A Breakdown of the ThinkCoin Whitepaper Pt 4/6


A Breakdown of the ThinkCoin Whitepaper

Pt 4/6


TRADING ON THE NETWORK

Trade matching

This trading method is the simplest on the network: it works by bringing together two participants with equal stakes during buying and selling.

Case study
Customer A, a member of the TradeConnect network converts some BTC to TCO through an exchange and is willing to trade. A takes a look at the network and sees some markets that are available and decides to offer the market a long trade on FTSE with $200. The artificial intelligence guiding the system matches customer A with another user of the network (hereinafter called B). When B accept the trade (as Market Taker) and sends $202 of TCO to the trade smart contract stored on the blockchain: $200 as taker’s trade and $2 as the Connect Fee.

Pending the conclusion and settlement of this trade, these amounts are kept in the network in the smart contract. A fall in the price of the FTSE makes customer A to lose the $200, the $200 is then transferred to customer B, settling the smart contract automatically. The Connect Fee is shared between TradeConnect and Market Maker, TradeConnect’s share of the connect fee is used to support the network.

Advantages:
·         Customer A and customer B trade on the network is unaltered and verified.
·         Both participants have their funds within reach.
·         The terms of the contract dictated the trade and the absence of a third party makes settlement instant.

Multiple participants trading
Trades of bigger sizes or lesser liquidity are filled with multiple traders by the TradeConnect’s algorithms.

Case study
A brokerage establishment that is also a participant in the TradeConnect network will like to hedge some of its long exposure on Barclays Plc. But instead of working with a prime broker, this firm decides to offer trades to the TradeConnect network, taking prime brokers out of the picture. As the Market Maker, the brokerage will get receive the Connect Fee returns. The brokerage firm gives the market a long trade on Barclays with an amount of $10,000 in a bid to reduce their exposure.

The network’s artificial intelligence matches the firm’s trade with many Takers who will like to short the price of Barclays for the available amount. When the market makers accept the trade, each of the takers will send the accepted trade size in addition to the Connect Fee. These sums are kept in the network by a smart contract till the settlement and conclusion of the trade. An increase in the price of Barclays will make the Market Takers lose their invested funds, settling the smart contract and the brokerage receives its payout. The Connect Fee is shared between TradeConnect and Market Maker, TradeConnect’s share of the connect fee is used to support the network.

Advantages:
·         The brokerage saved itself some stress by trading on the network and also get the connect fee return for trading
·         Trades are priced and matched automatically on the network with many participants
·         The terms of the contract dictated the trade and the absence of a third party makes settlement instant.

Friends’ network matching

Member of the network can decide to offer and accept trades from participants in their personal network.

Case study

A group of friends joins the TradeConnect network; they each converted some USD to TCO through an exchange and are willing to trade. While participants in this group can trade with others on the network, they decide to trade with each other only. One of them decides to give a trade size of $1,200 to go long on the market; three other members of the group are ready to accept the offer. The network AI will match these trades as each will put $400 to the trade in addition to the Connect Fee of $4.

These sums are kept in the network by a smart contract till the settlement and conclusion of the trade. The market goes in favor of the group member with the trade size of $1,200, settling the smart contract and the winning member receives the payout. The Connect Fee is shared between TradeConnect and Market Maker, TradeConnect’s share of the connect fee is used to support the network

Advantages:
·         Trade flexibility because participants can trade with friends or with the wider network.
·         The terms of the contracts are determined by the group members.

Security
System security depends on oracles and Trading contracts. Industry standards will be followed when drawing up the Trading contracts: stored on the blockchain, open-source, vetted by two external security auditors, and verified formally.

Oracles will act as trusted third parties.

Transactions will be easy to audit as all trades will visible on the blockchain.

Check out the ANN page here and website here 
Personal Bitcointalk Profile

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