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Last updated: 6 November 2017

The Need for a Paradigm Shift in the Exchange Business

15^th November 2017

www.oax.org

Agenda��

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1. The Market
2. Centralized Exchanges
3. Decentralized Exchanges
4. OTC & P2P
5. Bridging the Crypto/Fiat Divide
6. The OAX Platform
7. The OAX Roadmap:

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Market

Crypto has gone from $40 Billion to $200 Billion in 12 months, but the foundational infrastructure that supports the industry has not gone undergone corresponding growth.

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• Estimated 14.5 million wallets are currently active and estimated 7.8 million unique users

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• Market capitalization has increased 715% since Feb 19, 2016

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• Coinbase reports signing up 100,000 new users daily

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Centralized Exchanges Landscape

• For centralized exchanges, 75% of transactions occur on 9 platforms

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Sources: Cambridge Judge Business School - Global Cryptocurrency Benchmarking Study 2017

Issues with Centralized Exchanges

• Liquidity of centralized exchanges is fragmented
• Lack of operational and financial transparency
• Each has own opaque rules
• Security: >50% have been compromised
• BTC lost is greater than 925,000 BTC (>USD 1.62 Billion as of 15 May 2017¹)

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Source: https://99bitcoins.com/price-chart-history/

BTC Price Versus Major Historical Events

Source: https://www.theatlas.com/charts/Bk1RzceF

¹https://coinmarketcap.com

Issues with Decentralized Exchanges

• Existing decentralized exchanges
• Trade volumes comprise only 0.049% of global exchange trade volumes¹
• Low trade volumes = limited liquidity
• EtherDelta, the largest DEX does $4.5 million to $6.1 million daily
• No integration of fiat settlement
• Limits transactions to crypto pair trading
• Off platform fiat settlement limits trade size due to counterparty settlement risk

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¹ https://coinmarketcap.com/exchanges/volume/24-hour/

OTC and P2P

• It is estimated that only 15% of trading occurs on unregulated centralized exchanges

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Source: openANX Analytics

Issues with OTC and P2P Trading

• The OTC market for cryptocurrency is bigger than the exchange market¹
• Institutions, miners, high-net-worth individuals and other large scale participants engage due to
• Higher liquidity
• Fixed price trading
• It has significant counterparty risk
• Less transparent
• Information is solely provided by OTC buyer

and sellers

• Less regulated
• Buyers and sellers not regulated

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Source: https://blockunchained.com/how-chinese-is-bitcoin-part-1-trade-volume-795ac3ed221b

¹https://news.bitcoin.com/vinny-lingham-otc-market-bitcoin-bigger-exchange-market/

Bridging the �Crypto/Fiat Divide��or��“You still can’t reliably get money in and out”��

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Regulatory

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Regulation is evolving rapidly and broadly speaking, there are three distinct attitudes when it comes to governments in terms of cryptocurrencies and digital assets and tokens;

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• The innovative, early adopters who see the opportunity
• Those that follow the SEC fairly closely – the middle way
• Those that see cryptocurrency as a significant challenge
• Even the Russian Central Bank and President Putin have been in the news recently regarding how to handle cryptocurrency

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Banking and Acceptance

The key challenges facing mass acceptance of crypto are:

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• KYC/AML concerns by traditional financial Institutions
• Russia Central Bank
• Gatecoin and Bitfinex

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• Barrier to Entry
• Understanding how to be safe and secure online

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• Reputational issues regarding handling and disbursement of cryptographic tokens
• ”Silk Road Effect”

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Solution – The OAX Platform

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Key Components

Decentralized exchange

Asset gateways and existing service providers (include exchanges)

Retail and commercial users

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New participants (credit risk traders, risk assessors, rating agencies)

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Off chain and Collateral

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Dispute resolution

The OAX Platform

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OAX: Mission and Vision�Hugh Madden – Director OAX Foundation

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1. To promote and support a new decentralized exchange platform
2. Allows transparency for end users
3. Enhance counterparty risk assessment
4. Holds collateral for participating gateways
5. Develop channel for dispute resolution
6. Open new markets that would benefit the community

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Role of Asset Gateways  

The gateway will first direct them to one or more KYC services. The KYC service will provide a KYC rating, which is registered into the OAX DAO

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Asset Gateways take into custody real world assets such as EUR or USD fiat and in turn mint ERC20 tokens onto the blockchain, for example ANX may issue ANXUSD tokens

The ability to trade credit risk specifically is notably missing from current crypto markets

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Asset Gateways

KYC/AML service to first be performed on any user receiving these real-world assets. This is done by the nomination of a KYC service smart contract address as part of the Asset Gateway registration

Role of New Participants

By making available risk assessment indicators, participants can access information about Asset Gateways

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User Benefits

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• Users can quantifiably assess risk
• Users can choose the asset gateway they prefer
• Have access to easy on/off fiat services
• Can use the dispute resolution system if needed

Access OAX

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Product & Technology Development

• Delivery of decentralized Ethereum based platform for support of fiat and digital currency trading and payments

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• Integration to major decentralized exchange protocols

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• Development of a reference API and UI

Legal & Regulatory Framework

Community & Ecosystem

• Working Group

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• Creating large grass roots community

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• Building industry support

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• Educating community

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The Foundation’s role is to direct and fund technology, ecosystem & legal frameworks to allow other entities to operate & participate with the platform in a safe and legal manner – the Foundation is NOT the operator of the system.

• Independent governance model

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• Legal framework to support various regulatory requirements

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• Jurisdictional opinions

Building blocks for this initiative

OAX Technical Development Update�

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Mint and Burn Administration

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Mint Flow Process

Mint and Burn Flow

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Gateway A fund: Default state

Minting

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KYC and minting request

The OAX Roadmap�

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KYC/AML/KYB

Providers

Fiat

Currencies

Fiat¹

Token²

Creating a New Crypto Fiat Ecosystem

Token Exchange Service Providers

OAX Platform

Tokens created and held in

e-Wallet

Trading & Credit Trading

Prepaid Cards

Online/Offline Merchants

(Fiat

Token in Phase 2)

$

$

Customers

Asset Gateways

Payments Mechanisms

Designated Decentralized Exchanges

Token Exchange Service Providers

Cash

Liquidity Aggregation

Banking

System

A clear delivery timetable has been established

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2017

Q1

Q2

Q4

Q2

Q2 2016

Concept Development

Q1 2017

Concept

Validation

JUNE 2017

OAX

Token Sale

MAY 2017

White Paper Released

Q2 2018

OAX Prototype Release

APRIL 2017

OAX Project Revealed

Q3

Q4 2017

Working Group Setup

2018

Q1

Q4 2017

Delivery of pilot technology and legal opinions on fiat tokens

Ongoing delivery of whitepapers to support community

Q4

Q2 2019

Target

Live Date

Short Term Key deliveries/Ambitions�

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Thank You

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