MoatCoin Whitepaper

Abstract

We describe a protocol for MoatCoin Fund that facilitates on ethereum blockchain. MoatCoin fund is managed by a system of Ethereum smart contracts that are publicly accessible and that can govern the full ecosystem of fund managing functionalities. The protocol is not biased towards one group of users to benefit another. Every MoatCoin denotes the Proof of Membership (POM)​ in MoatCoin Fund and they have right to vote for the MoatCoin protocol updates assisting to build a decentralized governance.

Content

• Introduction
• Specifications
• Decentralized Governance
• Investment Strategy
• Transparency and Security
• Fees
• Roadmap
• Advantages
• About
• Disclaimer

Introduction

Blockchains have been revolutionary by allowing anyone to own and transfer assets across an open financial network without the need for a trusted third party. Now that there are hundreds of blockchain based assets and more being added every month, the need to manage these assets is compounding. With the advent of smart contracts, it is possible to let others manage your asset without the need for a trusted third party.

Decentralized governance in fund management is an important progression from the ecosystem of centralized fund management for a few key reasons: decentralized ecosystem can provide stronger security guarantees to end users since there is no longer a central party which can run away with customer funds or be subjected to government regulations.

Belfort penny-stock scam to Madoff investment scandal have demonstrated that these types of third-party risks are perceivable. Decentralized governance in fund management will eliminate these risks by providing a transparent and secure platform to investors through which they invest their funds trustfully, thereby delegating the burden of security on the community rather than to a single custodian.

Two years since the Ethereum blockchain genesis block, numerous crypto coins are introduced in the market. Rapid growth of the community without much experience has left the noob investors for either buying the hyped coins or staying away from the wave of the crypto market. There remains a significant need in the crypto market for a due diligence-backed investment methodology to avoid boom and bust cycles.

We present you MoatCoin to solve this problem. It’s an Ethereum blockchain based ERC20 token which seeks to establish a streamlined platform, whereby investors hold only ”MoatCoin” which consists large range of research-backed cryptos through one simple channel, avoiding the need for their own due diligence and subscription process headaches.

It uses a publicly accessible system of smart contracts that can act as a shared platform to create, burn or exchange MoatCoin. As more assets are being tokenized on the blockchain each month, we will see more coins entering the crypto space that needs to be evaluated. As a result, an open decentralized governance based fund management protocol is critical for security and transparency.

Specifications

Research from PwC predicts that global assets under management (AuM) will rise to around $101.7 trillion by 2020, from a 2012 total of $63.9 trillion. This represents a compound annual growth rate (CAGR) of nearly 6%. There is a huge market in asset management which needs to be tokenized and can be traded openly on blockchain.

MoatCoin is somewhat similar to an ETF. You buy a coin and keep it in your ether wallet. That token then represents the Net Asset Value of our MoatCoin fund. It’s a combination of close and open-end fund. The tokens will be unredeemable in nature and available for trade on decentralised exchange.

The Initial Coin Offering (ICO) will infuse the funds in MoatCoin ecosystem and all the ICO proceeds will be allocated to the wide range of research-backed cryptos. Each coin will show your membership in the fund and accordingly share in proportionate profit.

We have 3 target audience:

• As a benchmark for our industry.​ Our goal is to provide an index that helps people get a benchmark view of the cryptocurrency market, similar to what Sensex does for stocks.
• People with no exposure to the asset class.​ As more and more people learn about cryptocurrencies, they become interested in investing but are scared of the volatility and complex process. They can get exposure to wide range of coins by holding MoatCoin.
• People who only hold Bitcoin.​ There are around half a million people who own more than 1 bitcoin. Our goal is to provide diversification to these customers. They can now invest in a mix of different currencies that helps them to reduce volatility and get exposure to the large number of up-and-coming coins.

Decentralized Governance

MoatCoin smart contract allows creation additional coins with decentralized governance which will benefit existing MoatCoin holders but on the condition of more than 50% of token holders voting in favor of infusing more funds to the Moatcoin ecosystem.

After ICO, Follow-up Coin Offering (FCO) will be conducted on quarterly basis to add more funds to the MoatCoin ecosystem in a manner that will add more value to the existing MoatCoin holders.

After evaluating the MoatCoin market value, the management team will publish the coin price on the smart contract. The individual MoatCoin price will surely be above existing NAV value. The chances are negligible that the community will not agree to raise funds as the existing token holders will be benefited if the funds are raised at a premium (above NAV). Here’s a quick illustration.

Let us take a base value of 1 MoatCoin as 100 after ICO. MoatCoin management team turned 100 into 120 in 90 days and decided to propose Follow-up Coin Offering (FCO) at 123 after analyzing the demand & supply in the market.

The team will then publish the following information on MoatCoin smart contract:

• Value of MoatCoin (i.e. 123).
• Number of coins (say 5,000,000).
• Token holders voting duration.
• Follow-on Coin Offering (FCO) duration.

The community will be notified via different channels and they can cross-check the published information and call the smart contract vote function with their votes “YES” or “NO”.

Let’s say, 10,000,000 MoatCoins are issued in ICO and the community favoured the proposal for follow-on coin offering adding 5,000,000 more coins in the MoatCoin ecosystem at 123 valuation per MoatCoin (and the current NAV is assumed 120).

1 MoatCoin value equals to (10 Mil x 120) + (5 Mil x 123) divided by 15,000,000 (the total MoatCoins in ecosystem) which gives us 121 NAV for each coin, adding 1 unit of value to existing token holders.

That’s how the further funds will be infused into ecosystem and existing MoatCoin holders are benefited from the further offering under decentralised governance maintained using smart contract which can be accessed publicly.

The further coins can also be raised at NAV value if the community agrees. No Follow-on Coin Offering within 90 days of the previous offering.

Portfolio Outline

Our portfolio will be divided into:

• Ethereum & Tether — 30%
• Above 1 billion market cap — 30%
• 100 million to 1 billion market cap — 20%
• Below 100 million market cap — 15%
• For ICO — 5%
• Above figures are subject to change as per prevailing market situations.

Other constraints:

• Ethereum is the base currency for all the operations and Tether will be kept for reducing volatility risk.
• We may use reserve to buy-back MoatCoin from the open market and the coins will be burned, adding values to the existing Moatcoin fund.
• No single coin will represent more than 6% of the portfolio.
• We will maintain a range of 25 to 30 coins in MoatCoin Fund. More diversification will reduce the return and less diversification will increase the risk.
• Our Follow-on Coin Offering will be issued at or above NAV value of the MoatCoin so it will not deflate the valuation of existing coin holders.
• Preferably, all the coins in our portfolio will be of ERC20 standard to maintain the transparency on blockchain.

Transparency and Security

We will publish quarterly reports of our performance. Anyone can check our portfolio at MoatCoin web client. Holding MoatCoin will show the proportionate Proof of Membership (POM) in MoatCoin Fund.

Preferably, ICO proceeds will be allocated to ERC20 standard tokens, so all of our portfolio stake will be publicly view able on Ethereum Blockchain. The funds will never be kept out of Ethereum blockchain until and unless we find a reliable cross blockchain based decentralized exchange. Many prototypes are in working for this purpose.

MoatCoin itself being an ERC20 standard token can be traded on any decentralized exchange. All the information will be on Ethereum blockchain which is immutable maintaining the transparency and public access of internal operations.

Rest assured, our methodology only includes established exchanges such as Poloniex, Bittrex and Kraken, and by using API technology to build an Auditable Exchange Accounts, so that all the investors will able to see in real-time, current balances in the account and all the transactions we are executing.

A multi sign smart contract will be implemented to verify a transaction only if multiple stakeholders have agreed to the terms.

Our preference is to use exchanges that have Proof of Solvency (POS) implemented and the cold storage reserves can be audited, as in Poloniex and Kraken. We are also planning to keep a certain amount of funds in Cold Storage to ensure the safety.

The portfolio will be publicly available to everyone and all the transactions can be seen via a read-only exchange API which allows anyone to verify the balance and trade history of the account and we will certainly not compromise with security.

Cryptography Audit is another mind-blowing innovation which ensures the Auditing of accounts on blockchains. The underlying concept is simple. Just keep updating the important sets of data on blockchain at particular time intervals so that the information can’t be manipulated, later on, making it impossible to change past activity effectively providing an immutable and verifiable track record.

It is clear to see that MoatCoin is trying to develop the right set of tools to offer its investors the best possible platform and to show the world how simple and transparent trading funds can be.

Fees

We are following a dynamic fee model:

1% of total NAV (charged 0,25% quarterly).

The valuation of all the coins in MoatCoin Fund at the end of each quarter will be the Net Asset Value (NAV) of the fund. It will be charged quarterly @0.25%, regardless of profit or loss.

5% of the profit share each quarter.

The team will be entitled to receive 5% of the profit share each quarter only if the MoatCoin fund is above its previous highest NAV. Here’s a numeric illustration.

Let’s assume the following NAV value for previous 4 quarters, starting from a base of 100.

• Q1–150
• Q2–190
• Q3–160
• Q4–180

The team will be entitled to 2.5 (5% of 150–100) in Q1 whereas 2 (5% of 190–150) in Q2. There will be no profit sharing in Q3 as it’s below the previous NAV.

Q4 NAV (180) is 20 units higher than Q3 NAV (160) but still, the team will not be entitled to share in any profits as it is below all time high NAV (i.e. Q2–190).

So to get share in profit, our team needs to outperform previous heights. The NAV will be marked as the coins underlying asset value equivalent to ETH at the end of each Quarter.

Roadmap

Our team is 100% passionate and absolutely committed to delivering our promise to you.

2018 / Q1

• Deploying a well-detailed website (done)
• Publishing a comprehensive Whitepaper (done)
• Our Smart Contract Protocol on public GitHub repo for review.
• Starting the eKYC registration.

2018 / Q2

• Launching MoatCoin (MTC) Initial Coin Offering (ICO).
• Allocating ICO proceedings between well-researched crypto coins.
• Illustrative dashboard for MoatCoin fund and individual MoatCoin holdings.

2018 / Q3

• Cryptographic Auditing and Client end for cross verifying our internal transactions.
• Establishing a voting platform for MoatCoin holders regulated via smart contract.
• In-house decentralised exchange for trading MoatCoin with any ERC20 Tokens or Wrap ETH.

2018 / Q4

• Comprehensive annual performance evaluation report.
• Follow-on Coin Offering (FCO).

Advantages

• Exposure to Wide Range of Research-Backed Cryptos. Analyzing 1000s of coins, following developments takes a lot of work. To add to dismay is the FOMO, FUD and volatile market sentiments. Reducing noise and focusing on the key element
• No Hustle for Subscription Process and Quarterly Performance Reports.
• Transparency. Smart Contracts reduce costs, save time and provide new options for automating complex transactions.
• Risk Management. Reduced risk via diversification across cryptocurrencies operating in different industries and sectors.
• Better Security. Cold Storage will allow your coins to be safe from potential attacks.
• Value Investing. Investing backed by sound fundamental analysis in cryptocurrency and holding it for just a quarter could potentially yield more returns than in any other asset class in the world.

About

MoatCoin is an initiative by Fintrig Technologies Private Limited, a fintech company building financial products that are complex for today’s world but will be the norm for tomorrow. Our close-knit team has never stopped amazing people. Every single day, we work hard to push ourselves forward.

Reach us anywhere!

• connect@moatcoin.com
• Telegram group
• Facebook group
• Twitter

Disclaimer

Investment in the cryptocoins can involve greater risk than is generally associated with alternative investments that can result in significant capital loss that may have a detrimental effect on the value of the fund.

Crypto market involves substantial risk of loss and is not suitable for every investor. The valuation of coins may fluctuate, and, as a result, clients may lose their original investment. The impact of seasonal and geopolitical events is already factored into market prices.

The highly volatile nature of cryptocoins means that small market movements will have a great impact and this can work against you, leading to large losses or can work for you, leading to large gains. If you do not fully understand these risks you must seek independent advice from your financial adviser.