Announcing the first Åzone Futures Market Meetup: Exhibition Discussion and Hack, December 8 at 6:30pm in New York City
Want to contribute to Åzone Futures Market, the first online exhibition of the Guggenheim? If so, sign up for our upcoming meetup in New York City here: http://www.meetup.com/Azone-Futures-Market-Meetup/events/227171088/.
Simultaneously an exhibition and a platform, Åzone Futures Market is at once a demonstration and a prompt to think reflexively about contemporary art exhibition formats. We are organizing this series of meetups to discuss the issues thatÅzone intersects–such as art and finance, futurology and platform design, and critical techno-social discourse in the context of museums–as well as the opportunities to extend its functionality and other projects that could be built upon it.
We have some features that are in progress, like peer-to-peer transactions (ie. passing cåin from one user to another) and market-generated soundscapes, but hope you will come with others. The market engineer, Cab Broskoski, co-founder of Are.na, will be on hand to take you under the hood of the code and answer questions you may have about contributing to the project and show you some of the endpoints of our unexposed market kernel API. Guggenheim curators will also give you a sneak peak of some of the new additions on the horizon, including work by the contributing artists and writers.
Contributors Dan Taeyoung and Sam Hart will join for anyone wishing to discuss their projects, Numeral Corp and Nonagon Corp, and the bots that they have produced to trade on the market at high frequency.
The main code, minus the market kernel, is available here: https://github.com/AOzone/median. We suggest you take a look before coming. We’ll be setting up staging servers soon for full stack testing.
Defeating the Botnet Armies: New Regulations, Engineering, and Architecture to Turn Bots for Bad into Bots for Good, and the First Cåin (Å) Denominated Features Go on Sale
Åzone Futures Market is at once an exhibition and an educational apparatus. Certain behaviors were built in from the beginning to allow it to function like contemporary financial markets, and as such, to be exploited like them as well. This was by design to demonstrate the activities in the markets that shape our world and their consequences. A major part of the exhibition is how the market will evolve over time to account for these exploits.
In the first few days of operations, a number of bots have flooded the market. This has destroyed the ability to create meaningful prices that reflect the aggregate worldviews of human investors and undermined the value of hot tips. This mirrors the activity of high-frequency trading (HFT), the superfast computer-driven trading that has come to dominate current financial markets. HFT makes it increasingly difficult for regular investors to achieve profits in the market, in part by abstracting the value of the underlying asset. When you invest in a publicly listed company today on an exchange that allows HFT, part of the price is created by software run by advanced traders like banks and hedge funds that responds to more activity in the market than to the health of the company. The result is a market that is a playground for those with capital and technical means to get rich off of everyone else’s money rather than a reflection of the value of the companies that are being invested in.
Today, our market engineer, Charles Broskoski, and market architect, Hugo Liu, have rolled out new measures to help stem the adverse effects the bot activity in the Åzone market. All trades must now be confirmed with an “I am not a robot” captcha, a box that is simple for humans to check but difficult or impossible for bots, stopping their trades. Also, we have now limited account sign up to one per person, making it difficult to launch an army of investors, and the market-making algorithm that determines prices has been tuned to favor the investments of earnest investors over speculating bots. To support these technical fixes we have also launched the first iteration of the Åzone Regulations, available here on Github, which spell out acceptable investment behavior and penalties for breaching the rules. These will be updated over time.
While the bot behavior has destroyed pricing in some futures, it has also provided a valuable lesson and was not against the original terms and conditions. As such, we are rolling out our first cåin (Å) denominated features which can be purchased by those who have accrued large amounts of cåin. This rewards ingenuity while requiring those who have amassed great wealth to enter into a contract to behave according to the new regulations that ensure market health, stability, and fairness.
For 250,000Å, any investor will soon be able to purchase the right to operate sanctioned bots with direct access to the Åzone market engine in the form of an API key—the secret codes that unlock the feeds to market data and trade functions. To keep this privilege, they must help bolster the market stability rather than take it away. Any malicious activity will result in penalty fees and the termination of their API key.
We are in talks with the original owners of the botnets to determine other creative uses of the cåin they have amassed. Updates will be issued on the Åzone Review.
Image: View of the Great Chartist Meeting on Kennington Common (1848) by William Edward Kilburn via Google Art Project
The DRUG Trade: Daniel Keller and His Army of Pump-and-Dump Bots
At the close of trading on Sunday, October 25, 2015, Berlin-based artist Daniel Keller (dnlklr) was the top Forecaster and Activist, with a net worth of 601,024Å after a total of 947 trades. Having manually set up 174 separate accounts, Keller had created an army of investors to do his bidding, allowing him to pump up the value of the futures he was personally invested in before dumping his shares to make a huge profit.
His botnet’s trades in the Drug Decriminalization future clearly illustrate the effect. The sawtooth shape in the hero image above shows him pushing up the price, and then selling off, pushing it back down so his strategy can start over.
The Åzone Review discusses strategy, regulation, and ethics with Keller in the Q&A below.
ÅR: What’s the secret to your success in the market?
dnlklr: I guess I just have an extremely high threshold for tedious repetitive tasks for the sake of obsessive-compulsive competition—I justified it to myself as a bit of an endurance performance.
At first I was just playing around without much of a strategy, but once I noticed a few glaring structural issues with the market, attempting to exploit them became irresistible for me. I realized as long as there is no shorting (in essence, betting that a price will go down instead of up) that there would be zero risk to my strategy.
ÅR: There are a number of investors with derivatives of your username under your control. How did they help you amass your wealth?
dnlklr: My strategy was really very simple. I bought as many shares of an underpriced future as I could with my main account, and then created dozens (now hundreds) of fake accounts to subsequently buy the future. Once I decided I had enough, I liquidated my holdings in the main account and then repeated that down the line of fake accounts, pushing the price down to where I had originally purchased it. I then used the profit from the first trade to buy even more of the asset, and then used the same dummy accounts (plus many more) to buy and push the price back up even further. In essence it was a sort of pseudo Ponzi scheme followed by a pump-and-dump-and-pump.
ÅR: What motivated you to deploy this strategy?
dnlklr: At first it was simply to front-run what I figured other people would figure out how to do very quickly. I also realized that because of the rampant inflation built into a system which constantly introduces new users without any way (or incentive) to take money out of the market, the prices of all of the futures will soon climb to above 10,000Å, which means new users will be entirely priced out of the market, and the earliest and most successful adopters would soon have an insurmountable advantage.
It would have been just as easy for me to make random usernames for my army, but I decided to use the name dnlklrbot (although technically, they’re mechanical turks, not bots) to make what I was doing transparent. I was reminded of a great Adam Curtis short from Charlie Brooker’s 2014 Newswipe where he talks about the rather genius strategy of Vladimir Putin’s political advisor Vladislav Surkov. Surkov funded all sorts of oppositon parties ranging from Putin loyalists, social democrats to neo-Nazis but most cleverly, let it be known that he had done it, therefore fundamentally undermining the public’s faith in all dissenting narratives.
Similarly, I thought that if people (mistakenly) thought they were against an unstoppable bot army, it would be more demoralizing than my trying to do it sneakily, which would make people give up and further entrench my power.
Moreover, the future I chose for my initial pump-and-dump was basically arbitrary, except that it was cheap at the time and therefore easy to corner. I think this underlines a fundamental problem with the abstracting effect of market dynamics. For instance, technical stock analysis completely ignores all information about what a company actually produces what it stands for or, who works there in favor of looking exclusively at numerical “fundamentals” and price momentum. So I thought engaging in this ad absurdum could be an effective critique of the underlying reasoning behind using market mechanics to predict much of anything in the real world.
ÅR: Should this activity be regulated? How?
dnlklr: Yes! It would be extremely easy to prevent what I did from happening by making it a bit harder to sign up for new accounts—if you could only have one account per e-mail address/IP address and need to click a confirmation link in an e-mail to prove it is real and maybe fill out a captcha. It still wouldn’t 100% kill the bot problem, but it would effectively make it too annoying and tedious for me (or I imagine anyone else, since there is no actual money on the line) to keep doing it.
I think if you really want it to be fair, you should institute this new rule first and reset the market (deleting all of my 174 accounts) entirely.
ÅR: Does this relate to activity in other markets or environments outside of Åzone?
dnlklr: Certainly. The inflation that is baked into the system reflects some of the macroeconomic issues the world might soon be coming to grips with in the wake of years of endless global quantitative easing, or QE [see October 24 ÅR post: “Initial Public Offerings Recap: Over 3 Million Cåin (Å) Traded, Inflation, and Loose Morals”].
I would make a comparison to high-frequency trading (HFT) as well, but the only true similarity is that both HFT and my botnet activities give a distorted illusion of greater market depth or liquidity than is actually there.
ÅR: What would you like to be able to do with all the cåin you’ve accrued?
dnlklr: In a sense the leaderboard is plenty enough incentive to try to win. But one of the major issues I have with the market as it currently works is that despite how crucial it is for the market to continue functioning, there is no way or incentive to take money out of the market and spend it. I’m not sure what I’d spend it on if there is no way to convert cåin into any other currency, but I think some sort of funny badge system would be fun and could be a good way to periodically retire capital from the system and postpone or prevent the “+10k price for every future” apocalypse.
Initial Public Offerings Recap: Over Three Million Cåin (Å) Traded, Inflation, and Loose Morals
Åzone Futures Market opened to the public yesterday after four days of test trading.
Over 200 investors made 2030 trades worth a total of 3,003,690Å. Prices quickly inflated as 10,000Å was printed for each new investor, increasing the overall amount of money in the market.
This inflationary behavior is by design. Åzone Futures Market employs a strategy used heavily by the Fed (the Federal Reserve, the United States central bank) since the financial crisis began in 2007. The Fed tried its old tricks to stimulate recovery but the scale of the crisis overwhelmed it. In August of 2008, it instigated radical measures by, simply, printing more money. This strategy, called “quantitative easing,” has invented more than three billion, more than quadrupling the amount of U.S. dollars.
This money didn’t go to regular citizens to help them pay their debts, but was fed into banks with the idea that they would increase loans to people looking to buy homes, cars, and other assets to feed the economy. It may have worked somewhat, but the main winners were those who invested in the stock market, which has grown enormously since the strategy began.
Åzone Futures Market uses a similar strategy, printing 10,000 new cåin for every new investor. With all that free money flowing into the market yesterday, it was interesting to see that the last future to attract investment was Moral Enhancement, as illustrated in the screenshot above from 12:58 pm EDT (remember: green is good; blue is bad).
New measures will be released soon to stem inflation in the market. Stay tuned!
Read More about the Exhibition on the Guggenheim Blog
Caitlin Dover interviewed curator Troy Conrad Therrien on the Guggenheim blog about Åzone Futures Market and Åzone Terminal, opening tonight in collaboration with the Center for Architecture at the Seaport Cultural District, 181 Front Street, New York City. Check out the post at the link below to learn more about the project and join the opening celebrations tonight at 6 pm.
Image: Åzone Terminal. Photo: Kristopher McKay
Åzone Futures Market Is Open for Trading
An initial list of 36 futures has been developed collaboratively with the exhibition contributors and issued for investment. Each future articulates a condition enabled by emerging technologies that until recently were limited to marginal prototypes or science fiction.
The price of each future is determined by live indicators of supply and demand, causing it to change from one moment to the next. The market value, represented by relative circle size on the futures page, illustrates the general popularity of a future. The color represents the daily percentage change in price. Just remember: green is good; blue is bad.
Investors who sign up in the early days of the market may be in for a wild ride, but will likely profit from first-mover advantage. The prices may swing sharply, but will likely trend upwards for a while before leveling off, so early investors have a high chance of seeing the value of their portfolios increase.
This is similar to the behavior seen with the value of Bitcoin, which took a few years to increase, but then jumped up from fractions of a cent to roughly one thousand dollars before coming down to a more steady price at a few hundred dollars.
Image: The Old Bourse of Amsterdam, the first modern stock exchange, destroyed by fire in 1858. After an old woodcut in the Germanic National Museum in Nuremburg. H.F. Helmolt, History of the World, Volume VII, Dodd Mead 1902