Blockchain is Ready To Disrupt the Existing Financial Trading Status Quo
When did you understand that there was a need for Stockus?
To be frank, the idea behind Stockus has been long in the making. Perhaps around 5–6 years to be exact. Back then, I did not fully understand that the concept was already in the making as I was a full-time trader and managed accounts in one of the largest brokerage firms. Throughout my career as a trader, I slowly began to pick up on fundamental flaws of trading on the stock exchange.
For example, as soon as I transferred money from my bank account to my brokerage account, my perception and attitude towards money drastically changed. Psychological phenomena undoubtedly influence our finances, and this was particularly clear as my attachment and cautious approach to investment management was suddenly eliminated. Making financial decisions, especially whilst trading, is not any different from any other choices we make in life. This form of financial desensitisation made me question the existing structure of trading.
Furthermore, I was constantly faced with obstacles while trading on the stock exchange. The entire structure of trader-broker relations is set in place in such a way, that the trader is in a lower, dependent position. The trader ends up in a position with no rights, owing and paying everyone just to be able to trade. A situation that is subject to control by others; the continuous input-withdrawal of money in his account, and with the need to comply with all those rules that are imposed by the brokerage firm. Overly complicated trading platforms, useless functions that do not serve a purpose to ordinary traders, high commission rates and the limitations set forth by brokerage firms in regards to trading on different exchanges with different conditions at the same time. Such obstacles were seen on a daily basis.
The greatest barrier of all was the grueling fear of losing money. It was the feeling of constant fear that turned trading on the stock exchange into everyday stress, preventing adequate assessment of the situation and making the right decisions. I noticed that while trading with a demo account, players are able to assess the situation more precisely at hand and often make the right decision rather than when trading with their own money.
The very idea of Stockus came about when I accidentally took part in an international championship for traders. I saw how close the competition is, to the point where you can experience players’ frustrations, tactics and competitive nature online. On the stock exchange, the trader is battling a huge monster one on one, trying to make money, and cannot even receive assistance or support from others fighting the same fight. It turns trading into a game, giving each participant the opportunity to compete with their peers, and the winnings become not only a monetary but also a public prize. Something that is valuable for any player.
It was then that I formed the basic principles of Stockus:
- Personal investment of starting capital should not be a prerequisite for trading on the stock market. The results of trades should be the primary focus for players.
- The ability for players to compete amongst each other is what makes it a trading game. Trading on the stock exchange, in this case, turns from a goal to a tool.
- The better a player performs, the higher their winnings should be.
- A game on the stock exchange should be organised by a variety of time-bound tournaments.
- The trading platform should be accessible and straightforward for any player, no matter their level of skill or experience.
- The structure of the prize pool and its distribution should be transparent and observable by all players at all times.
- Participation and registration should be simple and easily accessible. The player must be able to enter the game in just two clicks.
- Stockus game can be global only if it can operate without transactions in fiat money
What major challenges and obstacles did you face?
As with any start-up, there were many problems at the beginning. Firstly, the fundamental principles of monetisation of the game were not entirely laid out and understood. How would we create a system where players could earn as much money as they would on the classic stock exchange, if not even more? Where would this money come from?
A solution was hard to find but I realised that this was not the biggest obstacle after all. As more F2P games emerged, it was clear to see that their monetisation scheme, along with a few minor changes, could work for us. Further research into the scheme’s widespread application in other games allowed us to put our original monetisation mechanism on Stockus.
Upon discussing the idea with various venture capital funds and incubators, it was clear to see that there was a hesitance from their side. Nobody wanted to take up a raw and naked idea, especially the one attempting to merge the financial and gaming industry. To be quite blunt — no one even wanted to truly understand what our idea was about. ‘We do not fund start-ups at this level’ was the typical response I received from most companies that I approached.
It was then that we decided to take things into our own hands and make the game ourselves. We collected enough money to invest in developing the most crucial element of the game itself, the trading platform. After the platform was created and debugged, we began testing. During the tests, the success of Stockus’ underlying principles and the structure was apparent to see. Furthermore, the monetisation scheme worked, and a competitive atmosphere amongst players was evident and thriving. Testing gave us an indication of what tournament durations were most appropriate and exciting for players, and what price should additional in-platform tools and services have (which was the basis of our monetisation scheme) and much more.
Understandably, we soon ran out of money. Already during the testing stage, we understood that we could not singlehandedly uphold the game. Essentially, the greatest challenge and the problem was that before the game became profitable, we needed to overcome a so-called ‘Valley of Death’. This is a period when there is still a cost of maintaining and developing the game further but the player payoff is still small and not enough to cover the expenses. Our calculations have shown that the length of this ‘valley’ was approximately half a year.
Afterwards, we decided to seek partnerships with venture funds yet again. We thought that we finally were at the right stage to be properly considered. After all, we already established the game and tested the fundamental principles with over 10,000 players. To our amazement, no typical venture fund wanted to even hear about our idea, proposal or intricacies of the structure. ‘Not an e-shop? Not a health-orientated startup? Not focusing on Big Data? — Sorry, we are not interested‘, was the usual response. Actually no, the typical response was… complete silence.
Why did you choose to do an ICO?
The main problem of financing startups via venture funds is that they do not finance ideas, but instead teams. Financing via venture funds has also turned into a highly exclusive process. Many venture funds openly declare ‘We do not work with start-ups “on the streets”. You need connections to reach us.’ This becomes the primary work of the startup team at the first stage.
Vitalik Buterin said at one of his previous speeches:
- The decentralised aspect should solve the problem so that money is not collected by people, but rather by ideas and solutions. For this money, the teams must compete to solve problems using pre-established funds or just as much as they need to release their potential…
- ICOs are similar to crowdfunding, and ICO development teams conduct their crowdfunding on decentralised platforms to receive funding for their projects. However, they also have their flaws, and I think many of these flaws arise from the fact that even though the ICOs are happening on a decentralised platform, the ICOs themselves are hardly centralised; they inherently involve many people trusting a single development team with the potential of over $200 million in funding.
- Such a decentralised approach to the solution of problems can push the development in many industries, where a centralised model artificially inhibits development and research, due to various reasons (including banking, BaaS + PoA).
As you can see, the approaches to financing and organisation of start-ups for venture funds and a founder of an ICO are fundamentally different. That is why we chose ICO. We believe in our idea, we know how to implement it, we understand how significant and promising it is. Moreover, we want to tell this to all interested people and convince them that our idea is entirely new, moderately insane, and ultimately lies in the mainstream of the current trends in the development of the modern market.
How do you see the long-term prospects of Stockus?
We see great interest in the game on exchange markets among modern youth. The financial market itself and the opportunity to play on it and earn, are fascinating to people. Due to lack of capital to trade on the traditional exchange markets, many go to the unregulated Forex market, where entry conditions are much more natural. However, the risks are higher, which leads to a rapid outflow of players and their withdrawal from the market.