Spectre AI ($SPECTRE) Pitch Outline (Spring 2024)

Brock O Nelson

Published in

Oregon Blockchain Group

13 min readApr 25, 2024

An investment thesis for $SPECTRE, written for Oregon Blockchain Group’s Venture Capital style investment fund.

By Brock Nelson

General Background on Protocol

The first $SPECTRE token ICO was held on November 19th 2023. Spectre AI powers an ethereum-based AI prediction toolkit through its trading bot on telegram. This bot assists traders in making informed decisions through algorithms that analyze historical data and identify patterns. Spectre has established valuable partnerships with big tech companies like Google and Nvidia giving it key access to ML equipment that is unavailable to the public. The AI engine of the Spectre bot utilizes sophisticated ML methods such as LSTM networks to deliver perceptive short-term token predictions spanning 6, 12, 24, and 48 hours. Users can utilize features like Bubblemaps, Sentiment Analysis charts, and AI-powered telegram Chatbots to gain insight on market sentiment. Spectre’s strengths can be attributed to the combination of its three essential pillars; AI predictions, sentiment analysis, and technical analysis. It is important to note that Spectre AI’s trading bot does not provide financial advice and is solely used for informational purposes.

Macro Factors Impacting Protocol

Over 90% of leading businesses are investing in AI development and ML. The AI market was valued at $200B in 2023 and is expected to grow to over $1.8T by 2030. The convergence of blockchain and AI has captured the attention of individuals and businesses worldwide. Could AI and blockchain work as catalysts for each other? Blockchain technology’s secure, transparent and decentralized nature integrating with ML promises to redefine these industries. A multitude of untapped use cases exist in the AI blockchain market, including healthcare recommendation improvements, increasing data security and transparency, improving smart contract automation, offering predictive analytics, and much more.

Blockchain AI trading bots have emerged as valuable tools that leverage AI to analyze market trends, execute trades, and manage risk with enhanced efficiency and minimal human intervention. AI trading bots are powered by ML algorithms that analyze vast amounts of data and identify patterns to swiftly execute trades. These bots are evaluated based on automated trading features, customizable strategies, analytical tools, and multi-chain support that they offer. Some AI trading bot development protocols include 3Commas, known for its customizable trading strategies, Kryll, which allows users to create their own trading strategies, and Dash2Trade, which integrates AI with social trading features.

While there are a number of AI trading models on the market, none have captured significant market share. A few large trading platforms like Binance and OKX offer limited AI strategies on top of traditional trading bot applications, but are mainly used for their trading bots, offering AI strategies on the side. AI trading bots are in early development, but represent a convergence of two cutting-edge technologies. As the crypto landscape evolves, these bots will continue to shape the future of finance.

The Team

The Spectre team consists of 14 individuals with expertise in ML, data science, finance, and software development. The full list of team members is available on the Spectre website but no information is offered beyond each team member’s first name and their role title.

General Auditing Background for Protocol

No auditing background.

Specific on What Protocol Does

Currently, Spectre offers an AI trading prediction toolkit through a Telegram bot. Users can interact with the bot through Spectre’s official Telegram channel by selecting a timeframe and inputting the contract address (CA) of any token. The analysis bot produces forecasts by analyzing historical data, trends, seasonal patterns, and detecting changepoints. Changepoint detection is used to identify shifts in trends or impacts of large events on future price movements. Spectre AI is committed to ongoing improvement through user feedback loops and data updates. Its cutting-edge ML algorithms are continuously collecting and learning from massive datasets including historical price information, trading volumes, and market indicators to drive its predictive capabilities. This data is meticulously preprocessed and analyzed seasonally to provide optimal analysis. Specific algorithms and methodologies remain confidential.

Spectre’s main objective is to create state-of-the-art AI predictive tools, which is achieved through three key areas of emphasis; AI predictions, sentiment analysis, and technical analysis. Its AI predictions utilize ML algorithms to analyze and identify patterns in historical data and create short-term price forecasts. It leverages the processing power of tech giants like Nvidia, Google, Bitquery, and TradingView to develop these algorithms. The team states these unique algorithms are its “secret weapon”. Spectre employs sentiment analysis that is curated through advanced analytical tools that consume social media content to disclose market mood and investor sentiment. It offers features like in-depth sentiment analysis charts for a holistic view of market sentiment, as well as Spectre Bubblemaps. Bubblemaps showcase project profiles, key influencers, their interactions, and their follower networks to gain insight on sentiment analysis and visualize a “crypto cosmos”. The AI bot conducts market analysis that is automated by Spectre’s AI engine to create clear recommendations and actionable insights. An interactive technical analysis chatbot is in development for users to discuss trading strategies.

Spectre implements a tiered based system that offers different features to a wide range of users. Tier 1, the Basic tier, is currently in development and aims to provide basic functions for users to test out for free. Tier 2, or the Pro tier, requires the ownership of 1,000 $SPECTRE and offers additional features and exclusive rights including access to the Spectre AI degen land lounge. This is an area where users can interact with each other and discuss trading strategies. Tier 3, the Ultra tier, offers access to the AI MainBot, including full features and advanced prediction capabilities with a requirement of 2,000 $SPECTRE. Bubblemaps and sentiment analysis charts are only available on Tier 3 and up. A 4th tier will be created in Phase 3 of Spectre’s roadmap that will include an expansion in its revenue sharing program.

One downside is that Spectre settles transactions to the Ethereum mainnet. This offers slower transaction times and increased costs compared to L2 options. This isn’t an issue in the short term as users primarily interact with Spectre through telegram. The only token utility at the moment is to buy $SPECTRE for investment purposes or to use the AI bot. However, when Spectre scales and its dAPP transforms into a full trading platform as outlined in its roadmap, it may face network congestion and high fees. There is no solution for this problem outlined in the roadmap, but it would be fairly easy to outsource functions like settlement to an L2 to address this issue in the future.

Why the Protocol Offering Matters to Consumers

Through Spectre, traders of all skill levels have access to state-of-the-art AI prediction engines powered by cutting-edge ML algorithms, industry-leading sentiment analysis technology, and top-tier technical analysis. These tools help users make informed trading decisions by predicting and analyzing price movements in the market. Low-budget traders will soon have access to Spectre’s free Tier 1 bot that offers introductory access to the trading bot. More advanced traders can utilize Spectre’s Pro and Ultra tiers that offer additional benefits including sentiment analysis tools and advanced prediction capabilities. In Phase 3, users will have the opportunity to participate in an expanded revenue sharing program.

Protocol Versus Competitors Chart

Protocol Go To Market Strategy Versus Competitors

Spectre’s strategy lies in its three pillars: AI predictions, sentiment analysis, and technical analysis. Many other AI prediction trading protocols are focused on offering other features like traditional automated trading bots and automated trading terminals. Spectre currently has its full focus on the development of quality AI prediction tools. In particular, sentiment analysis provides a unique selling point for Spectre through tools like SA charts and Bubblemaps. Analyzing market sentiment and gauging the level of hype around a project is very difficult to measure and train into an adaptive trading bot. Spectre is a frontrunner in developing sentiment analysis tools which could be a major factor that differentiates its model from competitors.

The strategic partnerships that Spectre has established makes them really stand out compared to the competition. AltCTRL, an all-in-one trading platform, is Spectre’s bot developer. Bitquery, trusted by platforms like Binance and CoinMarketCap, will be Spectre’s data API provider. PAAL AI is a leader in advanced AI and ML technologies and will collaborate with Spectre’s team to develop a custom AI community bot. It will utilize PAAL’s vast AI ecosystem to leverage comprehensive AI solutions. An ecosystem partnership has been formed with Palm AI for access to Web3/AI intelligence solutions. Another partner is TradingView, a platform that offers charting tools and high processing power.

Spectre has created another partnership leading tech corporation Nvidia to utilize powerful GPUs with the ability to explore new algorithmic possibilities for DA and train complex AI models. Last but not least, Spectre has partnered with Google to utilize their technological, digital advertising, cloud computing, and AI expertise. The team is dedicated to creating a high quality core product with its partners before implementing features like automated trading in future phases. Having a market-defining AI prediction toolkit will make Spectre stand out among competitors as it scales.

How Token Extracts Value

The token extracts value through two main functions. The first is through its underlying product offering of AI prediction tools. Users are currently required to own $SPECTRE to gain access to different tiers of the Spectre AI bot. The second way value is extracted is through its revenue sharing program that will be expanded during Phase 3. It is unclear how the revenue sharing program will be structured, but we can assume that some portion of taxes/fees will be allocated proportionately to Tier 4 users. Spectre will release its Tier 1 bot later in Phase 2 that offers free function and the possibility to create groups. There is a 5% tax on all buy and sell transactions, and tax proceeds are used to increase liquidity on exchanges, enhance the AI bot, and assist marketing efforts. A large portion of the tax revenue is also reinvested into continuous product development. As Spectre continues to navigate its initial startup phase and turns its dAPP into an all-encompassing trading platform, there will continue to be more ways that users will be able to participate in the extraction of token value. Additional revenue is also likely to accumulate during Phase 5 as the SWAN becomes functional and executes automated trades. However, during this initial startup and product development, the main value provided to users will be Spectre’s AI trading tools made available via the Spectre trading bot.

Tokenomics/Vesting Schedule

$SPECTRE is the native token used on the Spectre AI protocol, and has a total supply of 10,000,000 $SPECTRE. Just over 9,000,000 tokens are in circulating supply with no outline on how the rest of the tokens will be vested. Because over 90% of $SPECTRE is currently in circulation, Spectre’s market cap has already surpassed 95% of its FDV. There will not be a significant amount of token unlocks ahead where users are looking to sell, which should help cool inflation. No token burns have been mentioned in the documentation.

Modeling/Ratio Analysis

As previously mentioned, blockchain and AI are two emerging technologies that are experiencing high growth rates. Together they function as growth stimulants. Both technologies are expected to continue this rapid growth due to multiple catalysts.

Many are beginning to look to blockchain as the future of finance. The tokenization of assets gives users the ability to seamlessly transact through trustless systems and hold assets with self custody. As we enter the anticipated 2024 bull run, there is lots of hype around trading digital assets to bootstrap protocols and experience high returns. An Bloomberg article stated that spot trading volumes surged 108% in March to $2.93T, the highest trading volume we’ve seen since the end of the last bull run in May 2021. Lots of fresh money is entering the market with Spot Bitcoin ETFs alone seeing net inflows of over $12B in Q1 2024. While most of these inflows will not circulate to other tokens, they will push up price and lead to more investment into the broader crypto industry. With the crypto market previously experiencing 81% growth from the year prior, it is still valued at just 2% of the traditional stock market.

This is where AI comes in. AI not only assists in protocol development and growth, but also assists traders in predicting changes in the market and capitalizing on them. After seeing the mass adoption of ML programs like ChatGPT and other various chatbots, protocols have continued to develop AI models to identify patterns and predict changes in the crypto market. While this is a valuable product offering, many AI models are still primitive and none of them currently dominate market share. This opens a huge window of opportunity for AI prediction toolkit protocols, specifically Spectre AI, as its primary strategy is to develop an industry standard in AI trading tools with its high profile partnerships.

Above, I compared Spectre to two prominent leaders in the development of AI prediction bots, Dash2Trade and Kryll. Although Kryll is a leader in this sector and has been around since 2017, it still has a relatively small market cap. The growth of both the AI and blockchain markets should fuel the AI trading bot market. OKX is a traditional bot provider, as well as an exchange and onboarding platform for users. It can serve as a vague reference for the size in which leading AI trading bot protocols could grow in the coming years. This is under the assumption that AI bots will integrate with and take market share from traditional bots. If Spectre could be a frontrunner in the AI trading bot industry as it matures, and reaches the size of a protocol like OKX, it would 192x.

Road Map

The Spectre team has provided a very intricate roadmap displaying 5 different phases of the project. Keeping in mind that the roadmap provided is tentative and details are subject to change, the first phase, which provided detailed goals of Spectre’s establishment and launch, is complete. This included the implementation and launch of the SPECTRE token, community building plans, the deployment of the V1 beta bot (the initial version of the Spectre AI trading bot), and initial marketing plans. Spectre is currently in Phase 2, which focuses on bot improvement and expansion. The team has already launched a two level gating system for holders and created a degen land lounge.

During the rest of Phase 2 Spectre will focus on two main areas. The first is creating top tier partnerships to gain access to sophisticated development tools and expertise, as well as increase brand visibility and credibility. Two vital partnerships have recently been established with Google and Nvidia, as Spectre was accepted into their Tier 1 startup foundations. Spectre has expanded its bot’s reach to the PAAL, and hopes to expand on its partnership by collaborating with their team to integrate Spectre’s AI capabilities into their platform. PAAL’s ecosystem features personalized AI bots that users can create and deploy on custom apps. This partnership would help expand the bot’s exposure and accelerate protocol adoption. The second main area of focus for Phase 2 is in developing new tools. This includes the development of an AI technical analyst, AI sentiment analyst, and AI analyst chatbot. The team would also like to implement the Tier 1 Bot, replace CAs with TICKERs, expand onchain prediction to integrate BTC/ETH trend pairing, and introduce USDT trading pairs.

Phase 3 focuses on growth and revenue sharing by targeting three milestones. The first is the development of the full V2 AI prediction bot. Spectre states that it is currently working with a world class AI development team and ML model to transform their prediction engine. The second milestone is to transform Spectre’s dAPP into an all-encompassing crypto trading platform that integrates AI prediction, on-chain analysis, sentiment analysis, and chatbot features. Multi-platform dAPP versions will be developed to provide easy access to apps, browsers, and dAPPs. Spectre’s third milestone will be to expand the revenue-sharing program to recognize more token holders participating in active and passive contributions. Various revenue stream expansion opportunities like incentive mechanisms and partnerships with third-party platforms will also be considered.

Full integration with V2 SPECTRE bot, seeking listings on CEXs, seeking partnership expansions, and integrating gamification elements will be at the center of the team’s attention during phase 4. These projects are driven by Spectre’s main Phase 4 goal of increasing user engagement, convenience, and accessibility of its trading features. The final phase currently outlined by the team, Phase 5, represents Spectre’s “Holy Grail Moment”. This surrounds the launch of “The SWAN”, the Alpha v3 bot touted as the “holy grail of crypto prediction and trading tools” (by the Spectre team). The bot will experience upgrades in its prediction capabilities by utilizing advanced sentiment analysis that operates various functions like sniping news to upgrade predictions and alert users. Auto trading features based on AI-driven signals and analysis will be integrated as well as live data logging to provide users with real time analytics and insights. The main focus during this phase will be to offer precision through a comprehensive user experience that sets an industry standard in AI predictive tools.

Investment Thesis

Spectre held its ICO just six months ago. While the protocol is still in early development, the team has provided a very detailed roadmap that outlines extremely positive outcomes for the future. There are many unknowns about the future, but we do know what Spectre is at its core. Its a protocol dedicated to one goal: developing world-class predictive trading tools that offer unparalleled accuracy and real-time data-driven insights. With the plethora of partnerships Spectre has established, it seems to have all the tools it needs to achieve this goal. As Spectre builds out its dAPP there will continue to be more ways for users to interact with the protocol, inevitably increasing the amount of fees and revenue generated. Spectre’s dedication to quality, encouraging roadmap, and partnerships with leaders in tech make the protocol primed for growth.

Fund Recommendation