European Union’s plans for a digital transformation in the decade of 2020-2030.
The concept of having one or more fund managers to deploy an investment strategy or to manage the trading activities of a portfolio is common. These activities can range from managing a single person’s fund at a small scale to managing the operations of a pension, trust, or hedge fund at a larger scale. The fund managers are paid a fee, which usually is a % percentage of the total assets’ under management worth.
In the case of bitcoin and other cryptocurrencies there aren’t many solutions available at the moment that provide secure and trustworthy management of digital assets. As a new industry, crypto attracts many scammers and fraudsters. Many people try to deceive newbies, who are usually naive and easily deceived as they haven’t explored the space enough or have never been involved in economic activities (i.e. trading) in their lives.
Membrana is a decentralized management platform for digital assets. It provides tools for traders and investors to safely cooperate in the trustless environment of the crypto market. It enables the users to trade with their own assets across multiple exchanges and also provides them the ability to entrust them with a professional manager to receive passive income.
In a few words: Traders and Fund Managers can trade on the platform to increase their success rate and their reputation, while investors can get these traders to manage and trade their assets without ever giving up ownership of their funds. This is achieved through exchanges APIs and smart contracts.
It’s known that the assets management market in cryptocurrencies can be characterized with the following problems:
- Direct fraud of investor or trader
- Loss of control over the funds
- Lack of transparency
1. Trading groups and personal managers
This type of asset management is a perfect example of a direct fraud. These can be signal groups, some of them with paid entrance. On the channel, they publish profitable deals to create a FOMO effect. Sometimes the authors of such channels use Photoshop to change the balances or the trade results to encourage their followers to send them assets for management. At this stage, investors do lose control over their deposit and most likely won’t get their money back. Of course there are legit cryptocurrency trading groups, but many of them only want to take your money. You’ve got to do a thorough research before joining a paid group.
Example - Leon Scam
After offering this Christmas promotion he dissapeared with 50 people’s money. You can check his Christmas wallet address on the blockchain here.
2. Trading through direct API access
Another popular way of trusting the assets to a manager is by giving direct access to your exchange API key. With this method, the investor basically loses access to his funds and puts a huge risk on himself.
This is what happens: when providing your API key to a trader, the investor can seriously harm his balance because of the absence of any risk management tools and uncareful trader’s actions. There are lots of cases when traders do not use any stop-orders and market swing can cost the investor a big portion of his balance.
Moreover, unavailability to put any restriction on the trader and allowed trading pairs can cause loss of a full deposit. Using the client’s assets trader can buy his own sell orders on low-liquidity pars, washing away the money.
The most popular service out there is copy-trading or social trading. The idea is that you choose a trader and automatically follow his activity. That way you can follow a human trader, trading algorithm or even a chat with signals.
This kind of service lacks a risk-management system and with no restriction on the trader, it has similar risks to providing access to direct API. As you already know that puts a huge risk on the investor and can cost him his deposit.
Another huge problem of copy-trading platforms is that it puts restrictions on the investor itself. You can’t trade on this account by yourself, cos it will interrupt the trader’s activity. And if you want to work with several traders, you would need to create multiple accounts on exchange, which is impossible in most of the cases.
How Membrana solves these problems
Membrana uses another approach to provide safety for investors— p2p contracts for asset management, which uses the best of the API protocol and Ethereum Smart-Contracts.
Safe transfer of funds in trust management
All investors’ funds remain on their exchange account, and are not transferred to the trader. Membrana also maintains the restrictions set at the contracting stage: stop loss, time period for trading by the API key, etc.
Contract between Investors and traders
Traders’ consideration is reserved in a Smart Contract, in advance, and it is automatically paid upon reaching the target profit set in a percent of the amount transferred in trust management, or upon expiration of the Smart Contract term.
The Membrana platform provides fund security for investors – funds are transferred to traders in trust management. The funds are not directly transferred to traders under any circumstances, nor do traders have access to investors’ API keys. API keys are stored on the Membrana platform in a secure database.
Conclusion of a contract
Having chosen a suitable offer, the investor sends an application to the trader for the conclusion of a contract. To manage this account, the investor must have an account on the cryptocurrency exchange, and an API key added to the Membrana platform.
Each trader who uses the Membrana platform participates in a traders’ rating. The rating system is based on a comprehensive analysis of the trader’s past results. Such parameters include: the trader’s ROI, the number of contracts awarded, the number of profitable contracts, the total amount of funds which is currently under management and/or has been managed in the past.
Membrana has developed an internal registry in which all the completed transactions on the platform are recorded and are transparent. The possibility of falsification of the trader’s trading history and its efficiency is completely excluded.
Another development of Membrana is a group order algorithm, which allows the trader to work with the assets of many investors with a convenient interface and automation of operational activities: regular reporting and payments, maintaining the safety provided by the smart-contract system.
The trader doesn’t have direct access to investor funds and trades through the Membrana trading terminal. The investor connects his wallet through the API keys to the platform. Binance, Huobi, Bittrex exchanges are already available for use. Because of smart-contracts, the risk-management system and the contract execution is automatically done. The trader’s commission is stored on the escrow account and is paid proportionally to the trader’s performance. Oracles provide centralized off-chain data for smart contracts and all the trade data goes through them. Membrana has developed an external API for connecting algorithm bots and other software like signals or external trading environment.
The Membrana team aims to earn income from:
1. Commission fees
0,33% per month
P2p contracts between trader and investor. Fee from overall contract amount.
10% performance fee
Contract between Membrana Fund (COF) and investor.
$10-25 per month
Subscription to access platform’s services: trading, investing & additional tools.
The average cost of competitors’ services (for traders / investors) in the market at the moment is $15.
1) 3commas = $22-75 /month
2) Trade-mate = $39 /month + 10% performance fee
3) Coinigy = $18-99 /month
The Membrana token (MBN) is an ERC-20 compliant token to be issued on the Ethereum blockchain. The MBN token model is giving different kind of utilities, which offers interacting with the platform and directly with other users.
Additionally, there are multiple staking features, which allows users to receive rewards, benefits and governance of community operated fund. Customers are encouraged to stack tokens or use tokens as a payment method providing organic growth of token ecosystem.
You can read detailed tokenomics in English with full information about stacking rewards here.
Token Buyback Plan
Membrana plans to spend up to 30% of income every month for the token Buyback from the market. Each user who paid for a subscription automatically contributes to the program. The program will begin in 2020 after the release of a final product and the formation of a sufficient user base.
Staking pool contains around 44,000,000 MBN Tokens. If you calculate the size of monthly payments for 3 years, then it will be: 44,000,000/12 * 3 = 1,220,000 MBN average monthly payment over 3 years.
On the other side, the earnings from subscriptions will be used to buy back tokens. The bought tokens are then brought back to the staking pool to be distributed as a reward for customers.
I believe that the token economics are a bit complicated and unclear for now. One needs to calculate a lot in order to get a clear picture and it’s based on hypotheses of the number of future users for now. Personally, I’ll wait for the platform’s full launch to evaluate.
The Membership has launched a staking program consisting of 4 levels:
1. Level 1 =100,000 MBN Required
Staking Reward: 20% per annum
2. Level 2 = 300,000 MBN Required
Staking Reward: 20% per annum
+ part of payments from Community Operated Fund profit. Level 2 is involved in the distribution of 10% of the profits from the results of COF — Community Operated Fund.
3. Level 3 = 1,000,000 MBN Required
Staking Reward: 27% per annum
+ part of payments from Community Operated Fund profit. Level 3 is involved in the distribution of 10% of the profits from the results of COF — Community Operated Fund.
4. Level 4 = 3,000,000 MBN Required
Staking Reward: 43% per annum
+ part of payments from Community Operated Fund profit. Level 4 is involved in the distribution of 10% of the profits from the results of COF — Community Operated Fund. On top of that, an additional 5% of COF activities will be allocated to Level 4 users, which are distributed only among them.
For staking levels 2, 3 & 4 payouts will be processed in BTC, ETH or USDT.
Membrana.io platform is released with full functionality, and it’s ready to enter the market:
- Supporting main cryptocurrency exchanges with API keys
- Exchange of text messages between investor and trader
- Connection of DEX Exchange
- Publication of the Membrana API for trading on supported exchanges in automatic mode (trading bots)
- Algorithmic orders: iceberg orders, peg orders, trailing orders and others
- An opportunity for the investor to transfer funds to management from his Ethereum wallet with no requirements to have accounts on the cryptocurrency exchange
- Manager contract: contract between investor and portfolio manager who does the work for finding the best trader
- Connection to top50 exchanges via API protocol
- Algo builder implemented in the platform
- Trading on exchanges with support of margin trading
- Support for decentralized exchange trade
The Company has already released the Membrana Public Beta version of the product which is available on the website: beta.membrana.io
I believe that the platform can really be useful for people that manage other people’s money like fund managers and paid group owners. Also, investors can find successful traders and in essence take advantage of their skills for profitable trading. Membrana will create a new way of collective group trading with security, trust and transparency.
Share this post
Biweekly update 24th January — 7th February.