REAL WORLD APPLICATION OF DECENTRALIZED EXCHANGES

Transcription

1 REAL WORLD APPLICATION OF DECENTRALIZED EXCHANGES Disclaimer: Not an offer for investment or securities Version: 4.6 Last updated: 21 June 2017

2 Disclaimer This confidential overview (the Overview ) has been prepared by Open ANX Foundation Limited (the Foundation ) solely for information purposes. This Overview has been prepared to assist the recipient in deciding whether to proceed with further analysis of the matters contained in this Overview and does not purport to be all-inclusive or to contain all of the information the recipient may desire or require. The Foundation reserves the right to amend or replace any or all of the Overview at any time and undertakes no obligation to update the Overview or to provide the recipient with access to any additional information. The Foundation makes no representation or warranty, express or implied, as to the accuracy or completeness of this Overview or the information contained herein, and shall have no liability for the information contained in, or any omissions from this Overview,or any of the written, electronic, or oral communications transmitted to the recipient as from the date of receipt of this Overview. Each recipient should comprehend, consider and evaluate carefully the full contents of the Information Memorandum. If there is any inconsistency between the information in this Overview and the Information Memorandum, the Information Memorandum prevails. This Overview and related materials may be translated. Any translation is for reference purposes only and is not certified by any person. If there is any inconsistency between a translation and the English version of this Overview, the English version prevails. Each recipient should conduct his own investigation and analysis and make his own independent assessment of the merits of any transaction and should consult his own professional advisors. This Overview does not constitute an offer or invitation to subscribe for or purchase any securities nor solicit any investments, and neither this Overview nor anything contained herein shall form the basis of any contract or commitment whatsoever. This Overview contains forward-looking statements that are based on the beliefs of the Foundation, as well as assumptions made by and information available to the Foundation. This Overview has not been reviewed by any regulatory authority in any jurisdictions 2

3 The openanx Platform Collateralized Asset Gateways CounterpartyRisk Transparency KYC Smart Contracts Liquidity Aggregation Decentralized Exchange Open Source Code DisputeResolution Mechanism Exchange Channel Integration Credit Risk Trading and Pricing DAO Governance Non-Profit Foundation 3

4 Cryptocurrency Landscape Market capitalization of cryptocurrencies reached a new high of USD 102 Billion 1,an increase of 1363% since Feb 19, 2016 Estimated 11.5 million active wallets and 5.8 million unique users Over 98% of transactions occur on centralized exchanges 2 Decentralized Exchanges Centralized Exchanges Source: 1 As of June 15, OTC and P2P transactions are excluded Source: Open ANX Foundation Limited 4

5 Platform Comparison Factors Centralized Exchanges Decentralized Exchanges OTC / P2P openanx Platform Liquidity and Price Discovery User Experience Operational Transparency Credit Risk Transparency Legal Framework Open Source Software Dispute Resolution Competitiveness Source: Open ANX Foundation Limited Poor Good 5

6 Centralized Exchange Landscape 75% of transactions on centralized exchanges occur on only8 platforms Centralized Exchange Market Share (Feb-Mar 2017) Huobi, China BTCC, China GDAX, United States Bitstamp, UK 5% 6% 7% 7% OKCoin, China Kraken, United States 9% 10% Bitflyer, Japan Bitfinex, BVI 15% 16% Others 25% 0% 5% 10% 15% 20% 25% 30% Sources: Cambridge Judge Business School - Global Cryptocurrency Benchmarking Study

7 Issues with Centralized Exchanges Holds customers private keys increasing counterparty risk Fragmented liquidity Lack of operational and financial transparency BTC Price Versus Major Historical Events Source: 7

8 Issues with Centralized Exchanges A significant number of centralized exchanges have been compromised Losses in excess of 925,000 BTC 1 (>USD 2.1 Billion as of 15 June 2017) Amount Lost (BTC ) Mt Gox, 2014 Bitfinex, ,756 BTC BitFloor, ,000 BTC Bitstamp, ,000 BTC Bitcoinica, ,547 BTC 744,408 BTC lost Source:

9 Issues with Decentralized Exchanges Existing decentralized exchanges Limited ability to batch trade Trade volumes comprise only % of global exchange trade volumes 1 Low trade volumes = limited liquidity; suboptimal price discovery No integration of fiat settlement Limits on-platform transactions to crypto pair trading Off-platform fiat settlement limits trade size due to counterparty settlement risk Decentralized exchanges 24h trade volume USD (15 June 2017) 2 Bitshares Open Ledger DEX Waves Bitsquare Counterparty DEX USD 3,828 USD 3,043 USD 365,727 USD 1,347,425 USD 3,922,438 1 As calculated by Open ANX Foundation Limited 2 9

10 Issues with OTC and P2P Trading The OTC cryptocurrency market is bigger than the exchange market 1 Institutions, miners, high-net-worth individuals and other large scale participants engage due to Higher liquidity Greater efficiency Fixed price trading Significant counterpartyrisk Lack of transparency - Information is solely provided by OTC buyers and sellers Not all OTC traders are regulated 1 Source: 10

11 openanx Platform 1 New Participants (credit risk traders, risk assessors, rating agencies) Key Components Decentralized Exchange Dispute Resolution Asset Gateways and Existing Service Providers (including exchanges) Payment Channels and Collateral Retail and Commercial Users 1 openanx prototype expected to release in second quarter

12 openanx Proposition Open Transparent Decentralized Open to existing and future exchange partners Provide universal access to cryptocurrency market make onboarding and pricing accessible and practical Bridge real world fiat assets into the cryptocurrency world; fiat token compatible with exchanges Lower cost, greater liquidity, and volume sharing through order book aggregation and network scale economies Source: openanx White Paper Collateralized asset gateways and other information enable risk assessment High speed transactions and security, with permanent records of transactions KYC flexibility for participants Establishment of credit markets for risk pricing and ability to control risk exposure Impartial dispute resolution mechanism through third parties Governance through DAO mechanism and non-profit foundation Community driven with regionally incentivized support Open Source Software 12

13 openanx Platform Overview 1 Ability to trade Asset Gateway tokens with various crypto pairs including other Asset Gateway tokens Transparent credit market to price risk of different asset gateways Asset Gateways post collateral Fast execution through payment/ exchange channels Greater access to liquidity and improved price discovery Transparent dispute resolution mechanism 1 Key features and functionalities subject to change and/or modification 13

14 openanx Platform Overview The development of openanx is expected to result in new gateway operators entering the market, with varying levels of credit quality and asset support Asset Gateways Order Books Exchanges Users With the ability of Asset Gateways to register their tokens and sponsor their own order books, the barriers to entry for gateway operators are expected to be lowered Credit risk order books are expected to enable trading of gateway tokens against each other and are expected to improve price discovery for the market 14

15 DAO Decentralized Exchange Ethereumsmart contracts to govern and operatethe exchange Integration with exchangechannels to supportordermatching API functions for each off-chain gateway intersection include trading, KYC, order book registration, dispute resolution, DAO governance and upgrades Predetermined disputeresolutionprocessto be implemented Dispute resolution can be enacted through the release of collateral on the blockchain Exchanges Asset Gateways Collateral DAO Order Books Users Foundation Dispute Resolution 15

16 The Role of Asset Gateways and Service Providers Collateral Retention Asset Gateways pledge native Ethereum collateral onto the blockchain, which will be time locked by the DAO. This collateral serves to protect consumers KYC/AML Service First to be performed on any user depositing real world assets; done by the nomination of a KYC service smart contract address as part of the Asset Gateway registration The gateway will arrange for the KYC of the user; the resulting KYC rating is then registered in the DAO Issue Digital Tokens Asset Gateways take into custody real world assets such as EUR or USD fiat and in turn mint ERC20 tokens onto the blockchain, for example Asset Gateway ANX may issue USD token ANXUSD Sponsor Order Books With the ability of Asset Gateways to register their tokens and sponsor their own order books, the barriers to entry for gateway operators are expected to be significantly lowered 16

17 Use of Payment Channels and Role of Collateral Collateralmanagement function could allow users to assess the creditworthiness of Asset Gateways Users Credit Order books Asset Gateways Collateral Order books are opened by the DAO at the request of a sponsoring user With the availability of transparent, locked collateral, and transparent token issuance, users could form quantifiable views on the creditworthiness of Asset Gateways Integrated order book support to allow trading of credit and market risks 17

18 Role of New Participants By making available risk assessment indicators and predetermined dispute resolution mechanisms, participants are provided with access to the important information needed to evaluate the credit quality of Asset Gateways Users Risk assessment indicators Asset Gateways Exchanges Participants are able to make more informed decisions with regards to credit trading prices and also the counterparty risk they are willing to assume for non-crypto pair trading 18

19 The openanx User Journey Users could assess risk and have freedom to choose between asset gateways to onboard / offboardfiat, while still having access to aggregated order books On the openanx platform, users could trade traditional digital assets, and gateway tokens a new dynamic of credit risk markets Dispute resolution provided via external service providers disputes could be escalated beyond the asset gateway 19

20 OAX Token Allocation A total of 100,000,000 OAX Tokens generated for the development of the openanx project Token Sale being conducted to fund the development of prototypes and proof-of-concepts, marketing, strategic Token Sale 30% Additional Token Sale 30% Discretionary Distribution 20% Foundation Treasury 20% partnership developments, operations, legal and administrative expenses Additional Token Sale to fund production launch and development of relevant technology and organization matters; terms and lock-up to be determined Foundation Treasury to be used for community development andoperationcosts; subjectto2-year lock-up Source: openanx White Paper ( epaper/openanx_white_paper_enu.pdf) Discretionary Distribution to advisors, directors and early backers; 70% locked up for one (1) year, 30% locked up for two (2) years 20

21 Use of the OAX Tokens OAX Tokens can be used for participating on openanx and exchanged for memberships 1 Participant Member Voting Member Founding Member Third Party Service Provider Member Asset Gateway Member Access openanx platform for transaction purposes Vote on decisionsregardingtheopenanxplatform Same privileges as Voting Member plus right to suggest topics for upcomingdiscussions Provide services within the ecosystem including KYC, trading systems, legal and/or smart contracts Same privileges as Third Party Service Provider Member plus right to offer services as a provider of token-to-fiat currency, multicurrency, or token-to-token exchanges 1 Memberships are transferable. Structure and privileges may vary subject to legal regulations and advice 21

22 Token Model Tokens exchanged for memberships shall be destroyed thereby preventing the accumulation of OAX and reducing the overall OAX token supply Excess funds generated by openanx platform shall be also used to acquire OAX tokens in secondary markets and any such acquired tokens shall be destroyed Acquisition initiated by algorithmic RNG process executed by the openanx platform 1 Participants Purchase OAX OAX Purchasers Redeem Membership DAO Grant Membership Smart Contract Destruction of OAX Verifiable via openanx platform Reduce OAX supply Expected to result in increasing demand and decreasing in supply 1 Subject to regulatory and technical restrictions 22

23 Token Model The initial number of issued OAX Tokens is 100,000,000; as there is no planned inflation, the number of outstanding tokens would be reduced over time as activity on the openanx platform increases Platform activity and participation drive membership demand and token redemption / destruction Excess funds surplus generated by increasing platform activity drives token repurchase / destruction Units Token Demand 1 1 Units Token Supply 1 Graphs for illustrative purposes only Activity Activity 23

24 openanx Project Roadmap Q Concept Development Q Concept Validation APRIL 2017 OAX Project Revealed MAY 2017 White Paper Released JUNE 2017 OAX Token Sale Q Working Group Setup Q User Group Signup Q openanx Prototype Release Q1 Q2 Q3 Q4 Q1 Q

25 Open ANX Foundation Not-for-profit entity established under the laws of Hong Kong as a company limited by guarantee Objective is to promote the real world application of the openanx platform No distribution of profits The Foundation is involved in the initial development and rollout of the openanx platform, and is undertaking the Token Sale to fund the project 25

26 Conceptualized, Supported and Catalyzed by ANX 1 Firmly committed to an open and decentralized future Vast experience in managing exchanges, order matching, infrastructure and the real world fiat systems Contribution of perpetual license to extensive intellectual property Migration of ANX customers to openanx bringing liquidity to the system Network of relationships amongst the digital token community 1 ANX International Limited and the Open ANX Foundation are separate legal entities; ANX International Limited is not expected to provide financial support to Open ANX Foundation or the openanx Platform 26

27 OAX Token Sale The below summary is presented for convenience only and those considering a possible purchase of OAX Tokens should comprehend, consider and evaluate carefully the full contents of the Information Memorandum, in particular the discussion of risks Launch Date 1:00 PM GMT on 22 June 2017 Total Number of Tokens Price per Token Purchase Channels 30,000,000 OAX Tokens (30% of total issued), subject to soft cap of 13,000,000 OAX Tokens 1 1 ETH = OAX (approximately 1 OAX = ETH 2 ) (Exchange rate based on closing price on 20 June 2017) 1. Open ANX Foundation ( 2. Authorized Distributors 3 1 Can be applied at the absolute discretion of the Foundation 2 Rounded to 9 decimal places for convenience. The actual amount is ETH per OAX 3 A full list of Distributors will be published on the Website. Purchasers will be required to open an account with a Distributor and are subject to any applicable account opening procedures (including but not limited to Know-Your-Customer verifications) and fee schedule (including but not limited to exchange fees for exchanging other currencies/tokens into ETH) as required by that Distributor 27

28 OAX Token Sale The below summary is presented for convenience only and those considering a possible purchase of OAX Tokens should comprehend, consider and evaluate carefully the full contents of the Information Memorandum, in particular the discussion of risks Eligible Purchasers 4 Not prohibited to purchase or own OAX Tokens under applicable laws and regulations Residents of any country or jurisdiction where the sale of the Tokens are not prohibited or regulated by any law or regulation Comply with KYC and AML requirements as required by Distributors or the Foundation Sophisticated and experienced traders, experts, technicians and/or professionals in the fields of distributed ledger technology and cryptographic tokens, and are fully aware of the risks associated with development and use of OAX Closing Date 5 1:00 PM GMT on 22 July 2017 Activation of Tokens 29 July 2017 unless such purchaser has not yet fully complied with applicable KYC and AML requirements 4 The Foundation reserves the right to reject any contribution in its absolute discretion 5 The Foundation reserves the right to advance earlier at its sole discretion 28

29 Founding Team Ken Lo Leadership Hugh Madden Leadership Dave Chapman Leadership David Tee Leadership Jehan Chu Strategy Advisory Chandler Guo Strategy Advisory Bok Khoo Technology Advisory 29

30 Project Team IT Infrastructure IT Infrastructure Corporate Finance Corporate Finance Product 30

31 Advisors Peter Smith Strategy Advisory Lionello Lunesu Technology Advisory Henry Yu Legal Advisory Ben Tai Strategy Advisory Zane Tackett Strategy Advisory 31

32 Partners 1 0xproject CryptoDerivatives.Market ANX International Octagon Strategy Enuma Technologies 1 Independent entities not expected to provide financial support 32

33 Legal KING&WOOD MALLESONS Cooley L & Y Law Office Early Contributors HYPERCHAIN CAPITAL JEN ADVISORS BINARY FINANCIAL 33

34 OAX Token Sale Launch: 1 PM GMT on 22 June