Sprocket cover feature

Sprocket

Next Generation Exchange
$0 Raised
Ended December 31st

Digital Asset Trading 2.0

Sprocket, Inc. is a US company whose mission is to reduce the risk and friction of digital asset trading across marketplaces, regions and exchanges by exchanging a group of owned-and-operated trading exchanges interconnected with leading third-party exchanges in jurisdictions around the globe that together create a single aggregated global trading marketplace with large scale liquidity, rapid execution, minimal counterparty risk, and price transparency.

Trading volume of digital assets is widely distributed across a large number of exchanges globally. The top 100 exchanges by volume in aggregate traded 76% of the total daily trading volume on 3/26/18, with the top 5 exchanges representing 25%, the next 5 exchanges (ranked 6-10) representing 11%, the next 10 exchanges (ranked 11-20) representing 11%, and the next 15 exchanges (ranked 21-35) representing 10.5%.


  • GDAX, one of the largest U.S. based exchanges represented only 2.7% of the total daily trading volume of BTC/USD on 3/26/18.


This wide distribution creates pricing and volume inefficiencies and increases risk to traders trying to arbitrage the pricing differences or trade high volumes by trading across multiple exchanges.

Source: Bitcoin market trade data on 3/26/18 from https://coinmarketcap.com/currencies/bitcoin/#markets

Global Trading Network

Industry Overview

This wide distribution creates pricing and volume inefficiencies and increases risk to traders trying to arbitrage the pricing differences or trade high volumes by trading across multiple exchanges. We believe that interconnecting many exchanges together on a single trading platform with a global order book and single wallet, will result in increased supply and liquidity, resulting in narrower price ranges due to increased supply and transparency, which will increase liquidity while reducing digital asset price volatility, pricing disparity, trading costs, as well as investment and compliance risk.

Quotes by Cryptocompare.com (https://www.cryptocompare.com/coins/btc/markets/USD)

Challenges and risks...

  • Friction is caused by a number of factors including the variance in digital asset pricing and supply across exchanges, the difficulty of moving assets between exchanges, and the inability to trade simultaneously on multiple exchange to take advantage of arbitrage opportunities.
  • Cost is caused by the need to move assets and execute trades across multiple exchanges, which incur greater fees.
  • Risk is caused by the need to move and hold assets across multiple exchanges and wallets subject to counter party risk and varying regulatory rules, which potentially subjects traders to increased risk of theft, loss, and regulatory intervention.

Pricing and Volume Inefficiencies

  • Pricing across exchanges can vary by up to 10% for same pairs at same time.
  • Hard to trade larger volumes due to lack of liquidity
  • Traders need accounts on multiple exchanges
  • Need to maintain multiple exchange accounts with assets and transfer between exchanges and accounts

Additional Risks

  • Usability
  • Storage
  • Security
  • Volatility
  • Code Changes
  • Legality
  • Digital Exchange Instability

Our Vision and High-Level Roadmap

The Sprocket Platform will consist of multiple, independent functional elements that are connected and interoperate via a proprietary API.  This architecture will provide the platform with the ability to easily scale and expand its capabilities, features and functionality.

Sprocket|EX and Exchanges

Sprocket|EX will be the order book and routing engine, intended to be an enterprise grade, redundant, and secure high velocity transaction processing system capable of executing a million trades per minute with low latency, near instant liquidity and secure execution. Sprocket|EX will provide global orderbook across Sprocket owned and operated Sprocket exchanges and third-party exchanges, routing and matching, and also a complete reporting module.



Sprocket Wallet

The Sprocket Wallet will be the account holder’s wallet.  It will have two partitions: “Exchange Wallet” and a “Offline Wallet”, with unique instant trading capabilities. We intend for the wallet to offer a simple to use in-wallet trading UI to facilitate quick and easy trades when needed.

SproXLi

SproXLi will be the asset management, clearing and settlement, liquidity holder and asset distribution module for the Sprocket Platform.

SLiX

SLiX will be the external, smart contract based secure escrow function, implemented on a blockchain, which will safeguard funds used for instant settlement trading while providing the customer otherwise full control over their funds/private keys. The smart contract is public and auditable by customers and third parties, creating ultimate trust in the fact that the private funds of customers held in the Sprocket Offline Wallet can neither be used by Sprocket nor stolen from Sprocket – effectively preventing robbery.


Advanced Trader's Dashboard

The Advanced Trader’s Dashboard will be the UI where advanced traders can perform complex trades and install specialized digital asset trading (charting, AI tools, trade bots etc…), information and asset management widgets written by Sprocket, third-parties or individual traders. The widgets will be available for purchase in the Sprocket Widget Store.

Security and Coin Storage

We intend to build a robust security platform with the experience and insights of Sprocket’s advisory board’s security and bank operations experts for financial systems and cyber defense. Furthermore, the management team has extensive experience gained from years working in the payment processing and digital currency industries.

Compliance

It is our intention to comply with the global standards for KYC/AML, OFAC and GDPR, as well as other regulations as needed by jurisdiction.


Anyone wanting to open an account (a requirement for trading on the platform) will need to go through Sprocket’s KYC procedure. In most cases this will be an automated process using a system such as the Civic SIP API[1].  However, in some cases we will likely still have to manually review and approve the account holder.  


[1] Civic Secure Identity Platform (SIP)

The Business Model and Revenue Streams

Our business model is based on fees earned when traders execute trades and transfer digital assets.  Revenue growth is driven by a combination of platform user growth and trade volume growth. Additionally, we intend to collect listing fees from new digital assets that list on our exchanges as and when allowed by regulators. We intend to price our fee structure such that our pricing is very competitive with leading exchanges.  Traders who hold Sprocket EX tokens that receive SprocketCoin will further benefit from the 25% discount on fees they can receive when they pay for fees using SprocketCoin.

Introducing Our Token

Sprocket EX Token

  • Sprocket EX token is an ERC-20 token that will have a value at issuance of USD $10.00. 
  • The Sprocket EX smart contract will automatically calculate and distribute to holders a pro-rata share of 10% of the net revenues of the global Sprocket|EX Platform quarterly paid in SprocketCoins. 
  • Pro rata shares of net revenue will only be issued to Sprocket EX tokens held in Sprocket wallets.  Sprocket EX tokens held elsewhere will not receive pro rata net revenue shares.
  • The smart contract will distribute each quarter a pro rata share of net revenues to each Sprocket EX token holder by purchasing ETH equivalent to the 10% of net revenue and issuing a number of SprocketCoin tokens, each valued at 1/100th (0.01) ETH.
  •  A transfer restriction to ensure compliance with any holding periods under applicable securities laws.



SprocketCoin

  • SprocketCoin is an ERC-20 compliant token issued on the Ethereum network and will be backed by the ETH purchased each month and held by Sprocket Inc.
  • SprocketCoins can be stored on any Ethereum wallet, allowing holders full control of their Private keys if they so desire.
  • SprocketCoins can either be exchanged for the equivalent in ETH on the Sprocket|EX exchange or used to pay for fees for Sprocket Inc. services and products, at a 25% discount.
  •  A transfer restriction to ensure compliance with any holding periods under applicable securities laws.

Click Here to View the Private Placement Memorandum

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