Sphinks Project (SKFT) ICO

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Sphinks Project (SKFT) ICO Review

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Sphinks is a platform where customers and professionals get in touch, make deals and design new projects. Every phase exploits blockchain technologies, managed by Smart Contracts, and supported by Artificial Intelligence.

Essential Information
Ico Time
Aug 10, 2019 – Jun 27, 2020
Token Name Sphinks
Token Symbol SKFT
Whitepaper View Whitepaper
Website Link Home
Price
$  0.10
Platform NEM
Soft Cap
n/a
Hard Cap
5.00 M

More about Sphinks Project

Sphinks Token is a decentralized stablecoin project with no reliance on traditional systems and trusted third-parties. It initially pegs to the USD, though it has the capability to transition to a new form of a stable system that has no susceptibility to hyper-inflation or reliance on underlying commodities.

The project focuses on harnessing open and decentralized technologies to provide user-friendly monetary systems with next-gen features. It aims to provide high-throughput for global merchant and consumer adoption, fee-less and near-instant transactions, private accounts and transactions, smart contracts and zero reliance on traditional systems and trusted third-parties.

Introduction

Decentralized cryptocurrencies are digital systems that utilize consensus mechanisms to create fair and trust-less participation within a network. This empowers each and every user with control over their own funds and any accompanying features.

There are various levels and types of cryptocurrencies that cover a large spectrum of what such technologies can provide, Sphinks Token (Sphinks) is of a class known as “stablecoins” which have the capacity to act as a unit of measure, medium of exchange and store of value. Transparent stablecoins built with no central authority are an evolution in money; some of the benefits that this project aims to provide include:

  • No account servicing fees.
  • Negligible transaction fees.
  • Immutable payments.
  • No barriers to entry – accounts may be created by anyone with access to the internet.
  • Private and untraceable transactions via anonymous accounts.
  • 100% network uptime. Funds can be sent anywhere in the world, on any day and at any time, regardless of public holidays/weekends.
  • No identity theft can occur as user’s personal information is not gathered.
  • Control over funds – nobody other than the keyholder can access funds within the account and as such, bail-ins, fraudulent activity and “account garnishing” cannot occur.
  • Censorship-resistance – funds can be spent however you like.
  • Inability to forge tokens as they are protected by cryptography.

The information within the abstract is accomplished summarily through a combination of fundamentals in the governance and token issuance systems. The governance system ensures overall functionality without compromising decentralization by giving users across all levels, respective avenues of access to perform collaboratively on modifying any function of the system. The issuance system provides the potential for open market volatility mitigation and liquidity via backing, persistent token issuance as required and fundamentally regulated stability through price pegging. Backing is provided via a floating (either partial or over) cryptocurrency- collateralization as currencies received by the system are largely retained for future trade through open markets in return for Sphinks Tokens (Sphinks) at predetermined thresholds. Token issuance essentially operates in the way that each request to exchange cryptocurrencies with the system is calculated at the time to maintain an issuance ratio value of 1 token per 1 U.S. Dollar (USD). The use of fiat value is a stepping stone toward the long-term objective of switching to a virtual system as explained under the section fiat inflation contingency.

As a user can always purchase directly from the issuance system with relative ease, the stability against upward pressure from the open market is gained by the incapability to trade tokens for a higher value than the pegging. The stability against both upward and downward pressure is inherited through the value transfer model, creating a user-based reliance whereby having placed a dollar value into each token upon purchase, users would expect to retain such value and therefore would not be likely to trade out for other than what was placed in those initial holdings (further details against such pressures are explained under the section Fiat inflation contingency).

Trust in developer control over the system will not be necessary due to the system of governance preventing any changes that the broader community may not agree upon, therefore employing a decentralized system that automatically evolves into a highly decentralized system when the developers access to code ceases (further information can be found under the Governance section). Due to the project development process, the governance system does not exist within the initial phase although it has been partially referenced in this document for ease of understanding as to how the system is to function upon full development.

The project is open source, operating on the NEM platform initially, and each token is divisible to 6 decimal places.

Abstract

With the advent of distributed ledger systems that possess the ability to perform as intended without the threat of malicious intervention, we have the power to place code as law and thus removing virtually all forms of trust in any such system. The unique value proposition of this project lies both with the capability to transition to a “virtual” system from its initial fiat pegging and the ability to provide a practically stable currency that is essentially free from nefarious manipulation. The main vision of this project is to provide a transparent and reliable monetary system which functions independently of traditional systems and trusted third-parties. The long- term prospect is to provide both the benefits and means of a macro economic transition from fiat currencies to cryptocurrencies.

The more we understand what gives value to currency we realize that virtual systems with no physical links to traditional systems have the potential to function on a global scale if they provide practical usability with definitive rules in both code and operation. As we analyze the root of perceived value in any fiat pegged or otherwise stable cryptocurrency, there exists nothing other than a unified belief among users of underlying value or concepts to provide volatility mitigation. That belief is formed when a catalyst such as placing a dollar on lien occurs, thereby creating the perception that the user has transferred such value into the tokenized system. This project proposes a different system of “cryptocurrency value transfer with floating cryptocurrency- collateralization” rather than fiat-collateralization or non-collateralization methods as the mechanism for bringing value to each token; thus removing reliance and trust on traditional systems.

Vision

The Sphinks project focuses on harnessing open and decentralized technologies to provide user-friendly monetary systems with next-gen features. It aims to provide private accounts and transactions, smart contracts, fee-less and near-instant transactions, zero reliance on traditional systems and trusted third-parties, high-throughput for global merchant and consumer adoption and a decentralized exchange with negligible exchange fees.

How Sphinks works
Sphinks initially pegs token value to the U.S. Dollar through a method of “cryptocurrency value transfer with floating cryptocurrency-collateralization” for easily obtainable stability. As simply pegging to fiat is unrealistic in the long-term due to inflationary issues within fiat systems, Sphinks can implement a unique break-away system that effectively places all participants in a global collective determination of a dollar value, hence creating a technologically advanced and virtually indefinite form of money. The Sphinks project is open-source and initially operates on the NEM platform. Please refer to the FAQ and whitepaper for a detailed explanation of how Sphinks functions both now and in the future.
Token issuance

The main purpose of the issuance system is to be constantly available via the wallet to produce new tokens at a rate congruent with user requirement. The system continuously queries cryptocurrency to USD prices to determine the production value of a single token at any given time.

A brief explanation of the issuance process is as follows:
A user wants to purchase a single token from the issuance system using Bitcoin (BTC). They create an order through their wallet and send their BTC to the issuance system. The order then processes through a queue and upon the trade being executed, the system queries the BTC value in relation to USD and generates the equivalent USD value worth of Sphinks to send in return. Limitations throughout the token issuance process are designed to mitigate potential manipulation of fundamentals within the system and encourage trades to occur peer-to-peer while maintaining convenience of use.

The specific process is as follows:
Price data of all cryptocurrencies that are accepted by the issuance system are displayed within the Sphinks wallet application. Trade requests are established through the wallet by sending a zero-sum transaction from the token issuance page and including within the message field the address where the crypto being traded is sent from. The user then has 14 days for their funds to be received by the system before the order is canceled (any cryptocurrencies received by the system that do not have an open order are automatically returned). Received cryptocurrencies then require approximately 1 hours’ worth of confirmations before entering the queue whereby each trade is executed at a maximum of 2,000 Sphinks before the system executes on the next order in queue; an order is complete when the queue has repeated enough times to clear the order total. The system is rate limited to 1 transaction per second and trade amounts are calculated as they are executed upon.

An example of the specific process is as follows:
A user wants to trade 4 BTC with a market value of 4,000 Sphinks. The user opens an order with the issuance system through the Sphinks wallet by sending a zero-sum transaction from the token issuance page and including within the message field the address where the crypto being traded is sent from. Confirmation details are displayed and the 14-day timer begins for the cryptocurrencies to be received and confirmed. In this example, after approximately one hour it is confirmed the cryptocurrencies are received, the order is then placed in the queue of a hypothetical amount of 60 orders and hence anywhere up to 60 seconds later, the order will be executed upon at the maximum per trade allowance of 2,000 Sphinks . Assuming half the orders in the queue were under the per trade limit and no further orders had been created, the system would return to the example order within approximately 30 seconds and execute on the remaining 2,000 Sphinks. Once the total funds received are cleared by the queue system, the order is finalized and the new tokens are sent to the users address. Hypothetically, from the time of opening the order to executing trades, the value of BTC differed from the initial value to where it was 1% lower upon the first execution and 1% higher upon the second, the user in that case would receive their expected 4,000 tokens.

Further issuance system details:
The issuance system initially accepts Bitcoin (BTC) followed soon thereafter by Ethereum (ETH). The issuance system will be easier and free to use (no transaction cost) upon future development. Additional cryptocurrencies will be accepted over time via either the voting process or direct developer addition although for developer consideration, cryptocurrencies should preferably qualify as being an open source project, have a Sphinks pairing on the open market and be within the top 200 by market capitalization. Any cryptocurrencies received by the system that the developer deems as “less certain long-term projects” will be converted into what the developer believes to be less speculative cryptocurrencies such as BTC (backing will still be available to those “less certain long-term projects” at the predetermined thresholds).

A separate system will be operated to monitor the open market for low liquidity or pricing variances between Sphinks and all cryptocurrencies that are accepted by the issuance system. If predetermined thresholds are met and maintained for a certain amount of time, the system will notify the developer who will then determine whether to release held cryptocurrencies onto those markets in trade for Sphinks. It is anticipated that this system will be automated and decentralized in the future to help maintain stability and mitigate market manipulation.

A system of automatic “dumping” protection will exist to prevent cryptocurrencies that are experiencing significant price decreases from being offloaded onto the issuance system. It functions by monitoring the price difference of the previous two hours and if price has decreased by a certain percentage within the previous hour without having increased by the same amount within the hour before, protection is then activated. The system is designed to be active only during abnormal conditions and hence attempts to avoid triggering over standard price fluctuations.

Governance

As previously mentioned, the developer is initially in control of the code-base and currently any information relating to governance is simply to explain how the basic governance system is intended to function upon full development and therefore, not all features of this system are divulged here at this time.

The developers unhindered access to code is necessary for applying upgrades and unforeseen fixes, however, some degree of trust is required if the developer is virtually unchallenged in making such changes, therefore, a system of voting is implemented that allows for system-wide fixes and changes to occur without compromising decentralization.

The voting system is weighted dependent on how many tokens an address holds and new or recently transferred tokens will be unable to vote for a certain amount of time. Voting weight is calculated as each token equaling 1 point; points are pooled into their respective fields and are converted into percentages for comparison upon final tallies. It is not mandatory to vote and proposals for changes are categorized into either new feature, current feature modifications/removals or direct developer changes. Users will have a varied amount of time to vote on any given change dependent on the category. The developer initially retains a 30% voting right (any funds held in Sphinks will not be utilized for additional voting rights).

All aspects of the system are open for change and the voting requirement for implementation is 60%. Separate methods for instituting changes exist dependent on whether it is the developer or the community who are requesting a change. The developer may only execute changes directly upon the system that relate to security/bug fixes or are minute changes that do not affect any core functionality, while any other proposed developer changes will be subject to the community voting process. Community requests for changes are raised by any individual willing to institute a proposal, allowing the community to implement changes directly upon the system themselves. There is a system cost before a proposal is accepted into a category where other users can manually browse and vote upon them. Proposals that gain 5% of the averaged total weighting as was gained by the previous 10 implemented proposals are activated for community voting.

Any direct developer changes can be flagged by the community to vote upon if they so choose to, however, the same weighting as for activating community proposals is required. If developer changes are flagged, they are automatically reverted until community voting occurs. Costs to implement approved community proposals will remain at the developer’s expense.

All voting categories, other than direct developer and flagged changes, have a 21-day voting window; direct developer changes that are flagged by the community have a 3-day voting window. The period for which voting inability of new or recently transferred tokens is 28 days. Votes may be changed at any time during the voting window though there is a small fee to do so. Notifications for new proposals will display for anyone running the wallet.

If the developer does not access the system for a period of one year, their functions are automatically removed and replaced with community elected custodians along with other supporting positions to ensure continued functionality in a decentralized manner. Removal of the developer will trigger two to five custodians to be voted upon dependent on how the votes were spread. Custodians receive reduced capabilities such as having no developer voting rights, thereby further decentralizing the system; their main functions will be to implement security/bug fixes along with performing other operational functions. Users may also change their voting preferences at any time (subject to a minute fee) and hence cause under-performing custodians to be replaced should they lose enough preferential votes.

Fiat inflation contingency

For easily obtainable stability and ease of use during the early stages of adoption and development, the system initially utilizes the value of the USD, however, simply pegging to fiat without any contingencies is unrealistic for the long-term due to the inevitable fiat hyper-inflation and as such, any solid-pegged stablecoin in turn would suffer the same devaluing fate. Pegging to other physical commodities or systems would not necessarily function optimally either due to susceptibilities of supply & demand manipulation. For these reasons, Sphinks can either convert at any time to another fiat type (still not ideal for the long-term) or switch to a virtual system as outlined in the following proposal.

A proposal could be instituted whereby the community can vote for a switch from the fiat pegged system to a significantly different virtual system. This system operates by utilizing a global collective determination of users in quasi-agreement of the tokens perceived USD pegged value as it was at the time of the break. The belief of perceived value as the stable mechanism has the potential to be existentially viable within the system as users must place a dollar value into purchasing each token initially with both the intent and expectation of retrieving no more or less than such value upon disposal. In a larger sense, the global economic ecosystem determines the perceived value through the combination of reacting and adjusting to supply & demand of variances in open market token valuation and token value placed on products and services.

The stability against pressures is inherited from the combination of majority agreement on perceived value and robust levels of supply & demand. With a large enough user-base adhering to the fundamentals, the system would be self-adjusting for if supply were low and hence value increased, more users would sell to take advantage of the increased prices. Likewise, if users were willing to devalue their holdings and sell for less than the perceived value, others would purchase those devalued tokens. In either case, factoring in market manipulators and collateralized backing, deviations from standard values are likely unsustainable for any meaningful amount of time.

As users may perceive the value of a “dollar” to continue to remain as it is at the time of the break, the value from that point onward could be virtually solidified to Sphinks and therefore retaining its buying power for potential long-term reliability. A major benefit of this virtual setup is gaining a system which, once established, has the potential to exist virtually indefinitely as it is not susceptible to geopolitical inflation. In the case where Sphinks were to be widely adopted as a major unit of measure, trading for other than what is considered the standard value would not necessarily reflect on the perceived value of Sphinks but rather reflect the value of the paired market in comparison, in which case stability in the token is easily achievable. This situation can be thought of as how the pricing between fiat and cryptocurrency markets operate where a change in the price is known/believed to always be a change on the cryptocurrency side.

An intermediary phase can be utilized depending on the level of adoption at the time of the fiat break which would be implemented if there were a level of only semi-adoption where the user-base would not be large enough to maintain uniform values between markets. This temporary phase would utilize a cryptocurrency “pegging” as detailed below to maintain a close level of accuracy across markets within the token issuance system.

In the semi-adoption phase, stability across markets may be achieved through the same collective determination of the perceived value of Sphinks in addition to pegging through another cryptocurrency. The utilized cryptocurrency in this instance will be BTC; acting as a window of entry for all other cryptocurrencies (Altcoins). To ensure accuracy across Altcoin markets within the token issuance system and negate susceptibility to market forces, Altcoin value will be determined based upon the flow of Altcoin to BTC (in USD) to Sphinks, rather than Altcoin to Sphinks directly. For example, if on the open market, 1 BTC equaled $1001 USD/ 1,000 Sphinks, 1 ETH equaled $299 USD/300 Sphinks and a user traded 1 ETH with the issuance system, the calculation would be 299/1001=0.2987013 x 1000=298.701299 Sphinks. Users trading between Sphinks and Altcoins on the open market can query the issuance system at any time for a more accurate display of market prices.

Upon implementation of the fiat inflation contingency, the use of the issuance system to provide partial stability becomes obsolete and, as such, the remaining function is to provide new tokens at a rate congruent with user requirements. This setup allows for growth while avoiding issues inherent with deflationary/ unmitigated inflationary systems when it comes to forming a long-term, reliable monetary system.

Additional details
  • The system initially utilizes CoinMarketCap.com for price acquisition although future upgrades will likely aggregate data directly from decentralized exchanges.
  • As this project is bootstrapping, initial funds received by the issuance system will not be used primarily for backing as described under Introduction but will rather be utilized for exchange listings, construction of future developments, marketing, etc.
  • However obvious, it is noteworthy to mention that instability in token price and illiquidity is anticipated during the early stages of development until a large user-base is built. The difference between how the developer expects this project to function and the resulting function is unknown until large scale adoption; an experiment worth pursuing though.
  • An issue exists where received funds could be utilized to recirculate back into the issuance system which would essentially produce fiat currency (creating Sphinks with no value sacrificed). As the developer understands the harm this could pose to the system, anyone who understands how to monitor the markets for such actions is encouraged to do so to ensure the developer is complying with their intentions not to abuse this problem. The issue is resolvable in time as features within future developments will provide a fix. In the interim, the risk for the developer abusing the system is with open source code allowing anyone to hard fork and implement a different system of governance.
  • Please be aware, as this is the initial implementation of the project, it is recommended that you do not transact with the token issuance system in any amount that you cannot afford to lose until it has been sufficiently tested at scale over time.
Future developments

Sphinks is an ongoing project designed to be a reliable and useful currency for the future and therefore, when innovative ideas or technologies are developed, it would absolutely be proposed to incorporate such advancements if practical. The initial stage of the project provides basic functionality and has much to develop, most notably the implementation of a standalone system (V1.0), though the developer is dedicated to implementing this as soon as practically possible taking quality, security, and ease of use into high regard. The standalone version is expected to possess at least the following additional features: Integration of interoperability technologies such as the lightning network, greater scalability and near-instant transactions (likely via a Directed Acyclic Graph structure), Testnet along with simulations for the fiat inflation contingency, quantum computing resistance, privacy features, decentralized exchange, smart contracts (to a degree) and a modified Proof of Stake consensus algorithm referred to as Selected Proof of Stake (SPoS).

A system will be implemented where the staking reward is paid in another token called “Lava” which would then be the medium used to cover transaction, community proposal and exchange fees. In this way, users who contribute to the network will essentially receive free transactions and exchanges (aside from the cost of electricity in staking), otherwise if a user has produced no Lava on their account, they may either purchase from others or simply pay fees in Sphinks which would then automatically convert to Lava through the wallets in-built exchange. Each Lava token, whether minted or bought, self-destructs after one month. The main purpose of Lava is to move the inflationary pressures of a PoS system outside of the stable network.

ICO

Sphinks is running an ICO period – begins 10 August 2019 and ends 27 June 2020 with a target of $5 million. Tokens are available for only $0.10 via the wallets issuance system

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