Introducing Prism: The world's first trustless portfolio market platform

When we started building ShapeShift in the Spring of 2014, we made an uncommon assumption at the time: that blockchains and (especially) the tokens built upon them were going to expand out in all directions. We believed this not because the world needs a thousand crypto “currencies” in the narrow sense, but because blockchain technology would enable all manner of new digital experimentation, financial and otherwise. Bitcoin inspired a Crypto-Cambrian Explosion; a transformative species from which entire kingdoms of new technological life arise.

Three years on and our assumption appears increasingly validated. The market cap of digital assets has surpassed $50 billion (up from about $5 billion when ShapeShift launched). Perhaps the world is starting to realize that value can be natively digital, like all other forms of human information. Indeed, the digitization of value will be one of the 21st century’s most transformative themes.

Thus we believe blockchains and the tokens upon them will continue to flourish, through bubbles, through busts, through controversy, calamity, struggle, insight, and brilliance. ShapeShift’s purpose was, and remains, to enable humans and machines to move between these chains and tokens with as little energy expended, and as much risk avoided, as possible; to connect these new forms, and by extension, the people and lives attached to them, without friction.

We are thus immensely pleased to deliver to the world the newest addition to the ShapeShift family.

Its name is Prism. It is built entirely upon Ethereum-based smart contracts. We also look forward to bringing this product to Rootstock (RSK) on Bitcoin in the near future.

Prism is a platform upon which humans and machines can acquire exposure to portfolios of digital assets without trusting a counterparty. These portfolios (called “Prisms”) are customizable in size, allocation, and duration. One acquires a Prism using nothing but an Ethereum wallet as the tool, and Ether as the collateral.

An example: Sarah is bullish on privacy-centric digital assets and wants to easily and safely invest $5,000 in them.

  • She designs a Prism consisting of 1/3 Dash, 1/3 Monero, and 1/3 Zcash, putting up $5,000 of Ether as collateral.
  • Upon creation, a unique smart contract tracks the value of her three assets, and holding her collateral. It also holds an equivalent amount of collateral from another party who took the opposite position (this other party is ShapeShift, for now).
  • Three weeks later, the price of the three components have risen an average of 25%. Sarah chooses to close her Prism, and she receives 125% of the collateral she deposited (less fees).

By setting up the Prism, Sarah didn’t need to find a trustworthy/convenient wallet for each coin. Other than Ethereum, she didn’t need to sync anything, or manage disparate keys. The entire process from first idea to instantiated contract takes Sarah five minutes. Most importantly, Prism allowed Sarah to avoid leaving funds at an exchange - her collateral was held in a smart contract, which may only be withdrawn to her pre-stated Ethereum account.

The Prism portfolios are fully-collateralized by both parties, so there is no risk of non-performance. Risk is herein minimized: with trust placed in objective open-source code, instead of upon the subjective whims of a human counter-party.

Some day, we imagine, nearly all financial infrastructure will be built upon open, objective, non-discretionary code. The ability of a human to decide not to fulfill a transactional obligation (either by mistake or malice), will seem quaint. Inevitably, an economy is more efficient, honest, productive and fair to the extent it is built upon the laws of code and mathematics, instead of the laws of men. Pre-blockchain, that was impossible. Upon products like Prism (itself built upon the pioneering work of blockchain protocol engineers), it is our hope that some day it won’t merely be possible, but indeed the expectation, that finance itself becomes provably fair; not by the decree of politicians, but by the demanded security and supplied innovation of a marketplace set free. Society deserves nothing less.

While Prism is, in a sense, an exchange platform, to our knowledge nothing like it has ever existed in a live, production capacity. No bank or traditional financial institution, with their billions in capital and polished claims of consumer protection, has ever brought something like this to market.

That we, a small startup, can build such a thing and release it to the world is a testament to the power of open blockchain technology.

We invite you to sign up for a closed beta invite at prism.exchange.

In liberty,

-Erik Voorhees

ShapeShift AG

Notes

  • Prism is currently in closed invite-only beta, but operating on the live Ethereum network. It should not yet be considered “trustless.” The code is not yet open-source (though it will be prior to full release). Further, there is an escape hatch currently built into the smart contract code, which enables ShapeShift to withdraw and secure the collateral if smart contract bugs are discovered. This escape hatch will be removed (possibly at the option of the user) as we become comfortable with the security of Prism in the wild.
  • A formal independent security audit was conducted earlier this year by Piper Merriam, and two other independent audits will be conducted prior to Prism leaving beta. We believe smart contract code can be secure, but it is still a frontier, and thus Prism development will proceed cautiously.
  • If the name “Prism” reminds some of the unconstitutional NSA surveillance program, good. Such Orwellian travesties should remain top of mind. The name Prism, in our context, comes from the relationship of one source of light (Ether) entering, and multiple shades of light (the portfolio components) being seen on the other side.
  • Please note that Prism is currently an invite-only beta product, and that invites are granted periodically at the discretion of ShapeShift.