Yesterday we relaunched operations of Satoshi Pie as were able to evaluate the portfolio. Let me remind that White Hat Group returned us the funds they had saved. What a wonderful event! These good fellows have given about $7 m as ethers and tokens back.
While experiencing all this, we realized several things. We have a good community from whom we’ve received multiple offers of help and support. But we also got some feedback from those who neglected to study the blockchain basics and to learn about the risks related to investments to tokens (that is mentioned in Satoshi Pie Whitepaper).
We are convinced that the thing of the future of investment is in the decentralized approach allowing every investor to manage their tokens or trust the fund managers with complete understanding of probable risks including hacker attacks.
But that’s not all what happened. The Securities and Exchange Commission has declared The DAO tokens as securities. It increases the risks related to the token issuance.
Taking into consideration that the best part of customers does not acknowledge the risks of investing to blockchain assets and that the token issuance risks have increased, we have decided to give up storing the customers’ blockchain assets under our control and switch from custodian to software manufacturer. Therefore, having considered all pros and cons, we have decided to liquidate Satoshi Pie.
We understand that part of our customers had invested at a higher price than now and the immediate Satoshi Pie elimination will hurt them, as they expected to put money under management for the investment period of about 18 months upon our recommendation.
Consequently, we are planning to fulfill our obligations of fund management within the following 18 months. However, due to the increased risks, the management fee will be raised.
The goal of our transformation is to enable future changes of fund management that will allow us not to hold the customers’ assets under our direct control. We have some ideas that we are planning to implement. So, we will be doing and creating what we did before — the new products in the area of investment asset management.
Understanding the importance of blockchain assets and the exponential growth of market, we set a task to develop and use only software, which allows every customer to hold the assets by themselves like it works for instance with bitcoins. But via smart contracts they could transfer the management of their funds to professional fund managers.
In the future blockchain and smart contracts will allow to launch fully-audited investment funds, in which every action of managers will be 100% verified. At the same time the blockchain assets will be stored either in smart contracts or on accounts, whose private keys are held by the customers.
The transfer from one type of funds to another will not be instant. To implement the solution described above, there must be an infrastructure including:
It is also important to solve issues of blockchain assets standardization and methods of their interaction.
The end-customers will benefit from the development of tools allowing easily to create various 100%-audited investment products. The more funds are opened, the more competition and better conditions there are; the more independent the end-customers are, the easier they can transfer the assets under temporary management to the best managers.
We are looking forward to show the first prototypes of our product built based on the mentioned principles till the end of the year!
In order to keep the Ethereum blockchain assets, we chose the best software — the product of Gavin Wood’s company. He is a founder of Ethereum and wrote a part of its protocol. As Ethereum does not have multi-signature wallets, the smart contracts are used for storing the funds on multi-signature accounts.
As a vulnerability was found in the contract we were using, ⅓ of Satoshi Pie funds was the under risk of attack, and luckily was saved by White Hat Group.
Everyone who invests in blockchain assets should remember that this software is on early stage of development and may have vulnerabilities that could be exploited. So, investments in blockchain assets are very risky. And we’ll keep reminding you about this over and over!
In our case it is $316,000 or 1.51% of Satoshi Pie portfolio:
We wouldn’t say that we escaped unscathed. Unfortunately, we are not aware of a way how to give up storing private keys and help our clients to make money on blockchain investments. There are some hardcore developments in neural cryptography but these things could not be implemented in the measurable future.
In accordance with the adopted decision:
We want to remind our customers that the mission of Satoshi Fund is to make investments in blockchain assets easy, clear and available for everyone. Stay tuned and follow our developments ;)
As we’ve mentioned, we are planning to send 2% of the saved funds as a reward to White Hat Group. We believe that this kind of support towards good hackers will be a standard accepted in the industry and will help simplify many complicated things. Funding such groups we can decrease the chances of fraudulent activity and increase the probability of hacker attack prevention. We are building a decentralized world where skilled and socially beneficial activities must be decently paid.
In the future we will keep rewarding those looking and for critical software vulnerabilities. If a hacker attack takes place again, we will send a reward in the amount of 2% of the funds that will be returned if the attack vector is disclosed and the funds are sent back. This is one of the most efficient protection mechanisms against massive hacker attacks. This costs are to be covered from Pie as the risks are beared by all Pie investors and there is no better way to hedge them.
In case of the loss of private keys, in order to redeem, the Pie customers should verify their identity and a link with the account via one of the following methods:
It should be noted that if phone number and email address were not specified during registration, they cannot be used for the confirmation of deposits to Pie. For dealing with private key loss, please contact our support team. Please also note, that the redemption for accounts, whose private keys were lost, cannot be fast for safety reasons and will be processed within a month after liquidation.
In cybereconomics there is a rising market of alternative products in investment management area. It’s up to the customers to decide whether to use them or not, depending on their trust to certain people, who manage the funds and software.
We think that the best possible strategy of blockchain investment can be the consumer strategy. i.e. when you invest in what you use! In this case the value of investment object will be much clearer for you. For example, if you need ethers in order to use smart contracts, buy them. If you don’t understand what smart contracts are, don’t buy ethers, you don’t need it. We think that this approach will change a consumer paradigm but that’s quite a different story.
In the conclusion we’d like to thank again our clients who appreciate what we do, help us develop and deliver our innovative products to the market!
