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MARKET Protocol

MARKET Protocol

Early Stage

Building the next generation of safe derivatives

Building the next generation of safe derivatives

Overview

Raised this Round: Raised: $0

Total Commitments ($USD)

Platform

SeedInvest

Start Date

10/22/2019

Close Date

12/13/2019

Min. Goal
$25,000
Max. Goal
$1,070,000
Min. Investment

$1,000

Security Type

Equity - Preferred

SEC Filing Type

RegCF / RegD 506(c)    Open SEC Filing

Price Per Share

$0.84

Pre-Money Valuation

$11,380,900

Year Founded

2017

Industry

Financial & Insurance Products & Services

Tech Sector

Location

Boulder, Colorado

MARKET Protocol, with a pre-money valuation of $11.3 million, is raising funds on SeedInvest. The company is using the blockchain technology to keep track of assets and build safe derivatives. People can use the MARKET Protocol platform to enter into an agreement to pay one another based on specific rules. MARKET Protocol was founded by Seth Rubin and Collins Brown and has raised more than $2 million in previous rounds of funding. The proceeds of the current crowdfunding round, with a minimum target of $350,000 and a maximum target of $1,500,000, will be used for marketing, payroll & benefits, contract staff, legal expenses, and general expenses. The recently launched platform of MARKET Protocol already has over 600 accounts with more than $700,000 in notional traded value.
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Analyst Report Analyst Report Methodology Article

Summary

MARKET Protocol has been selected as a “Deal To Watch” by KingsCrowd. This distinction is reserved for deals selected into the top 10% of our deal diligence funnel. If you have questions regarding our deal diligence and selection methodology, please reach out to hello@kingscrowd.com.

Next Section: Problem

Problem

Global interest in investing in and trading cryptocurrencies is undeniable. “Coinbase also reports that 70,000 to 100,000 new crypto trading accounts are being opened every day on their platform.”  These assets are made possible with the use of blockchain technology, an attractive alternative to more centralized asset management.

 

This is not to say there are no problems with the crypto market. Specifically, most crypto exchanges simply don’t provide enough liquidity. “High transaction fees, poor security and non-availability of fiat gateways to on-ramp new customers – hamper seamless trading in cryptocurrencies” which can turn away potential traders.”

 

The opportunities for trading derivatives and futures specifically are limited. MARKET Protocol aims to become the “next big derivatives exchange” in an attempt to tackle these problems.

Next Section: Solution

Solution

MARKET Protocol has established a platform for creating safer digital assets (derivatives). Specifically, MARKET Protocol has created ‘legos’ that make up derivatives. Through the platform, users can take these legos and design tokens to represent their assets. For example, Apple shares, or bitcoin.

 

MARKET Protocol offers three products- the latter mentioned MARKET Protocol, MARKET Protocol Exchange, and the Minting Platform. The first incorporates the ‘legos,’ where a user can build derivatives via an open-source, blockchain-backed framework. The MARKET Protocol Exchange is a simpler trading interface through which token offerings can be viewed, as well as trader feedback. The Minting Platform is where the ‘legos’ “are combined to create products with a straightforward interface.”

Since its launch in July of 2019, MARKET Protocol has over 650 registered users and over $450000 in minted tokens.

 

Next Section: Other

The Team

CEO and Co-Founder, Seth Rubin, has experience as a derivatives trader and previously founded BRE Trading, an algorithmic trading group. He holds a degree in Economics from the University of Rochester.

COO and Co-Founder, Collins Brown, previously traded U.S. government bonds, U.S. Treasury futures, Eurodollars, and international interest rates at Transmarket Group. He later worked alongside Rubin the co-found BRE Trading. He holds a degree in Finance and Economics from Miami University.

Next Section: Other

Business Model

In order to mint tokens, users deposit collateral and pay a 0.50% minting fee based on the amount of the collateral. Rubin reports that they will also collect trading fees from transactions on the exchange, but the majority of revenue will come from the minting of these tokens.

 

To date, MARKET Protocol has $0 in revenue and cost of goods sold. Internal revenue projections suggest $100M by 2023, though the company is not currently profitable.

Next Section: Why We Like it

Why We Like it

 

  • Competitive Differentiators: Though the large market is indicative of a crowded space, MARKET Protocol stands out with several key differentiators. Specifically, MARKET Protocol is both decentralized and covers a range of assets. CME Group, for example offers a marketplace for a diverse set of derivatives, but remains relatively centralized. BitMEX, another exchange, is narrowly focused on Bitcoin products.
  • Impressive Team: The collective industry experience of the MARKET Protocol team is undeniable. Not only do the founders have industry expertise, they have previously co-founded a trading group.
  • Venture Backing: MARKET Protocol already has backing from two firms: Zero G Capital and Wyre Capital, grounding trust in any investment.

Next Section: Other

The Rating: Deal To Watch

MARKET Protocol is a Deal To Watch. The team is going to have to raise significant revenue to win out in the space, however this is a large addressable market with a clear pain point. The team’s significant experience in the industry mitigates some of the risk of investment.  

 

Though the company is not cash flow positive at this time, the product is highly scalable and nearing profitability. Having not one, but two venture firms backing the product alleviates concerns regarding the lack of revenue.

 

The product is still in its infancy which could pose a risk, however the team has a clear roadmap for future iterations and some solid early traction. Finally, the product is significantly differentiated from both other startups and large incumbents, making an investment at the ground floor potentially quite rewarding. 

 

Additionally, the crypto market is ripe with acquisitions. Blockchain startup Coinsquare acquired StellarX, a decentralized exchange app in February of 2019.  Facebook acqui-hired Chainspace, another decentralized infrastructure, in 2019. As seen below, the trading and investing sector led in number of M&A deals this year, making an acquisition a likely exit opportunity for the MARKET Protocol.

Since it is still early, and there are some risks associated with investment alongside the strong team and competitive differentiation, MARKET Protocol is a Deal To Watch.

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MARKET Protocol on SeedInvest
Platform: SeedInvest
Security Type: Equity - Preferred
Valuation: $11,380,900
Price per Share: $0.84

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