Hi, interesting project.
Can you list some worst-case scenarios for when COIN prices fall or spike sharply, and how you plan to ensure people who have made fiat or BTC gains through their virtual portfolio are able to realize those gains even though they are withdrawing in COIN, which may become an issue given the fiat or BTC price is now much lower or higher than that of the initial COIN investment?
Specifically, are there any cases in which the primary and secondary reserve can fail, or would you say it is 100% foolproof?
Thanks
Hi! As you find in our whitepaper, we have two reserves. The first reserve is our COIN reserve and houses all of the COIN that will be distributed as profit for the network. The Second reserve will be actual cryptonized assets mapped to what users are trading on the platform. The business has been architected to never even deploy the use of the second reserve. Only unless in the event of worst case scenario. Suppose every trader has profited and decides to liquidate at the same time. If that amount happens to exceed the first reserve, then would the second reserve be deployed. Even in that case, the second reserve would have had the same or similar holdings to those in the user portfolios that the system is still liquid and we could replenish the first reserve again.
Here are six reasons why we forecast we would never even hit "worst case scenario":
1) Please also note that COIN losses from unprofitable trades go to the COIN reserve
2) We will implement trading pairs and match buy / sell orders (Which derisks the platform because orders then wash each other)
3) Trading markets usually have probability (odds) that are around 50%. So that naturally creates a balanced profit / loss market to always ensure that the reserve is liquid.
4) We will have a secondary reserve in place to backup the COIN reserve that can mirror or outpace trades on the platform
5) We will have trading limits to protect the network in the case of large swing orders
6) Our profit model enables us to buyback and replenish the COIN reserve as needed
Unlike many other startups that use a large percentage of raised funds for who knows what... 25% of our total token supply (15M COINS) is immediately put in the COIN reserve in the smart contract. ADDITIONALLY, 50% of the funds being raised are used for the reserves as well. Assume we hit our full raise of $33M, that would be 16.5M. Suppose we don't hit our full raise, any unsold tokens go into the COIN reserve. With our buybacks (that also go into the reserve) and investor trading losses going into the reserves.
On day one of opening our doors, that's quite of bit of liquidity. We will also scale the platform alongside its growth. As previously mentioned, we will deploy user and trading limits to ensure the network is operating correctly before opening it to the world or putting any liquidity pools at risk.
