Cryptocurrency and digital asset markets are relatively small compared to traditional
finance markets and do not allow large institutional investors to enter this new and fast
growing ecosystem. One of the main reasons preventing large players from entering the
crypto revolution are illiquid order books and wide market spreads. This prevents sizeable
cash flows from entering and exiting the markets in an efficient and cost effective way and
leads to scepticism among traditional money managers.
To support this fast growing ecosystem of various crypto currencies and digital assets, the
crypto economy needs a professional and large provider of liquidity across all crypto
related markets. This will lead to a faster and more stable growth
of the entire crypto economy.
Blockchain networks are secure but smart contracts are not. In June 2016, a hacker stole $55M
in Ethereum coins from the DAO due to a bug in its smart contract . In July 2017, another
hacker stole over $30M in Ether from crypto companies due to a one word bug in the smart
contract code in the Parity multi-sig wallet . Security issues like these are a serious impediment
to wider adoption of the Ethereum network because they erode trust in smart contracts.
Current efforts to validate smart contracts are inadequate. Engaging security consulting
companies require human experts to audit smart contracts. This process is expensive and
error-prone. Also, relying on a single company requires trusting that no bad actors exist in the
company. A distributed system relying on consensus among many different actors is far more
Security audit processes that rely on human experts cannot keep up with the exploding growth
rate of smart contract adoption. Between June 2017 and October 2017, the number of smart
contracts grew from 500K to 2M . Within a year, we expect there to be 10M smart contracts.
This will create an exponential increase in the demand for auditing. There aren’t enough security
experts in the world to audit all smart contracts today, and this shortage will be even more acute
in the future.
The potential costs of smart contract failures will also grow. As of October 2017, about $3.2B
(11M ETH) was locked in smart contracts. The number of dollars locked in smart contracts will
grow exponentially as Ethereum network and smart contract adoption grows. The potential cost
of smart contract vulnerabilities will grow commensurately.