Palettes is the brainchild of Akshay Raje, one of the first developers at Simple Token and formerly of EY and VP of Fab.com. He recognised that due to the constant innovations and change within the cryptocurrency space, a nimble investment solution was needed for investors to diversify their portfolio and minimise risk. The idea of allowing a user to build a palette of intelligently-weighted currencies, comprising of indices, themes or strategies — and backed by a fee-reducing token — is the core proposition for Palettes.

Palettes is not a cryptocurrency hedge fund or a tokenised fund, but rather a web app that lets you choose from available options to build a diversified investment portfolio with just a few clicks. The management of this portfolio is automated and lives within the user’s own exchange account via their own personal API keys.

The Palettes token is an ERC-20 utility token based upon the Ethereum blockchain that can be staked to unlock the Palettes platform. This token can also be redeemed for charges related to using the Palettes platform.

Palettes has been designed to provide:

1. A choice of indices, themes or strategies

2. Portfolio diversification, and

3. Trading automation

In this ever-dynamic cryptocurrency trading world, the only constant is change. Disruptive ideas, innovation, economic forces and natural events constantly change the investing landscape. Thematic investing identifies these shifts and invests strategically to benefit from those shifts.

Investors can select the ‘palette’ of their choice or invest in multiple palettes at the same time. This allows the user to invest in the broader market or invest in forward-looking scenarios that they believe will materialise in future.

Key features of Palettes

Choice of Themes or Strategies

Palettes enables users to invest in crypto indices (such as top market cap tokens), themes (such as protocol or privacy coins), or strategy models (such as EMA crossovers, scalping etc). There are multiple palettes available and the user has flexibility to choose a custom combination. Each palette is designed to reduce unsystematic risk by optimising portfolio diversification. Palettes can be weighted by market cap in one portfolio, while equi-weighted or custom-weighted for others.

Automated Purchasing, Rebalancing and Trading

Purchasing a palette is a quick and easy process on the Palettes web app. Each palette’s build (which comprises discovery, purchase, tracking and managing) takes just 2 clicks. Palettes will provide integrations with global exchanges such as Binance and HitBTC. Rebalancing is automated, which means the chosen trading strategy will align with changing market conditions.

Shorting Strategies

The Palettes platform will allow portfolio holders to stake PAL tokens in favor of a specific Palette if they are long on the underlying strategy. Other users, who are short on the same Palette can stake their PAL tokens as a collateral to take the opposite position. Each party will then settle their positions based on the long being honored or by a premature exit at the end of the contract period.

Custom Palettes

Expert traders with proven strategies will be able to create custom palettes of their own and publish those palettes on the platform. The creator of a custom palette will earn 70% of the revenue generated for the expertise, while the platform retains 30% for providing the infrastructure.

Trustless and Secure

Palettes does not need withdrawal permissions in the API keys and accordingly works without requiring access or custody of a user’s tokens. For enhanced security, it stores the API keys using a highly secured environment, which is completely independent of the trading engine. Additionally, Palettes uses the most reliable and industry-standard data providers (including coinmarketcap.com) to ensure accuracy for data indexing purposes.

Staking-based Portfolio Construction

Investors will be required to hold PAL tokens in order to construct and rebalance individual palettes. PAL tokens staked in the user accounts will enable the user to build a portfolio up to 20x valuation of the last 30-day average price of PAL tokens. Certain premium palettes will only unlock if the user has specific amount of PAL tokens staked in their account. Paying for platform fees in PAL tokens will obtain the equivalent of a 50% discount on fees.

Low Fees

The platform fees are designed to be as low as 1% of traded volume in most cases. Most palettes will rebalance periodically and not actively trade, so the churn in volume is not expected to be significant.

Head to the Palettes Telegram channel to be a part of the Alpha release in Q 3 2018 and reach out to admin if you would like to be considered for the Palettes product council. Have your say!