Disclosure: Smith + Crown was a compensated advisor to this project.
The proliferation of cryptoasset exchanges has forced funds and traders to manage a portfolio across multiple exchanges. This impedes a funds’ ability to manage trade execution and compliance, as exchanges’ have varying degrees of security, operational reliability, UX quality, liquidity, KYC/AML requirements— as well as fees and policies. Caspian is a cryptotrading platform that emerged in 2018 to address this challenge. The company believes that the crypto industry needs improved tools and functionality to reach its full potential and to onboard professional investors and funds that demand improved execution, position management and compliance.
Caspian arose as a joint venture between blockchain investment firm Kenetic Trading Systems Limited and asset management technology provider Tora Trading Services Limited. Tora has existing relationships with 150 equities and derivatives exchanges and their existing OEMS averages monthly notional equity volume of approximately USD $100 billion. Caspian’s founding leadership boasted numerous senior roles at top investment firms and technology companies: CEO & Cofounder Robert Dykes spent the past 14 years as the CEO of Tora, with a background in enterprise software.
Caspian provides a turnkey platform for the trade and management of cryptoassets, which includes:
- Order and Execution Management System (OEMS)
- Portfolio Management System (PMS)
- Risk Management System (RMS)
- Compliance Engine
The platform connects to multiple established cryptoasset exchanges and offers a single OEMS trading interface for users. Caspian inherits and builds upon Tora’s Smart Order Router technology, designed to allow investors to maximize favorable outcomes by algorithmically executing trades across Caspian’s multiple exchanges.
Caspian’s Order and Execution Management System (OEMS) interface enables trading across the multiple exchanges Caspian has integrated with, including full access to asset and order types supported by each exchange. Pricing and position information, bid/ask, margin management and individual exchange depth are provided, and the OEMS allows orders to be staged, sent, and amended. Order and order slice progress are viewable, and users can configure alerts. APIs are also available for staging and sending orders and slices while delivering transaction information around position, pricing, and exposure. Users may create their own order management strategies using a simple rule-based language that executes according to predefined conditions.
The Caspian management systems for Portfolio (PMS) and Risk (RMS) receives execution and order information from the OEMS, tracking and recording detailed data for the monitoring of positions, P&Ls and exposures. These systems allow users to perform a variety of back office functions, including reconciliations across multiple counterparties, rebalancing to help funds meet their objectives and distributing the results of trades between different portfolios and funds, even if originally executed with a single order. Caspian’s compliance engine is also built on proprietary technology inherited from Tora, and addresses both pre-trade and post-trade workflows. Flat file reports are made available, which provide data for trades, positions, audits, compliance, and snapshots. These reports are designed to be imported into data visualization tools as needed.
Caspian’s native ERC20 token, CSP, is not required to access the platform, though it has been designed to eventually confer a variety of rewards and discounts, as well as governance rights. CSP holders must first stake their tokens in order to trigger rewards, including commission, fee payment, and dynamic discounts. CSP additionally grant platform governance rights for the top 15 token stakers globally, where tokens have been staked for at least 6 weeks. These 15 stakers will be able to vote on key decisions affecting development and rewards mechanisms.
Finally, CSP is used to incentivize third party development on the platform. Developers opting to build alternative user interfaces, such as advanced charting libraries or external trading signal feeds, must stake tokens to launch a dApp. Alternatively, developers may offer their dApps for “free” to users who have staked a predetermined amount of CSP, thus becoming eligible for token rewards that will be allocated from a designated rewards pool.