COVESTING Q&A with Dmitrij Pruglo and Tim Voronin — Transcript
-Could you explain more about the copy trading function, at is not presented in the video?
We have a couple of different models that will be tested out in terms of the copy-trading, of course the most efficient one will be selected. The first one is to use the COV token as a medium to follow a trader — the moment the investor chooses a trader basically the COV token will be distributed — sold into the assets that are being held into the portfolio of the followed trader. There are usually questions regarding the liquidity of such a model — by comparison, the Binance Coin has a 50 mil $ daily volume. Having this in mind, imagine a whole ecosystem based on the Covesting token — some will be selling the Covesting token, while others will be buying it all the time, or just using the token to lower the fees on the exchange, entering the platform for the first time, holding it as a long term investment, unfollowing traders — basically, these wholes baskets of cryptocurrencies will be sold against covesting, all the commissions will be paid in COV, so there is also more demand.. Having this in mind, we think that integrating the Covesting token into the platform, step by step, will make it really liquid. Based on our calculations and preditctions it should work really fine.
-Are you going to participate as copy-traders? Are there going to be professional traders on the platform?
When we will be not so busy with the project we will definitely join as copytraders. As for professional traders, yes, we have reached out to our connections, because as you know, we have been trading for some time already, and some of the people we know have turned to crypto, we have also approached numerous top level traders from Twitter etc. The traders putting out their ideas in the trade idea’s section of the CI platform will probably also join copy-trading. Moreover, some of the top traders from trading view also confirmed that they will join our platform, as well as they will contribute to the CI platform. We need to polish the Crypto Inteligence portal however — we have just started it out.
-How will the copy trading work with low volume assets?
At the start of the platform we only plan to include the top 10–20 most liquid tokens/currencies available. On the later stages, we will add matching algorithms as well as the advanced filling infrastracture. It’s also important to add that when we will roll out tokens that are not liquid enough we will also impose restrictions per traders — a trader will be only allowed to put a certain amount of his portfolio into an illuqiud token. This will also protect the investors from market manipulation. By the way, we would also like to add that we will have a 24/7 live dealing desk and risk management personell which and a person specialized in the surveillance of the trading. It’s implemented in every decent broker house. The risk management personell will monitor the platform for suspicious actions that might damage investors — also automatic triggers if something suspicious happens ie oppossite trades. We have that in place, however we don’t want to say more to help potential manipulators.
-Will there be any age restrictions?
Yes, the platform will be available only for clients that are at least 18 years old — a requierement from the regulator.
-What will be the security measures?
We cannot say much about it, but as you have seen we will implement 2fa, e-mail confirmations for the most important transactions ie withdrawal, or the start of trading. As for the back side, we will use a diversifed server network which will ensure a stable up-time and, even more importantly, we will hold most of the funds in cold storage — a treasury department team will monitor the funds and a transit account will be used as a hot wallet for immediate transactions..
-Can we use SMS instead of 2fa?
We have thought about it, however we have learned tha SMS is not so reliabe recently — other people can somehow receive an SMS specified for you, moerover, mobile operators might have trouble delivering SMS if you are in a remote locations. It’s something we might consider in the future, but not initially.
-Will margin trading be implemented? What are the goals beyond 2018?
We are not thinking about implementing margin trading right now, but it will happen some time in the future. Margin trading requires additional liquidity — either our own or a full scale margin-lending service. This is going to be rolled out in the later stages ie after 2018. We really don’t want to say much about our further planst due to competition, but definitely margin trading is one of those goals.
-Can you tell something more about the marketing strategy after the beta is released?
As you might have noticed, we were not focused on marketing until the video presentation, we are picking it up little by little. It’s not our goal to build hype out of nothing, so the full scale marketing will kick in once we roll out beta — once we can start registrations, calculate metrics and conversions, see how the support team works through their own KPIs. The marketing however will start out about 2 weeks before beta — we are preparing digital marketing, a PR story and a referral system — up to 20% from all the commisions generated by the reffered person. We also think of starting out a trading competition in our actual covesting platform — possibly during the later stage of the beta. All the funds generated during the competiton will be available for withdrawal after the competition ends. We would also like to remind you that we will give out funds to beta testers so they do not risk their own money to test out the platform. We should also think of the Crypto Intelligence Portal as a method of marketing — at the moment it’s like 5–10% of what we want it to be, we want to be a compendium of information, even advanced info about trading, with professional content writers and a forum — we want the Crypto Intelligence Portal to become a homepage for the crypto community.
-What’s the status on the FIAT gateway on the DLT license?
These questions are connected — we will not be able to process Fiat until we receive the license — the process is moving forward. We cannot really say much, however Dmitrij is flying to Gibraltar in a few days, to meet the lawyers and the key people in Gibraltar on a Fintech Conference. We are hoping to meet the regulators and some potential partners there. More on the matter — when we receive the license we will be able to move legally in the field, then we will have to enable fiat payments to the plaform — we either need to partner with a service provider or get our own electronic issuers money license. This is a goal for this year, however the US client might be problematic — you need to get a separate license for each state — however other companies have done it already, so we can do it too!
-Will the fees be competitive?
2% is a market average when we talk about ETFs, management assets firms — some bond funds generally yield up to 10% a year, so the 2% fee for the buy-in plus 1% for the management is huge, while we don’t charge anything for the management and 2% in the crypto space is not much, when you can get up to 30–40% gains daily in some cases.
-Covesting promises to have the best customer support. How do you plan to keep this if the platform is super successful and gets flooded at some point. Do you have a ‘pool’ of people you could employ fast enough?
We aim to build a solid knowledge base that will answer up to 90% of questionts. We are integrating the Zendesk at the moment — one of the best practices in the industry. There will be chat support, a personalized serice and account managers for the most active clients — based mostly on volume. We are in the process of hiring people in Europe and in Asia. We aim to cover up to 10 languages even during the beta, about 10–20 people will be working for support from the beginning. Then we will scale, possible we might even start a call center.
-What fiat payment methods do you plan to integrate?
We will start with credit cards and wire transfers — after that we will think of other popular methods.
-Do you have plans to target High Net Worth Individuals or is it the platform going to be working only based on online registration like Binance?
We are going to build up a sales team — the way I see it working is that the original customer suppor team will gain a lot of knowledge about the product. Then, this core team will be responsible for teaching new employees and after that, they will switch into the sales. We are also setting up offices ie in Asia — either Singapore or Hongkong this year. Direct sales is one of our goals, however customer service is the best selling point.
-Comparison to eToro?
We are not saying that we are builiding something unique in terms of copy-trading, however our vision and scalabilaty are different. We do not follow the same regulations that eToro does. Etoro focuses on stock trades, we however try to focus on more innovative matters like arbitrage, we want to develop our own derivates based on cryptocurrencies. Again, I unfortunately cannot disclose more due to competition, however there are some interesting initiatives coming near the end of the year.
-General question regarding copy-trading
The copytrading will not work like a 100% copy of the trader — the follower will not have to execute the exact same limit order — when there is a trigger for the trader to enter a position, then this trigger will also occur for the investors to get into that positions — we are wanting it to work as a pooled investment — when the trader executes the trade on his portfolio, the execution will go in a block and will be executed in the same price for the trader and invester. The full amount will go into a technical separated account and this pool investment will execute into the portfolio of assets and then be distributed proportionally to the trader and the investors. This way we will secure that investors will not be victims of the front-running. This is why we are testing and we have few different models ready to choose the most effective one. These methods will be tested both internally and externaly.
-Will there be a limitiation number for the followers of the copy trader?
Yes, there will be one.
-What is the smallest investment size?
We think of starting with 100$.
-Will there be a demo-trading function implemented?
Yes, during q2 — first we need to test the platform during the beta.
-Will the trader history be downloadable?
Yes, you will see it during the beta — we are aware of the tax issues our Users might have. The report section will generate reports including the company info in the header. You an choose a period up to a year, it will include transactions, commisions, paid fees, deposits and withdrawals.
-How do you prove the history of a copy-trader and how far does it go?
This is why we cannot implement copy-trading from the beginning — we want to proide every trader an opportunity to prove themselves in the covesting platform. We will also introduce trader reviews in a simillar fasion to ebay based on their performance and the comunication with him
-What are the qualifications to become a trader?
Anyone can become a trader, however we are thinking of implementing the minimum amount of funds for each trader that wants to make his portfolio public. We are thinking of two ways for implementing this — either a fixed amount $ value in crypto assets or there is going to be a scale of the number of assets that can follow him based on his assets ie if you have 10 000 $ worth of assets, only a 100 000$ can follow you. We will decide the model based on statistics and community demand.
-Will it be possible to invest in ICOs via the platform?
No, that will not be possible
-What about the KYC? Will it be inhouse or outsourced?
The Gibraltar authorities require us to us to have a complaince team — a Senior Compliance Officer will be located in Gibraltar, we will have a KYC team going through the documents as fast as possible.Outside of the inhouse complaince team we will also work with Thomson Reuters verifying solution.
-What about the security measuers?
We work with both individuals and companies that are professionals with security audits, they will be finding vulnerabilities in our system and also audit our cybersecurity. It’s regulatory requirement to do an independent security audit at least once a year — we will be doing it more often. We are also required to have an independent compliance officer that will review any official compliants about the execution of the platform.
-What guarantees/SLAs do you have in place with exchanges for providing API support, since the platform is completely dependent on them
We are not completely dependant on 3rd parties, we will have our own liquidity and this is what we aim the do. The beta will use both the internal order book and the combined order book from 3rd party exchanges. Our goal is to scale up the internal market making algorithm. We think that during q2 and q3 most trades will be executed in-house.
-What is the charting package?
We will introduce an andvanced trading tool package.
-Will the profits be shown in COV?
At the moment it’s BTC and USD, but we will add the COV token as a benchmark.
-What sort of user base/volume of trades per year/month would be required to ensure operating costs are covered by transaction fees (no longer relying on ICO money). What year do you anticipate this to be ?
We cannot speak about this in detail, however we have financial projections prepared for two years ahead, we have provided the regulator with these numbers. We plan to provide the community with these numbers in the future for added transparency.
-How will arbitrage work?
As you know, we have partnered with ARCT, we tried to work with them, unfortunately, after trying it out we have decided it’s not good enough and we realize we can make a better solution inhouse. At the moment we have all the necessary API and Websockets connections with the top exchanges. These are separate channels, faster than the usual retail account. Nevertheless, as for arbitrage, the system monitors the order book of multiple exchanges at the same time then when it sees that there is a difference between platforms, the arbitrage solution takes advantage of that executing trades at the same time and extracting profits. This is a solution previously opened only to institutional investors, however we aim to make this solution public this year. Covesting tokens holder will be able to use this feature- you will have to stake a number of covesting tokens + the amount of crypto you are willing to trade to use this feature. We want to include the covesting token in every single feature of the platform.
-Will there be an insurance fund to buffer against hacks?
We were discussing it internally, it is definitely an opportunity, however we need to calculate all the risks, the average depost per client, client growth, the secure amount deposit etc.The regulator suggested working on such a solution, so I will question on this matter further when I get to Gibraltar. We, however, have not yet seen such a company, but when we find one we will take a closer look. The option of creating our own insurance fund from commisions is also something we need to think about.
-Was there any VC funding?
We are well funded and we are moving according to our roadmap, we are confident in completing everything on time.
-Is it true that 50% of the COV profit will be burned?
Yes, we have discussed a feature on the new website (coming in about two weeks) showing the exchange, we also plan to open up a smart contract showing how much of the tokens are already burned. So, when the platform becomes operational, there will be a smart contract disclosed on the website, so you can personally check the amount burned ie locked up until 2999, so you will see the counter showing how many tokens have been burned.
-Will the traders have a blog describing their trading strategy?
They will have their description in the portfolio — when a trader goes public he needs to explain the strategy, the risks involved, he can also shares his twitter etc. We also plan on combinining the trading ideas from the Crypto Intelligence portal with the trades in the platform itself, so you can easily copy the trade idea into the platform, to see how a person approaches the market.
-Do you have any agreements with exchanges?
Yes, we have agreements for liquidity provisions with the exchanges in place, we cannot say which ones.
-Is KYC required for everyone?
Yes, it’s the regulators requierements
-What conferences do you plan on attending?
Quite a few, we will be going to Gibraltar, we have been invited to one in Amsterdam in April and we consider going there too.
-Can I choose my own followers in a private group?
Interesting point, we will consider making a profile public only to specific Users.
-Will my government be able to see my cryptoportfolio?
We will not give out tax data etc, we are not becoming a brokerage house or an FSA, the only situation in we are required to give out personal data that I can think of it’s penal law infringement.
-What’s going on with OKEX?
We are experiencing some delays, we are in contact with the CEO, they claim they have been flooded by new projects, however you can be a 100% sure we will be listed there, however they had internal problems — they have a lot of projects lagging behind even covesting — we are certain the listing is coming in march.
-Any free tokens?
We are thinking of making a bounty for finding bugs with a challenge/competition in that matter.
-What about the referrals?
We will definitely work with referals, as mentioned before — the referal dashboard will have advanced metrics in regard to which marketing channel will be the most efficient one, where do you earn most of the referrals.
-How big is the dev team?
Sorry, we cannot comment on that, be sure it’s a big one and the development is going fine. Unfortunately, the devs team safety is in danger — they are literally being hunted cause of their experience.
-Can I post videos of my TA?
We will implement podcast trading in the Crypto Intelligence Portal for a selected group of traders.
-Will the 2% fee change?
It is fixed, we have no plans on changing it.
-Will there be a stop-loss functions?
-Will there be any slippage?
Yes, as it is in all markets, including forex, however, there are algos in place — this problem is manageable.
-Will the mobile app be available on IOS and Android?
-Where will the offices be open?
The first one will be in Gibraltar, then, as mentioned, Asia and eventually in London.
-What about that 1% commission fee in the presentation video?
It’s only a demo. At the beginning the fee will be 0% for market makers and 0.02% for market takers. Market makers are the people putting in a passive limit order on any side of the order book.
-Can I signup as a beta tester?
Yes, there will be such a possibility, however the guys that are with us the longest will have priority. We will be adding people in periods of time. As mentioned before, we will provide the testers with funds. If you will have any profit you will be able to withdraw it — however not the original amount that we have provided.
We can already disclose that there will be indexes available in our platform — ie top 10,25,50. If investors don’t want to follow traders, they can just follow index funds. They will be passively managed with rebalancing happening once a day too match the tops.