Sharespost

  • Cryptoasset Report
  • November 26, 2018

Sharespost Global Liquidity and Settlement System (GLASS) is a decentralized network enabling a shared liquidity pool and the compliant settlement of cryptoassets exchanged globally.

Overview

Disclosure: Smith + Crown was a compensated advisor to this project.

Sharespost GLASS aims to address several challenges currently facing decentralized exchange infrastructure, including the fact that decentralized exchanges currently suffer from low liquidity, poor user experiences, and are treated differently by regulators across various jurisdictions worldwide. GLASS aims to facilitate the compliant trading of cryptoassets regardless of token legal status and the jurisdiction of traders, by having their decentralized network verify each trader and token according to their specific location and the corresponding regulation that applies to them.

Sharespost, a FINRA registered clearing broker-dealer, currently operates a US-based ATS Marketplace with over 150,000 registered investors that compliantly trades cryptoassets and has completed over USD $4 billion in transactions to date. Token issuers may use the Sharespost Marketplace to issue both “utility” tokens as well as tokenized securities. Sharespost Marketplace offers custody of fiat and cryptoassets into brokerage accounts, and serves as the first participant in the GLASS liquidity pool and the first Settlement Provider on the network.

Sharespost is led by CEO Greg Brogger, and the team collectively have backgrounds in finance, fund management, custody, investment banking, and compliance. Investors include GSV Capital, Kenetic, Lin Partners, True Global Ventures.

Project Details

The GLASS network is comprised of two primary layers:

A shared liquidity pool can be used by any Trade Referrer (commonly these may be exchanges, OTC trade pools, DEXs, market makers, etc.) by sharing order books and matching orders with others participating in the liquidity pool. Trades crossed in the shared liquidity pool may be settled using the global settlement network, initiated when a Trade Referrer submits an encrypted trade to the network along with required fees. Exchanges have the flexibility to pool a single trading pair, multiple pairs, or their entire order book. As a result, participants are able to access a deeper network of orders, and offer significantly more liquidity to their customers. Proprietary side channel escrow order book technology is used to mitigate Exchange counterparty risk, and it adjusts for any failed payments at the end of each escrow period.

A global settlement network allows trade Settlement Providers to compliantly settle trades on the fly for any Trade Referrer (exchanges, broker-dealers, etc.) seeking settlement services. Though any regulated entity (such as a broker-dealer, ATS) can join the network as a Settlement Provider, Sharespost will act as the first in the United States. In this sense, the settlement layer is designed to facilitate decentralized and compliant cross-border trading irrespective of buyer and seller location and whether the classification of a token is as “utility”, security, or other. Settlement Providers intake a matched buyer and seller from a “Trade Referrer” on the network, and then are responsible for performing comprehensive KYC, AML and accreditation checks on both parties. If the proposed trade meets all applicable regulatory requirements, they send approval to the settlement network’s smart contract and notify the Trade Referrer to execute the trade. As an additional service, the settlement provider also is responsible for managing communication with local regulators on behalf of the Trade Referrer.

GLASS settlements utilize Ethereum smart contracts. Sensitive trade and identity data between buyers and sellers is stored as encrypted JSON files by Trade Referrers and Settlement Providers off-chain, while cryptographic hashes of data with one-time pads are stored on the Ethereum blockchain.

Asset Details

The network’s ERC-20 GLASS token will be generated via smart contract during their upcoming token generation event, which will produce a maximum supply of 1 billion tokens. The token will have three primary functions:

  • Payment of network fees, which are redistributed to Settlement Providers in proportion to their stake
  • Staking by Trade Referrers and Settlement Providers to access and contribute to the network
  • Payment and staking in exchange for discounts and preferred access to the variety of services provided by the SharesPost Marketplace

Exchanges may participate in the network under 3 different roles, each involving a slightly different implementation of GLASS tokens.