Fintech Genome

Lykke equity for sale


#41

@tempus A Dutch Auction would be cool. Tried in public markets years ago, but i-bankers hated it. It works for issuer and investor, so Lykke could really score with this. The market rewards transparency even if it is a tough journey


#42

Yes, absolutely agree! There might be some aspects that are hard to predict but especially in the Crypto/Blockchain-space transparency is very much appreciated and it also will let the market decide about the price. I really like that concept!


#43

Lykke Wallet Ethereum Integration
https://www.lykke.com/city/blog/lykke_wallet_ethereum_integration


#44

thanks @tempus copied it below for convenience with some comments in italics (Pics don’t copy automatically, so go to source to see them)

Mikhail Nikulin, Lykke co-founder and CTO

Lykke is a semi-centralized exchange. This means that the exchange does not take possession of the traded coins (Ethereum tokens, Ethers, Bitcoins or colored coins), but needs to be trusted to match trades correctly. Lykke has a centralized matching engine and decentralized coins settlement. Matched trades are settled on the blockchain. Each transaction must be signed by both parties and the exchange. Still to be able to trade, one should deposit his coins to Lykke exchange. Depositing coins is not equal to trusting coins. How can it be? Lykke uses multisignatures mechanism to hold client’s funds. Lykke exchange can not spend any coins without a client’s private key. Even if the exchange is compromised and the Lykke key is stolen, the client will not lose his coins. The second key is required to spend deposited coins. Lykke exchange also provides a refund mechanism to guarantee funds recovery in case of emergency.

Semi-Centralised" means “centralized matching engine and decentralized coins settlement”. That seems like a practical solution. I see no downside to centralised matching and it is probably better from a liquidity POV. Anybody have an issue with centralised matching that I am missing? Any solutions that have decentralised matching?

Mentioned features are now available on top of the Ethereum blockchain. In this post you will find some technical details of Ethereum settlement integration.

Lykke Ethereum Smart Contracts

There are two layers of contracts

  1. Multisignature protection layer implemented as Main Exchange Contract which is available for Lykke only.

Multi Sig is now de factor norm. No MT Gox type issue. Good.

  1. Money ownership layer implemented as an abstract Coin Contract which is available for noone but for Main Exchange Contract only. This contract actually owns all client’s funds deposited for trading with Lykke Exchange. There are 3 various types of the Coin Contract:

    a) Ethereum Contract which holds all client’s Ethers deposited for trading

    b) ERC20 adapter contract (to be implemented) which is the owner of all client’s ERC20 tokens deposited for trading

ERC20 is another de facto standard and is critical for interoperability.

c) Any arbitrary adapter contract that is not ERC20-compatible

ERC20 is another de facto standard and is critical for interoperability.

Main Exchange Contract

Main Exchange contract verifies that any transaction made by Lykke is signed by a client that owns the money. The Main Exchange Contract address does not hold any Ethers or coins on the blockchain.

Let’s examine CashOut function that Lykke calls when a client wants to withdraw his/her Ethers from the Trading wallet. The smart contract function first checks that the provided signature (“client_sign” parameter) corresponds to the required operation.

function cashout(uint id, address coinAddress, address client, address to, uint amount, bytes client_sign, bytes params) onlyowner {

    //1. Check if the transaction is called more than once
    if (transactions[id]) 
        throw; 

    //2. Check client’s signature
    bytes32 hash = sha3(id, coinAddress, client, to, amount);
        
    if (!_checkClientSign(client, hash, client_sign)) {
        throw;                    
    }

    //3. Call for cash out
    var coin_contract = Coin(coinAddress);
    coin_contract.cashout(client, to, amount);

    //4. Keep the transaction id
    transactions[id] = true;
}

Thus Lykke is not able to make any withdrawals without the client’s signature. The signature is generated by the client with his private key using the Lykke Wallet app on the smartphone side. If the signature is correct the money owner contract is called to send the client’s money.

Similar logic is implemented for all remaining functions that can spend the client’s money.

Currently the Main Exchange Contract is deployed on the following address.

ETH contract

The ETH contract is deployed at the following address

As one can see, it holds Ethers that belong to Lykke clients. The contract allows to transfer money if it’s called by the Main Exchange Contract.

Refunding Mechanism

The refund function implemented in the Main Exchange Contract allows a client to transfer deposited money to the specified address, if the Exchange is not alive during 30 days. The Exchange should ping the Main Exchange Contract Alive function at least once a month to block refunds. Normally money withdrawal should be confirmed by both the client and the Exchange.


#45

@tempus Is Bancor competition? They certainly raised enough - my head is still spinning! The common aim is liquidity for assets of multiple types, even if the way of doing it is very different. But I may have that wrong.


#46

@BernardLunn, that is a very good question but not easy to find a good answer. I can’t say that I fully understand bancor. It’s economical design is pretty complex and I personally don’t like what I understand, this “one token backs another token” plus “fractional reserve” - design. I believe there might be a thin line between useful and mis-use.

There may be some similar aspects to Lykke, there are enough differences in my opinion to say “no competitor” under the line, especially because Lykke already includes Fiat and on a way of being regulated while I’m not so sure how that will be possible for Bancor. But the real question my be how both will develop over time, how it would be if both projects already would be established and kind of “all what they can be”. Then it may be more competitive.

But, I personally pretty much stay away if I find a system very complex and that is the case for bancor. Another point is that I’m not sure about Ethereum and smart-contracts when it’s about security. TheDao is often seen as failed because of “sloppy coded” and that’s not untrue of course. But it was reviewed and my infos are that it’s not easy to code complex stuff on Ethereum and being sure that there are no critical bugs. So, under the line - bancor is nothing I personally invested in or plan to.

Two good articles about bancor are these in my opinion:


#47

Lykke and Offchain-Settlement:

Lykke Adds Scale to the Bitcoin Blockchain with Offchain Settlement
https://www.lykke.com/company/news/lykke_adds_scale_to_the_bitcoin_blockchain

FAQ - Lykke Offchain Settlement
https://www.lykke.com/city/blog/lykke_offchain_settlement


#48

@tempus Is it OK to copy the q&a we had on this from the Slack? Another Q, where does Lykke post financial info? I see 2015 but that is too long ago to be meaningful. Do you publish annually or quarterly?


#49

@bernard, Lykke publishes their results in their newsletter (sometimes on a monthly basis but not consistent) which is emailed to Lykke registered users.


#50

Hi @BernardLunn, what is it for a Q&A? Was it on the public slack? Don’t think that would be a problem.

Regarding financial infos: An actual financial report will be published soon. The most actual one before is this report from Feb 2017: https://forward.lykke.com/files/Memorandum.pdf

It was published prior to the LKK1Y (forward contract) crowdfunding.


#51

Update about the regulatory-situation(s):

Lykke Heat from the Global Street, May 2017
https://www.lykke.com/city/blog/lykke_heat_from_the_global_street


#52

@tempus the level of transparency on the regulatory front is very impressive. This is a hard slog but being regulated in multiple jurisdictions will be a big competitive differentiator. At some point, the market will move from early adopter to mainstream and when it does Lykke will be well positioned.


#53

@BernardLunn and it’s not even easy to be transparent about the regulatory topics because it’s really complex, not only because it’s about different countries, but just the USA - it differs from state to state and is kind of a “step-by-step-process”.

But yes, I believe exactly that is a big advantage or at least will turn out as a first-mover-advantage. There are others who will be technically good as well - but Crypto only. And it will take some time, and it needs resources, expertise and money to catch up on the regulatory front.


#54

Who may have missed the Coinholder meeting in which the team replies on questions after publishing the annual financial report - it can be watched here:

Voting results:


#55

I’ve been investing for more than 20yrs and last week was the first time that I genuinely participated in a shareholder meeting!

From the conventional signing of documents to live video broadcast with global Q&A.
From one way communication to interactive exchange.

Lykke’s share price today reflects a market valuation of approximety $450mil!
What are the expecations that the market is pricing in?
This is my take (but read more details in my post below):

“Lykke wants to be the global marketplace with the new understanding. They want all business to be launched and executed on their app. When I say all, I literally mean all. The Lykke app wants to be the center of the world. Whether you are a retail individual (investor, trader in the old sense, or not) or a business (to be built or grown up with complex business processes) or a government; Lykke wants to serve your needs. The accelerator they launched recently, will grow the ecosystem and have the desired network effects. Lykke is open of course, to all sorts of business partnerships, for example, the recent partnership with Splendid, a Swiss student loan lender, for servicing international students via blockchain transfers, a process which cuts costs of such cross border transactions and simplifies the process.”


#56

@Efi or @tempus On CoinMarket Cap it talks of a market cap around $55m. Is that the coin valuation and the equity valuation is more like $450m? How are these two calculated?


#57

Bernard, see the separate Circulating Supply and Total Supply numbers for Lykke in Coinmarketcap.


#58

I was at a Lykke q&a meet-up last week. I might not know much about the technicalities of this project but I was struck by the huge scale of vision - the philosophy behind it. From what Richard Olsen and others were saying, Lykke wants to save people from the inefficiencies of the financial system (fees & time wastage) + protect personal information from Facebook & Co + free people from central banks manipulating fiat currencies + save the world from environmental disaster. That’s quite a list!

The premise behind Lykke appears to be a slow burn game changer rather than a get rich quick ICO without too much substance backing up the trumpet calls. It’s going to take a lot of technical & business nous to translate the vision into a viable concern.


#59

@dailyfintechrocks Thanks/ Then CoinMarketCap has it wrong? You multiply price by total not amount in circulation. Surely? If so CoinMarketCap has it wrong for all coins.


#60

@swissinfomatt I agree, an impressive company. At over $400m valuation it has to be. I can see 10x easily if they execute, but that does not leave much room for error.