Our solution rests on four pillars:

1. Safe transfer of funds in trust management

For the purpose of transfer of an investor’s exchange account to a trader in trust management, an API key provided by the exchange is used. The API key is not transferred to the trader, but stored on Membrana’s platform in a secure database. The trader trades on an exchange via the Membrana single trading terminal. Consequently, the trader does not have access to the investor’s assets. 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.

2. Contract between Investors and traders

To conclude the transaction between investors and traders an Ethereum Smart Contract is used. 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.

3. Confirmation of past trader’s profitability using blockchain

All contracts concluded by traders via the Membrana blockchain platform will be saved to the database. This information is further used to calculate traders’ success using indicators, such as ROI, rating, etc. These indicators will be provided to investors, giving them a greater ability to select suitable traders.

The Membrana blockchain platform uses blockchain to validate traders’ details. To do this, the hash sum of traders’ transactions for the day is saved in the blockchain Ethereum Smart Contract. The block, where the hash sum is saved, is dated and cannot be counterfeited; therefore, the validity of all data on traders’ transactions of exchange is confirmed by their hash sum in the blockchain — in the block dated with the respective date of transaction. Thus, it is impossible to save only profitable transactions in the database and their hash sum externally as far as at the moment of saving, because it is not known which transactions are profitable.

4. Distribution of investor’s assets among several independent traders

The Membrana blockchain platform allows the investor to transfer, to trader, only part of his funds in the exchange account, as is stated in the contract terms. The remaining funds remain under the investor’s full control and can be used for independent trading, transfer of these funds to another trader, or withdrawal from an exchange account.

Trade in cryptocurrencies is actually carried out from one exchange account by different traders or by the investor himself. In spite of this, the Membrana blockchain platform provides isolated and independent trading within the amounts transferred to trust management for each trader and the investor himself.

At the time of the conclusion of the contract, the investor determines the amount transferred from trust management in the accounting currency to be used.

Currently, cryptocurrency market has a total market value of slightly below $200 billion. This market has emerged over the last three years and it has increased in value by roughly 100x since inception in 2014–2015. Yet, even after this impressive growth it is dwarfed by the global stock market which has a size of approximately $50 trillion.

Observes from all over the world agree that there are good chances that, once proper legal regulations are in place, the digital market will start taking bigger market share quickly expanding from its current 0.4% of the global wealth to tens of percent. This will be happening primarily because of the tokenization tools and techniques that are expected to enable real estate, industrial and commodity assets to be wrapped in digital cover, effectively enabling access to all assets for all investors on the globe.

This new reality will call for new infrastructure. Old school depositary and custody services won’t be able to promptly adjust to new scale of operations which will be fully global and will require faster and more transparent operation. Transitioning your stocks from the exchange to ADR programme agent for three days? Procedures like that will become history.

Neither will they posses the most needed attribute of this decentralized world: independence and risk elimination. Despite the multi layer insurance coverages, reinsurance agreements and banking norms, there always will be general risk that is associated with them and third party.

We, Membrana blockchain project, are certain that the blooming decentralized financial world will be using blockchain based mechanisms allowing to avoid third party risks and see clearly in every given moment what is happening with the funds, where are they located and what are those funds. No question about conversion rates, actual buying and selling prices, transaction fees, special commissions and other foggy elements.

Membrana blockchain project is here to present this option.