Ⓐ

Assign Onward Investor

Automatic trading

AOI (sometimes called AO-Eye) software enables investors to make automated trades in small issues based on various criteria, such as: number of shares outstanding, number of shares held and current bid/ask prices. Ted (from Island Life) lives in Dominica, but makes a small market in Bob's curry goat (BCG) plates. Ted's valuation formula for BCG goes like this: when Bob has 100 or less plates "out" with investors, Ted sets his maximum bid price at EC$27, and asks a +5% margin at EC$28.35. As Ted's holdings of BCG increase he reduces his bid price by EC$0.50 per plate held and also discounts his ask price to keep the same EC$1.35 per plate margin. Ted has also set a maximum holding level for Bob's curry goat of 12 plates. So, if Ted is currently holding 10 BCG and someone wants to buy two BCG, Ted's AOI app advertises that he will sell those for EC$47.20 equivalent in any of the issues he currently trades.
*Ted is also a cash-exchange agent, so if you're right there with Ted, he'd take US$17.50 for 2 BCG - or, if you've pre-purchased some of Ted's cash credits, his AOI app will automatically exchange US$17.50 in Ted credits for you no matter where you are.
After selling those 2 BCG, Ted's holding 8 BCG and his bid-ask chain for BCG looks like:
  • bid: 1 BCG: EC$23.00
  • bid: 1 BCG: EC$22.50
  • bid: 1 BCG: EC$22.00
  • bid: 1 BCG: EC$21.50
  • ask: 1 BCG: EC$24.85
  • ask: 1 BCG: EC$25.35
  • ask: 1 BCG: EC$25.85
  • ask: 1 BCG: EC$26.35
  • ask: 1 BCG: EC$26.85
  • ask: 1 BCG: EC$27.35
  • ask: 1 BCG: EC$27.85
  • ask: 1 BCG: EC$28.35
Ted has developed a diversified portfolio of over 100 blockchain issues like BCG throughout the Caribbean, mostly risking a maximum of EC$300 and average closer to EC$150 on each issue. Ted tries to invest in the most stable issues available, but every year two or three of his investments have a serious problem usually losing all value. Even accounting for the losses, overall he is making much better than bank interest on the US$6000 he has invested so far, and he really likes the fact that he and other investors like him are supporting local small businesses. Investors like Ted take notes while they travel. When they have a good experience with a vendor who offers blockchain shares, they will note the vendor's identity in their AOI, and if the fundamentals of shares outstanding, turnover rate and margin look good, they'll make a small investment, often no more than the cost of a dinner for the evening. Even if the fundamentals aren't great at the moment, AOI can "keep an eye" on the issue, and if the fundamentals improve AOI might automatically start a small investment then.

Bob doesn't usually have over 100 plates "out", but when he does, Ted discounts all his bid prices by EC$0.05 per share over 100 that Bob has outstanding. If Bob ever exceeds 200 plates "out" then Ted's AOI is programmed to halt further buying of BCG and start discounting his ask price on BCG by EC$0.02 per plate between 200 and 250 outstanding, for a maximum ask discount of EC$1.

Charlie is a little simpler than Ted and he makes a bigger market in BCG: holding up to 24 plates, and he simply bids EC$25 anytime Bob has less than 150 plates outstanding, and asks EC$27.

Ziggy has his AOI programmed to play the market. For BCG Ziggy tries to hold 20 plates and his current strategy will bid EC$0.01 over the highest bid out there, up to a max of EC$25.10, and asks EC$0.01 less than the lowest ask out there, as long as that's at least EC$2.00 more than he paid for his most expensive recent purchase of BCG. Sometimes Ziggy cleans up with these strategies, sometimes he ends up sitting on the sidelines while other investors make money on BCG.

As for Bob, he has a flat bid of EC$10 for all outstanding plates, and he asks EC$20 when he has no plates outstanding, increasing by EC$0.07 per plate outstanding, so when he has 100 plates outstanding, his ask sits at EC$27. Bob usually has about 70 plates outstanding, but it does bounce up and down quite a bit, especially when new players enter the market. While Bob's blockchain has a total of 1000 BCG available, anytime more than 200 BCG are out, Bob's AOI puts a hold on further trading - the price is already up to EC$34 per plate then, so Bob doesn't want somebody to come along and give him $10,000 by mistake thinking they're getting something they are not. Oscar, on the other hand, doesn't have the trading stop in place, hoping for a big windfall, he's still hoping.

Security Alert

Like AOE and AOS, AOI is an application with valuable concerns - it manages and uses secret keys. Unlike AOE and AOS which can always prompt a user for authorization of each transaction and identification in the form of passphrases, fingerprints, etc. AOI is meant to operate automatically, without user intervention, and potentially handling large amounts of value as well. AOI implementations will require care not only at the application level but also in the systems which they run in and how they safeguard the secret keys they handle, both from exposure and loss.