Granted Patent B1

US 11,522,700 · App. 16/282,955 · Granted Dec 6, 2022

Inventors: Ira Auerbach (Arverne, NY); Tyler Howard Winklevoss (New York, NY); Daniel William Halley James (Brooklyn, NY); Cameron Howard Winklevoss (New York, NY); Anas Saidi (Brooklyn, NY); Jamie Chapman (New York, NY); Brandon Arvanaghi (New York, NY); Stephen Judkins (Portland, OR); Alex Parkinson (Portland, OR); Eric Neiman Winer (New York, NY); Michael So (Tenafly, NJ)

Assignee: Gemini IP, LLC

H04L9/3213G06F16/27H04L9/0637H04L9/50H04L67/10

Abstract

Claims (120)

1. A method comprising:

(a) receiving, by an administrator system associated with an administrator of a security token, a smart contract proposal for a smart contract, wherein the security token is maintained on a distributed public transaction ledger in the form of a blockchain associated with an underlying digital asset maintained by a plurality of geographically distributed computer systems in a blockchain network, and wherein the smart contract proposal includes:

(i) first user information associated with a first user device that is associated with a first user; and

(ii) first contract information comprising at least the following contract parameters:

(A) an inception date;

(B) an inception value;

(C) at least one benchmark;

(D) a smart contract duration;

(E) at least one collateral requirement;

(F) a notional value of the smart contract; and

(G) first side information comprising identification of a first leg of the smart contract;

(b) receiving, by the administrator system, at least one indication of interest, wherein the at least one indication of interest includes at least:

(i) a first user response, from a second user device associated with a second user, the first user response comprising:

(1) second user information associated with the second user; and

(2) second side information comprising identification of a second leg of the smart contract;

(c) matching, by the administrator system, the first contract information and the first user response;

(d) generating, by the administrator system, first smart contract instructions associated with the security token, the first smart contract instructions associated with a first smart contract address associated with the blockchain for the underlying digital asset, wherein the first smart contract address and a second smart contract address associated with a stable value token are each associated with the same blockchain for the underlying digital asset, and wherein second smart contract instructions associated with the first smart contract address are saved in the same blockchain for the underlying digital asset, the second smart contract instructions including:

(i) first authorization instructions regarding creating stable value tokens;

(ii) second authorization instructions regarding transferring stable value tokens;

(iii) third authorization instructions regarding destroying stable value tokens; and

(iv) fourth authorization instructions regarding functions associated with the stable value token;

the first smart contract instructions including:

(v) first trade instructions including execution instructions to execute a first trade between the first user and the second user, wherein the first trade is based on at least the following:

(1) the smart contract proposal; and

(2) the first user response;

(vi) fifth authorization instructions regarding transferring security tokens;

(vii) sixth authorization instructions regarding destroying security tokens;

(viii) seventh authorization instructions regarding transferring stable value tokens to the second smart contract address;

(ix) eighth authorization instructions regarding transferring stable value tokens from the second smart contract address; and

(x) calculating instructions regarding calculating excess collateral;

(e) sending, by the administrator system to the blockchain network for the underlying digital asset, the first smart contract instructions;

(f) verifying, by the administrator system, that the first smart contract instructions are saved on the blockchain for the underlying digital asset based on reference to the blockchain;

(g) verifying, by the administrator system, receipt of a first amount of stable value tokens as a first amount of collateral, at the second smart contract address based on reference to the blockchain, wherein the first amount of collateral is associated with the first user, and wherein the first amount of stable value tokens associated with the first user is based on the at least one collateral requirement;

(h) verifying, by the administrator system, receipt of a second amount of stable value tokens as a second amount of collateral at the second smart contract address based on reference to the blockchain, wherein the second amount of collateral is associated with the second user and is based on the at least one collateral requirement;

(i) generating, by the administrator system, a first message from the administrator system to the second smart contract address to execute the first trade instructions, the first message including a digital signature associated with the administrator system;

(j) sending, by the administrator system to the blockchain network, the first message to execute the first trade instructions;

(k) verifying, by the administrator system, execution of the first trade instructions based on reference to the blockchain;

(l) generating, by the administrator system, a second message from the administrator system to the second smart contract address to return remaining collateral from the first trade in accordance with the first trade instructions;

(m) sending by the administrator system to the blockchain network, the second message to the second smart contract address to return remaining collateral in accordance with the first trade instructions, wherein computer systems among the plurality of geographically distributed computer systems in the blockchain network implement the return of remaining collateral by performing steps of:

(A) determining first remaining collateral for the first trade in accordance with the first smart contract instructions and the first trade instructions;

(B) determining second remaining collateral for the first trade in accordance with the first smart contract instructions and the first trade instructions;

(C) distributing the first remaining collateral for the first trade in accordance with the first smart contract instructions and the first trade instructions; and

(D) distributing the second remaining collateral for the first trade in accordance with the first smart contract instructions and the first trade instructions; and

(n) verifying, by the administrator system, distribution of the first remaining collateral and the second remaining collateral based on reference to the blockchain.

2. The method of claim 1 , wherein the first user information further comprises a first user public address associated with the blockchain of the underlying digital asset, and wherein the first user public address corresponds to a first user private key that is mathematically related to the first user public address, and

wherein the second user information further comprises a second user public address associated with the blockchain of the underlying digital asset and

wherein the second user public address corresponds to a second user private key that is mathematically related to the second user public address.

3. The method of claim 2 , wherein prior to step (g) the method further comprises sending, by the first user device via the blockchain from the first user public address associated with the blockchain to the first smart contract address associated with the blockchain, a third message comprising a request to transfer the first amount of collateral from the first user public address to the second smart contract address.

4. The method of claim 3 , wherein the first user device sends a fourth message to the first smart contract address including authorization to request a transfer of the first amount of collateral and wherein the administrator system sends a fifth message via the blockchain to the second smart contract address with instructions to send a request from the second smart contract address to the first smart contract address for the first amount of collateral to be transferred from the first user public address to the second smart contract address.

5. The method of claim 2 , wherein prior to step (h) the method further comprises sending, by the second user device via the blockchain from the second user public address associated with the blockchain to the first smart contract address associated with the blockchain, a sixth message comprising a request to transfer the second amount of collateral from the second user public address to the second smart contract address.

6. The method of claim 5 , wherein the second user device sends a seventh message to the first smart contract address including authorization to request a transfer of the second amount of collateral via the blockchain, and the administrator system sends an eighth message via the blockchain to the second smart contract address with instructions to send a request for the second amount of collateral to be transferred from the second user public address to the second smart contract address.

7. The method of claim 1 , further comprising, prior to the generating step (1), the further steps of:

(o) recalculating the first collateral amount based on the at least one collateral requirement and current benchmark information;

(p) determining a first additional collateral amount based on a difference between the recalculated first collateral amount and the first collateral amount; and

(q) receiving, at the second smart contract address, the first additional collateral amount.

8. The method of claim 7 , wherein the recalculating step is performed by the first user device.

9. The method of claim 7 , wherein the recalculating step is performed by the administrator system, and further comprises:

(i) generating, by the administrator system, an alert including the first additional collateral amount; and

(ii) sending, by the administrator system, to the first user device, the alert.

10. The method of claim 9 , further comprising, between step (o) and step (p), the further steps of:

(r) monitoring, by the administrator system, the second smart contract address on the blockchain associated with the underlying digital asset;

(s) determining, by the administrator system, whether the first additional collateral amount is received at the second smart contract address;

(t) generating, by the administrator system, a default notification when the administrator system determines that the first additional collateral amount is not received at the second smart contract address;

(u) sending, by the administrator system, the default notification to the first user device, the second user device and the second smart contract address;

(v) generating, by the administrator system, a ninth message including a request to transfer the first collateral amount and the second collateral amount in accordance with the first trade instructions; and

(w) sending, by the administrator system, the ninth message to the second smart contract address, where transfers of the first collateral amount and the second collateral amount are implemented by the plurality of geographically distributed computer systems in the blockchain network.

11. The method of claim 1 , further comprising, prior to the generating step (1), the further steps of:

(o) recalculating the second collateral amount based on the at least one collateral requirement and current benchmark information;

(p) determining a second additional collateral amount based on a difference between the recalculated second collateral amount and the second collateral amount; and

(q) receiving, at the second smart contract address, the second additional collateral amount.

12. The method of claim 11 , wherein the recalculating step is performed by the second user device.

13. The method of claim 11 , wherein the recalculating step is performed by the administrator system, and further comprises:

(i) generating, by the administrator system, an alert to the second user including the second additional collateral amount; and

(ii) sending, by the administrator system, to the second user device, the alert.

14. The method of claim 11 , further comprising, between the step (p) and the step (q), the further steps of:

(r) monitoring, by the administrator system, the second smart contract address on the blockchain associated with the underlying digital asset;

(s) determining, by the administrator system, whether the second additional collateral amount is received by the second smart contract address;

(t) generating, by the administrator system, a default notification when the administrator system determines that the second additional collateral amount is not received by the second smart contract address;

(u) sending, by the administrator system, the default notification to the first user device, the second user device and the second smart contract address;

(v) generating, by the administrator system, a tenth message including a request to transfer the first collateral amount and the second collateral amount in accordance with the first trade instructions; and

(w) sending, by the administrator system, the tenth message to the second smart contract address, where transfers of the first collateral amount and the second collateral amount are implemented by the plurality of geographically distributed computer systems in the peer-to-peer network.

15. The method of claim 2 , further comprising, prior to the generating step (1), the further steps of:

(o) determining, by the administrator system, at the end of the smart contract duration, a payout amount based on at least the first trade instructions;

(p) generating, by the administrator system, payout instructions based at least on the first side information and the second side information; and

(q) sending, by the administrator system, the payout instructions to the second smart contract address via the blockchain to provide the payout amount to one of the first user public address and the second user public address, wherein the payout instructions are implemented by the plurality of geographically distributed computer systems in the blockchain network.

16. The method of claim 1 , further comprising the further step of:

(o) collecting, by the administrator system from the security token, excess collateral from the first trade,

wherein the collecting step comprises:

(1) sending, by the administrator system via the blockchain for the underlying digital asset, an eleventh message comprising first requests to:

(A) determine first excess collateral for the first trade in accordance with the first smart contract instructions and the first trade instructions;

(B) determine second excess collateral for the first trade in accordance with the first smart contract instructions and the first trade instructions;

(C) distribute the first excess collateral for the first trade in accordance with the first smart contract instructions and the first trade instructions to the first user address; and

(D) distribute the second excess collateral for the first trade in accordance with the first smart contract instructions and the first trade instructions to the second user address;

wherein computer systems among the plurality of geographically distributed computer systems in the blockchain network implement the first requests.

17. The method of claim 16 , in the case where at least one of the first excess collateral is greater than zero or the second excess collateral is greater than zero, further comprising:

(o) calculating the first excess collateral for the first user and second excess collateral for the second user by using the first trade instructions and first benchmark information; and

(p) sending, from the second smart contract address to the first smart contract address, a twelfth message including a request to transfer:

(i) the first excess collateral in stable value tokens from the second smart contract address to the first user public address, when the first excess collateral is greater than zero; and

(ii) the second excess collateral in stable value tokens from the second smart contract address to the second user public address, when the second excess collateral is greater than zero;

wherein computer systems among the plurality of geographically distributed computer systems in the blockchain network implement the transfer of the first excess collateral and the second excess collateral.

18. The method of claim 1 , wherein step 1(a) further comprises:

(1) generating, by the administrator system, graphical user interface information including at least one prompt for the first user to provide the smart contract proposal;

(2) sending, by the administrator system to the first user device, the graphical user interface information; and

(3) receiving, from the first user device in response to the at least one prompt, the smart contract proposal.

19. The method of claim 1 , wherein the first contract information further comprises at least one of the following:

(H) derivative type information;

(I) early termination rules;

(J) a-second benchmark information;

(K) asset identification information;

(L) pricing model information; and

(M) volatility information.

20. The method of claim 1 , wherein the first contract information further comprises:

(H) first collateral information in stable value tokens.

21. The method of claim 1 , wherein the first contract information further comprises:

(H) second collateral information in stable value tokens.

22. The method of claim 1 , wherein the first contract information includes first transaction fee information.

23. The method of claim 1 , wherein the blockchain associated with the underlying digital asset uses proof of stake.

24. The method of claim 1 , wherein the underlying digital asset is Ether.

25. The method of claim 1 , wherein the underlying digital asset is Neo.

26. The method of claim 1 , wherein the second smart contract instructions are associated with more than one smart contract address.

Assignments (2)

Continuity (25)

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