Paloma Weekly Wings: December 13, 2023 - Paloma Deploys to Arbitrum for Mirror Trading Bots, Upgrades Message Attestation Router, and Cosmos-SDK 0.50.0

Your new Paloma hatchlings this week?

Welcome to the weekly update on new software design from the Paloma community of developers.

REMINDER WARNING: The Hatchling Paloma Network of “Messenger” (v1.10.2) and the Pigeon relay module are on v1.10.2. Paloma is still young, and its Cosmwasm and EVM contracts are still unaudited and undergoing continuous upgrades on the protocol and its smart contracts. The GRAIN token is on mainnet, but is not yet trading on any exchanges. Although the flock is flying on the messenger mainnet, it is still subject to the continued development of Paloma’s cross-chain messaging system and the security guarantees offered by the GRAIN token. We expect “Messenger” to experience weekly chain halts and chain restarts. We also expect numerous undiscovered vulnerabilities. No one on this project controls or influences the price of GRAINs. The community will strive to preserve the mainnet state, which includes balances, but considers this mainnet high-risk. Proceed with caution.

1. Paloma Deploys Compass-EV to Arbitrum For Mirror Trading Bots

What is the Problem?

The Paloma community continues to test interest in its relay network by connecting with decentralized exchanges (DEXes), seeking new ways to increase trading volume and interaction with their smart contracts. One of the issues the Volume team discovered this week was the steep learning curve required for derivative decentralized exchanges, such as options and futures exchanges. For example, the Arbitrum-based options exchange https://www.rysk.finance/ is a decentralized options trading platform. One of the biggest problems of this exchange is attracting more new users who wish to trade options. However, options trading is complex. It requires understanding the pricing and trading of derivatives. How will Rysk and other derivative exchanges grow users quickly with the costly constraint of user education?

What is a Mirror Trading Bot?

According to Wikipedia: https://en.wikipedia.org/wiki/Mirror_trading

Mirror trading is a trading selection methodology that can be carried out in both the foreign exchange and the stock markets; however, this is much more common in trading in the foreign exchange market.

The mirror trading method allows traders in financial markets (and, to a lesser degree, stock markets) to select a trading strategy and to automatically "mirror" the trades executed by the selected strategies in the trader's brokerage account.

There are two specifics of mirror trading. The first is connected with fundamentals of trading: To execute trades, investors copy signal services and auto-trading services. The second factor relates to the investment amounts, as mirror trading is linked to large investments.

Traders can select strategies that match their personal trading preferences, such as risk tolerance and past profits. Once a strategy has been selected, all the signals sent by the strategy will be automatically applied to the client's brokerage account. The trades are delivered and executed automatically with entry and exit points on multiple currency pairs. No intervention is required by the client as all the account activity is controlled by the platform.

Clients may trade one or more strategies concurrently. This enables the trader to diversify their risk while maintaining trading control of their account.

A Mirror Trading Bot is an effective way to help non-sophisticated traders copy strategies from more sophisticated and successful traders as well as signals from strategists who are willing to sell these signals. However, creating a non-custodial copy trading bot in a decentralized exchange requires Paloma’s pigeons to custody and execute trades for each user securely, and fast. Ensuring the non-commingling of funds will require that each bot is spawned for each Mirror Trading user on Arbitrum.

Taking Flight to Arbitrum

Paloma’s validators will receive an air-drop of ETH-Arb and be asked to prepare their pigeons and RPC endpoints to process relays to the Arbitrum network. The Volume team hopes to build a test Mirror Trading bot with Rysk Finance, Premia, and other options trading protocols on Arbitrum. The objective will be to demonstrate that Paloma’s validators will handle fast transaction execution on Arbitrum. We also aim to validate a compelling use case that will increase the volume of users on Arbitrum’s derivatives decentralized exchanges.

2. Upgrade Paloma Message Attestation Router

This week was the launch of Pigeon Feed Engineering with the successful upgrade to Paloma 10.0.2. Pigeon Feed is the on-chain marketplace for message relaying on Paloma. The marketplace consists of Paloma’s validator pigeons competing for message relay activities that will reward them GRAIN token rewards. In Paloma 10.0.2, pigeons are re-assigned messages when they are not selected within 10 seconds. Messages are dropped from the queue after 10 minutes instead of the previous 30 minutes. However, with this upgrade to Paloma and Pigeon 10.0.2, we identify that Paloma’s attestation software requires refactoring and upgrades. The attestation router, whereby all pigeons query the target chain to identify successful relay activity, is not sufficiently robust to handle fast message performance awareness.

This week, we will upgrade the attestation router with the following features:

Extract existing logic into modular handlers
Allow for dynamic assignment of the handler to message type
Introduce hooks to run before and after the handler

With modular handlers and hooks, we will now have a more reactive attestation functionality that will be a significant piece of the Pigeon Feed engine for managing message relays among the pigeon network.

3. Paloma to Cosmos-SDK 0.50.0, Comet BFT 0.38.1 and Cosmwasm 1.5.0 first merges to master

Paloma’s first merge into master of the Cosmos-SDK 0.50.0 upgrade began this week. This is a major milestone, and we expect further migration work to continue in December. Our objective will be for Paloma to take full advantage of advanced Cosmos-SDK features that allow for even further message relay and transaction throughput across the network.

Stay up to date and follow the Paloma public repositories and the commits of ongoing upgrades to the Paloma Cosmos-SDK blockchain and the Pigeon relay module here:

https://github.com/palomachain/paloma/releases

https://github.com/palomachain/pigeon/releases

Pigeon of the Week: AI Pigeon Series - The Cyborg Pigeon

The Cyborg Pigeon is a species of blockchain message relayer that has morphed with technology to enhance its previously slow, organic performance. The Cyborg Pigeon aims to keep adding more software and artificial intelligence augmentation.

The Cyborg Pigeon

source: https://t.me/palomachain/38946

Conclusions:

Paloma aims to land on Arbitrum to launch decentralized Mirror Trading bots on Rysk Finance and Premia as the network continues to find alignment with decentralized execution use cases with demonstrably strong demand by decentralized exchanges. Paloma attestation upgrades continue the work of Pigeon Feed, starting with the release of Paloma 10.0.2. We continue to partner with Vitwit for Paloma’s upgrade to Cosmos-SDK 0.50.0 with the first merges into the master branch. We continue to fly faster and faster with each week! COO! COO!

To learn more about Paloma, please visit https://palomachain.com

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