Token-as-a-Service (‘TaaS’), dubbed the “first-ever” tokenized closed-end fund (CEF) that allows investors to capitalize on the rise of blockchain markets, is to launch a fundraising next month through an Initial Coin Offering (ICO). The platform on which TaaS is based claims to offer “full transparency’ for investors by deploying Cryptographic Audit technology.
Utilizing the Ethereum blockchain and its Cryptographic Audit technology, TaaS was co-founded by Blockchain protagonists Konstantin Pysarenko, Ruslan Gavrilyuk, Dmytro Chupryna and Maksym Muratov.
Together with team members from the United States, China, Poland, South Africa and the Ukraine, fledgling startup TaaS with offices in Kiev and San Francisco intends to offer a “new way” to participate in and benefit from capital raising, fund management and cryptocurrency investing. Its use of the ICO funds raised will be audited by HLB, a worldwide network of independent accounting firms and business advisors.
Pysarenko, TaaS’ 26-year old Ukrainian-born American co-founder, commenting said: “Blockchain technology and cryptocurrencies have risen exponentially over the last 12 months with little doubt for its ability to disrupt and revolutionize major industries over the coming years.”
Having previously co-founded Geo-Earth Resources Ltd in 2011 and more recently Bitup Analytical Group in the crypto asset management space last year, he asserted that the blockchain pioneers believed there is “a unique window of opportunity for early adopters, enthusiasts and professional investors to join this phenomenon.”
What Assets Will Be Invested In?
Pysarenko told Forbes that in terms of the scope of investment to be pursued they intend to be “an active player” across blockchain markets, investing in cryptocurrencies and tokens. It is understood that they are interested in investing in “blockchains built by progressive-thinking teams” that solve crucial real-world problems, or are pioneering and stretching the limits of blockchain.
Citing “many barriers” to entry, TaaS aims to “reduce risks and technical barriers” associated with investing in the blockchain space and trading cryptocurrencies.
Indeed, investors interested in exploring blockchain markets face several problems. These sapn technical barriers such as owning and operating wallets, a lack of market understanding (including lack of understanding of blockchain economics), as well as a lack of transparency in existing investment solutions, and, limited investment instruments.
As the first and truly transparent closed-end fund on the market, Pysarenko stated that TaaS offers a solution to all the above cited problems.
Smart Contracts & Payouts
Unlike traditional closed-end funds, TaaS will issue tokens, which represent a ‘Proof-of-Membership’ in a fund that are built on a profit-sharing smart contract – executed by an Ethereum smart contract – where token owners collect 50% of quarterly profits. It is intended that these tokens will in due course to be traded on all major exchanges including Bittrex, Kraken and Poloniex.
In order to grow the fund’s capital pool without attracting additional investment, around 25% of the profits will be reinvested back into the fund.
The reasoning here is explained on the basis that as the Net Asset Value (NAV) of a token increases over time. And, TaaS tokens will have their value “explicitly tied” to the performance of its parent project, thereby introducing a ‘Token-as-a-Service’ business model.
“While smart contracts can guarantee payout distribution, it does not contribute to the problem of transparency of investing in non-Ethereum tokens,” explained Pysarenko, who studied at the University of Buckingham. To solve this they have built an in-house Cryptographic Audit technology.
What Is A Cryptographic Audit?
The Cryptographic Audit (CA) is a set of autonomous auditing techniques that tracks, records and timestamps trading activity. The technology was built by TaaS to ensure all profits are properly recorded, the money flow is transparent and the company is in possession of all declared funds from investors. It is said to enable any member of the public to validate trading history and portfolio history.
The founders said that by design it is intended to “simplify investors’ due diligence” and provide tools for maximum transparency.” To achieve the CA a number of steps or processes will be initiated, namely spanning:
Proof of Reserves: Preference will be given to using exchanges that have Proof of Solvency implemented; cold storage reserves are able to be audited such with Poloniex and Kraken.
Auditable Exchange Accounts: Where for each account used for trading on exchanges will have a view-only API key that permits anyone to check and verify the balance and trade history of the account.
Proof of Reserves for Non-Exchange Accounts: For all non-exchange accounts (e.g. cold storage address that will be used for their funds) a proof of ownership will provided.
Proof of Reserves for Fiat Accounts: TLSNotary or a similar solution will be used to provide a cryptographic proof of fiat currency in bank and exchange accounts.
Regular Blockchain Snapshots: In order to have proof that no one mismanages data between the audits, a special smart contract will be developed to retain the daily snapshots of audit data.
Bonus For Investors
By incorporating a bonus system for early bird investors, a 25% bonus will be offered for the first 1,000 Bitcoin (BTC) raised with the bonus system decreasing progressively up to the 9,000 BTC mark.
A figure of 2% of the funds collected will be reserved for bounty programs for investors and contributors, who include social media contributions, assistance with translations, beta testing and others. Payments for these bounties will be held upon completion of ICO.
The total supply of tokens is indicated at 101 million, with the price per token being $1.00. While those tokens not sold to investors will be burnt, no further tokens will be created and TaaS indicated that it will “never trade or own its tokens.”
In terms of the venture’s roadmap, a ‘Q1 payout’ is indicated for July 2017. The ICO distribution is broken down as follows: Portfolio (75%); Operations (15%); and, Reserve Fund (10%).
‘Bloomberg-Like’ Crypto Portfolio Management Platform
In addition to their fund, TaaS is also building Kepler, which is described as a “first Bloomberg-like” cryptocurrency portfolio management and analytics platform that aims to cover the “entire spectrum” of the investment process.
It understood that Kepler will provide market research, due diligence and order management as well as risk exposure and performance forecasting. Some might view this as an ambitious project for the early startup. A Kepler beta test release is slated and envisaged for later this year in December.
Board members include fund management expert John Wong, a former investment banker at Lehman Brothers with over 25 years’ experience taking companies public and managing funds. Joining Wong is Sergey Rabenko, a legal consultant at the International Finance Corporation (a member of the World Bank Group), who has over a decade of experience in advising on legal, M&A and tax issues.
Pysarenko boldly posited: “The overall aim of TaaS is to deliver long-lasting innovations in the blockchain industry. And, we believe that TaaS and Kepler are on track to revolutionize the journey of investing in cryptocurrencies and tokens forever and we are excited to watch it all unfold.”