Initial Capitalization

The initial capitalization sale for CRYPTO10 has been running since 1 April 2019 and will end on 30 April 2019 at 12h00 UTC. During the initial sale, users are able to purchase C10 tokens, which represent a proportional share of the underlying fund, by sending BTC, ETH or DASH as investment. The purchased tokens are valued in real-time and allocated to investors accordingly.

Between 30 April and 3 May 2019, the funds raised will be reconciled and rebalanced to the top 10 cryptoassets (with a 25% cash component) — in accordance with the litepaper — the audited C10 smart contract will be deployed, and all purchased tokens will be sent to investors.

Roadmap

On 3 May; the fund will transition into being fully open-ended by making use of an Ethereum smart contract. Investors will continually be able to invest and redeem tokens to enter and exit the fund. These interactions are facilitated through our investment portal and are denominated in Ether only. Please see the ‘Token Mechanism’ section below for an explainer of how this works.

During Q2 of this year, and as per the litepaper, the next phase of CRYPTO10 Hedged will be live. This will add an investment platform wrapper around the smart contract. The difference this makes is that investors are able to purchase C10 tokens directly with BTC, ETH and DASH (more coins can be added as demand dictates). Allowing investment in currencies other than ETH makes the investment process slightly easier for future investors.

Token Mechanism

Once the initial sale has ended and tokens have been issued, clients will be able to invest by making use of the C10 smart contract. It is important to note that interaction with the smart contract can only be done by pre-approved or “whitelisted” Ethereum addresses. Users are able to whitelist any Ethereum address they own once they have verified their identity within the investor portal, thus linking the address to their account. This anonymously approves the user’s address within the smart contract, which allows only verified users to purchase or redeem tokens.

Token purchase

Tokens are purchased by sending Ether to the smart contract address from a whitelisted Ethereum address. The smart contract makes use of a forward pricing policy, which means that tokens purchased or redeemed are valued at the next token price update. Much like CRYPTO20, CRYPTO10 Hedged price updates occur hourly.

Once Ether has been sent to the smart contract from a whitelisted address; at the next price update the Ether amount sent and the C10 tokens to create are valued and tokens are sent automatically to the Ethereum address that sent Ether to the contract. Note that an exchange address should NOT be whitelisted or used for investment as C10 tokens sent to it will be lost.

Token redemption

Investors holding C10 tokens are able to redeem their C10 tokens for their underlying value in Ether, in much the same way that is currently available for the CRYPTO20 fund. The request to redeem tokens can only be done by a whitelisted Ethereum address, with the entire process handled by an intuitive DApp hosted within the investor portal that interacts directly with Metamask, a popular Ethereum wallet.

The same withdrawal process can be followed by using MyEtherWallet (with a hardware wallet for example) to interact directly with the C10 smart contract. Calling the requestWithdrawal method will initiate a token redemption in the same way as using the DApp.

Investment DApp

The process for requesting a withdrawal is simple; a user with C10 tokens at their whitelisted address uses the DApp to sign and broadcast a transaction that specifies the number of tokens that user wishes to redeem for Ether. The specified number of C10 is removed from the user’s address until the next price update occurs. Once the next price update is made, the equivalent value of Ether is automatically sent to the requesting Ethereum address.

An example of the one-step investment DApp is shown on the left.

Motivation for using a smart contract

The C10 smart contract functions as the registrar of fund participants, as well as handling all clearing and settling of user interactions. Making use of a smart contract in this manner does not reduce the trust placed in fund managers, as the entire operation of the fund is not decentralised. It does, however, provide three large benefits; namely availability, transparency and reduced operational overhead.

The smart contract is operational 24/7, with token redemptions occurring every hour. Furthermore, token redemptions are guaranteed by the publicly viewable Ether balance on the smart contract. Over 10,000 Ether has been processed through similar functionality present in the CRYPTO20 smart contract.

Every single C10 token interaction is publicly viewable and verifiable. Anything fund managers or users do to increase or decrease token supply via the creation/redemption mechanism or token burning is transparently recorded on the Ethereum blockchain. It is not possible to be uncertain about current state of C10 ownership or the transfer history of tokens. Both fund managers and token holders are transparently accountable for their actions.

Thirdly, the above benefits come at little to no cost to fund managers and users. By making use of a smart contract to perform common fund administration tasks, the operational overhead of running a fund is greatly reduced. No staff are needed to process token creations, withdrawals or transfers. This results in cost savings that are passed on to the fund.