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Tradefor Partners with UpTrade

Tradefor is pleased to announce a long-term licensing agreement with UpTrade — an up-and-coming robo-advisory firm specializing in income-generating investment strategies.  The product licensing agreement between the two companies opens the door to a diversified product offering that bridges conventional stock trading with decentralized finance (DeFi).   

UpTrade  specializes in execution of risk-manged short option positions that includes covered-call, short-put and short-strangle strategies.  Its partnership with Tradefor  provides an innovative, peer-to-peer trading platform that uses the public Ethereum blockchain to distribute tokenized incentives to its customers.  This gives customers the ability create income-producing strategies that are largely automated.  Proceeds from successful option trades are directly deposited into a customer’s bank account, or crypto wallet, using a unique harvesting function.

UpTrade was founded by Peter Seed, a founder of TradeKing.  

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Tradefor Puppets featured in Adobe Spotlight

David Werner is a brilliant User Experience Manager for Adobe’s Character Animator software.   He used Tradefor as a use case in his Community Spotlight video.  Thank you, David.

Tradefor is the latest start-up from Peter Seed — an online trading start-up veteran. His latest creation is a collection of peer-to-peer markets for trading tokenized assets. Customers can fund and withdraw from privately-held Ethereum wallets using the Metamask browser extension. A “gamified” trading platform, Tradefor supports one-to-one exchanges of ERC-20 and ERC-721 tokens offered by brand marketers.

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Different Ways to Make a Trade

There are three ways to trade in Tradefor:

    • Using a trade ticket (“Ticket”)
    • On the trading floor with puppet traders (“Floor”)
    • In a peer-to-peer environment (“LIVE”).

Here is a quick overview of each method of trading:

The Trade Ticket

The Trade Ticket is available by clicking on “Ticket” in the header.  It has a simple slider for indicating the quantity of the units you want to trade.  All orders are market orders.  This means that the volume and price of the units transacted will be determined by market availability.  You will buy on the ask price and sell on the bid price.

The Trading Floor

The Trading Floor is a 24/7 market of avatar traders who reflect the orders posted within the LIVE market.  The floor is a good place to transact if you want to keep it simple.   Start by selecting whether you want to buy or sell.  If you see on offer you like, click on the trader for your trading options.  For example, you want to buy, your options will be: “buy one” or “buy ’em all”.

If they are no orders to show, the traders will be idle.  Also, If you are too slow in making a decision, the trade may be snapped up by another player.

Tradefor LIVE

Tradefor LIVE is a peer-to-peer trading system consisting of two views:

Order View (below)

Market View (below)

You can swipe left or right to alternate views.

The trade view is where you set up your orders.   You start by selecting whether you want to buy, or sell.  Once you select your directional sentiment, a coin will be displayed in a set-up box.  Move this coin by holding and dragging it within the box to set up your order parameters.  Moving the coin up and down sets volume.  Back and forth sets price.  To improve your chances of getting the best possible price, you may want to set a price that is close to the bid or ask.  Once you set your order, your view will change to the market view.

The market view shows all the buyers and all the sellers in the market.  This is where you find traders with whom you want to negotiate a trade.

One of three things can happen in the LIVE market:

    • Someone will select you as a potential counterparty to a trade.
    • You will select someone as a potential counterparty to a trade.
    • Nothing will happen. But your order will be posted until you cancel it.

If you are selected by someone else as a potential counter-party, you will have to go through the quick-fire negotiation, or alternatively, you can elect not to trade with the other person.  You can block the person for the whole market session (swipe up) or you can decline to negotiate one time (swipe left).  Check the experience and the reputation metrics for the trader before you decide what to do.

A trade pairing occurs when both players are willing to make a trade.  Note that the lowest volume between the two counter-parties will always be the volume of units traded.  The price, however,  will be negotiated using a simple “prisoner’s dilemma” selection process.  Each party in the trade pairing will be served two options the results of which are revealed to each trader, simultaneously, after each party makes a selection.

The selection choices are:

    • Share profit
    • Keep profit

When both parties make a selection (without knowing each other’s selection) the trade price is resolved using this simple matrix :

If both parties “share” the trade is executed at the midpoint between each parties price.  If the buyer “keeps” and the seller “shares”, the trade is executed at the buy’s price.  If the seller “keeps” and the buyer “shares”, the trade is executed at the seller’s price.  If both parties “keep”, there is no trade.

One more thing: Anytime you “keep”, you will lose two reputation points.  Every time you “share” it will increase by one point.  Everyone starts with a reputation of 50.  If your reputation drops below 40, you cannot trade with market makers.  So manage your reputation — as well as the reputation of others.

So there you have it.  It’s hard to make a mistake because the stakes are low.  Remember every time you “keep” your reputation will be reduced by two points.  Every time you share, it will be increased by one point.  Your reputation is viewable by all traders.

Now go for it.

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Our Currency Token

Building Tradefor has been a wild, exciting ride.  From the beginning, we wanted to create a user experience that broke new ground while embracing the emergence of blockchain technology.

Our go-to blockchain has always been Ethereum.  We liked the management team driving the Ethereum Foundation.  We liked Ethereum so much, in fact, that we decided we wanted Ether to be our in-game currency.

To come up with a name for our unit of Ether currency we consulted the well-established Ethereum chart above to select a fractional denomination that would be suitable for micropayments.  Ideally, we wanted a unit small enough so users would not have to enter decimals and large enough feel valuable.

The Ether chart gave us a couple of options. Our first option was to use Finneys.  One Finney is equal to 1/1000 of an Ether.  But when we dug deeper, we concluded that the Finney was not small enough.  One Finney equaled about fifty cents.  If we used Finneys, we concluded, we would have to accept decimal pricing.

So we went back to the denomination chart.  The next smaller denomination of Ether was a Szabo.  A Szabo was equal to 1/1000 of a Finney, or 1/1000000 of an Ether.  The Szabo, it turns out, is a little too micro.  One Szabo was worth $0.0005.   “What about the in-between denominations?”, we pondered.

After much thought, we decided to create our own denomination unit of Ether.  We settled on what we call a “Lubin” —  appropriately named after Joe Lubin, Founder of Consensys.

We decided to make the Lubin equal to 1/10000 of an Ether.

Then came the epiphany.  What if the Lubin also had some smart contract power?  Since we going to give a fair amount away,  we thought, let’s sweeten the pie.  Here is what we came up with:

    • One Lubin is equal to 1/10000 of one Ether.
    • A smart contract, incorporating Metamask, that helps Ethereum users to instantly fund or withdraw funds.
    • A second smart contract that allows Ethereum users to fund or withdraw directly from an Ethereum wallet.

So that is how the Lubin was born — as a big nod to your visionary  pioneer, Joseph Lubin who got us jazzed about Ethereum in the first place.

Thanks, Joe.

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How to Make Your First Trade on Tradefor

Alright.  You successfully registered at Tradefor and you are ready to make your first trade.

The Basics

A “market” is defined as a period of time when tokens can be traded. The market period will commence on a published start date and extend until a published assignment date.  The price of a gift card will likely increase as the time to the settlement date decreases.

Assignments will be settled at 12:00 pm UTC on the published date of settlement. Up until the moment, tokens can be freely bought and sold with a couple of notable restrictions that help to spread the wealth.

This is a game, after all, so here are some rules.

Hold and Assignment Limit Rules

Tradefor Rule #1: There is a maximum number of tokens you can hold in your account.  This is called a “hold limit”. The hold limit puts a cap on the number of tokens you can hold in your account at any time. This rule prevents a handful of traders from cornering the market.

Tradefor Rule #2: There is an “assignment limit”. An assignment limit is the maximum number of tokens that can be assigned to you on the assignment date. For example, if the assignment limit for a market is 2 tokens, and you hold four tokens, you will only be assigned two tokens at assignment.

At assignment, any excess tokens you hold in your account beyond the assignment limit will be called away — with no payment in kind. Needless to say, make sure you sell any excess tokens in your holdings before settlement.

Buying Power

A primary objective, aside from being assigned tokens you want to own, is to increase your buying power.  Your buying power is transferable to other markets.  Increased buying power can be used to trade for larger value tokens in other markets.

You can also add buying power to your account by transferring Ether into your account.

Why should I trade if I am limited to a handful of tokens assigned at a date in the future?

You don’t have to. But tokens will be gradually introduced, programmatically, into Tradefor with increasing prices over time. If you buy tokens near the beginning of the market, hold them for a few days, and then sell them, you will likely realize a buying-power profit.

Can my increased buying power be withdrawn from my account?

No. Buying power in Tradefor cannot be withdrawn. One exception: A trader can withdraw buying power equal to self-funded amounts. All withdraws will be denominated in Ether (ETH) and deposited to an Ethereum address provided to Tradefor by the trader.

Why are there hold and assignment limits?

Hold and assignment limits spread the wealth across many traders which ensures a wider distribution of tokens. From an token issuer’s viewpoint, Tradefor is a marketing platform — a way to distribute a promotional incentive to a large audience.   Issuers are essentially gifting tokens in exchange for brand awareness.  That is called advertising.

We take the position that awarding tokens in a skills-based adver-game is legal in any country.

Is there liquidity in the market?

Thin markets mean there is a lack of liquidity. Trades don’t cross because of the spread between the buy and sell prices desired by different traders. It’s like a seventh-grade dance where girls are standing one side of the room and boys on the other. Nobody is dancing…or trading.

Tradefor solves the liquidity problem by using a patent-pending negotiation process. If you are interested in the theory behind this capability, see our blog on the subject.  Our quick-fire trading method ensures market liquidity even if there are only two traders. 

Three ways to make a trade

There are three ways you can make a trade on the Tradefor exchange:

  • Use a trade ticket to place a market order
  • Engage with a trading avatar on the trading floor and buy what is offered at a published price
  • Trade LIVE in the Tradefor Pit quick-fire negotiation of prices

Let’s look at the easiest way to trade, first, by placing a market order.

Placing a market order from a trade ticket

First, go to “Positions” from the main menu. You will see that you have some buying power donated by Tradefor. One unit of buying power equals 1/10,000 of one Ether.  It is called a “Lubin”.  We may abbreviate that to LUB.  One unit of buying power in Tradefor (1 LUB) will equal about 7 cents assuming the price of one Ether is $700.

Next, pull down an order ticket. To do this, click on the logo graphic in the site’s header. This will drop down a market order ticket.

Now look at the current quote displayed on the ticket. Based on that quote, you will select a quantity to buy (or sell) knowing that you will be buying at the Ask price or selling on the Bid price– just like conventional stock trading. Market orders never have an absolute price guarantee, so be aware that the actual trade price may fluctuate from the quote price.

There is one more market order restriction to mention. Tradefor places a maximum quantity on the number of units you can trade as a market order. The maximum quantity of units that can be traded on any one market order is five (5) units. We implemented this rule to help prevent flash crashes.  Flash crashes occur when one large market order sweeps through an order book gobbling all orders at all prices and creating unrealistic volatility. Limiting the market order size solves this problem.

Sample Trade

Let’s look a sample trade.  Say you have 30 LUB in buying power in your account. The price of one gift card is 13 LUB. You decide you want to buy 2 tokens (representing two $10 gift cards).  To make this trade as a market order you will input the quantity as 2, and then select “Preview”.

If the preview is what you want, you will go on to select “Trade” to execute the order. You should see an instant validation of the trade. Within a few seconds, your screen view will automatically switch to your positions screen which will give you a visual confirmation of the trade.

Now that you own two tokens, you are in the game. You own the right to be assigned 2 tokens on the settlement date. You can hold these tokens and wait for settlement, of you can sell these tokens at any time.

Trading with avatar market makers

The second way to make a trade is to go on the trading floor and trade with an avatar market maker.  There are a couple of advantages to making a trade this way.

For one, you can buy either a single unit offered, or all the units offered by the avatar (those are the only quantity choices possible). What’s more, you have to decide quickly. Avatars offers will change every few seconds. Unlike market orders, the price offered by avatar traders is a guaranteed price. Other traders may be interested in making the same trade so you have to decide quickly.

To trade with an avatar, select “Trading Floor” from the menu.  This will take you the floor.  As a default, you will be looking at sellers as a buyer.

Once you are on the floor, you can review offers from a number of traders. If you want change side on the trade, click on the sell tab at the top. Try swiping left (or right) to see more traders. If an offer is interesting to you, click on the trader.  This will show the action buttons for that trade.

Trade LIVE

Trading in LIVE allows you to interact with other traders, like yourself and resolve pricing issues through a patent-pending method of negotiation. A description of LIVE trading is here.

Let’s Go!

Since the initial buying power you receive is free, we encourage you to try making a view trades.  Remember that there is a micro commission on each trade equal to about 0.7 cents a trade (0.1 LUB).

You can also add more buying power by funding your account.  Go to the menu item funding.  You can add buying power, directly, through an Ethereum wallet, through our money-transfer partner Uphold (you will need an Uphold account to use this option), or through PayPal.

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Why Tradefor Limits Ethereum Withdrawals

If we were to allow our users to withdrawal profits earned from trading, we would run the risk of misrepresenting our capabilities. Tradefor is not a gambling site.  Nor is it a cryptocurrency exchange.  More accurately, we are an entertainment site that provides gamified trading experiences to a social network of game-playing individuals.

In order to eliminate any misinterpretation by regulators as to what we are (a trading game) we limit withdrawals of Ether to a maximum of the amount that you deposit into Tradefor.  

All withdraws must be in Ether.

Any profits gained from trading will not be disbursed to traders. Although you can continue to use your increased buying power gained from making profitable trades to trade for new gift cards,  you cannot withdraw profits accrued from trading in Tradefor in cash.

Example of permitted withdrawals

Say you deposit 0.05 Ether into Tradefor and you trade your way into a total buying power of 0.08 Ether.  At this point, you can withdraw up to 0.05 Ether (the amount you funded yourself) but you cannot withdraw the 0.03 you made in trading profits.  Any profits made from good trades will remain in your Tradefor account as increased buying power.

How do I make an Ether withdrawal?

To make fund or withdraw your Tradefor account, first download Metamask.   Metamask is a browser extension that only works in  Google Chrome or Brave browser.  It allows you to interact with smart contracts in the Ethereum blockchain and view your remote Ethereum wallet from sites like MyEtherWallet.

In the Tradefor site, go to “Funding” in the main menu.

  1. Then select the “Ethereum” tab
  2. Select “Fund” tab for deposit. and “Withdraw” tab for a withdrawal
  3. Enter amount of transfer you want to make.  One LUB equals about $0.05.
  4. Press the “Fund” button

 

IMPORTANT:  You will have to validate your funding request in Metamask before your transaction will process.

Open Metamask and select “Submit”.  This will send your request to the smart contract on the Ethereum public blockchain.

In about a minute, your transaction show be updated — both in Tradefor’s site and in your Ethereum wallet.

Here is a video of the process:

Funding with Metamask

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Showdown Trades

Lately the Ethereum-based prediction market has accepted the challenge of creating a decentralized exchange on top of Ethereum. If exchanges are completely decentralized on a blockchain, the theory goes, they could offer near-real-time, peer-to-peer clearing and settlement with no single point of failure. Cool.

The team responsible for this initiative wrote extensively about the need for an automated market maker. They created a mathematical model that tests a method for adding liquidity as a bot  – comp;letely automated.

But there is one little wrinkle. What happens if there was no liquidity in the exchange?

Unfortunately, low liquidity is a natural by-product of new technology. Early adopters are a small group. And because the exchange will be built on a blockchain, the number of active traders could be very small, indeed — as small as one or two traders.

This chart shows the potential for failure if the wrong model is applied to a one-to-one trading situation.

Since inventors are typically ahead of the curve, it is likely that blockchain exchanges will not succeed, initially, due to lack of liquidity. That’s another way of saying: “Nobody will come”. (Cue video of tumbleweed rolling down a deserted main street.)

There is a possible solution. If an exchange can cover all the squares in the matrix, then there is a glimmer of hope.

As developers, we should make many-to-many exchange capabilities a lower priority. Instead, we should concentrate on creating a process of negotiation between a single buyer and a single seller. That’s the logical starting point. Until we solve that problem, blockchain exchanges will be fighting an uphill battle.

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The Problem with ICOs

The latest blockchain craze is ICOs – initial coin offerings. Coins are cryptocurrency units created to represent just about anything of value. They can have intrinsic value, such as a gold-backed coin, or simply represent an idea. Coins (a.k.a. “tokens”) are attractive to start-ups that want to raise capital completely bypassing the venture capital route.

ICOs are often managed in a blockchain.  If they are on the Ethereum blockchain, transfers and assignments can be 100% automated. As of this writing, Ethereum seems to be the go-to network for creating and managing initial coin offers. One start-up, Bancor, raised an eye-popping $150 million. With results like that, it is no wonder that many start-ups are glammering to be the next big ICO.

So what’s preventing any rag-tag group from introducing the next $150 million coin introduction?  Simply stated: lack of awareness. There is a proliferation of hundreds of other coins all competing for the same dollars. Throw in illiquid markets and you have what amounts to a marketing problem. As any good start-up knows, marketing is everything.

In the real world, initial public offerings of stocks require an investment banking firm acting as an underwriter, well-connected institutional investors and network of retail investors.  It is very well established.

The ICO network, on the other hand, is not part of the mainstream.  Some believe that it will never reach the expectations of experienced investors and that it will quickly crash and burn.

Tradefor takes a contrary view.  We look forward to servicing the ICO market as a marketing tool that addresses pricing issues in illiquid markets.  Start-ups will be able to offer both conventional financing offers and cryptocurrency offers in a unique adtech platform that features a growing network of interested investors.

 

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A Hybrid Ethereum Exchange

As early proponents of the Ethereum blockchain, we imagined a world where stock exchanges could exist on the Ethereum blockchain without the need for a clearing firm or a settlement house. Trades would just be matched and cleared on a blockchain.  Say goodbye to old-school clearing.

But despite the potential benefits of such a scheme, there are some serious usability issues that can’t be ignored.  Matching orders will take minutes to confirm and the complexity of implementing a matching algorithm as a smart contract will, at best, result in many partial order fills that take more than sixty seconds to confirm.  It all makes for a bad customer experience.

When building Tradefor, we concluded that a positive user experience is something that either makes or breaks any application designed for the mass market. Consequently, we built Tradefor’s front end using eminently-scalable Node.js.  But we didn’t want to completely walk away from Ethereum, so we decided to use Ethereum as a means of providing an immutable ledger of electronic assets assigned to our users AFTER the trade has been executed.

In short, we built a hybrid Ethereum exchange.  Holdings are updated on the Ethereum blockchain every six hours.  Whereas, we admit that we are not a pure DAPP, we are able to deliver many blockchain benefits while providing a very unique and engaging trading experience.  We can distribute any electronic asset, including gift cards and coin tokens, on the Ethereum public blockchain.

We will leave the pure exchange model to the purists.

 

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A Gamified Exchange

Sometimes trading can be tedious and boring. Yes, there can be reward in making a financial profit, but in a perfect world, trading should be a social exchange that has at least some entertainment value.

We built Tradefor as a gamified trading experience. Tradefor features all the usual capabilities of an exchange such as order placement, order management and order clearing. But unlike most online exchanges, Tradefor adds a distinct flare for the dramatic including the world’s first online trading pit.

Oh, and one more thing… we are passionate about the Ethereum blockchain. That is why we use Ether as buying power and also why we assign tokens on the Ethereum blockchain.