Lykke, a Swiss Fintech company, is building the next-generation trading platform, a semi-decentralized and fair marketplace with equal access for everyone, zero commission and for all kinds of assets and financial instruments. The platform is based on the Colored Coin protocol on blockchain.
Semi-decentralized means that the exchange does not take possession of the traded coins, but needs to be trusted to match trades correctly. Lykke has a centralized matching engine and decentralized coins settlement. Still to be able to trade, one should deposit his coins into Lykke exchange whick uses multisignatures mechanism to hold client’s funds. Because of that Lykke can not spend coins without client’s private key. Even if the exchange is compromised and the Lykke’s key is stolen, the client will not lose his coins. The second key is required to spend deposited coins. Lykke exchange also provides refund mechanism to guarantee funds recovery in case of emergency.
Lykke market allows buy/sell operations only. Upon matching buying asset passes into the ownership of the trader and, at the same time, sell asset passes into the ownership of the counterparty.
The Lykke Wallet
Key element of the system is the Lykke Wallet, available as iOS and Android app. The interface of the app is simple and intuitive. At first registration you are asked your email address, name, nationality and mobile phone number. You’ll need to confirm both email and phone number to complete the setup.
After registration your private key is generated within the app and you have to save the 12-word seed that will allow you to restore your wallet in case of device loss or if you want to move it on a different device. Make sure you store your seed in a safe location, you won’t be able to recover your account without it.
The latest version of the app (4.4.6 at the time of writing) supports BTC (Bitcoin), SLR (Solarcoin) and LKK (Lykke Tokens) cryptocurrencies, and CHF, EUR, GBP, JPY, USD fiat currencies. Operations with fiat currencies require KYC validation that can be done within the app.
Lykke settles all the transactions on the blockchain, so block size limit may put constraints on the number of transactions that may be processed. The team is developing off-chain protocols, that will allow scaling up the capacity.
Business Model and Funding
Lykke recently completed a three-week public offering of a deliverable 1-year forward equity contract. The offer, which was oversubscribed, garnered 2 million CHF for the company and added more than 340 new investors. In September of 2016, Lykke raised over 1.16 million CHF in its initial coin crowdsale. The tokens, traded under the symbol LKK, are available on the Lykke platform issued as “colored coins” on the bitcoin blockchain.
Since comissions are zero, Lykke will earn its revenue from the value add services such as liquidity provision, issuance services, whitelabeling and B2B consulting.