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What is SPECTRE (SXDT/SXUT)? | Simply Explained

By February 28, 2018 No Comments

What is Spectre?

Overview

SPECTRE is a ‘broker-less’ financial trading platform that allows users to speculatively trade on currencies, stocks and commodities, eliminating the middleman via private-escrow, smart contracts and a decentralised, autonomous liquidity pool. Based in the UK, with the first version of the platform recently released, SPECTRE aims to eliminate a lot of the fraud and tampering found in traditional financial trading platforms by using the Ethereum blockchain to remove the need for any human interaction, thus any manipulation of trades.

A speculative trading platform allows traders to place trades (or bets) on whether a stock, commodity or currency will go down or up in price. While some do call it a form of gambling, speculatively trading does have a science behind it in the form of technical and fundamental analysis and is often left to the highly-skilled and high-risk traders over mum-and-dad investors.

The liquidity pool

One of SPECTRE’s main features and selling points is an embedded liquidity pool (also known as a balance sheet) whereby liquidity (funds) is owned by token holders who receive dividends on SPECTRE’s gains. This liquidity pool removes the need for fiat deposits and allows a user to trade directly with their Ether (for example, ETH stored in their MyEtherWallet). Once signed up to the platform, a user creates a SPECTRE wallet and deposits their chosen amount into their wallet. It then gets allocated for trading and placed in private escrow. Unlike a traditional broker who would have access to your funds account, an encrypted wallet is created that only you can access, protected by the Ethereum blockchain. Even SPECTRE’s management team and employees have no access or control over your account or funds. And because the liquidity pool is governed by a smart contract, winning trades are paid out instantly which is a huge advantage over traditional platforms that sometimes halt or postpone withdrawals.

Goodbye brokers

With the introduction of smart contracts to the SPECTRE trading platform, it makes traditional brokers redundant and provides complete transparency to speculative trading. Once a user places a trade, a live feed of market data is monitored for the specified duration of the trade and when an outcome of a win or loss is registered, the platform automatically executes either in the users favour (win) or in SPECTRE’s favour (loss). For example, if a user loses a trade, the liquidity pool is credited from the user’s wallet, less 2% trade fee (to SPECTRE) and 2% dividend, paid out to SPECTRE’s dividend-token holders (not the utility token which is different – see A tale of two tokens).

If a user wins their trade (yay!), they receive an instant 75-93% return on investment (ROI) and the liquidity pool is debited for that amount. Similar to a loss, a 2% trade fee is collected by SPECTRE, as well as a 2% dividend to the token holders of the dividend token.

When a trader has a win, an advantage for dividend token holders is they don’t face a looming loss, which means token holder profits are not only driven by user losses but overall volume, i.e. the more trades placed on the platform, the more dividends for token holders. As mentioned earlier, this entire trade process is governed by a smart contract on the Ethereum blockchain and is immutable without any chance of human intervention.

Trader analytics

Let’s not beat around the bush, speculative trading is high risk and best left to the professionals, or those experienced enough to know their way around technical and fundamental analysis. Inexperienced traders often have a win ratio of much less than 50%, while experienced traders can sometimes reach a 60-70% rate. While SPECTRE obviously wants its liquidity pool to be ever-increasing, an experienced trader should be able to achieve a good win-rate with through the platform. However, since SPECTRE keeps 96% of all losses on the platform, their liquidity will have the growth it needs and dividend token holders are likely to receive additional ‘special dividend’ payments made yearly.

One of the advantages of SPECTRE’s trading platform in wanting traders to succeed in their trades is the inclusion of emotion control, risk management, trade setup identification, deep trader analytics, trader chat and on-board education features. These features are there to help traders gain experience, as well as know their strengths and weaknesses when it comes to their own particular trading style. Many of these features, however, are only available to holders of the other SPECTRE token, a utility token for the platform.

A tale of two tokens

Similar to a cryptocurrency such as NEO, which offers two tokens on the platform in the form of NEO and GAS, SPECTRE offers two ERC-20 tokens on its platform. During the ICO, these tokens funded the liquidity pool of the platform, making the pool decentralised and wholly owned by token holders. One of these tokens is a utility token (known as the U-TOKEN). While holding the U-TOKEN is not required to trade, a token holder does receive special privileges on the platform such as higher trade win payouts, access to all trade indicators, all assets per available class, and participation in the token buyback scheme (SPECTRE will use 3% of fees created on the platform to buy back tokens, thus reducing the supply over time).

The other token is a dividend token known as the D-TOKEN. This token allows users to receive dividends based on the profits from the SPECTRE platform. Each time a trader makes a trade, the token holder will receive 2%, plus at the end of each year a special dividend may be paid out if the liquidity pool growth targets are met. Eventually, these dividends will be paid out directly to a token holder’s Ethereum wallet without the need for logging onto the platform. When looking at the token economics of some platforms, it could be claimed that tokens are sometimes created just to raise money, however don’t offer any real value to the token holder and only function as a unit of account or means of exchange on their platform  when they could easily just accept one of the mainstream digital currencies. With SPECTRE’s dual-tokens, however, there is true value to holders of both tokens on the platform, and each has high utility as either a trader (U-TOKEN) or investor (D-TOKEN).

Main Platform Features

                             SPECTRE Dashboard

  • A utility token (SXUT) that offers special privileges on the platform such as 1-5% higher trade payouts (total supply of 43 million.)
  • A dividend token (SXDT) that pays out dividends when users place trades (total supply of 140 million).
  • ERC-20 tokens on the Ethereum blockchain.
  • Tokens are traded on several exchanges so can be held by anyone.
  • Offers a demo account for those who wish to gain experience in speculative trading.
  • Currency conversion between fiat and crypto carried out right on the platform.
  • A subsidiary of Neuchatel Ltd., who have solid experience running another speculative trading platform.

Strengths

  • An ambitious platform which disrupts the traditional broker trading model and eliminates fraud and market manipulation.
  • Platform is currently live, with a clean, simple and easy to use user interface.
  • A highly-experienced team with a mix of industry veterans and experienced blockchain developers.
  • A dividend-paying platform; strong incentive for users to hold tokens and potential for token appreciation.
  • Plans to bring other asset classes to the platform in the near future (such as CFDs).
  • A wealth of documentation available ranging from forecasts, SWOT analysis and liquidity pool security providing full transparency of the platform’s ins and outs.
  • Instant, fee-less withdrawals for winning trades.
  • Uses Oanda for market data, monitored and audited by reputable financial sources.
  • Offers trader protection algorithms which help with emotion control, risk management and the ability to track a user’s stats (monitoring their strengths and weaknesses) over time.
  • No brokers or agents harassing users to trade more than they can afford (a common practice in the traditional model).
  • A solid, 3-year roadmap with realistic timelines.

Weaknesses

  • An ongoing win-rate by a large number of traders on the platform could potentially (but unlikely) deplete liquidity and have a direct impact on trade caps, volume caps, and dividend payouts.
  • Huge growth in the platform may cause delays to transaction processing times given that Ethereum has already seen issues with the network from a DApp called CryptoKitties. Note: Trade outcomes would not be affected, only win/loss execution.
  • In 2018 and beyond, the regulatory landscape is unknown and could change, becoming unfavourable towards blockchain-based financial projects and tokens.
  • Due to the liquidity pool being Ether (ETH) denominated, the volatility of Ether could increase or decrease trader’s returns once converted to fiat currency. Note: SPECTRE will have backup liquidity in $USD to protect the balance sheet against huge swings in the Ethereum price (for example, a flash crash on the crypto markets).

Summary

In terms of forex and asset-class speculative trading, SPECTRE is a true game changer for the industry. To eliminate the main drawback of trading of any kind (market manipulation and fraud) is a huge advantage for SPECTRE’s platform and assures traders they won’t be swindled or duped from their trades with a smart contract and the blockchain providing immutable transactions.

It is an industry disruptor in the truest sense of the word, offering the world’s first broker-less, 24-hour trading platform built on the Ethereum blockchain, with a publicly-viewable liquidity pool entirely owned by token holders. Profits are paid out to token holders instantly resulting in a revolutionary change to the trading world and a new level of transparency.

In a recent post about Ethereum, I mentioned the lack of a killer app on the platform. With the product launch of SPECTRE, the strengths and features of their trading platform may well make it the first finance-based killer app to finally arrive.

Attribution – Images by Freepik and licensed under Creative Commons BY 3.0, with thanks.

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