On May 9, subscribers to shapeshift‘s mailing list received a mysterious email saying that they would be launching something called Prism on May 22. Apart from saying that Prism, “a platform powered by smart contract technology, will revolutionize crypto-finance as you know it”, the email gave no detail, fueling speculation over what the heck it was.
Now we know. Shapeshift launched Prism into private, invite-only beta yesterday. Prism is a platform, built entirely on Ethereum, to allow users to manage an invest portfolio with a range of cryptocurrencies.
Prism users will get an address to send ether to. This is the address of a smart contract on the Ethereum blockchain. Users send money to that address, to fund their portfolio, known as their ‘Prism’. They can then allocate funds among the supported cryptocurrencies, which include Dash, Bitcoin, Litecoin, Monero, Ripple, Golem and others.
Each Prism is limited to ten ether in the current (closed beta) stage, but this limit will be lifted once the software is mature. Shapeshift have tested and verified support for three ether wallets: Exodus.io, Jaxx.io, and MyEtherWallet.
In effect, Prism may seem rather like existing exchanges such as Poloniex. However, it is structured very differently. The asset allocations are executed by the Ethereum virtual machine, meaning that no exchange is in control of your coins.
It may sound like a multi-coin wallet, but it’s not that either. It’s a smart contract run entirely on Ethereum, using only ether. Deposits and withdrawals can only be made in ether. Rather than a collection of coins, it is a smart contract between you and Shapeshift, where you can gain or lose ether depending on the fluctuation of the coins you bet on.
prism.exchange is the online interface where users can interact with their smart contracts. At the time of writing, you can request an invite to the private beta there. Shapeshift have released this overview video explaining how to use the interface.
Shapeshift have stated that users can alternatively interact with their smart contract through a dedicated Ethereum client like Mist. Support for MetaMask is planned for the future.
In the next phase, prism.exchange will be open for anyone to create an account, and once it leaves beta, it will be possible to use the platform without having an account at all, just like the shapeshift.io exchange. They hope to leave beta in about six months.
The software has already undergone one security audit, carried out by Piper Merriam, with two more to come.
Shapeshift, founded in August 2014, is one of the most popular cryptocurrency exchanges online. It won acclaim for ease of use (because, unlike many other exchanges, it does not require users to register an account), and for the very long list of cryptocurrencies it supports.
Initial reactions to Prism have been mixed. While Shapeshift enjoy a good reputation in the cryptocurrency community, and Prism is a pioneering technical achievement, the fees may make it an unattractive choice for investors. Withdrawing money from Prism incurs a fee of 2.4 percent + 0.05 ether, and there is a monthly fee of 1 percent on capital held in the smart contract. This compounds to 12.68 percent per year, meaning any money invested in Prism would have to yield 12.68 percent just to break even. Hopefully these fees will come down in later versions of the software.
Image from Pixabay.
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