Analysis of Spectre – Speculative Tokenized Trading Exchange - Crush Crypto

Analysis of Spectre – Speculative Tokenized Trading Exchange

Summary

  • Project name: Spectre
  • Token symbol: SPEC-D / SPEC-U
  • Website: https://spectre.ai/
  • White paper: https://d1zzssn32v8b7a.cloudfront.net/media/spectre_whitepaper_v_2_3.pdf
  • Hard cap: US$30 million (public crowdsale ICO contributors own 50% of total token supply if hard cap is reached)
  • Conversion rate: 1 ETH = 2,000 SPEC-D or SPEC-U
  • Maximum market cap at ICO on a fully diluted basis: US$60 million
  • Bonus structure: During pre-sale, 33% bonus for the first $15 million and 22% for the remaining $15 million
  • Presale or white list: Presale open for registration
  • ERC20 token: Yes
  • Crowdsale date: Pre-sale from October 27 to November 5, 2017 / Public sale from November 17 to December 10, 2017 (please refer to Spectre’s website for the most up-to-date information)
  • Token distribution date: Distributed Immediately after contribution and tradable 24 days after the end of ICO
Video summary (video is 11:38 long):

Project Overview

What does the company/project do?

Spectre aims to bring transparency and remove the middleman for trading in the binary options and foreign exchange (FX) industries.

Spectre is building a trading platform that enables users to bet on the direction of financial assets using cryptocurrencies. It is similar to a gambling platform except the underlying assets are traditional asset classes like FX and options.

The traditional digital options and FX trading industry are riddled with fraud. For example, brokers would manipulate prices and even refuse or delay client withdrawals. By utilizing blockchain technology, conflict of interest can be reduced because the middleman is removed.

A key feature of Spectre is the utilization of a liquidity pool. This way, users can trade even when there is no counterparty taking up the other side of the trade. This way, liquidity can be guaranteed. There are three sources for the growth in liquidity pool:

a) peer 2 peer trade matches (losses and wins drive revenues)
b) trader losses
c) DApp store revenues driven by 3rd party apps which use the pool

Eventually, other dApps can be connected to the Spectre platform so that users can trade using those dApps.

How advanced is the project?

The idea of Spectre was conceived in Q4 2016. The public alpha was released in Q3 2017 where users can trade with play money. You can try the alpha on their website.

Here is a video demo of the alpha (video is 7:02 long):

Below is the future roadmap for the project:

Q4 2017

  • Public beta with testnet integration

Q1 2018

  • dApp smart contracts, dApp and servers security audits
  • Mainnet integration
  • Product launch
  • Trademark application

Q2-4 2018

  • New asset classes and trade types
  • MU MIFID compliant regulatory license (FCA, CySEC, BAFIN or other)
  • Forex & CFD trading

Q1-2 2019

  • Automated order matching
  • dApp store

What are the tokens used for and how can token value appreciate?

There are two types of tokens being offered in the token sale: dividend token and utility token. ICO participants need to specify which token(s) to get and in what proportion.

Utility Token

Token holders receive in-platform privileges which increases their chances of capital gain through time. These privileges are:

  • 1-5% higher trade pay outs
  • All trade expires on smart option contracts
  • All assets (not just a few per asset class)
  • All trade indicators (not just the ones found in the MVP)
  • Exotic trade types (smart option contracts such as knock-in-knock-outs, barriers, ladders and more)
  • Spectre Financial Education Academy (SpecED)

There is also a token buyback program for utility tokens where 3% of fees generated on the system will be used to buyback and retire the utility tokens.

Dividend Token

Spectre pays out normal dividends and special dividends to dividend-token holders. Normal dividends are paid as a 2% volume fee on trader’s wins or losses in the system at the end of each month.

Special dividends in the system are paid at the end of the year and only when the liquidity pool has experienced growth above a set threshold. If indeed pool growth exceeds pre-set, end-of-year targets, any excess growth above these targets is going to be paid out at a 70/30 basis to dividend token holders and Spectre management, respectively.

Initially, the dividend payment works on “pull” function, meaning that dividend token holders will login to spectre.ai and pull the dividends that are entitled to them. Eventually, it will move to the “push” function which means as long as the tokens are stored in an ERC20-compliant wallet, holders will receive dividends in Ether there.

Since the buyback/dividend for both tokens are tied to the usage and trading volume of the platform, the more usage and trading volume the Spectre platform has, the more valuable the tokens should be.

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Team

Spectre has a team of 10. The company behind Spectre, Neuchâtel, has been around since 2012. The key members of Spectre are also senior management of Neuchâtel.

Other than Spectre, Neuchâtel also has other products: Blue Sky Binary which provides financial education and algorithm design, and Bugscore 360 which provides discreet, big-data performance management solutions.

The bios of key members of Spectre are as follows:

Kay Khemani, CEO – previously Executive Director at Goldman Sachs and Associate at JP Morgan in the research department.

Jai Sankar, CTO – previously CEO of Credo Infotech, Senior Software Specialist at Mindtree.

Zisis Skouloudis, COO – previously worked as Account Manager and IT Operations Manager at Evoiki Group.


Opportunities

  • Financial trading is a large market and ripe for disruption. If Spectre gains traction, the potential is substantial.
  • Spectre allows other dApps to use its platform for trades, further increasing the project’s reach.
  • The use of blockchain makes sense for the project as it automates many processes and makes the entire experience more efficient.
  • The company has a lot of information about the project from the white paper and other documents, indicating that the team has put in a lot of thoughts into the business model and execution.

Concerns

  • The two tier token system can be confusing to some participants and future token holders – we believe it would be a cleaner and simpler structure if only the utility tokens are issued.
  • The project operates in a heavily regulated industry of financial trading. Spectre may need to get the necessary licenses/regulatory approvals in each country before allowing citizens of those countries to trade. Those approvals take time and Spectre may not be able to accomplish the milestone within the timeline that the roadmap prescribes (Q2-4 2018). 
  • Users are still betting against the house in the sense that Spectre’s management are directly incentivized from the growth in liquidity pool. It is in the Spectre’s interest for users to lose money (in non peer-to-peer trades) so that it can grow its liquidity pool to generate more trading and receive year-end dividends. Therefore, the conflict of interest is not completely removed in Spectre’s model.

Conclusion

Overall, we like this ICO for its short-term potential but are neutral about its long-term potential.

There is a bit of game theory going on for this token sale. Because participants can select either dividend of utility token, we believe most would select the utility token since it would most likely be tradable in more exchanges and have more liquidity.

However, all the dividend tokens together will receive a portion of trading fees, therefore, if only very few dividend tokens are minted, those tokens can be very valuable as each dividend token will get a bigger piece of the pie.

Our thoughts of the tokens for short term and long term are as follows:

For short-term holding

Good. The team, progress, idea, and market awareness of the project are all above average. The hard cap and ICO structure are also fair as long as participants get in at pre-sale stage.

For long-term holding

Neutral. We believe regulations will be a challenge for the project. The project has a lot of upside potential, but since it is entering in such a competitive and lucrative industry, it is expected that there would be a lot of competition coming up.


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