LOS ANGELES, April 26, 2021 -- Arkenstone Capital (“Ark” or “Arkenstone”)
What is a Smart Contract?
The ‘Smart Contract’ is a term created by the Ethereum founders to define:
“…a program that runs on the Ethereum blockchain. It’s a collection of code (its functions) and data (its state) that resides at a specific address on the…blockchain.”
In essence, a smart contract is a computer code-based contract between two or more individuals. Contracts are stored on the blockchain and are irreversible. A smart contract’s transactions are mediated by the blockchain, which means they can be submitted automatically without the need for a third party. The transactions can only remain in effect if the agreement’s conditions are met.
Anyone with knowledge of Solidity or Vyper can write a smart contract and deploy it to the network, given the right amount of ETH to deploy the contract. It’s important to remember that deploying a smart contract is considered a transaction, so your precious ETH will be sent away to Cthulu in the form of Gas fees.
(Further reading available here on ethereum.org)
What are you able to do with a Smart Contract?
Smart contracts can be viewed as a transparent, trustless method for exchanging money or ‘stock’ all while avoiding the services of an intermediary and the possibility of conflicting opinions. Listed are some of the benefits:
Self-governed — You make the deals and don’t need to rely on a middleman to validate transactions. The execution is handled automatically by a decentralized network, preventing contract abuse.
Quick — Automated contracts will save you hours of time by eliminating the need for manual paperwork.
Secure — Smart contracts are protected using the same cryptography that encrypts websites. In a nutshell, it safeguards your records. Smart contracts will save you a lot of money because they eliminate the need for an intermediary. Where previously you would have had to pay a notary to observe a transaction, the blockchain now regulates these variables.
Safe — Unlike files on your computer, data on the blockchain is duplicated several times over, unlike files on your device. As a result, you don’t have to be concerned about losing something that has been recorded on the blockchain. Also, no one can say that the contract was lost or that little fire ants stole it in the night.
How does it work in practice? Here’s an example (from Blockgeeks):
“Suppose you rent an apartment from me. You can do this through the blockchain by paying in cryptocurrency. You get a receipt which is held in our virtual contract; I give you the digital entry key which comes to you by a specified date. If the key doesn’t come on time, the blockchain releases a refund. If I send the key before the rental date, the function holds it releasing both the fee and key to you and me respectively when the date arrives. The system works on the If-Then premise and is witnessed by hundreds of people, so you can expect a faultless delivery. If I give you the key, I’m sure to be paid. If you send a certain amount in bitcoins, you receive the key. The document is automatically canceled after the time, and the code cannot be interfered by either of us without the other knowing since all participants are simultaneously alerted.”
How is this safe?
Programmers can decentralize smart contracts so that they are secure and reliable thanks to blockchain technology. Decentralization refers to the fact that they are not under the control of a single central authority, such as a bank or the government.The blockchain is a distributed database that is maintained by a number of computers (nodes). As a result, it is not under the management of any single individual or corporation. It also ensures that it is almost impossible to access it, allowing smart contracts to be executed safely and efficiently without the need for human intervention.
Best practices for smart contracts:
Smart contracts can be used for any kind of transaction, not just financial transactions. Here are a few industries that can benefit from smart contracts:
Healthcare: Encrypgen’s mission is to “give individual consumers control over the use of their data and to reward them for their contributions to science and medicine.” A valiant mission, but what are the details you may ask? This is a blockchain-based technology that secures the transfer of patient data by removing the need for third-party access. Patients are in control of their own data in this way. Patients’ data must be paid for if researchers wish to use it. The patient also has the option of allowing the data to be sold or not.
Asset Management: Fragmentation is rampant amount the current asset management industry. The value proposition and desired outcome of blockchain and smart contracts is a single source of reality. Assume you don’t have a single record that all parties can depend on and that each party holds their own record. In that case, our records can contain different information or be formatted differently, making it difficult to move data between systems. Smart contracts solve all of these problems. Packaging these containers into asset-backed securities can be highly granular, allowing you to exclude some properties while adding others. This removes the fees and all of the other issues that come with dealing with middlemen. An example of this is TokenSets, an ERC-20 based portfolio that is tradeable on exchanges using the Set Protocol.
Governments: In America, federally-regulated, state-run elections are secured to ensure that manipulating the voting mechanism is incredibly difficult, but smart contracts may eliminate those issues by offering an exponentially more safe system. Smart contracts can also help to reduce voter turnout. Anyone can safely pass their votes online using smart contracts, which is expected to result in a much higher response. Here’s an even more fun example, “the Federal Reserve Bank of Boston announced it would work with researchers from MIT’s Digital Currency Initiative (DCI) on a ‘multi-year collaboration’ to build and test a ‘hypothetical’ open-source central bank digital currency platform.”
Raising Funds: An initial coin offering (ICO), a form of an initial public offering, is a way for entrepreneurs to launch a new cryptocurrency (IPO). Since there are so many competing coins on the market, it’s important to figure out how to cater to the target demographic. You create a token and a contract to sell the token if you want to arrange an ICO (Initial Coin Offering). In this case, the smart contract’s work will be: if person A sends X amount of ETH, person A will receive X amount of tokens.
There are numerous applications of Smart Contracts, but to sum: A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network.
In conclusion, if there is anything to remember about smart contracts, it is that they are the digital representation of an immutable and distributed ‘IRL’ contract that functions as created. Smart Contracts are a digital agreement, processed on the blockchain without personal identification.
LOS ANGELES, April 11, 2021 -- Arkenstone Capital (“Ark” or “Arkenstone”)
We are a group of software developers, finance professionals, DeFi experts, and legal scholars focused on the convergence of value-investing principles and crypto-investing. Created in 2021, The Arkenstone DeFi Index Fund is designed to provide investors with exposure to the entire cryptocurrency market, including small, mid, and large-cap growth and value positions. The fund’s key attributes are its low costs, broad diversification, and the potential for tax efficiency.
Investors looking for a low-cost way to gain broad exposure to the cryptocurrency market, and who are willing to accept the volatility that comes with this nascent, yet innovative, market investing may wish to consider this fund as either a core investment position or as part of your exposure to the crypto market.
The full details are available on our Documentation site.
- Clear Goals
- Strong Balance
- Low Cost
- Maintain Discipline
The Opportunity in Decentralized Finance
As Fabian Schär, leading researcher for the St Louis Fed found in his publication: “DeFi may potentially contribute to a more robust and transparent financial infrastructure”. The leadership at Arkenstone Capital wholeheartedl yagrees with these statements.
DeFi is still a niche market with low volumes, but these figures are rapidly growing. The total amount of funds locked in DeFi-related smart contracts recently surpassed $10 billion USD. The technology presents exciting opportunities and the ability to build fully accessible, transparent, and immutable financial system. Since DeFi is made up of various highly interoperable protocols and frameworks, anyone can verify all transactions, and data is easily accessible for users and researchers to analyze.
ETFs and index items are the most frequently traded products, and firms like BlackRock ($7.4 trillion) and Vanguard ($6.2 trillion) are the world’s biggest fund managers. We believe that Arkenstone, as a first mover, has a strong opportunity to expand and scale into a leading provider of crypto index funds.
Visit our website here
Visit our Documentation website here
Join our Discord here
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Purchase ADIF on TokenSets here
View the St Louis Fed publication here
LOS ANGELES, April 2, 2021 -- Arkenstone Capital (“Ark” or “Arkenstone”), a Los Angeles-based crypto fund focused solely on digital asset investing in decentralized finance applications, is pleased to announce the launch of its new actively managed crypto exchange-traded fund (cETF), the Arkenstone DeFi Index Fund (ADIF) on TokenSets, effective Tuesday, April 2, 2021.
ADIF employs an indexing investment approach designed to track the performance of the largest weighted percentage possible for the Decentralized Finance cryptocurrency market or DeFi market, a calculation similar to the widely recognized benchmark of U.S. stock market performance, the S&P 500. The Fund attempts to replicate the target DeFi market by investing all, or substantially all, of its assets in the token that makes up the DeFi market, holding each token in approximately the same proportion as its weighting in the DeFi market.
The Arkenstone DeFi Index Fund (ADIF) enables non-technical investors to access the same returns as highly technical crypto insiders.
The Fund has a collection of criteria composed of four dimensions. Two dimensions are used to evaluate the token’s characteristics, one dimension is used to assess the project’s characteristics, and one is used to evaluate the protocol’s characteristics. The inclusion criteria are the basis to select what tokens will be included in the index.
Arkenstone believes that decentralized finance applications have a bright future in the next five to ten years. A winning strategy for founders is to create products that make these new products more accessible to a wider base of individuals.