Fixing Finance via Blockchain

Trading is burdensome, costly, and unfair.

Anyone who’s had to save up money for a big expense like a house, a car, or their retirement, knows that putting money in a bank account is not enough. Inflation eats it all up before you can use it on that big expense. So people turn to the capital markets, investing their money to reduce the effects of inflation, and ideally generating a profit while they’re at it.

And so it begins: investors need to open new bank accounts, find investment advisors, brokers, and exchanges. Exchanges list individual financial instruments and bundles like ETFs that are provided by yet other companies. All these actors are middlemen between the investor and their product. They all charge obscene fees while providing a bad service.

The service is bad because regular investors have to pay quite a lot, but do not get the same level of access as institutions. Have you ever tried to get exposure to an uncorrelated market like wheat? Or to short Facebook? Or to buy a Tesla stock on a weekend? Or to get exposure to real estate prices in your neighborhood? All of that is not easy for regular people, and it may even be impossible depending on which country you reside in.

All these actors are middlemen between the investor and their product. They all charge obscene fees while providing a bad service.

While institutional investors have a much easier time at getting these things, they face different problems of their own: their orders are so large, that they end up moving the market. Institutions often employ entire trading desks to get exposure to a target market at a reasonable average execution price and in reasonable time. Those traders that attempted to sell 10m+ stocks of GM after a tweet from the president know this pain firsthand.

Annual revenue of financial industry players in trading and investing.

Both institutions and retail investors pay their brokers and exchanges for every trade they make. They have to compensate their investment advisors and mutual fund or ETF providers. Each of them takes a cut of a few dollars here and a few percent there. Individually that may not be much, but collectively these financial infrastructure providers generate annual revenues in excess of USD 250 billion per year — in the US alone.

In an ideal world trading does not cost anything and investors get their assets directly from a marketplace without having to go through middlemen. They can trade any time in either direction (long or short). Their orders do not move the market and are executed immediately, regardless of their size. Finally, there is no counter-party that could default. Like when Lehman Brothers and Bear Stearns went under with over 1 trillion USD in assets on their books.

Morpher virtualizes trading and investing. We create a new financial system on the blockchain, where trading does not require middlemen, trust, or custodians, it does not cost anything, and it is available to anyone.

Trading on Morpher is better for the investor in every dimension compared to traditional exchanges.

Morpher issues a crypto currency that can morph into any other asset by emulating its return profile on the blockchain. We call this property universal atomic swap (UAS). Morpher’s currency can be staked via its smart contract on any market the platform supports: Stocks, Commodities, Forex, Crypto, and exotic instruments. If the underlying market gains in value, the smart contract issues new coins to the investor proportionally. If the underlying loses, staked coins are destroyed proportionally.

The actual underlying market is not traded — its price is just observed and replicated on the blockchain. Economically, the effect for an investor is similar to a direct investment on the traditional markets: Investing USD 100 in Apple returns USD 10 (less fees), if the stock’s price goes up 10%. It works analogous on Morpher: the investor ends up with 110 units of Morpher’s currency, if the underlying market gained 10%.

Virtualizing trading comes with a lot of benefits, that simply cannot be obtained on traditional markets.

1. There are no costs for trading other than the transaction costs on the blockchain
2. Investors can trade any market in the world, even markets that are out of reach otherwise or simply not available on traditional exchanges
3. For the first time, a buyer doesn’t have to find a seller on a marketplace. They trade directly with the smart contract
4. The smart contract replaces the counter-party and is solvent by design. The coins never leave the investor’s wallet, and there is no counter-party risk

Trading on Morpher is better for the investor in every dimension compared to traditional exchanges. Morpher creates equal opportunities in finance for anyone, regardless of their country of residence, wealth, or status. Let’s finally fix trading via blockchain.