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ShapeShift launches trustless asset portfolio platform, Prism

Swiss blockchain technology startup ShapeShift AG recently announced the launch of “the world’s first trustless asset portfolio platform,” called Prism. The service provides investors with customized portfolio management, allowing them to create their own digital asset portfolios without counterparty risk, and without the need to keep a wallet for each asset they’re invested in.

Swiss blockchain technology startup ShapeShift AG recently announced the launch of “the world’s first trustless asset portfolio platform,” called Prism. The service provides investors with customized portfolio management, allowing them to create their own digital asset portfolios without counterparty risk, and without the need to keep a wallet for each asset they’re invested in.

“Prism enables investors to gain secure, transparent exposure to digital assets in a way that has never before been possible. The days of leaving funds at an exchange ‘because it’s easier’ are over.”
— – Erik Voorhees, ShapeShift CEO

ShapeShift was founded in 2013, and is best known for the company’s crypto-only exchange service. The company initially released their existing service in June 2015, initially allowing users to swap 25 digital currencies. By September 2015, there were over 40 different digital currencies available for trade.

ShapeShift greatly reduces the risk of stolen funds and it increases privacy because it requires no account nor personal data to use. It has a strict "no fiat" policy, meaning that it can not be used to purchase cryptocurrencies with credit/debit cards or bank accounts. The company can be used everywhere except in New York and North Korea.

There is a major difference between using ShapeShift and using the new Prism platform. The former allows investors to actually buy coins whereas the latter does not. “You do not own the tokens in your Prism,” Monday’s announcement states.

Prism investors own and control smart contracts which pay them ether based on the performance of their underlying tokens. “If you want to buy actual coins and hold them, is a more appropriate product for that purpose,” the announcement adds.

“Prism takes us one step closer to a world of truly borderless finance. We suspect it will kickstart a vast horizon of financial experimentation upon smart contracts.”
— – Voorhees

“Prism is the first live platform that enables investors to create their own funds focused on investments in crypto-assets,” the company’s launch announcement states. Any digital asset that can be transferred across the Ethereum blockchain, including Bitcoins, most other cryptocurrencies, and ICO shares are all eligible to be put into a Prism portfolio, once they have “enough liquidity,” the company explained. “The assets on Prism don’t necessarily match the assets found on ShapeShift.”

Customer portfolios exist entirely as decentralized Ethereum smart contracts, out of the jurisdiction and control of any country or regulation. “Prism’s digital asset portfolios,” said CEO Erik Voorhees, “demonstrate a new standard in financial security.”

The individual portfolios that anyone can build on the Prism platform are called prisms, and each is as borderless and jurisdiction-resistant as the platform itself, by virtue of simply not holding any customer funds.

Users have to send ether to an address in the ethereum network for each asset purchased, which are then held in a smart contract until redeemed. This non-custodial role allows Shapeshift to offer prisms without asking for customer identification, and avoids almost any type of regulatory burden.

Jaxx, Exodus, and other multi-coin wallets already allow for trading assets using Shapeshift. In a similar fashion, the Prism platform plans to integrate directly into wallets, so users with participating wallets can simply open and close prisms. Users can alternatively use the ethereum wallet.

Each smart contract pays in Ethereum “based on the performance of the tokens in your Prism portfolio,” the company explains. “You cannot receive the underlying coins themselves.”

“Prism is the world’s first trustless asset portfolio platform, enabling investors to create portfolios of digital assets, such as Bitcoin, Litecoin, Ethereum, Dash, Monero, & Golem without counterparty risk.”
— – ShapeShift

Investors use the platform to create prisms by setting asset allocation for the portfolio, and funding an Ethereum address. Investors choose which assets to be included in their portfolios and specify in what percentages.

The amount of ether, which includes their fees, will act as collateral for the Ethereum smart contract address, which will then “initiate several steps to track and secure their portfolio on the Ethereum network,” the announcement claims.

There are no time limits for how long a prism can exist. An Ethereum wallet is needed to close each portfolio, which receives the incoming ether, including all returns. Investors are prompted by the platform to send a zero-ETH transaction to a provided Ethereum address, which signals the smart contract to close the portfolio. Rebalancing it works in a similar way.

“Prism is perhaps the first commercial demonstration of the revolutionary power of smart contracts generally, and the Ethereum platform in particular.”
— – Voorhees

Another feature of the Prism platform is that each prism is ranked and positioned on a leaderboard. This feature enables a social trading system, similar to eToro, and allows investors to publicly share performance data. This allows others to learn from, or automatically copy, portfolios with returns that “benchmark against other top traders.” The return of the portfolio will be the gains of its component assets, minus fees.

The leaderboard is re-calculated every 30 minutes, ranking all prisms based on ether gained. Small portfolios that perform extremely well could be ranked higher than large portfolios. However, to avoid being ‘gamed’ by users with lots of tiny portfolios, a few other factors are used in the ranking as well.

The new platform is currently in closed-beta. Once open beta begins, it will remain in beta for at least six months while new features are added over time, including MetaMask support, according to ShapeShift.

During the beta phase, the maximum prism funding amount is limited to 10 ETH. This limit will be higher during the coming open beta, and will likely increase thereafter, the company notes.

The company plans to generate revenue through a fee schedule that sounds a bit more like traditional asset management. At the time the portfolio is compiled a “creation fee” is paid, currently listed as 2.4 percent plus 0.05 ETH, although ShapeShift states they are waiving the fee during the closed beta.

There is also a monthly “capital fee” of one percent, for the life of the portfolio. Finally, there is a “rebalancing fee” of 0.5 percent, which applies only to those who rebalance a portfolios distribution. “We earn revenue primarily on the closing fee,” ShapeShift revealed.

“The creation fee roughly covers the gas costs of creating the smart contracts for your portfolio, and the monthly fee roughly covers the cost of capital to back the Prism’s.”

  • Shapeshift

Prism is wholly-owned and operated by ShapeShift AG, based in Zug, Switzerland. The company started developing Prism in late 2015 after raising $2.13 million in two rounds of funding. In March of this year, Shapeshift raised another $10.4 million in Series A funding from a large group of venture capitalists led by Earlybird.


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