Stox

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Stox is an open source, Ethereum base prediction market platform where people can trade the outcome of events in almost any imaginable category

Team Connections

Ophir Gertner, is Co_Founder at DunaPortal 2010 Ltd.

Ophir Gertner

Founder

Yossi Peretz

COO

Marek Lorinc

Executive Director

Shay Cohen

Head of UX & Design

Oded Noam (CoinTree)

Blockchain Architect

Leonid Beder (CoinTree)

Blockchain Security Architect

Oren De-Lange

Community Manager

Assaf Moalem

Controller

Jose Danon Saltiel

Online Marketing Wizard

Rutty Yeziorsky

Office Manager & PA to CEO

Israel Shenkar

System Administrator

Liron Golan

HR Manager

Ilya Kolesnikov

Core Developer

Amit Maor

R&D Manager

Eran Klein

Head Of Product & QA

Nissim Ben Alush

Support Team Leader

Yevgeny Michlin

Support Engineer

Konstantin Rezhets

Mobile Developer

Website

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Social Media Ststistics.

In Crypto, community matters
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Joined July 2017

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Whitepaper

Overview

Prediction markets are a disruptive economic instrument that has yet to penetrate mass investor audiences due to excessive regulation and the fragility of existing centralized implementations. The maturity of blockchain technology is poised to change that as decentralized implementations for scalable prediction markets are within reach.

Stox is an open source, Ethereum based platform for prediction markets where people can trade the outcome of events in almost any imaginable category - sports, celebrity marriages, election results and even the weather. The platform targets mainstream audiences and provides a haven for investors to find refuge from traditional financial instruments and participate in prediction events with the purpose of making profit, leveraging their knowledge in almost any imaginable field. Stox was designed by veterans of the online trading industry, using the knowledge and experience acquired by invest.com. invest.com is an established online financial company which has been operating in the investment field since 2014. invest.com’s trading platforms accommodate over 3 million registered users and facilitated more than 8 million transactions last year alone. invest. com currently employs over 200 employees across 5 countries, providing the solid foundation and infrastructure of the franchise to bootstrap the Stox network.

Combining expertise in regulated markets together with blockchain technology creates a unique solution for prediction markets that are tailored towards approaching the masses. Stox is creating a robust business model that incentivizes other providers and industry leaders with existing customer bases, such as invest.com itself, to join the Stox network and drive traffic to the network. Event syndication between providers carries this traffic beyond the confines of a single provider. Providers are motivated to cooperate as part of a larger network. On the other hand, users will enjoy a well-rounded selection accommodating their diversified interests, increasing overall engagement.

The power behind Stox is the STX digital token. All activity in the network revolves around STX, from serving as the primary form for fees and collaterals, to serving as the main currency used for predicting event outcomes. STX is the driver of a sustainable economy where demand grows as more users and providers join the ecosystem.

Introduction

What are prediction markets
Prediction markets are an exchange where any individual or organization can tap into the "wisdom of the crowd" to ask any question or predict the result of any event. Like any other exchange prediction platform, Stox utilizes the relevant event in the form of a stock where participants can trade on the outcome of the event.

Predicted events are diverse and can be based on any imaginable topic such as election results, sports, entertainment, financial instruments and even the weather. Similar to the financial markets, which assign a price to the future estimated earnings of a stock, prediction markets assign a traded price to a belief about the future. The market price can also be used to indicates how the crowd in general sees the probability of the outcome of an event.

Individuals buy and sell outcome shares based on what they see as the probability at any given moment. As long as a prediction is active, the price continues to fluctuate and indicates the probability of an outcome according to the crowd's wisdom.

Let's assume that a certain event is given a 60% chance of happening. This percentage represents the price of the event, in this case 0.6. As more people believe this event is going to happen, normally because they are in possession of information about this event but sometimes just because they are "following the crowd", more “shares" of this event outcome will be purchased and the price will increase. On contrary, some people may predict that this event will not happen and this opinion will effectively cause the price to drop. During the prediction period, the crowd analyzes the chances of this event happening, creating a useful tool to understand the crowd mindset on certain topics.

Because prediction markets represent diverse thoughts and opinions from different locations and personal observations, they have proven to be effective as a prognostic tool, similar to economic markets. As a result of their visionary value, prediction markets have been utilized by institutions and large companies like Google to predict internal outcomes of product development. We believe that due to their increasing popularity, prediction markets will become a popular tool with traders, especially as more platforms are introduced and decentralized technologies increase trust in these systems.

Challenges

There are various challenges in implementing prediction markets that serve as barriers of entry to this field and have prevented it from reaching mass adoption thus far.

Definition It is yet unclear how this activity is treated from a regulatory viewpoint. In the past, certain prediction markets were treated as financial activities as they predicted financial instruments and the regulator treated it as futures trading. It is clear that financial predictions will continue to be monitored by financial regulators, however it is not certain how other predictions such as political events, product releases etc will be governed, especially in a decentralized world and whether such activity will be captured by online gaming regulations. Stox is committed to following all required regulations.

Liquidity as with any exchange may also present issue. If there is not enough liquidity, investors may be deterred from participating. Another important consequence of lack of liquidity is that predictions might be less accurate when the amount and diversity of users is limited. We believe that the answers to these challenges lie in decentralized platform and blockchain technology. These innovations have the power to bring prediction markets closer to users and increase trust in the system, its oracles and its operators.

Market size and projections

Prediction markets have an immense potential. Companies working in this field have tens of thousands of active traders generating millions of dollars of trading volume. Profits are growing exponentially. Nevertheless, none of these companies appear to be exploiting the full potential of prediction markets.

PredictIt, a NZ-based company specializing in prediction markets, offers exchanges on political and financial events. It launched operations on November 3rd 2014 and by March 2016 had had 29K active traders. SMarkets is another example, it was founded in 2008 and almost doubled its trading volume between 2014 to 2015, increasing its pre-tax profit by 1,568%.

The vast majority of companies offer prediction market services in just a single area and each of the major areas within the prediction market arena shows growth. The global market for sports for example was almost 50 billion dollars in 2016 and keeps growing steadily by at least 10% annually. Financial predictions also show potential which is already seen in centralized online companies

where daily trading volume tops $5.5 billion. These numbers are expected to grow significantly in a decentralized environment. Many prediction verticals are not currently available in prediction markets including weather, current events, environmental, social, entertainment, decisions and policy set by governments and many more. These offer great potential and the chance for users to find new ways to profit from leveraging their interests and personal knowledge.

About invest.com

invest.com is an established online financial services provider. The invest.com brands are at the cutting edge of the fintech industry and their innovative platforms empower new and experienced investors to actively manage their finances with a large variety of instruments such as currencies, commodities, indices, CFDs, shares and automated investment strategies.

invest.com has been operating in the online investment field since 2014, serving a registered user base of over 3 million customers. The group currently employs over 200 people in five locations around the world - Berlin, Limassol, London, Sofia and Tel Aviv.

invest.com has experience with regulated markets and operates a legal division with expertise in licensing and compliance in multiple territories. The group is licensed to provide cross-border investment services in the European Union.

The invest.com group has developed a multitude of innovative investment platforms. These include a suite of automated investment strategies which use artificial intelligence to take advantage of market movements. These strategies, similar to quant hedge funds, are available to investors through robo-adviser technology. This is the first time this type of investment has been made available to retail investors.

The group’s trading platforms harness technology to offer a choice of ways to trade and are suitable for all levels of traders. They includes leveraged trading, buying and selling stocks and social trading where investors can follow and automatically copy others. The group has released a web-based trading app and online investment portfolio as well as a set of popular native mobile apps for iOS and Android.

The invest.com Pro platform is designed for experienced traders. It gives professional investors full control over their trades with the ability to reverse, double positions or close all trades in the click of a button. In addition, it offers competitive spreads and deep liquidity as expected from platforms of this caliber.

The invest.com Simple™ trading platform is tailored for introductory level investors and was designed with the novice in mind. The platform has innovative features that help minimise risk and simplify trading. It allows users to practise before performing actual trades and get the real trading experience with zero risk. All practice trades are based on actual real-time market movements. In 2016 alone, invest.com’s group achieved:
• More than $50 million revenue
• A trading volume of over 8 million trades on invest.com platforms
• Transaction volume of $12 billion
These achievements are due to the group’s development of innovative investment products which focus on a user-friendly experience, their top-class marketing capabilities and excellent customer support.

The scale of ambition in developing audacious investment products and the strong track record in attracting and retaining customers makes invest.com an ideal partner for Stox. As a launch partner invest.com will assume the role of an initial provider and operator of events in the Stox network and will drive traffic into the network to help bootstrap activity using invest.com’s existing user base. Since the Stox platform is decentralized and open for anyone, other industry leaders will follow and join as providers as the ecosystem matures.

The Stox Token

The Stox ecosystem is based on an open source cryptographic token named STX (the Stox Token). Like other similar cryptocurrencies, STX is fractionally divisible, transferable and fungible Purpose and usage

Activity in the Stox ecosystem is performed primarily using STX, making the token an integral part of the Stox platform and the driver for its economy. This includes:
• Users apply STX in the prediction of event outcomes and accordingly, profits over successful predictions are collected in STX. Users are required to purchase STX in order to participate in prediction markets running over the Stox network.
• Fees for participating in event predictions and investing in event outcomes are collected in STX. These fees are the primary channel of revenue for event creators and market makers.
• Syndication fees for promoting events between apps of different providers in the Stox ecosystem are paid between providers in STX.
• Event operators are required to hold STX as collateral for publishing new events for users to invest in. This means that providers are required to purchase STX in order to participate in the Stox network and generate revenue from it.
• Event operators must hold a reserve of STX to act as a counterparty for investments made by users on specific outcomes during the event.

Technical implementation
The Stox token (STX) is implemented as an ERC20-compatible token over the public Ethereum blockchain. Ethereum is the natural fit for Stox as it is quickly becoming the industry-standard for issuing custom digital assets.

Compatibility with the ERC20 standard leverages the rich existing infrastructure of the Ethereum ecosystem such as development tools, wallets and exchanges. The ability to program trustless smart contracts over Ethereum with a Turing-complete language allows for robust and secure customization of the cryptocurrency to the domain-specific requirements of the Stox network in a fully decentralized manner.

1 ERC20 is the Ethereum token standard. https://github.com/ethereum/EIPs/issues/20
Bringing cryptocurrency to the masses
One of the primary goals of Stox is the introduction of decentralized prediction markets to mainstream audiences. Such audiences are likely to have little experience with cryptocurrencies and likely to have little to no knowledge of blockchain-based technologies. Stox is looking to expand beyond the crypto community and focus its activity on broad audiences of regular investors in traditional financial instruments. Similarly, catering to this audience requires expertise on part of the application providers and operators: acquaintance with the industry’s marketing ecosystem, regulatory framework and UX know-how are a significant hurdle in providing a prediction market app, without which a provider would be slow to grow to achieve critical mass required for a successful prediction market.

As such, acquisition and utilization of STX will be made as straightforward for users as using tokens in an online game. The complexities of opening and maintaining a cryptocurrency wallet and paying Ethereum contract transaction fees in ether are abstracted in full by the Stox app. Stox is developed in close cooperation with incumbents providers in the industries of stock trading, options trading and currency trading, intending to operate as providers in the Stox ecosystem. Incumbents are expected to be the main channel for acquiring mainstream users as they are expected to introduce STX to their existing customer base. Our launch partner is invest.com, with a user base of over 3 million registered users. These users will have a cryptocurrency wallet opened seamlessly for their benefit at launch, making STX one of the most popular cryptocurrencies among mainstream users. 12 Incentivizing established companies and organizations that currently focus on traditional financial tools to enter the field of prediction markets through adoption of the Stox platform and technology will leverage their experience in maintaining active communities of investors and marketing efficiently towards these crowds. As the blockchain market is maturing, the time is ripe for established companies to benefit from decentralized systems and reap value from the rapid growth of this ecosystem.

A sustainable economy
For a cryptocurrency to be successful over time, it must become the driver for a sustainable economy. As STX is utilized by more users and adopted by more providers, the network effect of the Stox ecosystem will grow, building the value of the ecosystem for the benefit of long time holders and token sale participants.

A successful economy requires STX to have growing demand within the Stox network. Since participation in event prediction requires users to acquire STX, demand for the token will grow in proportion to the number of active users and the number of active events they invest in. Demand will also grow in proportion to the number of active providers who rely on STX to create events. Providers are incentivized to hold significant reserves of STX in order to provide the required collaterals and market making reserves for running many events concurrently. Aside from spending STX, the model also provides a means of earning STX as reward for services given. Event providers in the Stox ecosystem such as invest.com, are compensated in fees for the work they put towards operating events, acting as oracles and assuming the risks of functioning as market makers.

Liquidity and volatility
STX will be a single currency used both for the operation of the Stox network (transaction fees, syndicate payments, oracle payments) and as the functional currency for predicting event outcomes. Unlike other proposals for investment currencies, it is a flexible exchange-rate currency, making it exposed to liquidity and volatility risks:

• Liquidity: the risk of investors unable to acquire tokens when they want to speculate on the outcome of an event, and of users unable to sell tokens when they want to cash out.
• Volatility: the risk of currency fluctuations between the time an investor entered the action and purchased shares of an event outcome and the time the user wants to cash out.

These risks are a big concern for most bootstrapping markets, when the proposed service launches together with the currency, and in the subsequent period of no or little growth of the service. This is typical because peer-to-peer markets tend to follow an exponential growth pattern, due to the network externalities inherent to peer-to-peer services. Several techniques are being used to mitigate these risks, mainly usage of secondary currencies or an introduction of a pegged currency / stablecoins to be used by consumers. In the case of prediction markets, this comes at the price of separating the currency used for operational mechanisms from the investment currency. Such separation has adverse effects in thinning out the market for the operational currency, in addition to the missing out on the advantages that flexible exchange rate currencies have against monetary shocks.

Relying on Bancor as a token platform for STX will provide an unlimited liquidity pool and resolve liquidity risks. Volatility risk is also mitigated as our data shows that STX will enjoy a thick market from day one, eliminating the need for pegging or stabilization mechanism. invest.com, committed to be the first provider on the Stox network, enjoys more than 8 million trades annually. Such activity volume ensures the required liquidity and achieving a critical mass of end users needed to create efficient trade.

Bancor as a token platform
We aim to implement the STX token as a Smart Token which uses the Bancor protocol to maintain liquidity. Bancor is an ERC20-compatible token template, which offers continuous liquidity via an on-chain market maker. The Bancor smart contract holds a reserve of another currency (BNT) amounting to 4% of the STX market cap, and determines an appropriate exchange rate between BNT and STX in such way that assures the BNT reserve remains at 4%. Individuals wishing to buy or sell STX buy from, or sell to the market maker at the current price. The market maker can always act as the counterparty to such trade, as it holds a BNT reserve with which it can buy STX, and it has the sole permission to create STX which it can sell. Among the special properties of such token:

• Anyone can buy or sell STX at any time, without risk of not having a counterparty, and at predetermined cost (even “slippage” - exchange rate changes during the trade - can be calculated in advance).
• The total amount of STX in circulation can vary dynamically, as the market maker creates or removes STX.
• The core value of an STX unit is backed by its BNT reserve, assuring holders that the token has intrinsic value.
• BNT itself is a smart token backed by ETH, making conversion to and from ETH a simple twostep function.
More information about Bancor can be found on Bancor website and the Bancor white paper.

Our data shows that STX will enjoy sufficient liquidity and volatility from day one, eliminating the need for pegging or stabilization mechanism. invest.com, committed to be the first provider on the Stox network, enjoys more than 8 million trades annually. Such activity volume ensures the required liquidity and achieving a critical mass of end users needed to create efficient trade.

Challenges

There are various challenges in implementing prediction markets that serve as barriers of entry to this field and have prevented it from reaching mass adoption thus far.

Definition It is yet unclear how this activity is treated from a regulatory viewpoint. In the past, certain prediction markets were treated as financial activities as they predicted financial instruments and the regulator treated it as futures trading. It is clear that financial predictions will continue to be monitored by financial regulators, however it is not certain how other predictions such as political events, product releases etc will be governed, especially in a decentralized world and whether such activity will be captured by online gaming regulations. Stox is committed to following all required regulations.

Liquidity as with any exchange may also present issue. If there is not enough liquidity, investors may be deterred from participating. Another important consequence of lack of liquidity is that predictions might be less accurate when the amount and diversity of users is limited. We believe that the answers to these challenges lie in decentralized platform and blockchain technology. These innovations have the power to bring prediction markets closer to users and increase trust in the system, its oracles and its operators.

Market size and projections

Prediction markets have an immense potential. Companies working in this field have tens of thousands of active traders generating millions of dollars of trading volume. Profits are growing exponentially. Nevertheless, none of these companies appear to be exploiting the full potential of prediction markets.

PredictIt, a NZ-based company specializing in prediction markets, offers exchanges on political and financial events. It launched operations on November 3rd 2014 and by March 2016 had had 29K active traders. SMarkets is another example, it was founded in 2008 and almost doubled its trading volume between 2014 to 2015, increasing its pre-tax profit by 1,568%.

The vast majority of companies offer prediction market services in just a single area and each of the major areas within the prediction market arena shows growth. The global market for sports for example was almost 50 billion dollars in 2016 and keeps growing steadily by at least 10% annually. Financial predictions also show potential which is already seen in centralized online companies

where daily trading volume tops $5.5 billion. These numbers are expected to grow significantly in a decentralized environment. Many prediction verticals are not currently available in prediction markets including weather, current events, environmental, social, entertainment, decisions and policy set by governments and many more. These offer great potential and the chance for users to find new ways to profit from leveraging their interests and personal knowledge.

About invest.com

invest.com is an established online financial services provider. The invest.com brands are at the cutting edge of the fintech industry and their innovative platforms empower new and experienced investors to actively manage their finances with a large variety of instruments such as currencies, commodities, indices, CFDs, shares and automated investment strategies.

invest.com has been operating in the online investment field since 2014, serving a registered user base of over 3 million customers. The group currently employs over 200 people in five locations around the world - Berlin, Limassol, London, Sofia and Tel Aviv.

invest.com has experience with regulated markets and operates a legal division with expertise in licensing and compliance in multiple territories. The group is licensed to provide cross-border investment services in the European Union.

The invest.com group has developed a multitude of innovative investment platforms. These include a suite of automated investment strategies which use artificial intelligence to take advantage of market movements. These strategies, similar to quant hedge funds, are available to investors through robo-adviser technology. This is the first time this type of investment has been made available to retail investors.

The group’s trading platforms harness technology to offer a choice of ways to trade and are suitable for all levels of traders. They includes leveraged trading, buying and selling stocks and social trading where investors can follow and automatically copy others. The group has released a web-based trading app and online investment portfolio as well as a set of popular native mobile apps for iOS and Android.

The invest.com Pro platform is designed for experienced traders. It gives professional investors full control over their trades with the ability to reverse, double positions or close all trades in the click of a button. In addition, it offers competitive spreads and deep liquidity as expected from platforms of this caliber.

The invest.com Simple™ trading platform is tailored for introductory level investors and was designed with the novice in mind. The platform has innovative features that help minimise risk and simplify trading. It allows users to practise before performing actual trades and get the real trading experience with zero risk. All practice trades are based on actual real-time market movements. In 2016 alone, invest.com’s group achieved:
• More than $50 million revenue
• A trading volume of over 8 million trades on invest.com platforms
• Transaction volume of $12 billion
These achievements are due to the group’s development of innovative investment products which focus on a user-friendly experience, their top-class marketing capabilities and excellent customer support.

The scale of ambition in developing audacious investment products and the strong track record in attracting and retaining customers makes invest.com an ideal partner for Stox. As a launch partner invest.com will assume the role of an initial provider and operator of events in the Stox network and will drive traffic into the network to help bootstrap activity using invest.com’s existing user base. Since the Stox platform is decentralized and open for anyone, other industry leaders will follow and join as providers as the ecosystem matures.

The Stox Ecosystem

The Stox Ecosystem will seek to establish a global decentralized network centered around prediction markets where users are able to discover and participate in events created by providers and operators. The ecosystem builds a long term cooperative operating model where providers enjoy the opportunity to innovate and compete for compensation, and users enjoy the diversity of experiences and the ability to profit from participating in a wide variety of prediction events.

Providers and operators
Providers develop the prediction market client apps, based on the open source implementation provided by Stox (the reference implementation). Providers may customize the app, to create a user experience according to their best practice.
The roles of a provider include:
• Provide users with access to the network through the original Stox app or release a branded version of the app according to the reference implementation provided by Stox
• Bring traffic into the Stox network by promoting the app to its customers

Operators create events and upon time resolve their real-world outcome. Upon creating an event, the operator determines the participation fee in that event, out of which the syndication fee will be paid to the provider. Any entity, individual or organization can become an operator in the Stox network.

The roles of an operator include:
• Create prediction events that users will be interested in
• Act as a centralized reputable oracle for these events
• Provide the necessary collaterals and market maker reserves required for running these events
It is possible for a single entity to act as both a provider and an operator; similarly, a provider may integrate prediction markets from different operators in their app.