and are now accessible
sets of strategies on commodity markets. QUANTUMROCK to issue an innovative new series to outside institutional investors.
of insurance products.
QRC opens new office in Hamburg. QR moves into new and bigger office in prestigious
A group of high-ranking, renowned serial Munich suburb Grünwald.
QR further scales and develops its business model entrepreneurs (founders and investors of
into Rise, using distributed ledger technology and companies such as Simyo, amaysim, billiger.de, QR renames into RISE WEALTH TECHNOLOGIES
tokenization to disrupt the asset management PlanetSports, Mister Linse, AdScale, adtraffic, GmbH and founds THE RISE BLOCKCHAIN GmbH.
industry further and to democratize Wall Street Quandoo, PayOn, WebStocks, Web.de, UMT and
tech. Erdt Group, with combined millions of users and Rise conducts STO.
clients) invest jointly into QR to further develop the
QR is rated among the Top 20 Performing CTAs business model into a next-generation DLT and to
of the past five years” by investment research conduct the STO.
company BarclayHedge.
QR trading strategies are wrapped in default-
protected, exchange-tradable index certificates
and from this point on, available to all investors
2018
through their bank depot.
The first phase of the company’s development is
completed, in which the fundamental technology QR cements its thought-leader role by issuing one
foundation was conceived, time-tested, proven of the market’s first fully compliant, exchange-
and built with a solid track record with private and tradable investment products for cryptocurrencies.
institutional clients.
German economic magazine Wirtschaftswoche
The new Copernicus trading model, building on a ranks Germanys’ best performing money
24-year track record, goes live. managers. Compared to their published findings
for five-year performances, three out of QR’s four
strategies rank first, second and sixth.
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Testimonials from current learning systems as used by big banks and hedge funds.
corporate partners, investors This combined with the concept of a token that pays a Tanya Bogolomova.
dividend has in our opinion the potential to change the Private Investor,
and advisors asset management industry to the better. ONPEX, with its Business Development
leading platform to enable banking and payments, is proud Coral Club, Italy
The power of the Rise concept and technology has already to be the bank partner of Rise. We are convinced that with
gained considerable interest and investment. A sample of ONPEX Rise can solve all banking and payment needs, be it »Rise offers the most sophisticated portfolio management
Rise’s partners explain the value they see in Rise in their in the crypto or in the FIAT world.« for the price of a discounter. Finally, there is a professional
own words: investment option at an attractive price-performance ratio.«
Christoph Böckle. Volker Rofalski. Michael Eisenhardt.

Chief Innovation Officer, Private Family Office Private Investor,
Liechtenstein Life Privatier, Croatia
»The idea of Rise was exciting to me from the first minute,
»Liechtenstein Life wants to provide the highest degree especially because I have dealt with the topic of AI investing »My decision to invest in Rise came easily: in my opinion, they
of transparency to its customers when it comes to how a lot. Of all digital asset managers, I found Rise to be the have the best concept and the most advanced technology.
their investment portfolios are managed. Rise can give an most advanced.« The previous numbers speak for themselves.«
unprecedented access to systematic and fully automated
trading strategies that used to be accessible only to large
investment firms and global banks.«
Stefan Ehgartner.
Private Investor, Alexander Guralchuk.
Business Angel, CEO Private Investor,
Havana Orange Student, Ukraine
Christoph Tutsch. »The fact that there’s such an experienced team behind »The app seems surprisingly easy and intuitive – the concept
Founder & CEO, ONPEX Rise – with algorithms that outperformed the market immediately convinced me and inspired me to invest.«
several years in a row – made me invest in it.«
»Rise is on a quest to democratize Wall Street-technology
and to let small investors benefit from AI
/
machine
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R i s e Wh i te pap e r Ke y A d van tage s of R i s e 12
Key Advantages of Rise

choose to apply Rise algorithms. Taken together, the algorithms are used in funds with over
50 million USD in assets-under-management.
Leverage established product and algorithms that have
outperformed key markets The Rise app is based on an app from UpTick with over 100,000 downloads and an average
RSE will be a security token compliant to strict German regulation App Store rating of 4.8. Rise’s audience and usership continues to grow rapidly. Parts of the
Take advantage of volatility in crypto markets with high- STO proceeds will boost app activity to add new features for RISE (RSE) token management,
performance systems ensuring the user experience is impeccably designed for convenience and clarity.
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Rise is already established Rise is made to outperform

Rise is not just another STO making big promises that go unfulfilled. Rise already has a Rise has played with the sharks on Wall Street and has been winning since 2012. Many Rise
successful product employed by the company QUANTUMROCK and has been building algorithms have consistently outperformed major indices like the MSCI World. The best
algorithmic trading strategies since 2012 by investing significant, seven-figure amounts performing algorithm generated profits that were 318% higher than profits of DAX in the
into technological development. Rise’s algorithmically-traded strategies have substantially same time period (2015-2017) as exemplified in Figure 2: Performance Data. In addition
outperformed highly competitive markets with a proven AI / ML-based approach. to this track record of outperforming to generate profits, the Rise algorithm is designed
to reduce risk for investors. Rise sees significantly lower volatility compared to alternative
Product Customers Revenues approaches, with algorithms working independent of overall market developments, capable
of generating profits even in periods of declining markets.
Established.
5+ years outperformance
100k+ app users. 50M+ USD
asset-under-management
Existing license
fee revenues
Rise is reducing risk and performs during crises
Figure 1: Rise is an established company with a product, customers and revenue Rise algorithms are not only optimised to increase returns, but also to reduce the maximum
drawdown during crises. During 2016, for example, the max drawdown of the Rise QR
Prestigious international institutional investors such as stock-exchange listed BayWa AG and algorithm was as low as 3.75% while the DAX30 had temporary drawdowns of 18.25% (as
Liechtenstein Life Assurance AG (pensions and insurance), as well as various family offices, seen in Figure 3).
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160% Zoom in: Value of a scientific, uncorrelated investment strategy in rough times, view on year 2016
10.00%
5.00%
0.00%
120% -5.00%
-10.00%
Max Draw Down Max Draw Down

RISE Consolidated DAX -15.00%
3,75% 18,52%
-20.00%
80%
01.19.16
02.22.16
03.25.16
04.28.16
06.01.16
07.05.16
08.08.16
09.09.16
10.13.16
11.16.16
12.20.16
2015 2016 2017
RISE LEAP RISE ARRISE RISE COPERNICUS DAX DOW JONES MISCI WORLD DAX RISE Consolidated
Figure 2: Performance Data Figure 3: Drawdown comparison in 2016
In volatile markets, Rise algorithms proved to remain more stable than underlying markets. taken into consideration to find more intelligent ways to optimise profits and reduce volatility.
This is particularly relevant for crypto markets as their overall volatility typically is much Human experts assist the self-learning algorithms to enter new potential markets and set up
higher than that of traditional asset classes. structures to enter the market. Once a basis is created, technology takes the lead and learns
to improve its own performance over time.
Rise is tomorrow’s tech

Rise is rich in experience
Rise is not simply a tool to automate traditional trading by installing algorithms. Rise is
applying the latest artificial intelligence and machine learning technologies for optimised The best tech needs the best people behind it. Rise has an exceptional experienced senior
trading to allow the human investor to finally reap rewards that come with lightning- leadership team, who together have a proven track record within multiple companies that
fast, automated trading solutions. These award-winning algorithms automatically train have been successfully built and sold for over 200 million USD. The core team has worked
themselves and are fine-tuned routinely. Learning is constant, with new data continuously together for years now and is fully dedicated to the mission. As leading experts in trading,
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artificial intelligence and machine learning technologies they bring more than 100 years mathematical / algorithmic trading concepts. Rise’s AI identifies and utilizes the anomalies
of trading and technology experience. These experts have worked in senior positions for and patterns in these markets with high-performance systems and advanced quantitative
companies such as Amazon, JP Morgan Chase, British Petroleum, UniCredit and SAP, to methods.
name a few. .Additionally, a network of committed advisors combine a phenomenal array of
expertise that has already brought invaluable support to Rise over recent years. Cryptocurrency markets also have a unique property setting them apart from other
commodity markets. Tokens are stored and transacted on the blockchain, a cryptographically
validated, distributed ledger that is secured by expensive computational consensus
algorithms. Typically, this ledger is publicly accessible and allows for information about
RSE will be a BaFin-compliant security token the transaction history and the analysis of market behavior to be extracted in microscopic
granularity. Such is the potential distinguishing it from any other asset class and adding even
The RISE (RSE) token is designed as a top security token fully compliant to strict German more opportunities for quantitative approaches. Past transactions, participants, volumes,
regulation. There are no efforts to evade strict German regulations by registering in token holdings, and movements can be identified, analyzed, correlated and made available
Liechtenstein or Malta. As a Germany-based company, Rise is building a security token in for complex network analysis and machine learning algorithms that deliver aggregated input
close cooperation with one of the most strict jurisdictions in the world. for quantitative trading software.
Machine learning and complex network analysis on the distributed ledger can yield a
constantly updated data model with information about wallet addresses, coin credits,
Rise is perfect for crypto exchanges, transaction patterns, the behavior of role model-wallet addresses, clusters and
movements between addresses. Those anomalies, pulse patterns and “telegraphy signals”
Given the volatility of cryptocurrencies and ever-increasing trading volumes, this market is are all analyzed prior to the purchase or sale of coins, which occur by the movement of coins
ideally suited for Rise’s short-term trading approaches based on statistical mathematical from PC wallets, cold wallets, paper wallets into addresses suitable for the actual trade. Rise’s
models, statistical arbitrage, volatility concepts, pattern recognition, data science and predictive models are based on input features that have corollaries to physical phenomena,
machine learning. A large influx of money from institutions or professional investors is yet to such as percolation dynamics and detectable divergences of an order parameter prior to a
be invested in the sector. When this inflow of liquidity arrives, cryptocurrency markets can phase transition in an out-of-equilibrium system.
expect to see extraordinary growth rates on selected currencies, but also increased volatility
across all other currencies. In anticipation of this, Rise pivoted toward crypto markets in For example, a straightforward yet highly profitable trading strategy Rise AI currently is
2016 to gain experience and begin extending a range of services. developing is the arbitrage between cryptocurrency prices of relevant exchanges and futures
prices. This approach leverages the time offset between “anticipatory” price-influencing
Compared to established financial markets, cryptocurrency markets are young and full of exchanges to the representative exchanges, which are the basis for the price building of the
inefficiencies. Given their decentralized and largely unregulated structure, Rise predicts that exchange-traded futures and derivatives.
these markets will stay relatively inefficient for a long period of time. With price anomalies,
price lags, price discrepancies and temporal (cross-)correlations occurring for a sustained
period, these markets provide a promising environment for the application of sophisticated
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R i s e Wh i te pap e r Wh y R i s e – t h e c u r re n t state of c r ypto t rad i n g 15
Why Rise – the current state of crypto trading

Date Company Notes
Token-Holder Benefits: Early 2018 Sequola Capital Started investing in specialized crypto funds 1
Compete with the big-money entrants into crypto markets June 2018 Union Square Ventures Announced a number of crypto investments 2
Access streamlined systems that can be used across exchanges May 2018 JPMorgan Chase Created the position Head of Crypto-Assets Strategy 3
Avoid risk and errors inherent in human-centric trading to maximize Early 2018 Soros Fund Managenent Internally approved trading of virtual coins 4
Raised a $1.8 billion dollar fund that will also invest in crypto-
profits July 2018 Lightspeed Ventures Partners
currencies 5
Launched a new $300 million fund focused on cryptocurren-
June 2018 Andreessen Horowitz cies 6
4
Steve “Hedge Fund King” Invested in a new hedge fund focused on cryptocurrency
July 2018
Cryptocurrency markets are experiencing a transition as the primary beneficiaries change Cohen investment and blockchain startup equity 7
from tech-minded miners and crypto-enthusiasts to professional traders and large July 2018 Morgan Stanley Hired a Head of Digital Asset Markets 8
institutions. However, this transition has just begun and the industry as a whole is still in Announced a working group to look into cryptocurrencies
July 2018 Black Rock
and blockchain 9
its infancy. Institutional investing in cryptocurrencies is an emerging field and advanced
trading capabilities have yet to make a significant impact on what remains a very inefficient Table: A list of prominent traditional financial firms and their entry into the crypto market
market. Crypto investors continue hacking away at shrinking profits with a blunt tool while
Wall Street traders fine-tune their trading strategies to target inefficiencies in crypto markets The table above represents only a small subset—chosen for their prominence and importance
with surgical precision for massive profits. in their respective industries—of the traditional financial institutions that have started
operating in the crypto domain and the early steps they have taken.
Time is running out for unsophisticated traders to turn a profit from crypto. Early market
entrants who made big gains in Bitcoin’s early days lack the trading sophistication needed to These companies are intensifying their efforts. Union Square Ventures, for instance, now
compete with the advanced technology that dominates traditional markets. Bitcoin futures makes 25% of its investments in the crypto sector and also invests in equity and tokens in
entered the market in Q4 of 2017, creating an impact on all crypto markets that is still felt
today (Q3 of 2018). The first regulated ETFs, government-backed securities exchanges, and
billion-dollar hedge funds will follow before year’s end, funneling more and more profits 1 https://www.recode.net/2018/6/21/17484524/venture-capital-cryptocurrency-investing-structures
2 https://www.cnbc.com/2018/06/29/union-square-ventures-is-doubling-down-on-crypto.html
away from crypto’s retail investors. 3 http://fortune.com/2018/05/17/jpmorgan-bitcoin-cryptocurrency/
4 https://www.bloomberg.com/news/articles/2018-04-06/george-soros-prepares-to-trade-cryptocurrencies-as-p rices-
plunge
These traditional Wall Street firms have been preparing their market entry through a variety 5 https://www.reuters.com/article/us-lightspeed-investment/success-with-snap-helps-venture-firm-lightspeed-raise-1-
8-billion-for-new-funds-idUSKBN1K01P2?il=0
of systematic steps that include hiring specialized executives, investments in strategic 6 https://www.coindesk.com/andreessen-horowitz-launched-300-million-crypto-fund/
companies, trading digital assets and investing in crypto funds. 7 https://cryptoslate.com/billionaire-investor-steven-cohen-joins-crypto-hedge-fund/
8 https://cointelegraph.com/news/morgan-stanley-hires-credit-suisse-crypto-expert-as-head-of-digital-asset-markets
9 https://www.cnbc.com/2018/07/16/bitcoin-jumps-after-report-says-blackrock-exploring-cryptocurrencies.html
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this space.1 Increasingly, firms that normally compete with each other in traditional markets History shows that the transition from human trading to algorithmic trading ruthlessly
now compete in the digital assets market, too. For example, Morgan Stanley now also clears demolished a way of life for Wall Street traders in less than a decade, with the gap left
Bitcoin futures. 2 by the collapse of traditional exchanges operated by human brokers filled by firms using
quantitative trading techniques (see Figure 4 and Figure 5). Losses from retail investors who
These financial institutions, with their already impressive financial means and influence, failed to make the change simply became profits for firms who perfected trading strategies
are only the beginning of this major trend. According to a Thomson Reuters survey, one built into algorithmic trading robots.
in five financial firms, ranging from hedge funds to large banks, are considering entering
digital currency trading in the next three to twelve months. Furthermore they’re not only The same pattern is emerging in crypto markets as trading robots increasingly exert more
considering moving into cryptocurrencies, but are also planning to do so quickly: of the 20 control over markets and divert a greater share of profits to those with the best algorithms
percent that showed interest, about 70 percent were planning to start trading in the next (Figure 6). Crypto discussion forums are littered with complaints about the effect of trading
three to six months. 3 robots on coin prices, yet the crypto community at large has minimal engagement with
trading robots. Instead, these invisible market forces are responsible for price fluctuations
In 2017, the number of funds specializing in cryptocurrencies dramatically increased by 430%, that cannot be predicted or made profitable by the average investor.
and the trend is continuing in 2018. 4 These funds, which include liquid ventures investing in
tokens, former hedge fund managers and artificially intelligent or automated bot funds, are
leading to a concentrated industry dominated by its largest players: the 10 largest funds
New York City jobs in securities and commodities contracts
hold 43% of the industry’s investment capital and the top 50 account for 80%. 5
‘000
150%
Cryptocurrency markets are at a turning point. Market inefficiencies and the lack of trading
sophistication are creating a massive opportunity for quantitative investors who possess the
140%
tools capable of exploiting the miniscule inefficiencies of Wall Street markets. Those who
fail to change will face a similar fate as the Wall Street traders who were unconvinced by the
130%
potential of algorithmic trading until their jobs and exchanges were vaporized by quants.
Investors either have the choice to evolve or be left behind looking back in dismay at their
120%
wounded portfolios.
110%
100%
1 https://www.usv.com/blog/investing-in-token-focused-funds
90%
2 https://www.businessinsider.de/morgan-stanley-is-jumping-on-the-bitcoin-futures-bandwagon-2018-1?r=US&IR=T
2000 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
3 https://www.cnbc.com/2018/04/24/20-percent-of-financial-firms-are-looking-to-trade-crypto-in-2018-survey.html
4 https://www.reuters.com/article/uk-hedgefunds-bitcoin/number-of-crypto-hedge-funds-surges-amid-bitcoin- Source: New York State Department of Labor
volatility-idUSKCN1FZ189
5 https://www.ccn.com/major-milestone-there-are-now-more-than-300-cryptocurrency-funds/ Figure 4: Jobs in Securities and Commodities Contracts
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Share of WTI crude oil options volume 100

Per cent
100
80
80
60
60
% of Bot Trading
40
40
20
0
2008 09 10 11 12 13 14 15 16 20
01-2015 02-2015 03-2015 04-2015 01-2016 02-2016 03-2016 04-2016 01-2017 02-2017 03-2017 04-2017
Privately negotiated trades Pit trades Electronic trades
Source: CME WTI = West Texas Intermediate Figure 6: Qualitative chart showing the increase of bot trading in crypto markets. Bot trading levels during Q1-2017 were
estimated to be between 60 and 80 percent. 1
Figure 5: Share of WTI Crude Oil Traded by volume
Algorithmic trading robots in traditional markets typically make use of high-frequency “If you don‘t have the financial smarts to put together a trading strategy, then bots could
trading strategies to extract large profits via small margins on a massive scale. This requires simply end up automating a set of poor market trading decisions.” — Danny Bradbury
trading strategies that are backed by massive funds with expensive and exclusive deals with
exchanges that cost millions of dollars per year. Such large funds buy and sell with hundreds Algorithmic trading robots have led to less spread between exchanges, as basic arbitrage
of millions and even billions of dollars in capital, requiring high buy-in amounts out of reach and market making strategies no longer produce the gains that may have been profitable just
for the retail investor. A quarter-million dollars may be enough to participate in a smaller a year or so ago. Furthermore, data outside of the order books has a different importance
fund, but the best funds require investors to put up seven- or eight-figure sums to take in crypto since the added effect of influencers, new STOs, and other off-book events can
advantage of their trading technology. trigger disruptive movements across markets. 2
Crypto exchanges do offer free or cheap access to exchange order books via API, but the The extreme volatility and regulatory ambiguity that characterize cryptocurrency markets
fragmentation of exchanges makes implementing effective trading strategies impossible have deterred traditional investment funds. However, profitable inefficiencies in crypto are
even for experienced traders. Even when it is relatively easy to connect a bot to a particular
exchange, the trading bots available to retail investors lack sophistication compared to
those used in traditional financial markets. 1 https://www.bloomberg.com/news/articles/2017-01-16/high-speed-traders-are-taking-over-bitcoin-as-easy-money-
beckons
2 https://www.forbes.com/sites/forbesproductgroup/2018/01/11/the-ripple-effect-of-cryptocurrencies/#291ce1a06080
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now proving too tempting for the traditional finance world to ignore. Wall Street funds are
moving into crypto, armed with a decade of quantitative strategy development and the
funds capable of unleashing seismic effects on low-volume cryptocurrencies.
mean
Figure 8: Reversion to the mean: Making profits in a declining market
Democratizing advanced trading with Rise

It must not be forgotten or underestimated that human traders trade with emotion, reacting to
Time is running out for regular human trading in crypto to be profitable. Rise is an early- many signals when deciding when to take a position on a certain coin. In Figure 7, humans invest
mover and, unlike the other sophisticated new market entrants above, aims to democratize with the hope to go from A to C. Volatility in cryptocurrencies is often the result of many human
access to its advanced trading capabilities with the RISE (RSE) token—following the same traders identifying the same trend and then overshooting C and crashing the price.
crypto community ethos that has driven crypto adoption to global significance.
Rise trading systems improve the efficiency of crypto markets as a whole, identifying trading
The traditional stock market is extremely mature and efficient, and only the top players signals that are impossible for humans to recognize. The system is even able to to enter
are able to extract profits. Humans have now been replaced by machines to which access markets that look more like D (Figure 8), identify profitable short positions like C, and only
is restricted to a small population of the global uber-wealthy. Without Rise, the average follow trends when positions from A to B show an extremely low risk profile—safely closing
investor lacks the ability to automate their earning potential as otherwise it is simply too positions before a trend reverses.
resource- and knowledge-intensive to perform high-tech trading that happens in traditional
markets. So far, few specialized firms have entered crypto markets, but that is changing. Rise will help investors avoid all of the errors, risks and inefficiencies that inevitably arise
with human-influenced trading. It allows investors to leverage a Wall Street, tech-focused
C
approach to generate profits from crypto investments for a considerable and relatively
effortless stream of passive income.
B Rise is what the crypto community

& markets need
Rise’s entry into crypto markets will bring a series of positive effects to the crypto community.
These benefits range from democratizing AI technologies to increasing market stability and
A
connecting crypto markets to traditional markets. Not only will these benefits help crypto
markets by making them more attractive, they will also lead to greater returns for current
Figure 7: Showcasing the difference between human and computer assisted trading members of the crypto community.
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•• One of Rise’s key competencies is its Wall Street level trading AI that it is now dollars.1 These practices plague current crypto markets and are holding
democratizing. As already explained, Wall Street is entering crypto markets crypto markets back. These anomalies can be countered, though, by Rise’s
and bringing years of experience in developing trading AI. Most crypto ability to quickly detect them and invest large sums. This will protect smaller
investors don’t have access to these technologies and risk being squeezed investors from the actions of maligned market manipulators and create a
out of profitable trading. Rise will counter this trend by empowering crypto more stable and fair environment to invest in.
investors with an AI that has already performed in competitive traditional
markets. A comprehensive description of Rise’s AI, its different approaches •• The stability that Rise will bring to the market and Rise’s Crypto-Traded
to trading and how RISE (RSE) investors can use these tools to compete with Funds (CTFs) will make cryptos attractive to more conservative financial
sophisticated financial institutions follow later in the whitepaper. institutions: the lines between crypto and traditional markets will blur and
crypto investors will reap tremendous benefits. Traditional capital from
•• Cryptocurrency markets are currently characterized by a high degree of more conservative institutions will flow into crypto markets, and this large
volatility. A major part of this volatility is due to the large role that emotions inflow will push crypto assets prices higher to the benefit of all current crypto
play in the cryptocurrency markets: bull markets are further overheated investors. The liquidity that will come with this will make crypto trading easier
by hopeful enthusiasm and bear markets are further depressed by blind and faster.
pessimism. Rise’s algorithmic trading AI does not operate through emotions
and therefore is immune to them, leading the AI to avoid investing in •• At the same time, this blurring of the lines between traditional and crypto
overheated bull markets and to invest in underpriced bear markets. Not only markets will also allow crypto investors to diversify their investments. Many
is this a winning strategy for RISE investors, but it also has various benefits crypto investors have built wide-ranging and substantial portfolios, but
for the community as a whole. One of these benefits is that Rise, through its these investment portfolios lack diversification outside of crypto markets.
scale and emotion-free algorithmic trading, will function as a countercyclical Extensive diversification, a trading practice ubiquitous in high finance,
actor. These systematic and large-scale countercyclical investments will protects investors from downturns in markets. Rise will empower crypto
stabilize crypto markets and smoothen out portfolio returns for the whole investors to diversify their portfolios through CTFs and thereby help them
community. achieve stable and substantial returns in the long run.
•• Another benefit will be that Rise’s AI-driven algorithmic trading will help
counter market manipulation. The vast amounts of data that Rise processes
for trading allow it to detect, analyze and act on anomalies in the market
at their infancy. Many of these anomalies are the fruit of active market
manipulation by maligned actors: small groups of investors pump up certain
cryptos and then dump them, costing other ordinary investors millions of
1 https://www.wsj.com/graphics/cryptocurrency-schemes-generate-big-coin/
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R i s e Wh i te pap e r R i s e reve n u e st ream s i n b r i ef 20
Rise revenue streams in brief

dividend equal to performance of Rise algorithms
Participate in Rise algorithms‘ performance Investment
• 69% of STO: Investment
Profit from licensing Rise technology to institutional third parties 69% of STO 1
• into Rise algorithms
Investment into • 31% of STO: development of
Access and profit from RISE (RSE)-fueled Crypto-Traded Funds Rise algorithms
• trading algorithms & OPEX
• Investment into CTFs
Investor
CTFs
(Token-Holder)
Rise is forming a unique financial ecosystem in which it is planned for RISE (RSE) token-
4
holders to recieve profits from multiple revenue sources and they will be able to invest and RISE R&D Profit payouts
License Business • Participation in algorithms' performance
manage their tokens easily. Investors will benefit from automated Rise trading systems
31% of STO • + 20% of licensing revenues are
2
typically reserved exclusively for the largest institutional investors. • regularly paid out to all
• token holders (divident payout)
• Dividends from CTFs
The Rise ecosystem revenue streams will include:
20% of profits
• • Direct participation in the performance of Rise‘s algorithms based on Figure 9: Simplified key revenue streams for Rise investors
a 69% share of the initial STO investment: Rise algorithms will power
trading in crypto and traditional asset classes. Direct participation in the Profits generated within the ecosystem are significantly higher than regular investments
performance of Rise‘s algorithms at a virtual 69% share of initial token- and will continue to attract more investments into the Rise ecosystem, thereby creating
holder investment. substantial demand for the RSE token. This will potentially lead to great increases in the
•• Sharing in profits from licensing Rise technology to third parties: All token value.
token-holders will share in dividends from revenue from licensed Rise
technologies. These licenses will provide an ongoing, steady profit stream for Investors will receive quarterly dividends from multiple independent revenue sources
token-holders. within the Rise ecosystem, directly into their wallet as seen above. Every bank licensing
•• A dditional returns for investors investing tokens into Crypto-Traded Rise algorithms and every investor contributing to Rise-managed funds increases investors’
Funds: All token holders will be entitled to invest RSE token into special CTFs profits via profit-sharing with Rise capital.
(Crypto-Traded Funds), leveraged investment vehicles which yield returns on
the investment on top of the potential profit from increasing RSE token value.
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STO proceeds development of new algorithms) but only after a locking period of 10 years after the
completion of the STO.
80% Crypto
dividends
Generate and reinvest revenue from license fees
Investment into
Token holders invest
Rise algorithms
Rise is also licenses its technology and algorithms to third-party customers, e.g. larger
investment funds / banks, family offices, high net-worth individuals, insurance companies,
Traditional
20% assets etc. The profits generated from management and performance fees are used for operational
expenses at Rise and continuous improvement of the algorithms. Of all licensing revenues,
20% will be shared with investors. The resulting amount will be traded with Rise algorithms
Licensing
revenues for 3 years. Actual returns will be paid out as dividends on quarterly basis, while the entire
amount itself will be paid out in full after three years. Thus, this 20% revenue share becomes
Figure 10: Structure of Rise algorithm participation and payouts an additional, substantial dividend for RISE (RSE) token-holders, allowing them to benefit
directly from the overall business performance of Rise.
Generate returns on Rise algorithms�
performance
Investors will participate directly in the performance of Rise‘s algorithms. Rise plans to pay Generate returns from Crypto-Traded Funds
out dividends to investors equaling a return on 69% of their investment with the actual yield
of the Rise algorithms. Rise plans to set up a dedicated algorithm for this purpose which can Rise Crypto-Traded Funds (CTFs) are designed to combine the best of ETF investments
easily be tracked and performance will be measured transparently. As this algorithm will and the high-profit potential of algorithmic trading. CTFs will be open exclusively to RISE
mix traditional asset classes and crypto-investments, the underlying scenario is calculated (RSE) token-holders and can only be invested into with RISE tokens. The tokens will serve as
on a 30% annual return. Which would be a conservative calculation given the fact that in collateral for a special lending entity to lend the CTF a share of its value as fiat or crypto for
recent years traditional markets showed ~15% return, whereas first crypto-based algorithms the CTF to invest.
yielded reutrns as high as 50-80%. The participation will be paid out to RSE tokens for a
minimum of 10 years starting with the end of the STO. Crypto-Traded Funds returns are forecasted based on past Rise algorithm performances,
which have been performing at 15-18% in the last five years. They are therefore counted into
The profits generated by Rise algorithms will be paid to each token-holder every quarter. the simulation model with a 17% p.a. average profit. In such Crypto-Traded Funds, trades
Token-holders may opt for either an ETH-payout with transaction fee or a feeless RISE can be completely automated based on Rise trading algorithms. The structure of the fund is
(RSE) payout to ensure no transaction fees are incurred. The initial STO proceeds remain fully streamlined to ensure low operational costs.
invested. Rise may use the STO proceeds in part or in full for operational expenses (e.g.
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Profits from the CTFs are paid out quarterly in ETH or Rise (RSE) tokens, in the same manner
as returns generated by Rise algorithms‘ performance are issued. The investor will be able
to request their investment at any time to receive their initial investment plus accumulated
profits, after a short processing time to allow the Crypto-Traded Fund to properly close all
positions.
RISE (RSE) token-holders will keep ownership of their tokens at all time while locked as long
as they are invested. This will result in a multiplication of investment capital as the general
RISE market rate increase impacts the investors’ total wealth. Additional investment returns
also will come via the Crypto-Traded Funds.
The strength of the CTF is that by virtue of being backed by a crypto token, all traditional
asset classes will up for the investor, which provides an additional source of return and will
help reduce the risk of crypto holdings. Eventually, via the CTF the RISE (RSE) token-holder
will have participated in two rounds of receiving returns. Firstly as a token-holder gaining
benefits from any appreciation in the currency, and secondly as returns of the leveraged
investment in other asset classes arrive. This principle allows for the cumulation of returns,
making the RISE (RSE) token an impeccable model for proper wealth accumulation and
management.
Fuel demand for the RISE token through

Crypto-Traded Funds
Rise algorithms have proven to outperform key industry benchmarks. An investment into
Crypto-Traded Funds will therefore continue to pull new capital from outside sources into
the Rise ecosystem. The structure of the Rise system results in high chances of raising RISE
(RSE) token market rates. Existing RISE token-holders will benefit in multiple ways: profit
from increasing value of RISE as well as all of the additional profit components from within
the Rise ecosystem.
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R i s e Wh i te pap e r T h e R i s e STO 23
The Rise STO

The Rise STO will fulfill three central financing goals:
Gain an affordable entrance point to top-level AI technology
1 Roll out globally. Rise will continuously develop additional algorithms
Generate a lifetime of passive income, with nearly 70% of (e.g. for new investment markets, with new technologies) and enhance
STO proceeds invested into Rise algorithms existing algorithms, with plans to roll out the Rise approach globally.
Participate in robust Rise ecosystem through dividend gains, Therefore 17% of the STO proceeds will be reserved for research and
automated investments, and access to wide range of assets development, which includes marketing.
4
2 Grow the license business. In order to attract more large institutional

investors licensing Rise trading algorithms, Rise needs to increase its
STO Objective assets-under-management quickly to reach a solid 100m+ EUR AUM.
A significant portion of the STO proceeds will get invested into Rise
The entire financial system benefits from diversification and decentralization. More liquidity, algorithms to quickly achieve this AUM target and to boost licensing
financial products and services, participants with differing motivations, and commodities revenues streams, which will in part also get paid out to all token-holders.
makes for a more stable and productive market. This also holds true for individual investment
vehicles, but especially for an investment vehicle that is powered by a machine learning ‘big- 3 Improve access to the Rise ecosystem. The Rise app will act as entry
data’ technology like Rise. The Rise STO will both improves the effectiveness of Rise’s trading point and central steering hub for all crypto investments and trades.
systems by providing the financial resources to scale the technology that has already shown Rise will use parts of the R&D budget to add features related to the
itself to be successful, and create a more robust crypto market by enabling more strategies management of Rise tokens, the Rise CTF, etc.
to be developed, which in turn will create more data to train the system and improve the
effectiveness of the technology. In the end, better trading means a fairer market for everyone.
Rise will share in the profits from crypto markets by following the democratic ethos of the The RISE token
crypto community—the STO will finance the buildout of Rise’s trading technology and also
will reward the community that makes it possible. RISE (RSE) tokens will provide an affordable The RISE (RSE) token aims to let every token-holder fully participate in the success of the
entrance point to top-level trading technology, as well as profit-sharing with token-holders. Rise ecosystem and the STO-funded initiatives mentioned above, which will generate long-
term passive income for investors and provide the backbone for Rise’s trading algorithms
The technology improves via financial investment and participation, and investors will be and platforms.
compensated directly with dividends paid to every token-holder.
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RISE (RSE) will be built around the legal framework of a security token compliant to strict Allocation of funds
German regulation. All tokens will be generated immediately after the end of the STO during
the “token generating event” (TGE). The smart contract for the RISE (RSE) token is set up More than two-thirds of the STO proceeds will be invested into Rise algorithms, which will quickly
on the Ethereum blockchain and will be compatible with the standard for transferable reach 100 million EUR invested. Token-holders will receive returns equivalent to the performance
tokens (ERC20). of these investments. For the rest of the proceeds, 17% are planned for research and development
(R&D), which includes marketing to achieve Rise’s top three STO growth goals as outlined above.
It also includes the planned extensions of the algorithms to address additional market segments,
the ongoing optimization of the algorithms (including the integration of more sophisticated
Token distribution AI / ML technologies and logics), the enhancement of our app in order to allow a proper and easy
management of all Rise token proceeds and some general technological improvements (such as
Of all the RISE (RSE) tokens, 90% will be allocated to investors. This keeps in line with the improving the speed and stability of our algorithms). The remaining 14% are required to process
spirit of Rise, to liberate the market and allow everyone the opportunity to access the newest, the STO, including the seed financing which helped to bring Rise to the point where it already is.
breakthrough trading technologies.
Fund distribution has been designed in a such a way to maximize the benefit from the token-
Rise management, Rise advisors and the Rise company will take a mere 10%, which also holders’ perspective. Thus, the greatest part is reserved to go into Rise algorithms, which will
includes the seed investors who already helped to bring Rise to the outstanding level it is at enrich the value of the token as it increases the amount paid to to token-holders. To stay one
today. Since the team believes in its own project, tokens held by the team will benefit every step ahead of the competition and future proof the project, Rise will continue optimizing the
token-holder, due to the additional incentive of maintaining the algorithm’s exceptional algorithm and infrastructure around it so that the token-holder can benefit from dividends
performance. over a long period of time.
70% Public Sale 69% Investment into Rise algorithms
20% Pre Sale
14% Financing (Seed, STO, etc.)
7,5% Team, advisors, Company
2,5% Seed investors 17% Research and Development
Figure 11: Token Distribution Figure 12: Fund Allocation
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STO timeline
Start of Quantumock First Algorithms go live First Crypto Algos live
Q1/2012 Q3/2014 Q4/2017
(rebranded to RISE)
Start Pre-Sale Website & Campaign Start Start of public STO End of public STO
Today Sep 1 Nov 1 Nov 30
Post STO product improvement and roll-out plan
Q1/2019 Q2/2019 Q3/2019 Q4/2019 2020
Launch full app version Scale neural networks/AI Integrate complex Launch expanded set of Increase complexity with
including all RISE machine updates for blockchain signals statistical approaches (e.g. more “telegraphy
trading features added crypto signals (e.g. liquidity flows.) Barabasi, Estrada, etc.) signals” and game
theory approaches
Figure 13: STO Timeline
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R i s e Wh i te pap e r O ve r v i ew : T h e R i s e e cos yste m 26
Overview: The Rise ecosystem

Participation in algorithm performance
Rise will use nearly 70% of STO funds to generate trade based on Rise algorithms. This will
Earn profit through dividends through diverse stream of revenues enable Rise to license its technology to even the largest potential investors, as those require
Invest RISE (RSE) tokens in Rise-powered Crypto-Traded Funds high assets-under-management. It also helps to stabilize the RSE token value, as this ‚gravity
Share in third-party licensing revenues from institutional third force‘ increases as profits grow, leading to more trading power and finally bigger dividends
parties for token-holders.
4
Third-party trading systems licensing
Democratizing the specialized and resource-intensive technology necessary for high-level Banks and hedge funds connect to Rise’s API to trade assets using Rise’s trading strategies
trading is a radical proposition that requires a comprehensive business solution reaching and execution system. The API provides institutions with access to a flexible apparatus
far beyond technical competency in trading alone. An entire ecosystem of interconnecting for determining and testing parameters to create custom trading strategies. Usage fees
technologies must work in concert to provide token-holders with investment tools that are collected from this third-party licensing will be invested in Rise algorithms, which increases
user-friendly, secure, and tailored for retail and institutional investors. profits for token-holders.
The RISE (RSE) token, financial instruments, and trading tools developed by Rise create a Dividend-paying ERC20 token
flexible and accessible platform for all types of investors: from casual investors content to All profits to be paid out will be paid out quarterly to the wallets of token-holders in either
sit and watch passive income accrue via Rise algorithms, to skilled traders who combine RISE (RSE) tokens or Ether (ETH) using the Ethereum blockchain. Any non-exchange ERC20-
fund investments using collateralized RISE (RSE) tokens with manual trades, to institutional compatible wallet holding tokens will receive dividends for as long as it holds tokens.
investors like hedge funds seeking expert execution of customized strategies.
Margin investing with Crypto-Traded Funds (CTFs)
The following is a functional overview of the Rise ecosystem that demonstrates the purpose Rise (or other third-party lenders) will lend its capital to token-holders to invest in Rise managed
and place of each component within the Rise concept. Further technical specifications for Crypto-Traded Funds (CTFs), holding the RISE (RSE) tokens as collateral. The CTFs will vary in
individual components appear later in this whitepaper. different in risk profiles and trading parameters. Investors amplify their investing potential and
choose which CTFs fit their investing style. A portion of CTF fees are invested in Rise algorithms,
Scientific risk- / return-balanced trading systems increasing their potential return, and hence generating more alogrithmically based profits.
Complex algorithms developed with Rise’s so-called “ÜBER AI” trade hundreds of times per
day, around the clock, in every market, and avoid the mistakes made by human traders. The Multi-exchange trading platform and mobile app
effect is predictable short- and medium-term market positions that smooth the profit curve Investors will be able to connect to dozens of exchanges and monitor their Rise investments
by identifying valuable trading signals from myriad data sources. with the Rise mobile app. They will be able to watch dividends accrue from the STO fund,
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invest in CTFs, and connect their personal portfolio for automated trades with Rise algorithms Trading systems — third-party licensing
or manual trading.
Institutional investors can also benefit from Rise’s trading technology via the Rise trading
API. The API allows banks and hedge funds to customize parameters and trading data sets as
well as test trading strategies using Rise’s patent-pending AI. Trading strategies are executed
The RISE (RSE) ERC20 token via the Rise platform or via the customer’s internal systems.
The RISE (RSE) token will be a security token built according to the ERC20 protocol on the Institutional investors pay fees to connect to the Rise AI to access one (or more) specific
Ethereum blockchain. The token is the digital entity that allows the creation, delivery, and trading systems and adapt parameters according to their specific trading strategy. A higher
transfer of an asset-backed security (ABS). The asset is the securitization of the cash flow fee class applies to client-specific trading algorithms developed by the Rise team for specific
from Rise algorithm performance participation and not to be confused with a physical or markets and investment parameters on a project basis.
equity asset. This ABS is a financial instrument entitling the token-holder to revenues derived
from Rise’s lines of business generated by Rise algorithms. Rise will accept fiat and RISE (RSE) tokens as payment for all institutional licensing, including
custom projects. At contract closing, the fee is either paid in USD or RISE (RSE). A 20% share
The token will provide the technical mechanism for paying dividends to token-holders via of all such licensing profits will be paid out to investors. However, these amounts will be
the Ethereum blockchain. All payable dividends will be distributed quarterly in either RISE traded with Rise algorithms for 3 years before being paid out in full to investors.
(RSE) tokens or the ETH equivalent to all ERC20 wallets containing RISE (RSE) tokens. Please
note that RISE (RSE) should not be stored in exchange wallets.
The RISE (RSE) token will be a financial product that can be collateralized and used for loans Crypto-Traded Funds (CTFs)
of fiat currency or cryptocurrency to be used for margin investing in Crypto-Traded Funds.
Like other types of lending, the collateral value is increased by leveraging credit against RISE The RISE (RSE) token will enable investors to participate in so-called Crypto-Traded Funds
(RSE) tokens, which will be locked from transfer during the lending period. operated by Rise. Future CTFs will also be operated by independent third parties — typically
regulated funds. CTF trades will be either completely automated, based on Rise AI trading
algorithms, or manually executed by fund managers. The structure of the fund is designed to
be fully streamlined to ensure low operational costs as illustrated in Figure 14.
Participation in algorithm performance
The RISE (RSE) token will be the only currency accepted by Crypto-Traded Funds. All investors
A significant majority of STO funds will be invested invested in Rise algorithms. Investors participating in CTFs must purchase RISE (RSE) during the STO or on crypto exchanges after
will participate directly in the actual performance of Rise‘s algorithms. Rise plans to let the STO sale period. This additional demand for RISE (RSE) will put upward pressure on its
investors participate at a ratio of 69% of the STO proceeds, and as such there is no exposure market price and will benefit all token-holders. RISE (RSE) tokens invested in CTFs will be
to divestiture. This assures consistent trading power that stabilizes and improves the locked in the fund and serve as collateral for executing interest-yielding loans from third-
effectiveness of trading strategies over time. party lenders.
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Depending on the trading strategy of the Crypto-Traded Fund, these loans will be issued in Fully-regulated investment vehicle
fiat or crypto. Initially a high level of collateralization will likely be needed, but CTFs will be The basic design of a Rise Crypto-Traded Fund is specified by Rise as a Crypto-Traded Fund
able to use higher leverage to generate greater returns as the RISE (RSE) token matures and Investment Scheme (CTF-IS). The crucial aspect of the CTF-IS is that the fund operator is
demonstrates lasting value. only allowed to accept RISE (RSE) tokens as the medium of exchange. The CTF-IS will enable
the public to invest RISE tokens in exchange for shares in the fund. Equally, RISE tokens from
Financial returns in Crypto-Traded Funds will be generated from investment activities the fund will be required for divestments.
executed by Rise algorithms, third-party algorithms or manual investment manager trading.
Any resulting fees generated by licensing Rise algorithms remain in the Rise ecosystem: a The fund operator will use fund-accumulated RISE tokens as collateral for receiving a credit
fifth of all licensing fees will be returned to token-holders and the remaining will be used for from third parties. The percentage of collateralized tokens will be set by the fund operator.
Rise’s operating expenses to maintain and enhance the ecosystem. Profits generated by the
CTFs will be paid out in predefined regular intervals as dividends, either in ETH or RISE (RSE) Crypto-Traded Funds will hold RISE (RSE) tokens in multi-signature Ethereum wallets (two
tokens — according to investor preference. out of three). In order to use RISE (RSE) tokens as collateral, it is necessary to grant the lender
access to the tokens. On the other side, it is important to guarantee that RISE tokens can only
Receiving dividends in the form of RISE (RSE) tokens best facilitates reinvestment of profits to be withdrawn by the lender when the contractual obligations are not met. Therefore, a third
compound returns and is likely to be the preferred method of payment. Executing dividend party acting as an independant mediator is planned to be established, and a private key will
payments will require each Crypto-Traded Fund to purchase RISE (RSE) tokens on the open market be given to the fund operator, the creditor and the mediator. Collateralized RISE tokens will
through public exchanges at current market price. Furthermore, disinvesting by selling shares of be able to accessed with two private keys. This will either require consent between the fund
a Crypto-Traded Fund back to the fund operator will result in a disbursement in the form of RISE operator and creditor or between one of the aforementioned parties and the mediator. This
(RSE) tokens. These two policies will put further upward pressure on the price of RISE (RSE). This concept grants the bank access as soon as obligations are not fulfilled and ensures inhibited
ensures that investors profit twice: not only will they recieve the returns of the Crypto-Traded access so that funds are not embezzled.
Fund but they will also profit from the increase in value of the RISE (RSE) tokens themselves.
The Crypto-Traded Fund operator then will have the option to leverage trading signals received
by the Rise AI to invest the received liquidity in form of fiat or crypto. All asset classes that
1 2 are served by Rise AI may be traded. Currently, the Rise AI entails strategies for commodities,
Token holder CTF Leverager volatility, long / short equity, stock / indices, currencies including cryptocurrencies and an
6 3
overall strategy called absolute return. The fund operator will set the trading strategy of the
1 Investment in CTF with (RSE) tokens
2 Tokens are collateralized
fund.
5 4
3 Third-party lender provides fiat or crypto
4 Licensing fee paid to Rise The possibility of automating a large portion of trades through the Rise AI will greatly reduce
5 Purchase of RISE for dividends
operational costs. SFIS based Crypto-Traded Funds will recieve the trading signals provided
6 Dividend paid out to investor and
Exchange RISE
6 divestment via RSE tokens by Rise AI (subject to fees). Eventually, only the administration costs will be carried by the
investor in form of RISE (RSE) tokens.
Figure 14: Structure and functionality of the Crypto-Traded Funds
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Administration tasks comprise of defining investment strategies including the trading markets The gross returns generated by each CTF will be first used to cover its administration costs
and parameters, taking out a loan, and buying back RISE tokens / crypto with the remaining and to pay interest fees for the loans received. Net returns after administration costs and
return after interest fees and administration costs to payout dividends. The fund operators interest fees will be used to buy RISE (RSE) tokens and Ether at market price in order to
will decide on their own compensation, e.g. initial reward, part of the return, time interval payout dividends. Possible losses will be handled through the sale of RISE tokens to ensure
of compensation, etc. The competitive nature of the funds will ensure fair compensation. the payment of the interest fees.
Since all Crypto-Traded Funds (CTFs) will have access to the Rise AI, these funds are under
strong competition with each other. Fund operators will choose different trading strategies All CTFs will have to pay a listing fee to become part of the unique rise ecosystem. The
and markets, which will lead to differences in performance. These differences in operations initiator of each CTF will be free to charge a management and / or performance fee, the same
will also lead to different levels of administration costs. In the event one CTF has an inferior as in the traditional finance world with ETF or funds. Those CTFs set up and managed by
performance compared to other CTFs (e.g. through higher administration costs or poor Rise will be exempted from listing fees and will only be charged a standard Rise algorithm
strategies), these fund operators eventually will have to adjust their compensation or trading licensing fee, of which the usual 20% share that will go directly back to all RISE (RSE) token-
strategies to not lose their investors. This will ensure fair investment opportunities and fair holders.
fund operator compensation among all CTFs. Rise will provide an overview of all available
CTF offers once fully launched, including their properties and performance.
The Rise Trading & Investment Platform

Fund Operator Margin Lender
The Rise application will be the nerve center of the Rise ecosystem. Users will be able to
connect and monitor their personal crypto exchange wallets across 20+ exchanges, place
trades and orders, subscribe to automated trading strategies powered by the Rise AI,
monitor their CTF and RISE (RSE) token investments and track their dividends from the entire
2 out of 3
Multisig Wallet Rise ecosystem. The application is being created with a mobile-first and highly user-centric
design approach, working across operating systems and also on desktop screen sizes. The
ultimate vision with the Rise application is to become the one-stop access point to the world
of crypto trading and to engage with the Rise investment fund ecosystem.
Trusted Mediator
Trusted Mediator
Private Key Distribution
Consensual Transaction Signature
Disput Case - Mediated Transaction Signature
Figure 15: Diagram showing how the 2 out of 3 multisig wallet will operate
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R i s e Wh i te pap e r Th e a rt of t ra d i n g an d ar t i f i c i al i n te l l i ge n ce 30
The art of trading and artificial intelligence

is imperative that a good risk and portfolio management system addresses this by monitoring
and identifying deteriorating strategies and reducing allocations to them. Strategies must
Access trading strategies developed by experts constantly be improved and maintained to stay ahead of other market participants.
Harness AI-driven quantitative trading
Trade with sophisticated risk-management Rise believes that staying ahead and profitable in terms of risk-return ratio, scalable and
robust strategies will increasingly require the use of AI, making the process of creating
benchmark-beating strategies a much faster and more focused process. Additionally,
Motivation
4
adapting to the constantly changing nature of markets can happen much quicker when
According to WirtschaftsWoche, Rise’s strategies have outperformed Germany’s leading using the Rise proprietary AI system.
money managers: 58.24% capital growth since 2014. Based on the analysis of 1.300 funds
from 400 banks and independent asset managers, Rise not only returned great profits to AI is the solution
investors but also had the lowest maximum drawdowns. Benchmark-beating performances Historically, decision-making in trading was based on a combination of human intuition
are not achieved by setting out on a search for the “holy grail” of strategies, whether it be and domain knowledge in finance and economics. With the progress of computing and
trading only one instrument using chart analysis or technical indicators. Instead, success information technologies, traders started formalizing and automating their trading ideas in
involves creating a variety trading strategies based on numerous instruments using all the the form of trading rules. The resulting rule-based systems were based on fundamental and
market information available while trying to minimize correlations of the returns among market data analysis (such as price and volume information) as well as utilizing available
the strategies. If all those strategies have positive return expectations and acceptable public information about the traded assets (financial and macroeconomic reports, etc.)
variances, in combination with proper portfolio and risk management, a steady and smooth
capital growth curve can be achieved. Rise seeks to achieve a high level of diversification by The advent of trading bots—programs for automatic trade execution with an underlying
developing a sufficiently large number of weakly correlated strategies operating on a broad parameterized set of rules (strategy)—was a natural extension of these rule-based systems.
range of assets. While bots have transformed markets, they largely are still hamstrung by their human
connection. For example, a common basic strategy based on the exponential moving average
This challenging goal is difficult to achieve since it requires considerable human effort involves selling or buying depending on selected thresholds. The trader still generally has to
and months of work to create a single profitable strategy. Creating strategies for different come up with parameters and thresholds based on previous experience and / or judgments
instruments and markets frequently requires deep domain knowledge of the respective made by market experts. These bots are ubiquitous in today‘s markets, with open-source
markets, even if similarities exist in terms of the testing, validation and evaluation needed. projects making these basic tactics available to everyone.
Moreover, markets are not static and regimes change over time. Strategies that were profitable Some approaches to refine these systems use artificial intelligence to test the best
in the past might start to exhibit higher drawdowns, lower profits or even losses. Therefore, it parameters for a given strategy or allow the AI to choose from multiple strategies. However,
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these approaches are unable to scale and are all analyzed, learned, simplified, modelled and Multiple data
Engine
developed by individuals who often do not fully possess the scope necessary to deal with sources
clean
the complex nature of the finance market.
The Rise approach—a powerful symbiosis of science, financial and behavioral theory—is to
leverage AI and machine learning to constantly learn, find, produce, test and refine algorithms
Professionals analyzes
and investment strategies—thousands per month. The Rise engine is implemented by
an interdisciplinary team of trading professionals, scientists and high-tech experts who
constantly research and develop new ways of making Rise’s systems more competitive.
control
Furthermore, the scaling limitations posed by human involvement in creating trading
systems are being overcome by allowing the AI to play a larger role in the creative process.
Risk automated automated Crypto
management RIBOs Blackbox exchanges
dashboard control trading trading
A pure machine learning approach to automate the process of generating trading ideas
allows a far greater scale of ideas to be generated and tested in a short amount of time, a
improves
vast departure from the unpredictable time spans and resource-intensive coding of other
approaches. Figure 16: Simplified overview of functionality of the Rise automated trading bots (RIBOs)
•• Advanced data sources

•• Optimized trading parameters
Rise Trading Robots & Algorithms (RIBOs & RITAs) •• Smart trading strategies
•• Quick execution
Rise automated trading robots (RIBOs) can be described simply as software applications that •• Continuous strategy maintenance
execute trades. This simple definition belies the enormous sophistication that is required •• Real time risk management dashboards
to make trading bots profitable in financial markets—especially as those markets become
more efficient. Rise is leveraging these components as part of its ecosystem to create several key benefits:
Automated trading bots can vastly differ in terms of sophistication and effectiveness. •• Possible reaction to massive amounts of trigger signals
Rise uses a combination of human expertise, machine learning, and advanced algorithms •• 24 / 7 trading and market attention—crypto never sleeps
to design trading strategies and execution technologies that return considerably higher, •• Continuous execution of pre-defined strategies in multiple markets
consistent profits with less risk than even the most savvy human investor. •• Faster trading on new coins
•• Early detection of market anomalies and short-term arbitrage opportunities
Rise trading bots have multiple components that work together to continuously make •• De-risk crypto investments through early detection of large-scale market
profitable trades: trends
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Apple Stock Price

Trading signals are executed and fully automated based on our proprietary high-tech
methodologies, removing any emotional human element from the decision-making process. 180
Our data scientists clean enormous sets of data—not only financial data but anything from
fundamentals, e.g. earnings projections, to weather data that may have an impact on our 160
trading systems.
Close
140
Whether by using statistical and mathematical modeling techniques, in-house developed

data visualization software, pattern recognition and machine learning techniques or by 120
exploiting behavioral tendencies of market participants, Rise’s systems constantly search

for statistical market anomalies that form the basis of our proprietary process-driven trading 100
approach.
80
All systems are created by veteran traders and industry experts. All key team members at 7/1/2015 1/1/2016 7/1/2016 1/1/2017 7/1/2017
0:00:00 0:00:00 0:00:00 0:00:00 0:00:00
Rise will be RISE token-holders, which instills and perpetuates an entrepreneurial spirit that
distinguishes Rise from other competitors that are merely financial service providers. Figure 17: Apple’s stock price from 2015 to 2018: traders that sold off too early at a loss couldn’t take part in the rally.
Trading sophistication can be assessed along a continuum from 100% human decision- Human traders looking to improve their results—especially short-term profitability and
making to 100% computer decision-making. All traders use trading strategies of some reliability—typically try to formalize their strategy. They will identify relevant parameters and
kind. Most crypto traders use a human-only approach whereas Rise uses a combination of search for trading signals by which to make trades. For example, one may look for altcoins
hybrid and fully artificially intelligent strategies. Rise finance experts utilize trading domain new to the market in their first month post STO stage that experience two continuous weeks
knowledge to work with the data science team to provide the AI with parameters that have of growth and take a position that they close after reaching 3% take-profit or 1% stop-
proven profitable over the course of the company’s existence. loss. This is a formal trading strategy that has 100% manual execution. It’s better than the
first type of trading as it can be evaluated and optimized, but still requires luck or market
An antiquated approach: human-only trading inefficiency to be profitable over time.
Many crypto traders have been lured into thinking this type of trading strategy is effective
in crypto because they entered a nascent market during a once-in-a-lifetime period of Human / Machine hybrid trading strategies
inefficiency. The most basic approach to trading is a human trader looking at market Rise is concerned with more sophisticated trading strategies that augment human domain
information and deciding to take a position based on data they perceive to be important—for expertise with machine learning techniques. These human / machine hybrid strategies make
example, purchasing BTC or any other currency with the belief that it will be worth more in the use of specialized domain expertise of finance experts who hold decades of experience to
future and holding for an indeterminate amount of time. This kind of trading is very risky and create the parameters for strategy frameworks. Once these parameters are set, they are
only works in cases of extreme inefficiency or extreme luck, especially for short-term trading. then optimized and validated by machine learning techniques.
Traders that wish to hold their positions for a long time are also at risk: large short-term drops
normally push investors to sell-off at a loss instead of sticking to their original strategy.
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As noted above, a trading bot is a parameterized set of rules, which means that the values of Rise applies varying levels of automation to table strategies and tree strategies that can be
those parameters should be somehow chosen. The simplest approach would be to do a grid hybridized or fully automated.
search over different parameters and choose the combination of parameter values that have
historically given the best results. This approach is prone to overfitting: namely choosing For table strategies, experienced Rise analysts establish feature vectors. The order is
the parameter values that instead of implicitly capturing market patterns will adapt to noise determined by machine learning techniques. These vectors are selected by experts with
and “memorize” history, thus losing the ability to generalize and perform in live trading. decades of experience in finance and specifically in creating strategies for automated
Machine learning has well researched and developed methods for mitigating these risks: trading. Machine learning techniques are applied to the human-created vectors in order to
cross-validation methods which detect overfitting and regularization methods to counter it. create a model, which is back tested using trading algorithms. Successful models are chosen
by human experts and implemented as strategies for trading robots.
In a hybrid human / AI system, the AI is not given any raw data, but only the features, or
parameters, that an AI operator (quantitative trader or analyst) believes might be important. A mixture of this hybrid AI approach and the pure AI approach (which will be discussed in the
Feature vectors are an ordered set of these parameters, e.g. outside events, market next segment) is also very much valid: processing both pre-selected features and raw data
momentum, etc. When manually choosing features for the vector, the operator must not gives an AI a “warm start,” in which it can both utilize the operator’s knowledge and extract
assume any relations between them, any dependencies between the values of features and features itself.
conditional distribution of prices in the future, or which actions should be taken in different
cases. The operator only assumes that there is a connection and instructs an AI to find and Fully-automated trading strategies
utilize these connections. However, this approach has some restrictions. If the operator Rise’s previous success in traditional financial markets comes as a result of the type of
misses some important feature and this feature cannot be statistically derived from the strategy mentioned above. However, further automation and scaling is possible. Fully-
others in the vector, then the AI won’t be able to use the feature for making trade decisions. automated processes for developing trading strategies are enormously resource-intensive,
This “disadvantage” is however beneficial as it essentially works as a regularizer and “forces” but have the potential to scale and create a higher number of effective trading strategies
an AI to work on specific approaches (for example passing only the current price and the resulting in reduced risk and a smoother profit curve.
fundamental data about the company will force an AI to create strategies solely based on
fundamental approach avoiding chart analysis). In Rise’s hybrid system, two strategies are The pure AI approach means that the system receives raw data (price, volume information,
used to facilitate these interactions between the AI and its operator: tree strategies and news, reports, fundamental information feed, etc.) and identifies relations and patterns as
table strategies. well as trading methodologies in order to create profitable strategies. In other words, the
AI system identifies both trading methodologies / strategies and generates trading signals.
Tree strategies utilize decision trees with a predefined set of indicators, comparative
elements, numbers or vectors and optimizable parameters. At present, the components of Automatic generation of trading strategies is a much more complex process than automated
decision trees are initially selected by expert Rise analysts before a variety of regularization parameter tuning, but with sufficient resources, Rise’s proprietary processes are more
approaches including machine learning techniques are applied to determine parameter predictable, controllable and efficient. The result requires fewer costly analysts and traders
values. The effectiveness of the trees is then assessed. Strategies based on decision trees and generates more diverse strategies that improve risk-return ratios along with reducing
identify market trends or take positions based on mean reversion among other trading the dependency on unpredictable human resources.
possibilities.
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Behavioral
Telegram
Twitter
News etc.
Strategy 1
Blacktests
Price Data
Perfomance
St
AI-Strategy Tradeable Paper- Live Portfolio
.
St
Strategy 2 and Risk
2
Generator Strategy Trading Trading Optimization
Data St. 3
Custom
Features
Manual
verification
process by Strategy 3
Blockchain
trading desk
Data
Figure 18: A diagram showing a simplified overview of Rise’s automated strategy approach
Predictive and Prescriptive Models for AI in Trading Another approach that deals with the pitfalls of the previously described method is a so-
Regardless of the choice of the level of human intervention in AI development, there are two called “end-to-end” approach. On a high level it works as following: analysts do not decide
different problem formulations to which the AI methods can be applied. which characteristics should be predicted. Instead, no characteristic is being explicitly
predicted. An AI directly tries to choose the best trading actions based on the market
The first one is building a predictive model, in which the AI can predict some reasonable properties. On one hand, this makes the system more complex to train. On the other hand, it
characteristics of joint distribution of prices, like its variance, mean and so on. The AI then enables the creation of strategies that utilize market inefficiencies that might not be visible
builds a prescriptive trading rule set that utilizes the predictions generated by the predictive to a trader. Additional training complexity arises because both market inefficiencies and the
model. In other words, the AI first solves a machine learning regression problem to make its methods of utilizing them needed to be found at the same time. This method goes more in
predictive model better, and then it uses its prescriptive model to search for trading actions the direction of a fully AI approach.
to optimize return- -risk ratios. The advantage of this approach is that the actions taken are
somehow justified and the system is not a complete black box (meaning, it can be interpreted). Implementing neural networks for trading
Moreover, the same predictive model can be used to build many different trading strategies Independently of the choice between predictive and prescriptive models, the structure of
on top of each other, and improving them in an iterative manner. The disadvantage of this the models must be properly chosen in order to achieve the desired general characteristics
approach is that in order to build a profitable system, the AI has to utilize some specific market of the trading strategies. Many classes of algorithms of incremental expressive power are
characteristics provided by the predictive model. But as there is a plethora of different market considered, in which each subsequent class usually contains the previous one as a partial
characteristics, the AI cannot always possibly guess in advance which one. Is it simpler to case. Any extension of the model structure is used to address specific drawbacks of less
predict for a specific financial instrument, or some combination of them? It might be the case expressive models. Rise constantly updates the types of the models by following recent
that for some of the instruments some of the characteristics can be better predicted than advancements in the fields of machine learning and artificial intelligence.
others. So, on the stage of creating trading rules, the AI is dependent on finding a predictable
market characteristic on the previous stage. And finding it is a human task.
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The above problem is addressed by a more general class of models known as recurrent
Autoregressive
models and containing the autoregressive models as a partial case. Within this approach,
the model walks over the input sequence step-by-step, takes the input values corresponding
to the current step and uses them in combination with the model-state vector to calculate
Memory Attention
Augmented
Recurrent
Based
a new state vector. As a result, at the end of the input sequence, a state vector represents
the whole input sequence. This vector, in its turn, is used as an input for generation of the
final prediction or action. The recurrent approach has been proven to be very successful for
a very broad range of sequential problems.
Relational
Despite their power and flexibility to accept and use inputs of arbitrary length, “vanilla”
recurrent neural networks, or RNNs, have been shown to be hard to train because of the
Graph Networks vanishing / exploding gradients problem. They also are very weak in capturing long-term
dependencies. In other words, simple RNNs accept inputs of arbitrary length but they use
Figure 19: Diagram showing the different classes of models and the relations among them. only its last part efficiently, which makes these systems not very distant from autoregressive
models. To address these issues, long-short-term memory (LSTM) networks have been
proposed. After advancement in computational power in general, and GPU computing in
Many data sets used in finance have a sequential nature. For example, transactions’ particular, LSTM-based models were proven to be successful in all domains where long-
volumes and prices ordered chronologically. The simplest classes of models that operate term dependencies play a role. As a result, they became a basis for almost any sequence
on sequences consist of autoregressive models. Within the autoregressive models, the modeling tasks, such as speech recognition, natural language processing, etc. Many different
immediate prediction or action—such a buy, sell, or do nothing—is modeled as a function variants of LSTM systems have been proposed recently. Further development of the LSTM-
of a fixed number of preceding observations. In this case, the AI needs to learn a vector-to- like architectures have also been supported by an automatic exhaustive search.
number mapping (or vector-to-vector mapping, in a more general case), which is a standard
machine learning regression task. In other words, in spite of their simplicity, models from this Over the years the idea of recurrence was not only studied and developed but also questioned
class utilize the full power of machine learning. This means that within this approach, any and extended. The most promising direction is the recent development of different memory-
known general-purpose regression method can be used together with advanced training and attention-augmented systems. Within the simple RNN-and-LSTM-like approaches, the
and regularization techniques, such as decision trees, random forest, XGBoost, neural memory of the system is given by a numerical vector of a fixed length. Obviously, such
networks and so on. This way, the AI can learn any complex non-linear patterns directly from a representation can be a bottleneck in cases where a long and rich sequence has to be
data. However, using only the recent, usually short, history of a predefined length as the encoded into a single vector. This problem became obvious in language modelling, where
only input to the models is a bottleneck of the autoregressive approach. By considering only use of a single encoding vector works well for representing single short sentences, but starts
short prehistory, other important moves that lie beyond the input window are neglected. to fail when long and contextually rich texts have to be encoded. The same problem has
By increasing the window, the problem arises around learning complex dependencies on been observed in other domains as well. The memory -based systems, like neural Turing
a huge number of parameters with an insufficient amount of data, which can easily lead to machines, introduce a more flexible memory representation (with many vector-valued
overfitting. memory cells) together with a rich and flexible mechanism for memory access, making those
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models closer to general-purpose computers. The memory-based systems learn from data Considering each time series in isolation is obviously an oversimplification. On the other
to separate computations and interactions with external memory resources. More flexible hand, allowing arbitrary dependency on all the other time series is too general and can often
memory interaction mechanisms increase the expressive power of the system, allowing them lead to an overfitting problem for insufficient amount of data. Models operating on graphs
to mimic simple algorithms and learn them directly from the data. Any system that exhibits and sets provide a flexible mechanism to balance between these two extremes to adjust the
different kinds of patterns, and different regimes, at different periods of its evolution, like expressive power of the model to the amount of available data.
the financial market, should benefit from the extended memory representation which can
naturally encode a complex and diverse history. For example, in the simplest case, each time series can be encoded into a vector using
either recurrent or attention-based approach. Then prediction or trading decision for a
Attention-based systems, on their turn, extend the idea of recurrence, in which the system given time series is done by looping over all the other time series and taking their encoding
walks over the input sequences step by step. Instead of processing the elements of the vectors together with the encoding vector of the considered time series as inputs to a neural
input sequence one by one in a chronological order, these attention-based systems are network. The corresponding outputs are then aggregated, and the result of the aggregation
able to flexibly choose their (soft) location as well as smoothly distribute it over the entire is used as the input for the prediction or decision. A model structured this way can teach
sequence. This increases the expressive power of the systems significantly, allowing them to itself, using the data, what other time series are relevant as well as to what extent and in
model more complex dependencies by focusing their attention on those parts of the input what way they should be used.
which are more relevant at the given stage of the inference process. In other words, if the
memory-based systems provide a more powerful way to remember the history, and also use In general, graphs provide a rich and flexible representation of data. For example, systems can
this memory in a flexible way, attention-based can observe and reason about the history bind each price-time-series of an asset with a vector containing static information about the
in a more flexible way. The attention models, in their turn, have been extended by multi- asset or the corresponding company. The system can teach itself how to use the additional
head attention models, utilizing different types of attention simultaneously. Because of this meta-information in order to enhance time series modeling, like predictions or trading
feature, models are not only able to remember patterns observed a long time ago (like an decisions. Moreover, the model can be extended by adding information vectors that are
LSTM) but also to relate different patterns separated in time. This ability is referred to as a not directly bound to the considered asset, such as vectors containing general information
relational reasoning. about an economic sector or macroeconomic situation. In this case, the model should teach
itself to what extent and how exactly to use the provided information. For example, in the
Another advantage of attention-augmented systems is that they can be naturally generalized simplest case, the final output for a time series can be generated by looping over all the
to models that use graphs as inputs, thus covering sequential inputs as a partial case. Within provided information vectors and using them together with the time series encoding vector
the last few years, there has been a rise of a large family of models operating on graphs, in as inputs to a neural network. The outputs of the network are then aggregated into a single
general, and on sets, in particular. The ability to accept graphs as input is needed for a large vector that is used for the final output for the considered time series. Within the graphs-
number of practical problems. For example, financial data can be structured as a set of based architecture, Rise analysts incorporate their domain knowledge by providing vectors
tuples containing asset ID, timestamp, volume and price of the transaction. By representing describing arbitrary relations between a given asset and a given external information vector
and modeling the data as a set of vectors, systems can address the fact that the values of (providing an “edge-vector”, if graph terminology is used). The system can then teach itself,
a given time series are distributed inhomogeneously over time. Moreover, by using models in a data-driven way, to what extent and how to use the additional information provided by
operating on sets, systems can naturally capture the fact that predictions or actions for a
single time series, in this case asset, can benefit from considering time series of other assets.
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Blacktests Out of sample blacktest

AI-Strategy
Generator Tradeable
AI-Strategy Generator Tradeable Strategy
Strategy
Manual verification
process by trading desk
Training - 200 days Test - 30 days
Figure 20: Cross-Validating and Quality Checking
the modeler. Very complex data structures can be constructed this way as graphs and be
Training - 200 days Test - 30 days
used as a natural input for neural networks.
Validating the Quality of Trading Bots Training - 200 days Test - 30 days
Trading bots must be cross-validated and checked for overfitting. If not done correctly, this
is the spot where the most dangerous errors can be made. False assumptions about the
returns and risks, namely underestimating risk-return ratios, can result in bigger leverage and Training - 200 days Test - 30 days
unpredictably large losses. Rise solves this challenge through a “meta strategy” approach.
Perfomance without reinvesting and leverage (only out of sample). Soy

The core aspect of overfitting is when the model starts to “memorize” the data, (in this case,
17,5
market) instead of finding patterns. This happens largely due to the fact that the amount of
data is unproportionally low compared to the number of predictor variables, e.g. features 0 15,0
like price-volume indicators. Reducing the number of variables helps to fight overfitting and
price change of the nearest future

12,5
works as a regularizer. The problem lies in how to reduce the number of predictors without
-100
ruining the structure of the strategy. The solution is to bind the optimizable parameters of
Performance
10,0
the strategy and thus reduce degrees of freedom. This is achieved by introducing the “meta
strategy” concept, in which the number of parameters is minimized. Instead of choosing the -200 7,5
value for each of the parameters, the learning method is parameterized.

5,0
-300
Backtesting example 2,5
In a strategy with 10 optimizable parameters, the goal is to make an out-of-sample backtest
-400
eliminating an overfit potential with 500 days of trading history for some financial instruments. 0
An example of a meta strategy with just two parameters works as follows: the strategy is
0 200 400 600 800
optimized on N days and picks up the parameters with the best Sharpe ratio, a widely used Day
method for calculating a trade’s risk-adjusted return. This strategy is then traded for the next Figure 21: shows the retraining process that happens every 1-5 days, depending on market volatility. The backtest period
M days. This provides for an “out-of-sample” performance because the optimization and is 200 days foll owed by a 30 day out of sample test. The result is one set of strategies with 100 sub-strategies.
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trading take place on different datasets and reduces the number of optimizable parameters precisely why Rise leverages its proprietary technology early in the development process
down to two (M, N). in order to analyse, gather and clean the data associated with the particular trading idea.
The process can take quite some time as each trading idea differs in terms of where to
A more in-depth approach would take the complete previous history but with an exponential look for deviations and anomalies in price or behavioural patterns. Rise’s AI and machine
weighting, giving the latest more weight than the previous. Theoretically, one could choose learning systems speed up the process to help validate or dismiss the initial idea. In the form
N equaling to 1 in combination with an exponential weighting parameter, thus reducing of an algorithm, the trading idea is ran across the cleansed historical data in the machine
the number of meta parameters. The choice of N greater than one is only beneficial for learning backtest engine, dynamically optimizing the trading parameters and producing an
the purpose of shorter backtest time. For N = 1 the optimization lasts 10 times longer than out-of-sample validation, or a historical simulation of the model’s performance. With this
for N = 10 because it is re-optimized every day, which should not be a big problem in live simulation, Rise analysts can see if the idea is great, terrible or perhaps one that produces
trading. The other meta parameters might include the governing variables for picking the good and uncorrelated returns in relation to the overall portfolio. From here, the idea is
best combinations, which is a crucial consideration as a strategy might have additional either dismissed or developed for operation.
properties beyond those that showed the highest Sharpe ratio, such as stability. It should
be noted that uncontrollably increasing the number of metaparameters increases the risk of If the investment committee decides to operationalize the idea, Rise analysts look in-depth
overfit. It’s critical to keep these parameters very low: between two to five depending on the at key risk and performance indicators, trying to better understand the risk and return
size of the data. profile of the strategy and how it will fit into the overall portfolio. Once the risk-return profile
is analysed further, the Rise infrastructure is taken into consideration, such as to determine
whether those anomalies can be leveraged or mitigated or whether slippage or trading costs
can be reduced via Rise’s low latency order management system.
Trading strategy development
The following is an example of how a trading idea is developed from its conception to back-
All Rise-generated trading strategies have a very low correlation with each other. Each testing and validation:
strategy is traded with different instruments catering to the individual characteristics of
instruments such as volatility patterns, liquidity, trading time. This way, Rise diversifies The goal of the system is to pick the cryptocurrencies that are expected to perform better
between different instruments and within the strategy by using different parameters. than others and identify opportunities to short cryptos that are expected to underperform.
Rise leverages technology and science as the basis for each of the new models developed. Rise analyzes the whole cryptocurrency market using exchanges and AI to build a ranking for
Most of the new models start with a simple idea. The next step is to verify that a trading each coin based on various features: e.g. trading volumes, type of currency, how long it has
idea has potential and research it further. Generally speaking, most ideas try to identify existed, its capitalization change, industry of the company, its origin, its performance compared
patterns from very small, weak signals barely distinguishable from market noise. This is to the market, exchanges where the coin is listed and Google search results. In the future, the
results of sentiment and blockchain analysis will also be incorporated. Each coin receives a
AI-Strategy Generator score to guide investment amounts. Rise does not assume any functional dependency between
the features and the score, instead using machine learning and artificial intelligence methods.
Figure 22: AI-Strategy Generator
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This strategy is promising because it offers an approach to detect smaller coins that have the Another challenge Rise addresses is the bottleneck of traders’ creativity. Generating an
potential to become lucrative investments. This enables Rise to scan the whole market and algorithm requires the creative thought process of traders and quantitative analysts, which is
detect the “big stories” before they happen highly dependent on their experience and make it extremely hard to estimate how long it will
take. With Rise’s AI approach, algorithms create a large number of parameterized algorithms,
Challenges and Solutions thus saving time and effort. This systematic way of generating new trading systems allows
Trading strategy development involves some challenges that Rise is addressing. Strategy for a more accurate scheduling of resources.
scaling is one of the crucial problems in algorithmic trading and a problem that Rise will have
to address because of the large investments into Rise algorithms, which could grow as high Data: a pillar of Rise’s trading strategies
as 70 million USD. Given that a strategy, which is based on historical data, is believed to have Successful creation of an AI depends not only the quality of the models, but the quality and
positive results in the future, there is no straightforward way to scale the strategy, namely to content of the data that the AI uses to make predictions and decisions. Data cleaning and
increase the trading volumes, without severely affecting its relative returns and all measures processing, responsible for the quality will be discussed in another chapter. Quality data
of return-risk ratios. The reason for that is that the slippage-per-lot ratio is dependent on gives a system an opportunity to make more sound decisions.
the volumes the strategy is trading. In other words, the order book is not infinitely liquid
and volume starts to affect the prices in a non-beneficial manner, namely when buying a The data that Rise uses for generating trading strategies can be categorized into two groups:
larger amount of lots: one either gets a higher average price, or only partially execute the trading data generated on an exchange, and external data that is not directly connected to
orders. The situation for selling is inverse. Thus, one cannot maintain a good performance the exchange.
by increasing the size of orders. Rise aims to tack tackle the problem by creating more
strategies that do not enter (or exit) the positions at exactly the same times and prices, with Trading data includes:
the introduction of small perturbations in the coefficients of the strategy.
1 Historical tick data: Information about all the market trades, described as
an ordered list of tuples (timestamp, trade price, trade volume). One tuple
corresponds to one trade. Although, tick data contain all the information about
Behavioral, Telegram, Twitter, News etc. the trades, it might not be convenient to work with it due to computational
complexity. Backtesting time is in most cases at least linearly proportional to
the number of ticks. So, it is often worth to aggregate the ticks into candles
Price Data
or objects which hold a different combination of tuple aggregates. Through
AI-Strategy Generator aggregation some of the information might be lost, but in return speed is
Custom Features gained. On the aggregation step, Rise analysts can use their domain knowledge
to generate the most relevant features and therefore help machine learning
algorithm to focus on the relevant aspects of the market dynamics.
Blockchain Data
2 Order book: A list of active orders at a certain point in time aggregated

Figure 23: Data Cleaning by price which reflects the interests of buyers and sellers in the traded
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asset. The information might be crucial for predicting short-term Cryptocurrency-specific data
movements on the market which is of utter importance not only for short- Public blockchain implementations of all relevant cryptocurrencies keep a complete and
term strategies but also for the strategies with longer holding period. immutable record of transactions. As public blockchains are inherently fully transparent
and easily accessible, they provide a huge source of pure and especially valuable data of
3 Instrument and exchange specifications: All the static information the usage and address distribution of cryptocurrencies. A comprehensive analysis of this
inherent to the asset and the exchange. Depending on the type of the data provides valuable insights into the user dynamics of each cryptocurrency with strong
asset (stock, derivative, cryptocurrency, bond etc.) it might include implications for the markets. As crypto markets grow and mature, Rise believes trading
trading times, tick size, minimum lot size, expiration, strike and much and price movements will be increasingly tied to the fundamental characteristics of the
more. cryptocurrency. Incorporating fundamental cryptocurrency characteristics into its trading
approaches will give Rise a competitive edge.
External data may include any outer source of information. The relevant sources and types
differ largely depending on the asset. External data can be classified as follows: The emergence of programmable blockchains providing smart contract functionalities, such as
Ethereum, has allowed for more complex interaction and transaction structures and therefore
1 Periodic reports (events) that are being published at a time that is known paved the way for a decentralized token / dapp ecosystem. As tokens—cryptocurrencies that
before (e.g. macroeconomic reports). The important trait of this data is are not built on their own blockchain—account for a substantial fraction of cryptocurrency
that it is published in a fixed format and there is no need for parsing the trading, the analysis of the fundamentals of these ecosystems is of great importance to us.
text and extracting the information.
For trading purposes, different cryptocurrency transactions have to be distinguished:
2 “Normal” human-readable news that is published very frequently without simple coin transfers, token transfers that indicate dapp usage, and transactions from and
a notice in advance. They have to be parsed and the information has to to exchanges. The vast number of transactions and their structure make it impossible for a
be correctly retrieved from the text. human to draw conclusions from this data. This distinction can, however, be automatically
achieved by applying semi-supervised machine learning techniques. Transaction data on
3 Social media though sharing many common properties with “normal” a blockchain is immutable and cryptographically secured, which makes it a reliable high-
human-readable news can be distinguished into its own category. quality data source. This is particularly important, as the performance of machine learning
Compared to the news, the number of agents producing content is much approaches heavily relies on the quality of the input data.
higher and the barrier of becoming this agent is much lower. Credibility
of the data produced by these agents is often questionable. The classification of transactions serves as the basis for advanced statistical analysis of
transaction, user and trading dynamics, which provides aggregated statistical measures
4 Fundamental information about the current and historical state of the for each cryptocurrency. These measures are then to be used as features in the bigger AI
factors relevant for the market. It is important to emphasize that the ecosystem.
factors may vary a lot depending on the asset. Cryptocurrencies have,
for example, a very specific source of fundamental information which is Making these data efficiently usable by the AI models constitutes a very important task of
transactions data stored in the underlying blockchain. our research and is itself solved with machine learning methods, e.g. deep recurrent neural
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Perfomance and Risk Data Portfolio Optimization
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periodic reports. 0
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Portfolio Optimization
Performance and risk data for each of Rise’s strategies is the feed for our portfolio
Volatility Product Spread Calendar Spreads
optimization. Rise passionately believes that composing the right portfolio is something
Figure 26: Portfolio Allocations
of an art form. It uses technology similar to an in-house “robo-advisor” in its effort to be

even more precise in creating the perfect mix of risk and reward. Additionally, all trading
systems are developed to produce returns that do not correlate with one another. Therefore,
a holistic portfolio management approach starts at the very beginning of the design phase
of Rise’s trading strategies.
The design phase begins with simulating 50,000 potential portfolios. The ideal portfolio is
selected depending on maximum Sharpe ratio or minimum volatility along the “efficient
frontier” as shown in the image below.
The minimum and maximum optimization is purely backward looking and selecting the most
efficient portfolio based on volatility or Sharpe ratio, so it’s not surprising that a more efficient
Sharpe portfolio has higher returns with fairly low volatility. The forward optimisation looks
at the implied volatility and decides minimum volatility or maximum Sharpe.
When options are available, forward optimization is preferred because it has some insight
into future expectations. By adding more strategies, the volatility of the portfolio continues
to decrease to the point where it can‘t be optimized lower, but the returns / Sharpe can still
Figure 25: Sharpe Ratio Optimization be optimized.
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From there, the portfolio is rebalanced based on the forward variance of implied vs. realised price of an investment) and beta (based on the statistical property of covariance in market
volatility of the underlying. If there is implied volatility greater than realised (six months data). Other approaches instead involve concepts from behavioural finance and its subfields,
rolling) then risk is decreased, i.e. allocation to strategy is reduced. As a result, the minimum such as prospect theory. These concepts allow Rise to incorporate human psychology into
volatility allocation is always selecting the allocation that would have resulted in the lowest its trading models so that, for example, asymmetries and crowd dynamics—which are often
volatility for the portfolio, and the maximum Sharpe ratio is allocating based on the highest irrational—can be identified, analyzed and accepted or mitigated.
possible Sharpe ratio.
Another key aspect of Rise’s approach to risk management is transparency toward clients.
The portfolio is rebalanced every 21 trading days or when one of the strategies moves by at Rise has developed proprietary dashboards and analysis tools for clients so that they can
least 6% on an intraday basis. In terms of allocation restrictions, no strategy is allowed to review key risk and performance indicators in real time whenever required. Additionally, all
make up more than 50% of the overall portfolio allocation. Rise technology is designed to actively support its risk management process, as Rise’s in-
house low-latency order management system restricts transaction costs.
Below shows as an example the changing portfolio allocations of Rise’s portfolio strategies.
Rise is also committed to further improving its already high level of risk management
expertise. Part of the funds received from the STO will be used to expand the team with new
expertise and set up a satellite office in one of the global trading hubs, allowing Rise to stay
The importance of risk management on top of the latest developments in the algo trading community and markets. Furthermore,
Rise will set up new partnerships similar to Rise’s partnership with Dublin City College
In Rise’s view, effective risk management begins with the design of the trading strategy itself. with more top-tier universities around the world in order to tap into the amazing research
This is why all Rise strategies have an inherent risk management process built into the design capabilities these educational institutions have built over the years. These partnerships also
of the algorithm and trading system itself. The strategies’ inherent risk management process will allow Rise to actively recruit new talent straight out of university in order to beat the
consists of a proprietary, dynamic position sizing methodology. The machine learning competition to top talent.
model predicts the maximal price fluctuation of the instruments for the next day based on
past daily volatilities and also takes next day industry events into consideration. The model
has, therefore, a substantial predicting power. Based on the calculated volatility prediction
for the given day, Rise’s AI proportionally adjusts the trading volumes. For example, if the A real-life example: The art of commodity trading
predicted volatility doubles compared to the previous day then the amount of lots bought
or sold for each 1% price movement is reduced by 50%. Commodity trading at Rise involves a diverse set of trading strategies that have been
developed, implemented and fine-tuned to optimize returns. These strategies vary in scope
Rise’s more traditional methods for risk management are based on quantitative analysis of and specialization to create together a holistic and reliable approach to commodity trading.
market data and behavioural finance. Some of the market-data driven indicators include Some of the strategies include the Spread Trading Strategies, Market Volatility Strategy and
but are not limited to standard deviation (a statistical measure of dispersion), value-at-risk Intraday / Event Trading Strategy.
(a probability based on the statistical characteristics of the investment and its distribution
curve of the potential losses), drawdown (the peak-to-trough decline during a period in the
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Spread Trading Volatility Trading

One of Rise’s spread trading strategies is calendar spread trading strategy, which involves Market volatility trading is another domain that Rise targets, leveraging changes in market
Rise trading a large universe of about 20 to 30 commodity instruments. This strategy is volatility to generate uncorrelated value for (RSE) token-holders and Crypto-Traded Funds.
rooted in behavioral finance, a field of economics that combines behavioral and cognitive
psychological theory with conventional economic theory. The strategy is based on and takes The Volatility Index (VIX) was introduced by the Chicago Board Options Exchange (CBOE)
advantage of an insight into the monthly roll windows of large long-only commodity funds. in 1993. The VIX Index is a real-time measure of market expectation of near-term volatility
These funds, which own a portfolio of highly-liquid commodity derivatives, roll down their conveyed by S&P 500 Index (SPX) option prices over the next 30 days. The greater the market
positions around the same trading window every month. This trading model leverages this uncertainty, the higher the VIX Index; with a VIX Index below 20, markets are expected to be
recurring behavior of large market participants. bullish and calm.
The second part of the calendar spread strategy is based on the decreased liquidity that The volatility strategy is a quantitative strategy that utilizes data points from the term
occurs after First Notice Day. A First Notice Day (FND) is the day after which an investor who structure of volatility futures as well as the implied volatility of volatility indexes. It involves
has purchased a futures contract may be required to take physical delivery of the contract‘s opportunistic, directional play on the volatility of the S&P 500, identifying the increasing
underlying commodity. The general trend that the model leverages is that spreads widen as and decreasing volatility regimes and clusters and exploiting the corresponding move in
traders get out of front month contracts about to expire and spreads come in again leading volatility. By using a multi-strategy approach to equity Index volatility, Rise leverages long,
up to settlement. The trading model therefore opens positions when spreads widen and short and sideways VIX movements equally.
closes them when spreads tighten. Rise has tested this strategy on BTC futures traded on
CPOE and they look very promising. On the short side, the volatility strategy has an average holding period of one week to
three months and trading mainly consists of the SVXY ETF, as it provides exposure to short
The second key spread trading strategy that makes up Rise’s commodity trading is the spread volatility further down the term structure of the VIX index. On the long side, holding periods
trend strategy. The universe being traded here consists of classic agricultural commodities: are much shorter: they range from a maximum of two days down to just minutes. With long
soybeans, corn and wheat. trading Rise’s market volatility trading model trades the VXX ETF, which tracks an index
with exposure to VIX futures. VXX invests in second-month VIX futures on a rotating basis: it
The strategy was developed after analyzing more than 30 years of agricultural futures continuously sells contracts from the front month and purchases contracts from the second
prices isolating seasonal bias in pairs of commodities. Similar to oil products, prices of month.1
agricultural products are characterized by high seasonality and are strongly influenced by
weather patterns and anomalies. This model takes these external influencing factors into The portfolio of volatility strategies consists of various sub-strategies. As with all Rise
consideration and adjusts trading parameters accordingly during the year. proprietary trading systems, a systematic and adaptive statistical approach to identify
trading opportunities in the equity index volatility market is employed.
The strategy involves initially identifying longer term trends of pairs and then trading short
and medium term trends and breakouts within the longer term trend. Effectively, the strategy
combines long-term trend following with short-term mean reversion.
1 https://seekingalpha.com/article/3350615-the-beginners-guide-to-volatility-vxx?page=2
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By using a multi-strategy approach to equity Index volatility, Rise participate and leverage Intraday / Event Trading
long, short and sideways VIX movements equally. Trading is performed on an intraday basis Rise’s showcase commodity trading strategy—the Intraday / Event trading strategy—is a
but some strategies hold overnight positions. A state recognition model drives investment pure machine learning strategy that’s been developed over a year. This automation leads
decisions to deliver absolute and uncorrelated returns. One of the sub-strategy aims is to to a considerable improvement in the number of trading ideas that can be generated in a
identify the most attractive VIX futures for a market neutral portfolio. limited amount of time. The amount of strategies is defined by the initial capital, the universe
of underlyings and the desired leverage.
As part of the portfolio construction process positions size is determined by certain criteria
such as market attractiveness, leverage, current drawdown, probability of volatility spikes, This AI strategy consists of different sub-strategies with varying starting times, trading
accuracy of historic volatility estimation. The market neutral volatility model always trades different volatility patterns around specific price levels on daily basis and especially around
two expiries, one short and one long. Rise aims to find the best short in calm periods (rising specific events such as, for example, the monthly release of the World Agricultural Supply
term-structure) and best long during market stress (declining term-structure). and Demand Estimates (WASDE) report. The WASDE is an official report published by the
United States Department of Agriculture providing a comprehensive forecast of U.S. and
A second sub-strategy is based on the negative correlation of VIX Futures to the S&P futures. world supply and demand for major crops and livestock.1 During specific industry events,
Both instruments are inherently linked. This strategy trades VIX futures and S&P 500 futures the strategy calibrates itself based on the values of the report (actual and survey) and
always both long or both short. The strategy leverages the fact that VIX futures have a determines the size of the expected market fluctuation. This AI uses substantial amounts
significant roll yield (return) – most of the time and S&P 500 futures do not have a significant of tick-data: for agricultural commodities, Rise takes seven years of tick data, for metals 10
roll yield. As S&P futures have a highly negative correlation with VIX futures and have no years and for energies (Crude Oil, Heating Oil, Natural Gas, Gasoline ) 11 years.
significant roll yield themselves, they are an efficient tool to hedge and “lock in” the VIX
futures roll yield and to reduce the risk compared to an outright position in VIX futures. The The system has been developed to create numerous uncorrelated strategies (trading single
strategy only takes positions if estimate VIX future roll yield (return) is high and if estimated lots) for each of the traded instruments with the goal of a double-layered diversification:
S&P 500 Index market risk is low. The position sizing is done by estimating the S&P Index various uncorrelated strategies for each instrument and diversified portfolio of each of the
market attractiveness and probability of volatility spikes by looking at option Skew. Trade different instruments. With multiple strategies per underlying, there are trades on up to 30%
VIX futures and S&P 500 futures always both long or both short. of the days with an average of a few trades per day. On the days with high volatility—as is often
the case during the aforementioned events—the number of trades increases dramatically.
So far the market volatility trading strategy exclusively trades S&P market volatility as the Although the strategies are developed to be uncorrelated, each additional strategy on one
equity market provides a variety of highly liquid instruments that give Rise’s AI systems underlying has diminishing returns in the sense of increasing the Sharpe ratio, because there
enough data points to identify profitable strategies. As part of the trading model development is a limited number of inefficiencies in the market and they all try to use them. In the current
pipeline, Rise has been working on a trading system that will trade around volatility in the oil setting having more than 10 strategies on one underlying does not bring any additional
market using options. decrease in portfolio variance.
By harvesting systematic, very short-termed price anomalies as a result of market events,

corporate news and times of high volatility, Rise uses the biggest risk to investor returns to
its advantage in order to smooth out portfolio returns. 1 http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1194
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Portfolio diversification and the resulting reduction in volatility of returns are achieved
by increasing the underlying universe of instruments and subsequently by increasing the
number of sub-strategies until the desired leverage is achieved. Capital allocation to the sub
strategies is determined by contract value as fractional lots cannot be traded. This way, the
strategy generates comparable results for each sub strategy.
The strategy involves several holding periods and indicators. The holding periods are
usually very small and in a vast majority of cases below one hour. In fact, no position is held
overnight. The indicators used include:
•• Amplitude imbalance
•• Relative momentum
•• Number of active seconds over some period
•• Relative volume
•• Various volatility measures (such as deviation percentiles)
The trading model is operated using three servers with 250 Gigabyte RAM and 12 cores
each and an input data set comprising comprehensive tick data history going back four
years. Under these conditions, the process of generating one set of strategies with 100 sub-
strategies takes 48 hours. This includes an out of sample validation (4x).
A continuous learning curve

Rise’s ongoing focus on risk management, diversification and a deep understanding of
industry-specific fundamental data will help to improve existing trading systems and lead to
the development of innovative approaches.
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R i s e Wh i te pap e r Th e R i s e a ppl i cat i o n – t h e ap p t h at co n n e cts i t al l 46
The Rise application – the app that connects it all

Token-Holder Benefits: Trade on 20+ EXCHANGES WATCH YOUR INVESTMENT GROW
Trade using an established, all-in-one trading app

• INVEST into CTFs (Crypto Traded Funds)
Profit from multi-exchange trading – top exchanges available all in • Trade MANUALLY
• AUTO-TRADE (using RISE A.I.)
one place • Earn DIVIDENDS
• PAY-OUT anytime
Avoid paying performance fees on Rise strategies
A brief history Figure 27: Overview of the Rise Application
The Rise application is an evolution of Rise’s popular UpTick Mobile-Trading application, The Rise Trading Hub will tackle two of the biggest pain points in the world of crypto trading: 1)
which launched 2015 with the vision to make mobile trading simple, easy and accessible fragmentation across multiple exchanges and 2) lack of mobile-optimized trading platforms.
for anyone. With support for over 12,000 assets, the UpTick application has grown to over The Rise multi-exchange portal will allow anyone to link their personal trading wallets from
100,000 registered users across 100+ countries on its flagship iOS application. With a focus over 20 crypto exchanges into one consolidated trading interface. The Rise multi-exchange
on simplicity and engaging features such as trading competitions and social trading signals, portal will be one of the only such solutions in which traders can track their portfolios, execute
the app has grown organically to one of the largest gamified trading platforms in the App trades and place orders via one unified, easy-to-use interface. Users will be able to control
Store. Now UpTick is evolving into the Rise Trading Hub, a full-fledged crypto operating their wallets for any exchanges they link via their exchange’s API keys. This will bring all assets
system to open the world of digital asset trading and investing to a mass audience. under one roof so it will be easy to keep track of returns and manage orders across multiple
trading venues. The Rise application will support a handful of exchanges from the start, with
Key facts1 plans to add 20+ exchange connections. The Rise Trading Hub will offer an intuitive and easy
•• Launched 2015 crypto-trading experience especially optimized for a mobile-first generation of users.
•• Over 100,000 registered traders
•• 2,000 trading portfolio competitions hosted Key features
•• Nearly 1,000 App Store reviews with a 4.8-star average rating •• Connect 20+ crypto exchange wallet into one application
•• 12,000 tradable products •• View over 2,000 connected crypto assets
•• Over 2.5 million executed trades •• Powerful, mobile-optimized charting
•• Users from 100+ countries •• Portfolio tracking
•• Profit from multi-exchange trading
1 This information is related to the UpTick app. The Rise app will be based on the UpTick product
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•• View and edit orders The Rise Token Wallet will be required, however, to invest RISE tokens in Crypto-Traded Funds
•• Place new orders (limit, stop-limit, market) (CTFs). Once users transfer tokens into their Rise wallet, they can choose how those tokens
•• Funding and withdrawals are kept on exchange only for maximum security should be allocated across the Rise CTFs. The investment portfolio is easily adjustable via
allocation sliders where users are able to choose between the following CTF fund classes:
•• Not invested (users will still receive Rise dividends for those tokens)
Use Rise AI trading algorithms •• Lower Risk
•• Medium Risk
In addition to trading manually on multiple crypto exchanges, the Rise platform will also •• Higher Risk
allow users to subscribe to automated trading strategies with Autopilot, powered by the Rise
AI. Users will be able to choose algorithms across a variety of risk classes, pick an allocation The Rise token-investing platform will allow users to track and adjust their portfolio on the
across any of their connected exchanges and then enable the Rise engine to automatically go in minutes (please note that changes to portfolio allocation can take several days to take
execute trades. A key feature is that users’ funds will never leave their wallet, which will allow effect, depending on market conditions and the type of underlying funds).
for full control and protection of assets. Users can track returns and start, stop or pause
algorithms at any time, directly via the application. Furthermore, users are able to define
custom stop-loss levels for each algorithm to match each users’ individual risk preference.
The vision with Autopilot is to become the trusted, automated trading companion that allows A quick app walkthrough
users to invest like the sophisticated trading elite, right on their mobile phone.
At the top of the Rise welcome screen, users get a quick look at their total net worth across
Key features multiple exchanges and assets. Below that, each of the two main trading functions and their
•• Subscribe to Rise trading algorithms respective asset values are displayed. The “My RISE Wallet” screen is home to everything
•• Algorithms trade right within a user’s connected exchange portfolio needed to manage RISE (RSE) tokens. RISE tokens can be purchased, dividends can be
•• Start and stop algorithms 24 / 7 viewed and managed, and RISE (RSE) tokens can be invested in Crypto-Traded Funds (CTFs).
•• View performance history The “My Trading Wallets” screen allows users to manage their connected exchanges, view
•• No performance fees, monthly fixed charge per strategy exchange wallet balances, compare current crypto market prices, and manage Autopilot,
•• Manage Rise dividends and invest in CTFs which allows users to designate crypto from any connected exchange to be automatically
traded using the powerful Rise AI.
The Rise platform will allow users to track their RISE (RSE) token balance and returns paid
out by STO Algo Profits. The application shows a unified overview of performance history
and key facts about the Rise universe, such as the RISE token price and historic charts. Users
don’t have to keep their tokens in the Rise wallet to receive dividends: by holding tokens in
an ERC20-compatible wallet, users will automatically get dividend payments every quarter.
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A demo version is available at: http://app.rise.eco

RISE Wallets The RISE welcome screen My Trading Wallets
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Brief overview of the key functions

Rise wallet functionality MY RISE TOKENS:
MY RISE WALLET: Users can view their RISE balance, token value and total value, as well
as investment gains over a chosen period. They can also purchase more
tokens or make a withdrawal to another wallet.
MY RISE DIVIDENDS:
Users will see the dividends they have earned as a RISE token-holder.
They can check the most recent dividend amount, total dividends
earned, date of next dividend as well as the all-time performance of Rise
algorithms. RISE dividends can also be easily reinvested from this screen.
MY RISE TOKENS:
Users can view their RISE balance, token value and total value, as well
as investment gains over a chosen period. They can also purchase more
tokens or make a withdrawal to another wallet.
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Trading wallet functionality
SEARCH & TRADE:

TRADING WALLET FUNCTIONALITY Users can view cryptocurrency markets across all exchanges that have
previously been connected. Users will be able to create, buy and sell
orders on any connected exchange.
MY PORTFOLIO:
This screen will show users’ complete crypto portfolio across all
connected exchanges. Individual exchange portfolios can be viewed
with the filter at the top. All open trade orders will be accessible at the
bottom, along with users’ complete trading history.
MY AUTOPILOTS:
This is where Autopilot strategies will be viewed and created. Visible
at the top are the total amount of assets managed by all Autopilots.
New Autopilots can be created in either the low, medium, or high risk
strategies. Crypto from any previously connected exchange can be
dedicated to Autopilot trading. Once confirmed, Autopilot takes it from
there.
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Example user flow – buying Bitcoin on any connected exchange

This process will demonstrate how easy it is to compare market prices across connected exchanges, and go through the process of purchasing
From your Welcome Screen, tap Tap “Search & Trade”. Here you can view market prices Here you can see the price of Bitcoin
“My Trading Wallets”. across all connected exchanges. over the last few hours.
Let’s look at Bitcoin. Tap the “Buy” button.
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On this screen, choose any exchanges you Here you can select how much Bitcoin This is the summary of your buy order. Now you’re back to your portfolio.
have previously connected. E.g. select you would like to purchase. Check the numbers one last time. Once your new order has been executed,
“Binance” and tap “Next”.Trading Wallets”. Set the amount and tap “Next”. If they look good, tap “Confirm”. you will see your new balance.
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Example user flow 2 – Setting up the Autopilot

This process will show the simplicity of setting up and viewing Autopilot strategies.
Start on the welcome screen. Tap “My Autopilot”. All currently running autopilots On this screen choose what kind All of your previously connected
Tap “My Trading Wallets”. and their total managed assets of risk profile you would like the exchange accounts will be
are displayed here. Tap” +Add Autopilot program to trade with, listed. Let’s go with Binance.
New Autopilot”. e.g. tap “Higher Risk”.
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Here you can select the amount Set your stop loss level on this screen. E.g. This is a summary of the options you You’re now back at your Autopilot
that the Autopilot should use to invest. 50% means that the Autopilot will stop if have chosen. If everything looks good, summary and you will see your new
Adjust the slider and tap “Next”. 50% losses are accumulated. Tap “Next” tap “Run Strategy”. strategy in the list.
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Example user flow 3 – managing Crypto-Traded Funds (CTFs)

Now let’s explore one of the exclusive features of the Rise wallet, the Crypto-Traded Funds (CTFs).
This process will show how to set up a CTF, and adjust the percentage of tokens being applied to each risk profile.
Start from the welcome screen. Tap on This screen shows your current Here you setup your RISE Now you’re back to the
This time, select “Crypto Traded Fund”. CTF allocations, split by risk tokens distribution between Crypto-Traded Fund
“My Rise Wallet” class. Tap “Adjust Allocation”. the risk classes. Once you have allocation overview,
everything the way you want it, and can see your changes.
click “Confirm Changes”.
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R i s e Wh i te pap e r L i ce ns e d R i s e A P I fo r i n st i t u t i o n al i n ve sto rs ( RA PI ) 56
Licensed Rise API for institutional investors (RAPI)

A brief technology overview of Rise API
Leverage Rise AI in internal trading systems The Rise API (RAPI) is designed to operate as a layer between the Rise system and a fully-
Generate on-demand price-movement indications automated software client managed by large institutional clients. Via the RAPI, clients can
Get actionable recommendations for long and short entries and leverage Rise’s AI generated signals and recommendations for their own trading systems.
exits The level of integration can be customized according to the client’s requirements.
4
There are two ways that large institutional clients can profit from the RAPI, specifically
For large-scale clients looking to integrate Rise into their existing system, Rise provides tailored to their requirements:
a secure API solution designed to comply with all compliance and IT security-related
requirements of institutions such as banks, hedge or pension funds as well as multinational 1 On-demand price movement indication: Rise’s AI machine will create
companies. indications on where the price of symbols is expected to move during a
certain period of time. The price movement indication will be valid for
Clearly, institutions have different technical requirements than retail clients. Each a limited period of time only. The client can request the prediction for
institutional client’s existing compliance and security policies will determine the final fee one or several symbols at a time. Rise will use REST to deliver the data in
structure that Rise will charge. Most integration projects will require significant work, and JSON format. The client is allowed to poll in certain time intervals.
a one-time setup fee will be required. Monthly licensing fees will depend on the size of the
organization in terms of Assets Under Management (AUM). 2 Actionable recommendations: Rise will recommend the long / short
entry and exit levels for coins and other underlyings. All trading systems
Rise protects its institutional clients through protections built into the algorithm. Trades are will be hosted in a highly secure VPN with latest monitoring tools
reconciled to trading signals generated by the algorithms. Any irregularities are identified (intrusion prevention, intrusion detection, audit).
and an alert is triggered immediately. The control process also checks the price feeds from
different sources in terms of completeness and accuracy in real time. Any issues will trigger For certain institutional clients, Rise also will also provide the service of integrating their
an alert. internal, anonymized data via the RAPI into its analysis. Given that this service requires a
large amount of technical work, the project costs will be determined on a case-by-case basis.
Due to the compliance and security sensitivity of any trading-related integration project,
robustness and scalability are key considerations. This is why the RAPI follows the design principles
of a RESTful API following the Richardson Maturity Model level 3 based on HATEOAS principle.
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default 1 2 3
data 1 data 2
Figure 28: Structure of the uniform resource identifiers
Figure 30: Example of a possible payload of a response
The uniform resource identifiers (URIs) are structured in a way that they can be easily
accessed and well organized. The top is made up by algorithm-ids that have been created The expectations are supplied in the format of estimated probability distribution and the valid
either by Rise with its own data and resources, or by the users with their own specific data. time period for the selected underlying. The payload of the result may look similar to Figure 30.
These resources can be accessed and manipulated by RESTful methods. In the table shown Security is a crucial factor for such a close integration project. Access restrictions are a critical
below are example calls with their desired effect. aspect of this and a token-based authentication system is used. The industry standard is to
follow the open standard of using a JSON Web Token (RFC 7519). After the client has logged
Resource GET POST DELETE onto the server with their own personalized credentials they are then given a token:
Create a new algorithm
/ - -
using proprietary data
Get a prediction of the Delete your p

roprietary,
eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJub3QiOiJ2ZXJ5Iiwic2Vuc2l0aXZlIjoiZGF0YSJ9.
/3 selected algorithm for all - previously created OMNMyJ9t0wZysEgkyOPhvc8DbC6aM0L-mg_oxmy-f-w
currencies a lgorithm
Delete your proprietary

/3/data - Create new data
data for the given algorithm
This token is then attached to any API request sent by the client to authenticate the user
Table 2: Example Calls and Effect when requesting to access the RAPI.
For example GET /:algorithm-id: would return expected market price moves for all currencies There are many benefits of using tokens over a state-based authentication system. Since
analysed. However, it is also possible to only receive expected price moves for particular every piece of information needed for the login system is contained in the token itself, it does
currencies. Alternatively, POST /:algorithm-id:/data can introduce a client’s proprietary data not require the server to keep track of every user‘s current login state. This ensures scalability,
set to be analyzed by the algorithm. Certain clients may be given the functionality to adjust which is an important factor when designing any RESTful interface. This also ensures detailed
the settings and parameters of the algorithm. access control, since every user may only access its own data and own specific algorithms.
This information is stored on the server side and is associated with the token. User access
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Client Server
Rise is currently working with two institutional clients on diverse projects that guarantee an
ongoing revenue stream. The following two case studies look at both projects in more detail.
login()
token BayWa
Over the past few years, BayWa has grown to become an international group and is now active
GET + token
today on all continents, extending its reach beyond its core regions of Germany and Austria.
response
BayWa develops leading solutions for the basic human needs of food, energy and building.
POST + token
response
In early 2013, BayWa completed the takeover of Cefetra, headquartered in Rotterdam.
destroyToken()
Cefetra supplies raw materials to the feed, food, and fuel industries. This includes the animal
Figure 31: UML sequence diagram for the RAPI feed industry, the foodstuffs industry (including drinks), the starch industry, and the bio-fuel
sector (including biomass). Each year, Cefetra trades around 20 million tonnes of agricultural
management is very effective reducing the need for hardware. The tokens are valid for a commodities. The supply of raw materials for animal feed forms more than 90% of Cefetra‘s
limited amount of time only —in the API, “time to live” (ttl) can be configured as needed. activities.
In 2016 BayWa – Cefetra and Rise (at this time operating as QUANTUMROCK) embarked
upon a joint project to better understand and trade around the constantly changing market
A few examples of Rise API licensing conditions in Cefetra’s core markets. Since the inception of the project, both companies have
been working closely together to create a number of cutting-edge algorithmic trading systems
Trillions of U.S. Dollars are currently not being invested by family offices, high net worth that leverage Rise’s proprietary artificial intelligence and machine learning technologies to
individuals and other smaller investment firms due to the lack of suitable investment dynamically adapt to the rapidly changing and challenging trading environment. Cefetra
opportunities that offer attractive risk adjusted returns. Licensing algorithms, trading has recently increased its financial commitment and is closely following and contributing
systems and automatic portfolio optimization software to these clients represents a growing actively to the continued development of new algorithmic trading systems.
and highly attractive revenue opportunity for Rise.
Liechtenstein Life
At Rise we have been developing algorithms and trading strategies that aim at generating Liechtenstein Life (LiLife) is a young and innovative life insurance company based in the
absolute returns for investors. Licensing these algorithms, trading systems and automated principality of Liechtenstein. With innovative business strategies, the company develops
portfolio optimization software to these clients represents a growing and highly attractive digital product solutions and services for customers and business partners that are highly
revenue opportunity for Rise. Compared to Wirtschaftswoche‘s list of Germany‘s leading disruptive.
money managers, Rise would have outperformed those with 58.24% capital growth since
20141 . Based on the analysis of 1.300 funds from 400 banks and independent asset managers,
Rise not only returned great profits to investors but also had the lowest maximum drawdowns. 1 WirtschaftsWoche 16.2.2018 https://www.wiwo.de/
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With its focus on insurance tech, Lichtenstein Life has been at the forefront of an industry trend a net long volatility exposure. The methodology behind the strategy leverages a number of
to radically improve the online client experience. Rise was selected as the exclusive partner market characteristics such as: the fact that rolling correlations of global indexes increase
to design specifically tailored investment products for LiLife’s clients. In line with a strong during times of distress, selling options where equity market volatility is most expensive, and
focus on customer experience and technology, the investment products that Rise designed buying options where the implied volatility is cheapest takes on a net long VEGA exposure
are transparent exchange-quoted instruments based on proprietary artificial intelligence and at little to no cost. Additionally, when analyzing the proposed trade in more detail in terms
machine learning approaches that are highly scientific and fully automated. LiLife’s customers of the options used for the hedge, the dynamic of the options’ market in relation to the
assess their personal investment risk profile via an interactive online portfolio management underlying derivatives need to be understood. Options have linear exposure, but one can
platform and are then able to manage their investment allocations accordingly using these isolate the volatility component and create a convex payoff scenario as shown by the blue
tailored products. Initially LiLife and Rise will offer1 three distinct risk profiles to clients: Risk line on the chart below. The isolation of the volatility element of the option is achieved by
Profile 3 ‘Defensive’, Risk Profile 4 ‘Moderate’, Risk Profile 6 ‘Opportunity’. delta hedging, i.e. limiting the directional price exposure of the option to the underlying,
which is achieved on a daily basis by using futures of the underlying.
Rise democratizes the portfolio selection process according to the client’s individual risk
appetite. Life insurance owners will have full transparency in terms of how their investment As stated earlier, rolling correlations of global equity indexes increase during times of
portfolios are managed and gain unprecedented access to systematic and fully automated distress. This observation is visualized in the chart below, plotting the three major European
trading strategies that used to be accessible only to large investment firms and global banks. equity indexes, namely the AEX (Amsterdam), DAX (Frankfurt) and OMX (Stockholm).
Other solutions $500,00 45
Designing tailored investment solutions for institutional clients is another important revenue
40
source. In this case, Rise’s Global Market Meltdown Protection (GMMP) is examined. $400,00
35
An institutional client approached Rise with the task to create a tailored investment solution 30
$300,00
that would protect their long-only equity portfolio from market meltdowns using stock
25
market volatility derivatives. Gaining exposure to the Volatility Index on the S&P 500 is only
possible through derivatives, i.e. options and futures. Being outright long volatility (VIX) $200,00 20
futures or options as a hedge is a perpetual loser, as the cost of replicating the VIX for long
15
volatility is expensive. Optimizing the cost of the hedge was the biggest challenge Rise faced
$100,00
while designing this investment solution. 10
5
$0
The investment solution that Rise proposed is called Global Market Meltdown Protection -10% -8% -6% -4% -2% -1% 0% 2,50% 5%
0
or GMMP. The strategy behind the solution uses relative value volatility spreads that have
-$100,00 -5
F&L change vol
1 Product will launch Q4 2018 Figure 32: Convex Payoff Scenario
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European Index Rolling 90 day Correlation
100,00%
50,00%
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Equity
9/11 Lehmans
Rebound
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AEX/DAX AEX/OMX DAX/OMX Vstoxx/FTSE Vstoxx/SMI
Figure 33: Rolling correlations of global equity indexes during times of distress
The profile of an example trade that was stress tested is as follows: This trade almost covered the entire loss from the 10% drop in the market while minimizing
the cost of hedging by collecting the premium, selling relatively more expensive puts,
1 year Futures & Options and buying more cost-effective long volatility options, effectively hedging at zero option
•• Long AEX (Amsterdam) Volatility premium.
•• Short DAX (Frankfurt) Volatility
•• Short OMX (Stockholm) Volatility By stress testing the proposed investment solution for a S&P 500 index long-only $5 million
portfolio, one better understands the tail protection this tailored product can add.
Equity portfolio of 5m USD is hedged
•• Market drops by 10% The profit and loss during the Lehman crisis in 2008 shows that the long-only S&P 500 index
•• VIX increases by 40 points portfolio lost approximately $727,000 while the tail protection returned a profit of $2.18
•• Hedge covers 454K USD of the ca. 500K USD equity portfolio losses million. Normally, one would have expected that the profit from the tail protection more or
less covers the losses from the long only exposure in equities, as was seen on 9 / 11 in 2001.
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$2.500.000
$2.000.000
$1.500.000
$1.000.000
$500.000
$0
-$500.000
-$1.000.000
9/11 Lehman Default 2008 Equity Markets Rebound - 2009
GMMP P&L S&P long P&L
Figure 34: European Index Hedge Historical Scenarios
However, as GMMP was long volatility in the AEX, which is bank heavy, Rise’s trade made
more profit than if it had been invested in less banking focused indexes.
The other very interesting findings from stress testing the methodology of Rise’s product is
that in calm markets, GMMP costs are less than outright hedging, losing only $45,000 during
the equity recovery phase from the middle of 2009 onwards, while gaining in excess of $2
million on the long equity side.
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R i s e Wh i te pap e r T h e s c i e nce an d bac kg ro u n d of R i s e 62
The science and background of Rise

to prevent negative results for the participant. These two factors, combined with the
recent popularity and scale, have created a world with huge potential for skilled investors.
Benefit from years of R&D and Rise’s expertise in AI In this world, utilizing data holds paramount importance, not only for maximizing trading
Harness trading strategies based on several data sources and AI models effectiveness but also to prevent any negative results.
Extract profits through deep machine learning techniques
In addition, the nature of the blockchain technology upon which cryptocurrencies are built
has created novel and complex data sets unique to this market. Along with these new data
Introduction
4
types, other more familiar types have found greater importance and influence. The following
passages will dive deeper into what this new world looks like and expand on how the data
Data and algorithms have proven to be of critical importance for success in traditional landscape in the crypto world differs.
financial markets. Big data has changed the entire financial market and redefined what the
most valuable assets are for investors. Human capital has been replaced by computing capital While cryptocurrency has gained tremendous popularity, it still remains nascent. Not only its
and the trader with the quant. Funds that have embraced this change have consequently market dynamics but also its technology. In terms of the scale and maturity of the offerings
thrived and emerged as the top players in the space. Those that continued with the status and technologies that are being developed, the vast majority of the industry is changing and
quo became unable to compete. As demonstrated in the previous sections, the founders of developing at a rapid pace. The rate of its growth and the expansion of the community that
Rise have cemented their status as the former through the consistent success of their trading is supporting this growth shows that this nascent industry will soon begin transforming into
methodologies. a massive global economic engine.
By pioneering various advanced trading methodologies and positioning itself as a leader in Leveraging a new data paradigm
the space, Rise is perfectly poised to take advantage of its strategies in the cryptocurrency Understanding the data around the market in its current hypergrowth state and developing
market. AI, machine learning and other techniques allow Rise to create unprecedented algorithms and methodologies to invest with gives Rise a powerful position for the future.
success in both traditional markets and in the world of crypto. This is particularly important in the short term while the market remains highly speculative.
For most entities in the crypto world, there are no financial statements, no agreed-upon
Rise leverages the crypto market’s nascent and often speculative nature. Nascent markets valuation methodologies, and unclear target markets. The volatile nature of the industry
are defined as being new and upcoming. These are naturally less predictable and hold many as a whole is in large part due to these factors. In order to be successful in these types
different traits to those of their traditional counterparts. The crypto market is no different. of markets, practical and theoretical experience in financial markets and effective tools
A speculative market is defined as a market whose value is not steadfastly defined and are necessary and Rise has proven its ability to cover both. Furthermore, data is the key to
can fluctuate because not all parties hold the same values in the market. These require unlocking the dynamics of this market and ensuring overall success for investment.
an in-depth knowledge and understanding of what causes market trends and fluctuations
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Traditional Investing Data Sources Crypto Investing Data Sources why, providing further investment openings in the future. The differentiation points between
crypto and traditional markets continues with other data types such as sentiment and
Financial Data Sentiment Data Financial Data Sentiment Data

technical data.
Sentiment data
Outside of traditional financial data, crypto trading is significantly influenced by other data
Technical Data On-Chain Data
types such as sentiment data. Sentiment data is often used in traditional markets but in
crypto holds even more significance. To begin with, the social media sources that influence
Figure 35: With wider ranging data sources, the crypto market provides greater possibility for successful investment. the crypto market are much more powerful. A single tweet, Telegram post, or Reddit
announcement can send token values skyrocketing or plummeting. As such, these various
The data that holds value when trading and investing in the crypto market spans a much types of media and the data around them are critical to effective investments and trading.
wider range than in the traditional world because of the aforementioned factors. In The ability for these media posts to affect assets so drastically is again due to the speculative
traditional markets, financial data is the dominant force. This data can include variables nature of the market. These assets often don’t have revenues or other financial metrics to
such as trading volume, unit price, market capitalization and many others. Companies such base their value on, so “hype” built from marketing and social media serves as a proxy. The
as Bloomberg built billion-dollar businesses by creating tools around this data and providing measurement of “hype”, essentially an understanding of how much excitement and market
quality, reliable access that traders and investors could use to do analysis and feed into potential a certain asset has, is critical in today’s crypto market. This measurement can take
their algorithms. In large part, financial data is the main source for traders and investors a token such as Dogecoin, which was initially created as a parody, from nonexistent to a top
because there is a substantial amount of hard information that generates values attached 50 asset in a matter of weeks (as seen in Figure 36).
to companies and assets. These values are based on revenues, profits, available supply and
Dogecoin Market Cap
many other factors, which are meticulously documented and the enforcement of which is
backed by national and oftentimes international regulations. $100,000,000
This data type is also very important in the crypto market. Despite the lack of regulation
$75,000,000
and the scattered sources for data, there are valuable insights to be had for trading and
Market Cap
investments. For crypto markets, these values can be found as an aggregate from sources
such as CoinMarketCap or from individual exchanges like Coinbase or Binance for the financial $50,000,000
information specific to that exchange. A major differentiating factor for financial data in
crypto is that this information does not hold consistent value across various exchanges.
$25,000,000
The prices, volumes and other data can sometimes vary depending on the exchange. This
variation can provide opportunities for traders and investors and also allow for training of
AI algorithms over many different sample cases. Through this process, the algorithms will $0
Dec 22, 2013 Jan 05, 2014 Jan 19, 2014 Feb 02, 2014 Feb 16, 2014
become even more effective because they have this opportunity unique to the crypto space.
These analyses will also allow Rise to understand which exchanges are most effective and Figure 36: How Hype Effects the Market
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Aside from the measurement of hype, sentiment data can extend to the rate and quality of into algorithms for investments will be a large part of determining the success of a particular
growth of a particular asset’s following on various media types. A certain asset may have fund or investor.
added 10,000 followers in one day but 9,000 may have been purchased or derived from
fake accounts. Examining the data around fellowship of certain assets can provide valuable With this new data landscape of the crypto market, investors and traders are given
insights into their potential long-term success and short-term hype. Additionally, sentiment unprecedented information to build and develop their tools. The lengthy experience of Rise
analysis can take the swaths of data from all media sources and transform it into more usable doing this in the traditional markets will help maximize the existing technology to find even
metrics. Instead of seeing a long list of information such as articles, posts, or mentions, greater success in the crypto world.
algorithms can be employed to show investors the “sentiment” of all the media. In other
words, the algorithm will show if the overall view of the asset is positive or negative and
exactly how positive or negative it is. These metrics can then be fed into the AI systems as
another variable to help predict assets’ variations or inform further investment decisions. The basics of machine learning
for trading systems
Technical data
Technical data also holds significant importance in crypto trading and investment. This data Most key elements of machine learning in trading are well established with certain best
type is wide-ranging, as it refers to the more technical aspects of a particular asset, including practises thought to be known. One of the most important approaches is to split all data
the skill of its developers, number of users, nature of its usage and much more. This data into training, validation and test data. Doing so avoids the dangerous pitfall of overfitting the
type is crucial for determining the longer term success of a particular asset because it is a model to past data without generalizing well on unseen, future data. The general approach
more direct measure of the asset’s technical ability and community. is then to test a model for the given problem, verify its effectiveness and pick the best of all
tested models, eventually learning and optimizing the parameters that the chosen model
Github is a useful source for much of this information as it is not only a platform posting and entails. The problem with this standard procedure is that experts have to first come up with
organizing technical information but also for determining the technical community around the appropriate models to use, which are based on assumptions about an idealised world.
an asset. Github can show a wide variety of information about a project and is by far the
largest and most active of this type of tool. This is a data type that usually is not available in
traditional markets because traditional assets are not open source. Crypto assets however
are often open-source. Because of the nature of open-source projects, investors and traders Decision Trees and Random Forests
are given a whole new type of data that previously was not accessible.
The employment of random decision forests, or random forests for short, is a key element of
Another available technical data resource specific to crypto is on-chain data. Blockchain the financial models at Rise. Random forests are an ensemble learning method that combine
projects by the very nature of the technology track and hold significant amounts of data the models produced by several classifiers into an ensemble that performs better than the
related to the usage of the project. This data can be accessed and analyzed by traders original classifier. The component classifiers used in this approach are called decision trees.
and investors to understand how the asset is being used. It can help gauge how large the A decision tree is a directed tree, i.e. a directed acyclic connected graph, used for decision
community is, how much activity is actual usage of the asset vs. trading, as well as many making and automated classification of objects, e.g. pattern recognition. These random
other insights. Understanding the various potential uses of this data and incorporating it forests help in preventing overfitting.
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Each node in this tree represents a possible attribute of the object in question and each Reducing p will result in a reduced correlation between any pair of trees, altogether reducing
branch a possible outcome. They can be used as a predictive model to derive an objects the overall variance while the bias of the random forest F is the same as the bias of any of
target value Y = (y1 , ..., ym) from the features X = (x 1, x 2, ..., xn) of the object. Allowing for Y to the individual sampled trees. The random forest regression predictor is now given by
take continuous values not only enables us to use decision trees for classification problems
1 B
but also for regression analysis. Starting with a large data set of observations Z = (X, Y) fˆrf
B
(x) = T (x; Θb ).
B b=1
the algorithm can inductively derive a decision tree for a given problem. There are several
competing techniques to this end, two prominent examples being CHAID and C4.5. Ĉk (x) denote
Typically, for regression p is chosen as ⌊n/3⌋ and nmin = 5. For classification, let
the prediction of the k-th random forest tree Tk ,B then Ĉrf (x) is obtained by a majority
B
Decision trees provide good models for many applications and are widely used in machine vote on the set {Ĉk (x)}k=1,...,B Here p = ⌊√n⌋ and the minimum node size is one. Of
learning. However, trees that are grown very deep are prone to overfitting; that is ,they have course, the exact values will depend greatly on the problem and are subject to deep analysis
low bias but high variance. Growing them to an ensemble was first proposed by Tin Kam of the Rise team. In general, increasing the number of trees B will make the predictions
more robust, but it also slows down the computation. Building on years of research, Rise
Ho in 1995. This is achieved by applying a type of bootstrap aggregation (or “feature bagging”), has developed a codebase with the most efficient implementations and parameters. This
which shows each classifier a randomly sampled subset Z ∗ of the training data Z so that the experience combined with the latest high performance hardware enables Rise to overcome
classifiers will produce different models which afterwards can be averaged. By restricting this performance challenge and drives its superior, adaptive trading algorithms.
the training data to random feature subsets Θb this method reduces the correlation between
the individual estimators. In sharp contrast to single decision trees, random forests can gain There are good and bad news concerning decision trees and random forests. The bad
accuracy as they grow without suffering from overtraining. news is that pure decision trees and random forests are not the hottest area of research
nowadays, as modern techniques such as deep neural network (to be discussed later) are far
To create a random forest F = {T (x; Θb )}b=1,...,B of size B one proceeds as more popular with enthusiasts and academic researchers. The good news is that depending
follows: For each b = 1, ..., B: on the actual problem, even a pure decision tree and random forest can attain a better
predictive performance than those modern techniques.
1 Draw a sample Z of size N at random with replacement from the training
∗
data Z Nevertheless, there are two points that should be addressed as advancements of decision
trees and random forests: computational complexity and model updates. Often decision
2 Now grow a tree T b
to the bootstrapped data Z∗, by recursively repeating trees and random forests (or indeed, most machine learning techniques discussed in
the following steps for each terminal node of the tree, until the minimum public) focus on how well they can potentially perform, but little emphasis goes into the
node size nmin is reached. above issues. These two points are especially relevant to trading situations, as under such
a) Select p < n variables at random from the n variables. environment, these models need to be trained and tested under a rigid time constraint.
b) Pick the best variable / split-point among the p.
c) Split the node into two daughter nodes. 1 Computational complexity. While random forest was first proposed by
Ho in 1995, the computational complexity analysis was rather recent. To
the best of our knowledge, the first comprehensive and rigorous work
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on computational complexity was only conducted in a doctoral thesis Gradient boosting

in 2016. They argued that the time taken to run a random forest can
grow up to the order of BmZ^ 2 log(Z), especially when the data is highly Boosting is a machine learning technique that can be applied to many different learning
unbalanced. That is, data are not well split in each decision process. algorithms. In contrast to the idea of “bagging” used with random forests, in boosting a
strong model is obtained step-by-step from weaker models. At each step, the new model is
Also, note that decision trees and random forests are in general faster, trying to correct the mistakes of its predecessor. Gradient boosting is an algorithm obtained
especially compared to modern techniques like deep neural networks. by applying the concept of boosting to the minimization of a differentiable loss function L
Unfortunately, the complexity of deep neural network is highly structure- by gradient descent.
dependent and there has yet to be a concrete and solid computational
complexity analysis to date. When various models are tested to decide Starting from a collection of sample data points Γ = { (xi, yi) | 1 ≤ i ≤ N }, a suitable mapping ĥ:
which model should be adopted, it is also important to take computational X → Y in the hypothesis space H from the input space X to the output space Y , such that ĥ is
complexity into account in addition to the predictive performance itself. a good approximation to a function h which minimizes some specified loss function L : Y ×Y
→ ℝ ≥0. That is, the expected value of the loss function L(y, h(x)) over the joint distribution P
2 Model Updates. Decision trees and random forests are originally (x, y) is minimized:
designed in the way that the whole data set is needed from the beginning
in order to produce an output answer. That is, for every new input data ĥ = arg min Ey,x [L(y, h(x))] = arg min Ex [Ey ( L(y, h(x))) | x ] .
h∈H h∈H
inserted into training, the model needs to be re-trained again before
computing the predictive output. To avoid re-training the whole model
again, one heuristic is to set the following extra constraint in the step of Boosting approximates ĥ by an expansion of the base learners g(x; a) with parameters a = {
growing the tree: Split the node only when there are sufficient samples a1, ..., aN } and weights βk ∈ ℝ:
and the ‘gain’ of splitting the node has to exceed a certain threshold. N

To define the “gain,” denote Rj as node j with {Rjlx , Rjrx} the left and right ĥ(x) = βk g(x; ak ).
partition after the insertion of a new point x and |.| denotes the total k=1
number of points in a node. A quality measure of a node Rj can be defined
as some function L(Rj), which can be defined as an entropy or a Gini index. The weights and parameters can be fitted to the training data incrementally by starting with
Then, the “gain” of splitting the node can be defined as the difference in a initial guess h 0(x) and letting for k = 1, . . . , N:
quality measures. That is,
N
|Rjlx |

|Rjrx |
1 2(βk , ak ) = argβ,amin i=1 L (yi , hk−1 (xi ) + βg(xi ; a))
∆ (L(Rj ), x) = L(Rj ) − L (Rjlx ) + L (Rjrx )
|Rj | |Rj |
2 2hk (x) = hk−1 (x) + βk g(x; ak )
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For differentiable base learners this optimization problem is solved with gradient boosting Gradient boosting is essentially “gradient descent” plus “boosting.” Therefore, a natural
by first fitting g(x; a) by least squares approach to further advance the technique us to look into variants of gradient descent or
N
boosting. While there is enormous amount of literature, the following two advancements
2
ak = arg min (yik − γg(xi ; a)) have been identified which will be very useful in trading algorithm development.
a,γ i=1
1 Stochastic gradient descent. In solving an optimization problem,

where yik are the current pseudo-residuals defined as most technical papers often just state “use gradient descent” to

∂L(yi , h(xi )) maximum profit expectation or minimize risk. However, this is an
yik = − . oversimplification. While gradient descent is assumed to be well known
∂h(xi ) h(x)=hk−1 (x) for technicians and developers, it comes with practical limitations,
especially in trading. Computationally, this is expensive and can take
From this the optimal values of the coefficients βk are determined: extremely long time to archive an extrema. This usually gets worse when
N data are multidimensional and “rough” (for example, the price of a crypto

βk = arg min L (yi , hk−1 (xi ) + βg(xi ; ak )) . has lots of jumps and it will never look as smooth a simple function in a
β i=1 textbook). Even if it is certain that an extrema exists, a bad step size can
cause gradient descent to never attain the optimum.
When using decision trees as base learners gk(x) for gradient boosting, it is customary to modify
the algorithm slightly to improve the fit of the base learners. At the k − th iteration a decision One way to extend this approach is to randomise the step size. The trick
tree with Jk leaves partitions the input space into Jk disjoint regions {Rjk }j=1,...,Jk with is to divide the sample into a number of subsamples (say n subsamples),
corresponding predictions bjk . For the output gk(x), there is run gradient descent on each subsample and randomly pick the average
Jk
of different step sizes computed. Empirically, this turns out to be better
gk (x) = bjk χRjk (x), than pure gradient descent. Also, assume it takes time Tg to compute
j=1 one gradient and an error tolerance of ϵ is needed (in practice, loosely
around 10 -6 , often even lower, is needed). The time complexity needed
where χRjk is the indicator function on the region Rjk . Now the algorithm selects an optimal γ is nT g log(1/ϵ) for gradient descent but only T g /ϵ for stochastic gradient
for each region in each computation step descent. This shows that stochastic gradient descent is more efficient
computationally, especially when n is large.

γjk = arg min L(yi , hk−1 (xi ) + γ)
γ xi ∈Rjk There are also other variations and a number of them are already available
under optimization libraries in common programming languages. The
and updates its model according to the rule best choice is often highly problem dependent and is chosen after
Jk
rigorous work by Rise AI researchers and engineers.
hk (x) = hk−1 (x) + γjk χRjk (x).
j=1
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2 Online gradient boosting. The idea of online gradient boosting is Input layer Hidden layer Output layer
similar to an online forest where the system needs to define a certain

measure whenever a new point is entered. For each input point xi it is
Input 1 Output 1
now associated with a weight wi. Similar to the discussion in decision
trees and random forests, the weight component is now incorporated
into the loss function and the new loss function is of the form Input 2 Output 2
L(yi , hk−1 (xi ), wi )

Input 3 Output 3
The rest is nothing but more tedious mathematical expression, plus few
technical constructions without much intuitive insight. Interested readers Input 4
can refer to the paper “An Online Boosting Algorithm with Theoretical
Justifications” written by Chen et. al.
The advantage of using online gradient boosting is again to adapt the Figure 37: Hidden Layer in a Neural Network
model only when the new input is “worthy.” Empirically this is better than
plain gradient boosting. The topology of a neural network can be represented by a weighted connected digraph G
= (V, E) where each vi ∈ V is referred to as a neuron and (vi, vj) ∈ E represents a connection
from neuron vi to vj with weight wij. The weights are stored in a weight matrix W. One way to
design neural networks is to group neurons into “layers,” distinguishing a set of incoming
Neural networks neurons vi with deg− (vi ) = 0 as the input layer and vj with deg+ (vj ) = 0 as the
output layer. The nodes in between these layers are called “hidden” neurons. For example,
Theoretical background if a neural network is designed as a multilayer perceptron (MLP) with only one hidden layer
Artificial neural networks are arguably one of the oldest known tools of machine learning, (see diagram) , a neuron v_j in a hidden layer is depending on neurons in the input layer,
dating to the early 1940s. Nevertheless, with deep learning, it is only recently that they have given as a weighted sum
become suited to fit the needs of robust modern-day trading algorithms, the combination
deg− (vj )
of which is called deep neural networks. This leap in the development of deep neural netj = i=0 wij xi
networks was impressively demonstrated when Google‘s “AlphaGo” defeated the world‘s
top Go players in 2016 and 2017. Rise has incorporated deep neural network techniques to The output of each neuron oj is further equipped with a nonlinear, differentiable activation
fuel its trading algorithms to identify patterns from very small, weak signals that are barely function φ and a bias θj ∈ R. That is, oj = φ( netj , θj ) and this output will then be propagated
distinguishable from market noise. to other neurons. In this way, information that has been given to the neurons of the input
layer can be processed by the network and the result is returned by the output neurons.
The network can be trained by the adjustment of the weights wij. Deep neural networks
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are essentially about networks with multiple hidden layers. The training process is typically ∂Ep
(m)
carried out by the backpropagation algorithm. It uses a gradient-descent approach to δp,v =− (m)
, m = 2, . . . , M
∂netp,v
minimize a cost function equivalent to the MSE between the target and actual network
outputs. the algorithm can derive expressions for neurons of the output (m = M − 1) and hidden layers
(m = 1, . . . , M − 2)
In supervised learning with backpropagation, the network is given a training pattern (xp, yp)
(M )
∈ Γ . Here xp is the p-th input sample and yp the target output. By ŷp the actual output of δp,v = −ep,v ϕ̇(M
v
)
net(M
p,v
)
the network on the p-th pattern is denoted. The network weights are adjusted to minimize J
m+2
the error Ep =
1
2
− yp =
ŷp 2 1
2 p
ep = ŷp − yp and ep, i
e T ep where (m+1)
δp,v = ϕ(m+1)
v net(m+1)
p,v
(m+2)
δp,ω (m+1)
· wvω
is the projection of ep on its i-th element. Since most relevant quantities depend on the ω=1
current pattern, a new index p is added to the previous notation.
These equations can recursively solve (m+1) for the whole network and in each learning
δp,v
For a network with M layers, each having Jm neurons for m = 1,...,M the weights are denoted epoch adjust W by
from the (m − 1)-th layer to the m-th layer by W(m−1). That is, they are collected in a Jm−1 × Jm
∂Ep (m+1) (m)
matrix. Now for m = 2, ..., M and the p-th pattern (xp, yp) let:
(m)
= −δp,v op,u .
wuv
1 ŷp = o(M
p
)
and o(1)
p = xp
T In most scenarios, the same activation function φ for all connections is applied, but it is
2 net(m)
p = W (m−1)
o(m−1)
p +θ m
possible to set different activation functions for each connection between neurons. There is
no golden rule in choosing the right activation functions; optimal settings are designed by
3 o(m)
p = ϕ(m) (net(m)
p ) Rise AI researchers and engineers with laborious work.
There are several pitfalls in training and building neural networks. Often, the optimization

(m) (m)
where net(m) = netp,1 , . . . , netp,Jm is the m-th net input vector based on the outputs problems at hand are nonconvex and unstable. Choosing the correct number of hidden
p
(m−1) (m−1)
of the neurons in the (m-1)-th layer, o(m−1) = op,1 , . . . , op,Jm−1 is the (m-1)-th output layers and the proper choice of initialization values is highly non-trivial and requires deep
p
(m)
vector, θm = θ1(m) , . . . , θJ(m)
m is the m-th bias vector and ϕ (m)
(v) → ϕi (vi ) for i = insight into the technology.
1,...,Jm . The network parameters W(m−1) and θ(m) can be combined further into the matrix W =
(wij). Applying gradient-descent to Ep yields Based on years of experience, the Rise team has developed highly innovative heuristics and
algorithms to select from a multitude of possible network architectures the most performing
∂Ep
∆p W = −η network. The common problem of overfitting the network is largely solved by our cutting-
∂W edge regularization technique based on weight decay.
where η > 0 is the step size. When η is too small the algorithm may become stuck in a local
minimum of Ep, when η is too large it can cause oscillation. By introducing the delta function
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Rise’s neural networks are designed rather differently than the previous type of neural The major application of the CNN in trading includes short text
network described (often called MLP). Depending on which feature to use to forecast the categorisation, which will be useful when there is news concerning the
price movement of the crypto, such as world business news, bid-ask orders or historical cryptos or stocks. The CNN can also be used to find relevant features
prices, Rise uses other types of neural networks to achieve predictive performance even when many parameters exist and it is unclear which parameters are
better than MLP. crucial.
The main creative trick lies in modifying the way the neuron is computed. There are, in 2 Recurrent neural network. While MLPs and CNNs have been showing
particular, two classes of neural networks that have been successful in many state-of-the- great success, they are not well designed for temporal problems. To
art applications today: convolutional neural networks (CNN) and recurrent neural networks predict future prices, most approaches are based on past data, or a
(RNN). time series. A recurrent neural network is different from an MLP in that
neurons in the hidden layer do not only depend on the input but also
1 Convolutional neural network (CNN). In a CNN, the first step is to on neurons within layers. This can be illustrated by using the simplest
construct a filter vector K of size m. The filter vector is based on the example: a comparison of an RNN and an MLP with only one neuron in
structure of the data and designed by Rise researchers and engineers. the hidden layer (hereon one hidden layer, H, is named):
Given such a filter, step 2 in the p-th pattern is modified as
Simple
m
feed-forward Simple recurrent neutral network
net(m) = K(m) net(m−1) +θ (m) network

p p,q ∗ q ,
Y YT Y0 Y1 Y2 YT
q=1
where the operation * is the convolution operation in mathematics, which

is where the CNN gets it name. A deep CNN is a CNN with many convoluted
layers. A state-of-the-art, full deep CNN is usually a combination of many H HT H0 H1 H2 HT
CNN, MLP layers and a few other techniques, as shown below. This is the
basis of how AlphaGo is designed.
Input Convolutional Pooling Fully Connected Output XT X0 X1 X2 XT

X
Layer Layer Layer Layer Layer
Figure 39: A comparison between a simple feed-forward network and a RNN.
Given such design, input points can be naturally ordered in time. That is,
the (p-1)-th input is one time step before the p-th input. In the context of
Figure 38: An example of a CNN stating how data points are mapped between layers. deep learning, step 2 in the p-th pattern appears like the following:

(m)
net(m)
p =ϕ net(m−1)
p , netp−1 .
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There are different attempts in designing an appropriate RNN. The most ft = S(Wffxtt =+ S(W
Uf ht−1 f xt++θU f)f ht−1 + θf ) (1) (1)
popular and successful variant in price- and time-series forecasting is ιt = S(Wi xιt +=US(W i xt++θiU
i ht−1 )i ht−1 + θi ) (2) (2)
called Long Short Term Memory (LSTM). LSTMs are both general and ot = S(Wooxtt =+ S(W
Uo ht−1 +θU
o xt+ o )o ht−1 + θo ) (3) (3)
effective at capturing long-term temporal dependencies. Furthermore, ct =
ct = ft ◦ ct−1 t−1 +
+ fιt ◦ cS(W c xιtt+◦ S(W c xt+
Uc ht−1 +θU
c )c ht−1 + θc ) (4) (4)
they solve the vanishing gradient problem encountered with ht = ot )t ◦ tanh(ct )
ht = ot ◦ tanh(c (5) (5)
backpropagation in general RNNs.
where f t is the forget gate vector, ιt is the input gate vector, ot is the output
Xt Xt
gate vector, c t is the cell state vector, ht is the output of the LSTM unit, θp
is a bias vector of the respective components with p ∈ {f, ι, o, c} and Wq
Input Gate lt Output Gate Ot ∈ ℝ h×d , Uq ∈ ℝ h×h are the corresponding weight matrices with q ∈ {ι,
o}. S is a sigmoid function. The LSTM network can be trained by a slightly
Cell
modified version of the backpropagation algorithm described above.
Xt Ct ht
Note that LSTM (or general RNN) is strictly not deep by itself, as they use
a trick of input / output, forgetting gates rather than multiple layers. One
limitation of LSTM is that the performance is worse when the time frame
is short. That is, it is not very suitable for short-medium term trading.
ft Forget Gate
Rise AI researchers and engineers are still exploring how to further boost
trading performance. Nevertheless, LSTM can serve as a ground base for
further advancement.
Xt
Figure 40: Memory Blocks
This is achieved by introducing the notion of memory blocks. These new Dynamics of complex networks
building blocks replace the common nodes of the hidden layers and are
made up of one or more memory cells with self-connections and three Many real-world networks and their dynamics can be mathematically modelled by means
adaptive, multiplicative gating units to control the flow of information. of complex network theory. These networks often have a rich topological structure that
The input gate ι controls the input flow, the forget gate f controls how distinguishes them from randomly generated networks. For example, different information
much information is stored within the cell and the output gate o controls stored in the blockchain can be represented as a variety of complex networks, including
to what extent the information stored in the cell is propagated outward. transaction graphs between nodes (wallet addresses) or correlation of time series. The
In each time step t of the forward-pass, the LSTM unit can be described topology of the network is captured by a graph G = (V, E) while the dynamics are governed by
by the equations a system of differential equations pertaining to the nodes of the graph. Statistical analysis of
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network data suggests that networks of practical interest often exhibit a scale-free property; with ∆(i) being the number of triangles connected to the node vi, ki = deg(v i ) and the
that is, they possess a degree distribution that follows a power-law of the form eigenvector centrality

1
P (k) ∼ k −γ
, ϕ(i) = Aϕ1 ,
λ1 i
where γ ∈ R and typically 2 < γ < 3. In scale-free networks, nodes with widely different
degrees coexist, leading to small average path lengths due to the likely presence of hubs or where φ1 denotes the eigenvector corresponding to the largest eigenvalue λ 1 of the adjacency
high-degree nodes. However, in practice it is difficult to determine the degree distribution matrix A.
of a network. This is due to several factors, such as too small data sets or noise in the data.
In some cases it’s possible to describe the system as a scale-free ideal gas in an equilibrium A common phenomenon in networks of coupled oscillators, i.e. nodes that emit a signal
state and then derive the degree distribution via the minimization of Fisher’s information with some regularity, is a process called synchronization. This happens when large parts
measure. The Fisher information measure I for a system of N particles has the form of the network start pulsing with the same frequency. Monitoring the topological and

∂ ln F (k|θ) 2 dynamical properties of the corresponding network graphs for signatures of an approaching

I(F ) = ck F (k|θ) dk,

phase transition can, for example, indicate significant market movements. A network with
∂θ N oscillators with natural frequencies ωi can be described by the system of differential
equations:
where F (k|θ) is the density distribution in configuration space depending on the physical
dθi 1 N
parameters θ, and coordinates k, ck is a dimensionality constant. Subject to certain = ωi + Kij sin(θj − θi ), i = 1...N
boundary conditions, such as the normalization of F, the equilibrium state of the system
dt N j=1
minimizes I. The degree distribution is then retrieved by solving the variational problem
δ{I(F ) − µ1} = 0 where μ denotes the normalization-associated Lagrange where θi are the phases of the corresponding oscillators and K ij is the coupling strength
multiplier. between nodes i and j. The level of synchronisation between the oscillators is measured by
the order parameter:
In large networks, groups of agents with similar interests often develop. Depending on the
1 N
type of network, this may be reflected by a highly connected subgraph. Identifying and r(t) exp(iΨ(t)) = exp(iθj (t)).
classifying these groups in a network is critical. Rise has devised heuristics and algorithms to
N j=1
quantify the “importance” of network nodes and their ability to communicate directly with
other nodes. Some of the basic ingredients of these techniques are the clustering coefficients The synchronisation is then observed when r(t) ≠ 0 for a group of oscillators and r(t) → 1
indicates a collective movement of all the oscillators with almost identical phases.
2|∆(i)|
Ci = ,
ki (ki − 1) A closely related dynamical process on complex networks is consensus. Connected nodes
try to reach consensus regarding a given quantity of interest. Let N = |V | be the number of
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agents forming the network. Then the continuous-time dynamics of the group of agents are The McAfee Effect
McAfee‘s Twitter endorsements have (sometimes) fueled huge gains in prices
described by the system of differential equations
1-Day Price Change 7-Day Price Change
dui
= [uj − ui ] , ui (0) = zi ∈ R
dt i∼j Burst (Dec. 2017)
TRON (Dec. 2017)
Reddcoin (Dec. 2017)
where i = 1, . . . , N . Eventually the network as a whole collapses into a state of consensus, Digibyte (Dec. 2017)
which is the state in which the differences of the quantity of interest vanish for all pairs of Humaniq (Dec. 2017)
Factom (Jan. 2018)
nodes in the system.
Doge (Jan. 2018)
Syscoin (Jan. 2018)
NCASH* (May 2018)
-40 -20 0 20 40 60 80%
Processing and evaluating information sources Price Source: CoinMarketCap.com

*McAfee said NCASH was chosen by popular vote. Month of tweet in parenthesis.
In AI research, many subtasks are needed in order to create intelligent behavior and decision Figure 41: Effect of McAfee’s tweets on course changes. 1
making. For example, statistical methods are used for finding the right search result to show
a user in the search engine. Another example recognizes patterns in data, e.g. to forecast the by adjusting the meta parameters or the data given to a method. This means that selecting
weather. Again, other examples are the learning of problem-specific solutions like playing the data to feed into an AI / ML method needs to be done carefully because the implications
chess. The most common approaches to machine learning are supervised, unsupervised, on the results are often not intuitive.
and reinforcement learning methods. Supervised methods having labeled example data to
learn from and unsupervised methods, which only have unlabeled data. Depending on the Another modern approach to AI is data-driven methods, which train on data unrelated
data they use, the methods are either more specific to solve one problem, like predicting to a problem (e.g. reading newspapers and creating word embeddings) trying to answer
the price change of one special cryptocurrency, or they can be more general, and predict questions or predict results. This means that the same algorithm can be used to predict
multiple cryptocurrencies. Commonly, more specific methods perform better on a specific sickness in patients or lawsuit outcomes, depending on what data the AI / ML methods are
task, but are not as reusable. But selecting the right data for the algorithms to learn with given to learn on. With those methods, the data becomes the prime concern when learning
depends on how the methods will perform. This is where reinforcement learning comes into to solve a problem or to predict a cryptocurrency course.
play: In it, machines and software agents independently try to find the optimal behavior to
maximize a given reward. This in turn teaches the system to automatically determine the Theoretical background
ideal behaviour within a specific context, which then maximizes its performance. Not all changes in values of stock or cryptocurrency are explainable by values themselves.
Some changes may occur due to tweets that carry the so-called “McAfee Effect”—influencers
Another argument on why data selection should be done with care is that the result of
modern AI / ML methods are often too complex for humans to understand. Imagine a trained
1 https://www.bloomberg.com/news/articles/2018-06-26/crypto-influencers-pump-up-markets-with-105-000-a-pop-
neural net with millions of nodes; the developers of such methods can influence the network tweets
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on social media that stimulate a short-term price increase. Although this influence on crypto Where the decomposition can now be written as:
markets has gradually declined recently, it is still very much present today.  
x1,1 ... x1,j ... x1,n
 . .. .. .. ..      
 ..
 
 . . . . 
σ1 ... 0 [ v1 ]
Figure 41 shows an example of this effect in 1-day and 7-day changes, illustrating that the (tTi ) → 
xi,n  = (t̂Ti ) →
   .
u1  . . . ul · ..
  .. ..   .. 
 xi,1 ... xi,j ...   . . ·
 
. 

 .. .. .. 

.. ..  0 . . . σl [ ]
value of a stock is influenced by public opinion, not only by trading. This influence can also  . . . . .  vl
be analyzed to gain an information advantage for algorithmic trading. xm,1 . . . xm,j . . . xm,n
There are multiple tasks to consider. The algorithm needs to select certain information Here u 1 , . . . ,u l and v1 , . . . , vl are the left and right singular vectors and the
sources to consider, analyze the sources and integrate the results of the analysis into the σ1 , . . . , σl are the singular values. With this, something like a principal component
prediction [1]. analysis can be done by selecting the n largest eigenvalues (the length of an eigenvector1 ) to
reduce the dimension of the “semantic space” build up by the vectors t̂i . Those represent
T
The main problem with such a semantic approach is that the amount of information is too
big for humans to read and evaluate. Working at the speed in which such information is a lower dimensional approximation of the document, containing the words with the highest
needed to benefit from it fosters even more algorithms, including semantic information of eigenvalues out of u 1 , . . . ,u l . This leads to an embedding of the most significant words
external data sources. of a news article or a tweet. An embedding is the representation of a text in a vector space,
where the words making up the text are represented as s vector and each component of the
Automation of information evaluation like news or social media to predict potential price vector represents one word. The resulting vector space then has as many dimensions as
movements includes different tasks: there are different words in the analyzed texts [6].
Understanding of words and their meaning: Each word can have multiple meanings and The correlation of the so-created word vector with the values of the analyzed cryptocurrency
multiple words can have the same meaning. Understanding the meaning of a word includes can be done with multiple classical machine learnings like Bayes, SVM, Regression [6] or with
mapping its semantic content to the prediction of a price change. This is done in semantic modern approaches like ANN [8,9]
analysis, like when a word of assurance is mapped to a price change via a learned correlation.
Such an analysis is called Latent Semantic Analysis, which establishes a document-term Correlating different words to the change in price is a popular approach with sentiment
matrix and uses singular value decomposition X = U ΣV T
to calculate a term and analysis. However, this mixed bag of word approaches neglects that syntax changes the
document correlation. Document correlation is used to map documents or tweets to the
punct
same topic. Those then can be used to learn whether this information indeed influenced the dobj
T
price. = U ΣV ΣV T algebra,
= U ΣV V T ΣTvalue = U ΣV T V ΣT U Tcan
=U beΣΣ U = U Σ2 Uas:
T T T T
XX With rules ofUlinear this singular U T decomposition T T
reformulated
T
nsubj compound:prt compound

T
X T X = U ΣV T U ΣV T = V TT
ΣT U T U ΣV T = V ΣT U T U ΣV T = V ΣT ΣV T = V Σ2 V T
NNP VBZ RP NNP NNP .
AOL takes over Time Warner .
Figure 42: Abstract syntax tree of the sentence: AOL takes over Time Warner.
1 A eigenvector is a characteristic non-zero vector for a linear transformation which changes only by a scalar factor.
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information provided. An example could be the sentence: “AOL takes over Time Warner” directly encoded in the sentence itself can be extracted. One kind of fact is the syntax.
which is different from “Time Warner takes over AOL” even though the same words are used. Syntax describes the role the words play in a sentence. Depending on those roles, the words
Therefore, including the analysis of sentences is vital in order to extract relevant information. have a different meaning. A syntax graph of our example sentence could be:
This leads us to the problem of understanding sentences.
Basic syntactic analysis allows the analysis of word meaning in their right order and illustrates
Understanding sentences and their meaning or equivalence the difference of our two example sentences. The process of determining the right word
Understanding what a sentence means is the equivalent to extracting the facts it reveals. meaning in a linguistic context is called word sense disambiguation (WSD). With these right
The semantic analysis of a sentence is context independent [3], meaning that only facts word meanings, facts from additional information sources like WordNet or Wikipedia can be
extracted. Information sources could be:
•• Linked Open Data (LOD): The LOD consists of domain-specific ontologies

in a machine-readable format. An example LOD graph is shown in Figure 43.
Ever-growing semantic information makes it possible to extract facts about
many domains, which could help to bring reason about natural language and
its impact on the market.
•• Wikidata: A ontological representation of information extracted from
Wikipedia.
•• WordNet: A lexical database for languages grouping words into synsets.
•• Cyc: Ontology and knowledge base containing logical abstract facts of
common sense knowledge.
•• S ocial Media: A set of services for real time information exchange and
normally shared content creation.
•• News Feeds: Classical news digitized and accessible from the internet.
•• Twitter: A good example of how social media can be used to do sentiment
analysis on topics concerning special tokens or coins [2].
•• Specialist Forums: Platforms that contain domain-specific human written
knowledge.
•• E xtensible business reporting language (XBRL): An open international
standard for digital business reporting.
The extraction of facts needs an algorithm combining the different information sources
in one semantic graph. Such an algorithm is called semantic decomposition. A semantic
Figure 43: The Open Linked Data graph.
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decomposition takes a word as input and collects all facts known in the information sources •• Line 2 to 29 represents the recursive function that is called on all decomposed
known to it. These facts are then included in one big semantic graph. The abstract algorithm concepts. This function adds the decomposition to the semantic graph
is shown in Algorithm 1 taken from [5]: initialized in Line 1, which is called until the decomposition depth is reached
Algorithm 1 A decompositional algorithm.
or all concepts have been decomposed into semantic primes. A hierarchical
Name: Decompose Input: Concept word, Integer depth Output: Semantic Graph
1: SemanticGraph decomposition = ∅
structure made up of concepts is built, also referred to as lexical units. Those
2: function DECOMPOSE(Concept c, Integer depth, SemanticGraph decomposition) concepts include a lexical representation, the textual representation of a
3: if depth ≥ 0 ∧ c ∈ decomposition then lexeme and a decomposition.
4: concept ← Normalization(c)
•• Line 3 checks if the concepts have been already decomposed or if the
5: Relations ← getRelations(c)
6: Definitions ← lookUpDefinitions(c) decomposition depth is reached. The decomposition depth is a parameter
7: AddConcept(c, decomposition) of the decomposition, which restricts the decomposition to an amount
8: if concept ∈ IsSynonymOfPrime then
of relations to which the decomposition extends. The second part stops
9: return decomposition
10: end if
11: for all r ∈ Relations do
12: AddConcept(r, decomposition)
13: AddRelation(r, getTargets(r), decomposition)
14: DECOMPOSE (r, depth − 1)
15: for all target ∈ getTargets(r) do
16: DECOMPOSE (target, depth − 1)
17: end for
18: end for
19: for all definition in Definitions do
20: for all def in definition do
21: AddConcept(def , decomposition)
22: AddRelation(”definition”, {Concept , def }, decomposition)
23: DECOMPOSE (def , depth − 1)
24: end for
25: end for
27: else
29: end if
30: end function
31: DECOMPOSE(word, depth, decomposition)
The Algorithm 1 reads as follows:

•• Line 1 initializes the semantic graph that is developed during this algorithm
and represents the result at the end. Figure 44: Example semantic graph for the word bitcoin.
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the process of decomposition for the same concepts over and over again. Then all concepts which are connected by those relations are recursively
Additionally, the decomposition stops here if a synonym of the concept decomposed. Afterwards lines 19 to 25 decompose the definitions.
has been decomposed previously. This is because if a synonym has been Each definition is a list of concepts which get decomposed again and are
decomposed previously, its synonyms are added to the decomposition connected to the definiendum via a “definition” relations. Shown in Figure
as well. Thus this synonym, which is supposed to be decomposed now, is 44 an example decomposition graph connects decentralized currency and
already part of the decomposition and is not decomposed again. bitcoin automatically without human aid.
•• Line 4 takes the concept to decompose and normalizes it. Here the inflection
is removed, revealing the stem of a concept. Furthermore a concept includes The result of such a decomposition is a semantic graph which can be further used to reason
all its inflections (all concepts which can be created by applying grammatical upon the facts extracted from it, e.g. social media.
forms to a concept like eating, ate, eaten), all lexical paradigms for this
concept (all concepts rooting from the same word stem like to dine, dinner) Reasoning on facts
and all subcategorization frames (like the valence, which is the amount of The difficult part now is that the AI cannot know if one utterance has caused a change in price.
parameters like ask, ask X, ask X for Y). This kind of inflection is removed To infer which utterance had an effect on the price, the AI needs reasoning for correlating
as the algorithm is interested in the concepts described by a word, not its relevant information to a change in price and identifying irrelevant information.
relation to other words. Syntactic information is added into the graph, by
adding syntax relations and nodes. For this reduction, the linguistic process One of these reasoning algorithms is called marker passing. Marker passing is a generalization
of Lemmatization, sometimes referred to as a Stemming, is used, removing of artificial neural networks (ANN). Instead of passing an activation level from one node to
ends of words, such as removing something like a plural “s.” The function another, it passes so-called markers. These markers can contain any information needed for
Normalization in Algorithm 1 Line 4 hides this normalization of a concept. the reasoning. The activation of a node can be described as:
 
•• Line 5 brings all the relations of the concept from dictionaries used in the k
max
1 1
algorithm by looking up all the semantic relations the algorithm can find, â∗ (v) = D− 2 a∗ (v) = D− 2  αk a(k) (v)
remembering them for later processing. Line 6 looks up the definitions of k=1
the concept in all available dictionaries, while lines 8 to 10 check whether

the concept itself is a prime. If this is the case, the prime is added to the With â(k) being the activation level and D being the weight matrix, and using i.e. a cosine
decomposition, and the decomposition is finished for this concept. Finally the similarity for distance.
decomposition is returned. This hides technical optimizations, for example
â∗i (v), â∗i (u)H
for synonyms of primes as well as broadening the search. At the same time, dact (u, v) = cos (â∗i (v), â∗i (u)) = ∗
stop word removal is limited. Stop word represents ignored words. Those are
âi (v)L2 â∗i (u)L2
taken from natural language processing theory. These are mostly words with
less semantic meaning like “a”, “an” or “``the”. Those nodes are removed and With such a reasoning process, the AI can find similar or dissimilar utterances. Finding
are not further decomposed. similarity between utterances is important, because once the AI has identified a context
•• Lines 11 to 18 handle the relation of the concept being decomposed. Here all in which an utterance has been made, and by how, it can decide which information to
relations are added to the decomposition as a relation between concepts. include into the analysis of market change. If the same utterance is done in different words
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by multiple people of interest, these facts e.g. could be analyzed by an expert or directly •• S emantic Parsing: extracts facts from unstructured data. Here natural
influence investment strategies like in the example in Figure WWW. There are many different language is converted into a machine-readable form. Semantic parsing is split
types of reasoning: into two types: shallow and deep. Shallow semantic parsing extracts entities
and relations between them. Deep semantic parsing includes a semantic
•• Common sense: Based on basic facts, common sense reasoning allows decomposition into precise meaning representations.
handling complex situations without exact calculation. An example could be
the placement of a ball on a slope and the conclusion that it will start rolling. Challenges
•• Fuzzy reasoning: In a probabilistic world, reasoning with uncertainty allows Despite all those different open questions, they are only part of the overall problem. The
handling incomplete knowledge. Fuzzy reasoning is based on uncertain sets main problem with understanding language is its fuzziness and non-logical use. For an
and many-valued logic. AI, semantics are only the first hurdle. From that, the challenge extends to understanding
•• A bductive Reasoning: Generates an abstract rule from the observation of pragmatics, or context-dependent meaning. It involves understanding the right information
multiple special instances of events. at the right time in the right context to make informed decisions, such as investment
•• L
earning of relevant facts: Relevance is a concept of context. Depending on decisions.
the task, other facts are relevant and with that other conclusions can be drawn.
•• D
eductive reasoning: Generates special rules from general observations. The second challenge is that understanding needs to be able to extend beyond text.
•• Inference: The act of producing facts which are not directly given. Classically Understanding graphs or other graphics can complicate the AI’s reasoning, including
this is done by logical consequence. Some approaches include probabilistic graphical and spatial reasoning
reasoning or inference which uses fuzzy logic to construct new facts from
known ones. Thirdly, selecting the right information sources, such as on Twitter or certain people, is a
fundamental problem to establish causality. There are many events to any change in a value
Each of the above needs a different marker passing for different problems. This reasoning of a cryptocurrency. The questions is: what was the cause of the change? This reasoning
can be accompanied with different methods from machine learning. Depending on the type can be taken from abduction, e.g. selecting cryptocurrency that relevant people to follow
of reasoning that should be done, the different facts extracted from the information sources on Twitter, or deductive, with certain words to analyze e.g. with Google analytics or via
allow different conclusions. Different methods could be but are not limited to: decomposition.
•• S entiment analysis: Describes a notion of positive or negative utterances. Real-world problems

Classically a text is classified on an interval of [-1,1] in negative (-1), neutral Connecting the prediction of algorithmic trading to information sources other than the
(0) and positive (1). price itself leads to a new attack vector. For example, taking social media into account, an
• • WSD: Word sense disambiguation selects a meaning of a word in a context “Associated Press hack crash” could be fostered by feeding valid but highly opinionated
of use. This context-dependent meaning reduces misunderstandings. media into the prediction [1,6,7].
• • Information retrieval represents a set of methods which retrieve information
regarding a given query. Another challenge to semantic approaches is selecting the right information source. Here
any two events could correlate, but may still not be causally related. Furthermore, classical
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machine learning mechanisms and modern neural networks like long short-term memory
are not able to produce results with a single occurrence of an event. A tweet is normally a
one-time event that in this context cannot be repeated. This calls for an adaption of known
methods to one shot estimators or classifiers.
[1] Karppi, Tero, and Kate Crawford. “Social media, financial algorithms and the hack crash.”
Theory, Culture & Society 33.1 (2016): 73-92.
[2] S.R. Chheda, A.K.Singh, P.S. Singh, A.S. Bhole “Automated Trading of Cryptocurrency
Using Twitter Sentiment Analysis.” International Journal of Computer Sciences and
Engineering 6.5 (2018): 209-214.
[3] S. Löbner, Semantik: Eine Einführung. Walter de Gruyter GmbH & Co KG, 2013.
[4] Third, A., & Domingue, J. (2017, April). Linked Data indexing of distributed ledgers. In
Proceedings of the 26th International Conference on World Wide Web Companion (pp.
1431-1436). International World Wide Web Conferences Steering Committee.
[5] Fähndrich, Johannes. “Semantic decomposition and marker passing in an artificial
representation of meaning.” (2018).
[6] Colianni, S., Rosales, S., & Signorotti, M. (2015). Algorithmic Trading of Cryptocurrency
Based on Twitter Sentiment Analysis. CS229 Project.
[7] Perry-Carrera, B. (2018). Effect of Sentiment on Bitcoin Price Formation (Doctoral
dissertation, Duke University Durham).
[8] Persson, S., Slottje, A., & Shaw, I. (2018). Hybrid Autoregressive-Recurrent Neural Network
Architecture for Algorithmic Trading of Cryptocurrencies.
[9] Jan, Z., Third, A., Ibanez, L. D., Bachler, M., Simperl, E., & Domingue, J. (2018, April).
ScienceMiles: Digital Currency for Researchers. In Companion of the The Web Conference
2018 on The Web Conference 2018 (pp. 1183-1186). International World Wide Web
Conferences Steering Committee.
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R i s e Wh i te pape r S u m m ar y 80
Summary The team behind Rise

Through this fully machine learning approach, Rise will democratize algorithmic trading for Every detail of all Rise systems has been B2B SaaS platform, market leader, sold in
cryptocurrency investors, allowing them to access the same cutting-edge technology used by created by veteran traders and industry 2011 to SAP), TRAXPAY AG (a B2B real-time,
the world’s biggest banks to beat market averages and reduce risk regardless of investment experts who have conquered the trading blockchain based payments platform,
level. These systems, which already have been proven to outperform in traditional markets, floors of some of the largest exchanges became a strategic investment by
are poised to take advantage of the inherent volatility of crypto markets to maximize results in the US and run systematic hedge CommerzBank and Software AG in 2013),
for RISE (RSE) token-holders. funds. All of the key staff members at Masterpayment AG (an online payments
Rise are shareholders with “skin in the and working capital finance provider, sold
The RISE (RSE) token will fuel the Rise ecosystem, allowing investors to generate a lifetime of game,” unlike competitors who are merely in 2016 to NASDAQ-listed Net1 group),
passive income by leveraging these powerful AI tools, earning dividends from the licensing financial service providers. QUANTUMROCK Capital (a licensed asset
of the AI technology to third parties and participating in Crypto-Traded Funds. The token will manager, boutique hedge fund, majority
allow for investments in crypto and traditional investment classes, all powered by the Rise control), and SINUS CULTUR (a property
AI. Institutional investors will be able to leverage this AI and license it for internal use. Crypto Senior leadership team development company, majority control).
Traded Funds bring the power of traditional exchange traded funds to crypto markets, and will
help further increase wealth for RISE (RSE) token-holders. All features of the Rise ecosystem
will be available through the Rise app, a singular hub for managing investments, executing
trades and monitoring dividends with more than 100,000 1 established users already.
Stefan
All of this will be done by a dedicated team of veteran traders, analysts, scientists and Tittel. Michael
engineers all with substantial experience and proven track records in the finance sector. CEO Morsch.
CFO
Serial entrepreneur with impeccable
track record. Has led several companies Executive with more than ten years
throughout their complete business life experience as CFO in different technology
cycle (founded, grew, built to market driven companies and the financial sector.
leader, sold). These companies, with Worked as a certified executive director for
total investments of more than $90m, an European licensed financial institution
generated substantial value for the and the stock-listed companies T-Systems,
investors. The companies previously found SAP AG, and Net1 UEPS Technologies.
1 This information is related to the UpTick app. The Rise app will be based on the UpTick product
or cofounded by Stefan: CROSSGATE AG (a Cofounder of Masterpayment AG (an online
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R i s e Wh i te pap e r T h e team b e h i n d R i s e 81
payments and working capital finance data center solutions and operations strong background in machine learning,
provider, sold in 2016 to NASDAQ-listed which included the full process of software Victor mathematics, economics and computer
Net1 group), cofounder of SINUS CULTUR planning, development, realization, quality Bremer. science, he is now working on developing
(a property development company). assurance and deployment procedures. Chief an AI trading engine for Rise. Holds a
Investment Bachelor’s degree in economics and
Officer a MSc in cryptography from Moscow
Fully committed team State University, and a MSc in applied
of industry experts Michael A commodities markets specialist with mathematics from The Technical University
Zeller. long-term experience as a risk and trading of Munich.
Head of analyst on the trading floor of British
Institutional Petroleum in Spain and London as well as
Strategies JPMorgan Chase. Deep understanding of
Robert commodity markets, in particular crude Timon
Gold. Quantitative asset management specialist oil, which was an important catalyst for Hartung.
CTO Trading with a focus on institutional clients and Rise trading models. An active researcher Online
Systems alternative investments. Before joining for more than seven years in the area of Marketing
Rise, responsible for the quantitative fund anomalies in commodities price trends. Director
Very experienced software architect management of Alternative Investments
specialized in complex trading systems Derivatives at BAYERNINVEST. Held Holding a degree in computer science, has
as well as highly available real time data positions as a portfolio manager and specialized in online marketing since 2002
processing systems with high-throughputs. successfully developed quantitative multi- Nikolay with extensive experience in SEO and paid
Robert was in charge of the backend asset trading strategies for Credit Suisse, Nadirashvili. advertising channels, especially Facebook
architecture of financial.com AG, where he Lupus Alpha, Corebot and CM-Equity. Head of and RTB traffic. Previously worked at
successfully led a developer team of several Graduated in business administration with Algorithmic and founded several startups. Currently
highly-skilled experts working on scalable a focus on finance and investment analysis Trading a successful performance marketing
architecture solutions for processing from Augsburg University of Applied specialist, multichannel online marketing
huge amounts of streaming data in real Sciences. Has successfully developed algorithmic consultant and crypto enthusiast.
time. Financial.com’s information systems trading systems using machine learning for
supply more than 350 private banks in different Russian investment companies
Germany, Italy, Great Britain, Switzerland since 2008. As a quantitative analyst,
and the USA with real-time quotes and responsible for designing statistical
master data. Responsible for the strategic arbitrage, options and futures models
planning and development of complex for indices, stocks and currencies. With
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Benedict tech startup. Previous career experiences and banking industries worldwide, including
Frauen. include working as a professional trader MASTERPAYMENT – NET1 Group (Nasdaq:
Senior for a major Wall Street bank. Felix UEPS), epay – Euronet Worldwide Group
Program Buchert. (Nasdaq: EEFT), and Wirecard AG (ETR: WDI.
Manager & DLT Holds a degree in business administration
Authorized Simon von Specialist and is internationally experienced with a
Director Poschinger- multicultural exposure. Applies a high level
Bray. A data scientist and blockchain enthusiast of soft-skills on a day-to-day basis that
Passionate about innovation and growth in Chief with a strong background in computer demonstrate his all-round talent, specifically
the crypto and finance space. Has built and Platform science and mathematics. Experienced in human interactions with external
grown companies across the technology and Architect in development of Ethereum smart partners, employees and colleagues.
beverage sectors in Germany, the Netherlands, contracts and leveraging distributed
and the United States. Before joining Rise, A serial startup founder, crypto trader, ledger technologies such as R3’s Corda
successfully built the working capital business London Business School PhD, CASS EMBA, for applications in the automotive
at Masterpayment from scratch to a volume and the chief platform architect of Rise. aftermarket. Before joining Rise, worked
of over 50 million EUR. Graduated in finance Has led the strategy and development of for an IT consultancy in Switzerland Dr. Roman
from Maastricht University in 2014 and earned UpTick and has built several other startups applying statistical data analysis and Gorbunov.
his master’s in entrepreneurship from Lund which have been sold successfully. In machine learning methods. Regularly holds Head of
University in 2015. previous career, led a single family office workshops for students at the Technical AI-Systems
focusing on private equity and real estate. University of Munich on DLT-technologies
Also worked in his family business for and machine learning. Has more than a decade of experience
several years focusing on innovation in applying machine-learning in both
Maximilian opportunities in traditional brewery and academic and industry settings, including
von agriculture sectors. unsupervised learning for identification
Wallenberg. of patterns in large-scale multivariate
Head of David Beck. time series, supervised learning for
Product Head of predictions of time series of sales for
Client retail industry, reinforcement learning for
A serial start-up founder, crypto trader Relations inventory control and deep learning on
and Harvard MBA graduate. Has led the sets for modeling reactions of sales on
product team of UpTick since inception Has a proven track record of more than 10 years price changes. Recently worked with the
after serving several years as the coin various sales and business development Alexa Team at Amazon, leading a team of
founder and head of product of another leadership positions throughout the fintech researchers working on language modeling
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and automatic speech recognition for Senior advisors

conversational artificial intelligence. Holds
two PhDs, in game theory and quantum Rise’s advisory board consists of various
chemistry, and a master’s degree in seasoned serial entrepreneurs and seed
theoretical physics. investors of Rise. Rise does not seek Volker
to make headlines or adorn itself with Urs Keller Rofalski
advisors who only look good on paper.
These advisors are carefully hand picked Founder of billiger.de, PlanetSports, Founder of WebStock AG, sold to BAADER
based on the valued advice they provide AdScale, adtraffic, and Mister Linse. Bank in 1999 and TradeCross AG, sold
Koung Tran. to help propel Rise forward to its goals and Started his online career in 1999 after to VEM Aktienbank in 2005. Since then,
Head of the real-world future value they bring that studying business administration and has been director of Equity Capital
Software will see Rise succeed. engineering at The University of Karlsruhe. Markets and authorized officer of the VEM
Development Went on to found Websolute AG, a web Aktienbank. Studied business economics
agency with over 100 staff members at the University of Augsburg. Member of
A superb software developer with more based in both Karlsruhe and Hong Kong. the supervisory board of several listed and
than 20 years of experience in the financial In 2000, sold the agency to WEB.DE AG, non-listed companies.
industry. Before joining Rise, worked at taking over as senior portal manager at
leading companies including Masterpayment, one of Germany’s largest email service
financial.com, HypoVereinsbank, UniCredit Andreas providers with more than 20 million users.
Bank AG and Honeywell. An agile software Perreiter In 2003 Urs Keller left WEB.de to found
architect with strengths in software planning, multiple start-ups. As a business angel,
development, realization, quality assurance Entrepreneur, business angel and he has supported numerous founders and
and deployment procedures. international investor in early stage tech ventures with his extensive market know- Markus
companies. Advisor, investor and senior how and worldwide contacts. Stylight, Rinderer
executive for over 20 years in international Lokalisten and Quandoo are few of the top
telecommunications companies and notch listings in his investment portfolio. The ex-CEO and founder of PAY.ON, a
mobile / internet start-ups. Founding leading global payment gateway that was
partner and CTO of amaysim Australia acquired by ACI Worldwide in 2015. Also
Inc. (IPO in 2015). Founding partner, Founding Partner of CURRENT Ventures, a
shareholder and COO of simyo in Europe global fintech incubator, and co-founder of
(trade sale in 2007 to E-Plus / KPN). Member multiple fintech startups.
of the Letsbuyit.com start-up team 1999
and international IT manager.
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exit of several investments. Member of Finance, with a specialization in the cloud-based and DLT-powered products.
the management board of Liechtenstein application of integral transforms and the Has handled major technology deals
Life and also chairman of the board of fast Fourier transform (FFT) for derivatives with organizations such as NATO, UN and
Satabank PLC, Malta. valuation and risk management. Research the EC. Also has assisted blue-chip tech
Dr. Albert interests span: computational finance, companies such as Microsoft and Akamai,
Wahl energy and commodity finance, model with cybersecurity, antitrust, compliance
risk management, behavioural finance and tax matters. Speaks seven languages
Graduating with a degree in business and FinTech. Previous industry experience and is admitted to professional bars in the
engineering and a PhD completed in includes working as a Quantitative Analyst EU and in the state of New York.
Germany and the USA, Dr. Wahl began within the Global Risk Function for BP
career at BMW AG in Munich. After many Carsten Oil International Ltd., where primary
successful years as a manager at both IBM Erdt responsibilities involved derivatives
and Deutsche Bank, became member of and price curve model validation and
the board at MS Industrie AG (previously Founded a logistics company in 1990 today development.
GCI Industrie AG) from 1998 to 2012. Since known as Erdt-Gruppe employing over 500
2010, founder and board member at UMT staff with a turnover of 40 million euros.
AG. Since 1995, founded multiple companies
with product production in both China
and Korea. Currently an investor in over 20
start-ups over the past 6 years. Member of
numerous advisory councils and incubators Sasha
for German founders and SAP specialists. Borovik
Christoph Since graduating from Harvard Law School,

Boeckle has been working as an international
attorney, entrepreneur and senior
Has several years of experience in the manager at some of the best corporations
financial industry and was CEO of a leading and law firms in Silicon Valley, Seattle,
German bank which he successfully sold Dr. Mark Washington DC, Munich, Paris, London
to NTT DoCoMo. With net-m privatbank Cummins and emerging markets. As a member of
1891 AG, enabled several startups in several management teams, has been
Germany and Central Europe. With his Private consultant and university leading companies’ legal and growth
venture fund affinity ventures ag, managed professor. Holds a PhD in Quantitative strategy across the world, bringing in new
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R i s e Wh i te pap e r Legal d i s c l ai m e rs 85
Legal disclaimers
This whitepaper is for information purposes only. It should not be construed as an offer
to sell, or a solicitation to buy any security or token. The whitepaper is not for the general
public, but only for accredited or qualified investors as defined under European and / or US
Securities laws.
A large part of this whitepaper consists of “forward looking statements” relating to:
operations, product features or economic performance. Projected financial results in this
presentation are only samples for potential future profitability based on a final STO volume
of 150 million USD. Actual results could materially differ from forward-looking statements.
Therefore, nothing in this whitepaper shall be seen as a guarantee, warranty, assurance or
similar.
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R i s e Wh i te pap e r A p p e n d i x 86
Appendix
Glossary place trades. Brent Brent Crude Oil: The European crude oil
price benchmark traded on ICE in London.
AR Accounts Receivable
A
BTC Bitcoin
Abductive Reasoning Generates an abstract Arbitrage Taking advantage of price difference
rule from the observation of multiple special between markets BCH Bitcoin Cash Coin
instances of events.
B C
ABS Asset-backed Security: a security whose
income payments are derived from and B2B Business-to-Business C4.5 Algorithm used to create decision trees
collateralized by a specified pool of underlying
assets. The pool of assets is typically a group of BAFIN The Federal Financial Supervisory Authority Calendar Spread Trading Strategy Trading
small and illiquid assets which are unable to be (Financial regulatory authority for Germany) model which leverages the recurring behavior of
sold individually. large market participants.
Bayes Bayes’ theorem: the probability that
ADA Cardano Coin something will happen based on the knowledge of CBOE Chicago Board Options Exchange: An
circumstances that may have a correlation to the exchange which focuses on indexes, interest rates,
AI Artificial Intelligence event. and equities.
Algo-Traded (Algo-Trading) Algorithmic Behavioral Finance Field of economics that CEO Chief Executive Officer
Trading combines behavioral and cognitive psychology
theory with conventional economic theory. CME CME Group Inc.: An American financial
ANN Artificial Neural Networks: Computational market company operating an options and futures
algorithm simulating the biology of neural Binance Cryptocurrency exchange founded in 2017 exchange.
networks.
BP British Petroleum CNN Convolutional Neural Network
API Application Programming Interface: The
interface that enables your software to connect Breakouts When an asset price moves outside Coinbase Cryptocurrency exchange founded in
with a broker to obtain real-time pricing data or the support or resistance level. 2012
table of contents
CoinMarketCap Website that tracks all the A stock index representing 30 of the largest German
F
crypto coins on the market. companies trading on the Frankfurt Exchange.
FIAT Currency that a government has declared to
Commodity Market A market that trades within Deductive Reasoning Generates special rules be legal tender, but it is not backed by a physical
the primary economic sector instead of trading in from general observations. commodity.
manufactured products.
Derivative A contract that derives its value from FIFO First In First Out: First goods purchased are
Commodity Trading A way to diversify portfolios a commodity. also the first goods sold.
beyond traditional securities as commodities.
DOGE Dogecoin FND First Notice Day
Common Sense Based on basic facts, common
sense reasoning allows handling complex DOW JONES A price-weighted average of 30 Futures Financial contracts obligating the buyer
situations without exact calculation. An example stocks traded on the NYSE and the Nasdaq. to purchase an asset or the seller to sell an asset,
could be the placement of a ball on a slope and such as a physical commodity or a financial
the conclusion that it will start rolling. instrument, at a predetermined future date and
E
price.
COPERNICUS The first long-short equity hedge EOS EOS Coin
fund in Germany, founded in 1994. Founder now Fuzzy Reasoning In an probabilistic world,
part of the Rise ecosystem ERC20 Technical standard for smart contracts reasoning with uncertainty allows handling
on the Ethereum blockchain (ERC = Ethereum incomplete knowledge. Fuzzy reasoning is based
CTF Crypto-Traded Funds Request for Comment, and 20 is the number that on uncertain sets and many-valued logic.
was assigned to this request).
CTF-IS Crypto-Traded Fund Investment Scheme
G
ETC Ethereum Classic Coin
Cyc An ontology and knowledge base containing Gradient Boosting A machine learning technique
logical abstract facts of common sense knowledge. ETF Exchange-Traded Fund: An investment fund used for regression and classification problems.
traded on stock exchanges, much like stocks.
D H
ETH Ethereum Coin
DASH Dash Coin HATEOAS Hypermedia as the Engine of
Application State
DAX Deutscher Aktien Index (German Stock Index):
table of contents
facts are relevant and with that other conclusion MARS Multivariate Adaptive Regression Splines
I
can be drawn.
ICE Intercontinental Exchange McAfee Effect Social media stimulating a short-
Lemmatization Reducing a word from its term price increase.
STO Security Token Offering inflectional form to its base form.
Mean Reversion The theory that assets prices
Inference The act of producing facts which Liquid Commodity A commodity market with will return to the average price over time.
are not directly given. Classically this is done by enough existing units allowing large transactions
logical consequence. Some approaches include without causing a substantial change in price. ML Machine Learning
probabilistic reasoning or inference which uses
fuzzy logic to construct new facts from known LOD Linked Open Data MLP Multilayer Perceptron
ones.
Long-Only Commodity Fund A type of mutual MSCI WORLD Morgan Stanley Capital
Information Retrieval Represents a set of fund that takes a long position in investments. International: Measuring stock market
methods which retrieve information regarding a performance in a particular area.
given query. LSTM Long Short Term Memory
MSE Mean Squared Error
Intraday / Event Trading Strategy A fully LTC Litecoin
machine learning system where trading ideas are
N
generated and optimized by the algorithm itself.
M
Nascent Market A new developing market
Margin Trading Borrowing money from a broker
J
to purchase stock. In return, the broker keeps the NASDAQ Second-largest stock exchange in the
JSON JavaScript Object Notation stocks as collateral. world
Marker Passing A generalization of Artificial NYMEX New York Mercantile Exchange

L
Neural Networks (ANN) passing a Marker instead
LEAP Long Term Equity Anticipation Security: of an activation levels.
O
publicly traded options contracts with expiration
dates that are longer than one year Market Volatility Trading Strategy Utilizing OMS Order Management System
systematic, short-termed price anomalies as a
Learning of Relevant Facts Relevance is a result of market events and VIX in order to make
concept of context. Depending on a taks other lucrative trading decisions.
table of contents
Ontologies A set of concepts and categories in a RNN Recurrent neural network Sharpe Ratio A way of measuring the historical
subject area or domain that shows their properties risk-adjusted return on an investment. It is the
and the relations between them. Roll Windows Annualized average returns during average previous return minus the risk-free return,
a specified window of time. divided by the standard deviation (a measure of
OTC Over The Counter Markets risk that looks at the diversion of actual returns
from expected returns).
S
Q
S&P 500 Index (SPX) The Standard & Poor‘s 500: Spread Generally, the difference between two
QR In this Whitepaper, refers to QUANTUMROCK American stock market index based on the market prices or interest rates.
capitalizations of 500 large companies on the NYSE
QRC QUANTUMROCK Capital or NASDAQ Spread Trend Identifying longer term trends
and then trading short term trends, medium term
QRRT QUANTUMROCK Research & Trading SAP German multinational software corporation trends, and breakouts within the longer term trend.
Quants Quantitative Analyst Semantic Decomposition The extraction of Stemming Chopping off the end of a word to
facts needs an algorithm combining the different reduce it to its base form.
information sources in one semantic graph.
R
SVM Support Vector Machine
RAPI Rise API (Rise Application Program Interface) Semantic Parsing Extracts facts from
unstructured data. Here natural language is
T
Regression Statistical modeling process which converted into a machine-readable form. Semantic
determines the relationship between a set of Parsing is split into two types shallow and deep. TGE Token Generating Event
dependent and independent variables. Shallow semantic parsing extracts entities and
relations between them. Deep semantic parsing Tuple A data structure containing multiple parts.
REST / RESTful Representational State Transfer includes a semantic decomposition into precise
meaning representations.
U
RIBOs Rise automated trading RoBOts
Sentiment Analysis Describes a notion of Universe (Securities) Set of securities that share
Rise Rise company / technology positive or negative utterances. Classically a text a common feature.
is classified on an interval of [-1,1] in negative (-1),
RISE (RSE) RISE Token neutral (0) and positive (1). URIs Uniform Resource Identifiers
RITAs RIse automated Trading Algorithms USDT Tether Coin
table of contents
USP Unique Selling Proposition

/
Point: A
X
feature that makes a product better than all its
competitors‘ products. XBRL Extensible business reporting language : an
open international standard for digital business
UTC Universal Time Coordinated reporting.
XRP Ripple Coin

V
VBA Visual Basic for Applications
VIX The Volatility Index: A real-time measure

of market expectation of near-term volatility
conveyed by SPX option prices over the next 30
days.
VPN Virtual Private Network
WASDE World Agricultural Supply and Demand

Estimates
WSD Word Sense Disambiguation selects a

meaning of a word with multiple meanings, in a
context of use.
WTI Western Texas Intermediate: Medium grade

crude oil. Underlying commodity of NYMEXs oil
futures contracts, used as a benchmark in oil
pricing.
table of contents

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The Rise application – the app Summary............................................... 80

Licensed Rise API for institutional investors

The science and background of Rise........ 62

Token Name Token type Supply

Rise background, history & timeline

A brief overview of Rise 2015 2016

2017 2018 2018

Christoph Böckle. Volker Rofalski. Michael Eisenhardt.

Key Advantages of Rise

Rise is already established Rise is made to outperform

Max Draw Down Max Draw Down

Figure 2: Performance Data Figure 3: Drawdown comparison in 2016

Rise is tomorrow’s tech

Why Rise – the current state of crypto trading

Share of WTI crude oil options volume 100

Figure 8: Reversion to the mean: Making profits in a declining market

Democratizing advanced trading with Rise

B Rise is what the crypto community

Rise revenue streams in brief

Fuel demand for the RISE token through

The Rise STO

2 Grow the license business. In order to attract more large institutional

70% Public Sale 69% Investment into Rise algorithms

20% Pre Sale

14% Financing (Seed, STO, etc.)

7,5% Team, advisors, Company

2,5% Seed investors 17% Research and Development

Figure 11: Token Distribution Figure 12: Fund Allocation

Start of Quantumock First Algorithms go live First Crypto Algos live

Q1/2012 Q3/2014 Q4/2017

Today Sep 1 Nov 1 Nov 30

Post STO product improvement and roll-out plan

Q1/2019 Q2/2019 Q3/2019 Q4/2019 2020

Figure 13: STO Timeline

Overview: The Rise ecosystem

The Rise Trading & Investment Platform

Private Key Distribution

Consensual Transaction Signature

Disput Case - Mediated Transaction Signature

The art of trading and artificial intelligence

•• Advanced data sources

Apple Stock Price

Whether by using statistical and mathematical modeling techniques, in-house developed

exploiting behavioral tendencies of market participants, Rise’s systems constantly search

Blacktests Out of sample blacktest

Perfomance without reinvesting and leverage (only out of sample). Soy

price change of the nearest future

value for each of the parameters, the learning method is parameterized.

2 Order book: A list of active orders at a certain point in time aggregated

of an art form. It uses technology similar to an in-house “robo-advisor” in its effort to be

Spread Trading Volatility Trading

By harvesting systematic, very short-termed price anomalies as a result of market events,

A continuous learning curve

The Rise application – the app that connects it all

 Trade using an established, all-in-one trading app

A brief history Figure 27: Overview of the Rise Application

A demo version is available at: http://app.rise.eco

Brief overview of the key functions

Trading wallet functionality

SEARCH & TRADE:

Example user flow – buying Bitcoin on any connected exchange

Example user flow 2 – Setting up the Autopilot

Example user flow 3 – managing Crypto-Traded Funds (CTFs)

Trade using an established, all-in-one trading app

computationally, especially when n is large.