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ICO Analysis: adToken

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The problem of digital content has long been foremost on the list of those which can be addressed by the blockchain and cryptocurrency. Without someone paying for the creation of good content, there would be very little of it available. In the beginning of the Internet days, there was not even a secure way to transact over the Internet, let alone the mechanisms to secure its contents. because of that, the idea of paid subscriptions was incredibly hard to swallow, though over the years it has matured in the form of premium services and the likes of Netflix. Thus, advertising is still the dominant way that content online is paid for, and the creators of adToken don’t see that changing in the future. Rather, the problem they intend to address is not the method of paying for the content, but the fraudulent conditions in which advertisers currently are forced to operate.

As CPM rates have declined, downstream publishers and those who rely on advertising have begun resorting to cheating the algorithms with bots which can mimic human behavior and falsify traffic statistics. The decreasing cost of these methods has made the average advertising dollar of a given firm far less effective, as it’s said in the adToken Whitepaper:

Ad buyers are increasingly frustrated by having their money stolen. While programmatic ad buying is undoubtedly the path forward for quantifying the value of ad buys relative to direct dealing and is the highest growth area of digital advertising, programmatic is, at present, a morass for quantifying efficacy in advertising non-installable goods. The behaviors of humans on web pages are easily mimicked by bots and the flagging of bot network signatures is essentially a cat and mouse game. This leaves advertisers mostly powerless against the incentive structure of the downstream supply chain.

The solution that adToken presents is a registry of valid publishers who are not scamming the system for ad buyers to consult. Applications can be made and challenged in a decentralized manner and changed later on through the same governance model. The idea is that by becoming involved and moderately exposed in the adToken economy, ad buyers will save money long-term by only dealing with publishers who have been verified as honest. Additionally, the governance model is also used to change constants in the same; meaning that the periods for challenging new domain entries or the period of validity can be changed by token holders.

The Economics of Virtue

The purpose of the registry will be to provide value to ad buyers, so the whole system will rely on honesty and virtue from its participants. If a bad domain is submitted and no one challenges it, for instance, then the whole system can be tainted, with that bad domain siphoning funds and giving adToken a bad reputation. However, this point clearly illustrates a more important one: the incentive for adToken holders themselves to desecrate the system is not there because it will inevitably affect the exchange value of their token. Therefore, as a liability, this is limited in terms of rational self-interest to outside parties who likely have a competing service.

However, adToken does not appear to be trying to monopolize the digital advertising verification through the cryptography sphere. Instead, applicants will also be able to indicate if they are accepting Basic Attention Tokens as well, which are part a similar effort operated by Brave Software that is also creating a browser, which will allow web users to earn money for allowing advertising through.

The economics of virtue appear faulty at first glance, but when one thinks about it a bit deeper, one sees that it can be viable. For instance, a single attack of the kind outlined above would result in significant governance changes within the system. Perhaps a mandatory challenge/review would then be introduced, in which someone actually has to prove the site has never engaged in botvertising.

The voting process is interesting. The applicant provides a domain and an adToken deposit.Then, there is a challenge period during which another person can put up an equal deposit as a challenge. If a challenge is present, adToken holders are able to put up tokens to vote against or for the application. If the application fails, the person who challenged it receives half the deposit they put up, and everyone who voted in their favor also receives an even dispensation from the other half. The applicant loses all their deposit, but anyone who voted in favor of them receives their own voting deposit back.

This does leave the system vulnerable, still, to attackers with large bank rolls. However, one can guess that the parties with the most interest in this platform succeeding have deeper pockets than those who fear its success. One is a group which must resort to fraud to profit, the other is a group which simply wants its advertising dollars to effectively perform (by actually reaching humans instead of robots). From the whitepaper:

Token holders have one concern, which is to flag fraudulent and low quality applicants to the pool and win votes to reject those applications.

The adChain Team

adToken itself is actually a conglomerate of various operations, including ConsenSys, MetaX, the Data & Marketing Association, and the adChain Association. The DMA obviously has little technical input on the project, but having their backing earns this project significant credit, as it is their purview to better the conditions for their industry. The team is composed of elements of ConsenSys and MetaX, beginning with Mike Goldin, who works full-time at ConsenSys and had previously interned there during college a couple years ago. He has to his credit a successful smart contract for something called Ujo Music, which operates in the same space as several others regarding the identification, licensing, and payment of music artists.

Their primary development efforts seem to be at the behest of Miguel Morales, who works at MetaX and has worked at two other software-focused firms in the past. Morales is a highly competent developer. In relation to this current project, he recently wrote a tutorial regarding interactive bid requests.

In advisory roles, they have Shailin Dhar and Raleigh Harbour, both of whom share massive experience in the digital advertising world. Dhar is the author of an influential document on the subject, while Harbour formerly worked for AOL, who pioneered the industry early on, becoming one of the first important and sizable advertising networks.

Presumably, the team will rely on the vast human resources of ConsenSys and MetaX for actual development, so the significant lack of highly-technical people listed in their team section does not necessarily equate to technical debt. The major organs of this project will function in management and advertising anyway, since getting the word out to publishers and advertisers will be paramount in the success of the platform.

Investment Details

The adToken crowdsale will go live via Ethereum only on June 26th at 9 AM Pacific time. 500 million tokens will be for sale that day, with 100 million already being sold in pre-sale funding arrangements. An additional 400 million are split evenly between MetaX and ConsenSys, for a total of 1 billion coins in the economy.

This distribution is arguably a red flag, in traditional ICO analyses, due to the high level of coins that are not being released to the public. The least they could have done is pull the 100 million tokens they used for fundraising already from the 400 million being distributed between the firms, correcting the balance so that the majority are in the wild, while 40% remain in the citadel. Instead, 10% are unknown, 50% are in the public, and 40% are held by the founders. The pre-sale arrangements could be fictional or falsified, as well, making the thing suspicious on these grounds. In general, a small pre-mine or with-holding is acceptable to fund development, but the coins should be left to the market by and large for value and legitimacy.

A more in-depth map of the distribution is here:

No real information on how to actually invest is present yet, but presumably, that information will be available on June 26th. However, the site does say a MetaX GUI for participating will be built in the meantime. You can sign up for a reminder at the adToken website. A specified starting price has not been listed, but it does not that only the sending address will be able to receive the tokens, so do not fund the investment with an exchange account that you do not control.

The Verdict

adToken is a great idea with limited drawbacks. Let’s go over the drawbacks:

  • Potentially lots of others in the space, creating a sense of attrition in terms of growth. If a site cannot get whitelisted at adToken, perhaps it can somewhere else. This could lead to confusion in the market, and mean that reputation will be the primary factor in the value of adTokens. If this happens, the trajectory of the token itself could be straight up or down.
  • The vulnerability of deep-pocketed attackers from other whitelist operations or those who benefit from the problem’s existence. Penetrating the reputability of adChain would not be trivial, but could be possible. The system relies on there being enough active, rational participants to ensure against these types of denigrations. Anytime such problems were to arise, other plays in this market would have an opportunity.
  • The period between launch and gaining a reputation as a way for advertisers to actually save money and as something they should participate in could be prolonged, which means that the token and project themselves could be overshadowed by later efforts that get luckier in the beginning.

All of these things being the case, people could still profit in adChain. If you wanted to make money on the side, picking up some adTokens and making it your businesses to challenge faulty domains could be profitable. Entire firms could be built around this concept, and confederations of such firms could raise oceans so all ships float higher. The value of adTokens themselves will ultimately be determined by how badly submitters – publishers – want them, so the more of this virtuous work you did, the better the platform and higher the value of the token would be. This is somewhat unique in terms of tokens and cryptocurrencies, in a sense that the holder is not entirely powerless to influence the value of the token; instead, by doing good work, the holder can potentially increase the value of the token.

Of course, you’re also relying on the notion that others will do this by signing on. This is problematic. It’s not all there is to it, though, but let’s dock two points based on that fact. Now we’re at 8 remaining. We’ll take another half point for the risk of non-self-correction, another full point for 500 million tokens withheld from the market, and call adToken, as a whole, 65% safe in terms of likelihood of recouping your investment.

This is not a guarantee in any sense. Just as Exscudo appears to be moving forward without any issues, despite the concerns of this writer, adToken could fall flat on its face and receive no interest at all, thereby devaluing your purchased tokens to nothing at all. But given the assessment above, this seems unlikely.

 

 

 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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5 stars on average, based on 2 rated postsP. H. Madore has covered the cryptocurrency beat over the course of hundreds of articles for Hacked's sister site, CryptoCoinsNews, as well as some of her competitors. He is a major contributing developer to the Woodcoin project, and has made technical contributions on a number of other cryptocurrency projects. In spare time, he recently began a more personalized, weekly newsletter at http://ico.phm.link




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5 Comments

5 Comments

  1. embersburnbrightly

    June 6, 2017 at 10:19 pm

    A very thorough and informative analysis you have presented here; thank you!

  2. GhostCap

    June 7, 2017 at 12:44 am

    Been interested in some analysis on this one. Thanks for the breakdown! Very helpful.

  3. Navster

    June 7, 2017 at 3:25 am

    I would have liked to see more about how adToken competes or works in the same market as Basic Attention Token. It was mentioned very brief but I think it’s a lot to think about considering the ‘hype’ and ‘brainpower’ behind BAT.

    Thank you for the good insight as always Mr Madore.

    • P. H. Madore

      June 7, 2017 at 10:57 am

      My understanding of this aspect is that site publishers are allowed to indicate if they accept BATs for advertising payments. Applicants are allowed to supply limited additional metadata, including payment types, but the example given in their whitepaper is BAT, which to me is more of a philosophical move to say: we’re not trying to compete with BAT, but could be a way to facilitate its usage.

      Specialized smart contracts could be written using BAT and adChain, I reckon. Other tokens will probably come to the fold. Adult entertainment advertisers will probably want their own version as well.

      Actually, thinking about this all in depth makes me want to analyze and maybe make some bets on the future of advertising and the plays therein.

  4. GRACE88

    June 10, 2017 at 2:52 pm

    Thank you. Very useful analysis in comparison to BAT.

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Why Would Anyone Have Faith In Tether?

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I don’t want to get sued for slander so let me explain the reasoning beyond today’s title. After all of the turmoil surrounding Tether on Monday, how can the price be anywhere near the $1 parity level with the US dollar?  After more than a year, how can anyone have confidence in Tether and their common law partners Bitfinex when, for example, Circle, backed be the highly respected Wall Street giant Goldman Sachs offers an alternative?  We should also mention that Circle is just one of many so called stable coins.

It isn’t hard to find a list. Exchanges are feverishly adding stable coins. Singapore based Houbi is adding Paxos Standard Token (PAX), True USD (TUSD), Circle (USDC) and Gemini (GUSD).  

When Stable Coins Cause Instability

Well, the evidence is mounting as the months move along that so called stable coins can have the power of creating anything but stability.  This week’s experience with Tether, Bitfinex and the price explosion of Bitcoin demonstrates that there are still dangers lurking. This is why trust is important.

Monday’s gyrations were not the first questionable moment for Tether.  The coin, which gains its intended stability by being tied on a one for one basis with the US dollar, has been the subject of questionable behavior all year.  

As far back as January trade sources were expressing concern the Tether was responsible for last December’s major price bubble in Bitcoin.  The frenzy over Bitcoin set off speculation across the entire crypto spectrum. But that was just the beginning.

In June Bloomberg reported on a paper by John Griffin, a finance professor at the University of Texas, that among other things claimed 60% of last year’s price move in Bitcoin was the result of manipulation surrounding Bitfinex. That directly implicates Tether.

Using algorithms to analyze the blockchain data, Griffin’s team found that purchases with Tether were timed following market downturns and result in sizable increases in Bitcoin prices. Less than 1% of hours with such heavy Tether transactions are associated with 50% of the meteoric rise in Bitcoin and 64% of other top cryptocurrencies.

These findings prompted the US Commodity Futures Trading Commission to step in with a series of subpoenas.

Tether’s coins had become a popular substitute for dollars on cryptocurrency exchanges worldwide, and for good reason. They are anonymous, closely tied to the value of the US dollar and can be used in exchange for Bitcoin, Ether or about 10 other cryptocurrencies.  Tether is closely associated with Bitfinex, with whom they share common shareholders and management.

Bitfinex has offices in Hong Kong but it is legally headquartered in the British Virgin Islands. In May they announced plans to move to Zug, Switzerland. Bitfinex has a sorted history of poor security, having lost nearly $100 million worth of Bitcoin from customer accounts. Moreover, while claiming to have total one for one US dollar backing for each Tether, real proof is absent.  

Further Evidence of Manipulation

Over the course of this year, as we have gathered digitally to witness the loss of nearly $600 billion in crypto value, everyone has been looking for the culprit. When I first read of some of the academic studies that blamed the advent of futures trading on the CBOE, I laughed. Honestly, I believed the real cause of the rise and fall of crypto were a well connected group of billionaires that together had the power to move markets.  

Well the folks at Chainalysis have just produced some surprising research results. Their Blockchain Intelligence Platform powers investigation software for some of  the world’s top institutions. These guys don’t do surveys, the have their hands on big data that is able to detect some interesting stuff.

Chainalysis released a new report last week showing that the so called Bitcoin whales are not responsible for price volatility. The study examined the 32 largest BTC wallets, which reportedly represent 1 million BTC, or around $6.3 billion. That is a pretty solid sample size.

The data revealed that the BTC whales are do not act in concert with one another. In fact not only are they a diverse group but about two thirds behave like longer term investors. Instead of being FOMO (Fear Of Missing Out) types, on net they have traded against the heard buying on price weakness.

Putting The Pieces Together

The crypto world is bombarded with globally generated news on an hourly basis. But what does all of it mean anyway? Hopefully this article adds some perspective on what and who has been responsible for the direction of crypto prices over the past year.  As more of these weak players are identified and depleted of their business, real investors will have the confidence to return to the market.

Featured image courtesy of Shutterstock. 

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.4 stars on average, based on 113 rated postsJames Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.




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EOS Price Forecast: EOS/USD Heading for Another 300% Move?

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  • EOS/USD price action via the 4-hour chart view has formed a bullish flag pattern.
  • The price is moving around levels seen back end of March to early April, before a bull run of over 300%.

The past six sessions for EOS/USD have been erratic to say the least. It has been subject to a high amount of volatility, swinging aggressively in both directions. There has been a lack of commitment from either the bear or bull camps of late. As the market continues to trade with such behavior, it appears to be trying to find its feet, ahead of a potential chunky firm trend.

EOS DApp Hacked Again

An EOS based gambling DApp, EOSBet has been hacked, with $338,000 being reported as stolen. This isn’t the first time; just back in September, hackers managed to get away with a reported 40,000 worth of EOS, which at the time had a value of $200,000. It has been said that they were able to exploit their smart contracts, having found security vulnerabilities.

Technical Review – 4-hour Chart View

EOS/USD 4-hour chart

EOS/USD price action has formed a bullish flag pattern, which began taking shape on 15th October, after the aggressive price behavior stabilized. The bulls at the time ran the price well up into $6 territory. Consequently, it then met the breached ascending trend line, failing to move back above this area. This followed the sharp breakthrough to the downside, which occurred on 11th October. As a result, a drop of over 15% was seen, forcing EOS/USD to retreat in a demand area, within the $5.0000 level proximity.

Looking to the upside, small near-term resistance is seen at around $5.6100, which is the upper trend line of the mentioned bull flag pattern. A breakout will likely open the doors to a retest of the broken ascending trend line, tracking around $6.1100. Support can be eyed at $5.4600, which marks the lower trend line of the flag. Furthermore, should this fail to hold, EOS/USD could likely fall back down to the serving demand area, within the lower $5.0000 territory.

April 2018 Bull Run

EOS/USD April bull run

In April of this year EOS/USD entered a chunky bull run, gaining over 300%. From the back end of March until 11th April, the price had been stuck within consolidation mode. Resulting in the price trading within a tight range, at levels of where the price is currently seen today.

Something quite astonishing started to unfold. Between the period of 11th April to the 29th April, a bull run of around 290% was seen. Over this time frame EOS/USD went from $5.9500 up to a high of around $23.0811. The price is currently demonstrating a similar behavior to that of what was seen during the mentioned period. It is interesting to note that the price did have historical levels to break through, as it had already run higher during the period of December 2017 and came back down. Finally, this is not to say EOS/USD will observe the same bull run. However, it is an interesting observation to be aware of.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 30 rated postsKen has over 8 years exposure to the financial markets. During a large part of his career, he worked as an analyst, covering a variety of asset classes; forex, fixed income, commodities, equities and cryptocurrencies. Ken has gone on to become a regular contributor across several large news and analysis outlets.




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Analysis

Pre-Market Analysis And Chartbook: Risk Assets Under Pressure as Fed Minutes Loom

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Wednesday Market Snapshot

Asset Current Value Daily Change
S&P 500 2,789 -0.98%
DAX 30 11,715 -0.52%
WTI Crude Oil 69.79 -3.27%
GOLD 1,229 0.13%
Bitcoin 6,429 -0.49%
EUR/USD 1.1528 -0.38%

While yesterday we saw a huge oversold rally in equities, with the help of positive corporate earnings, the easing of the US-Saudi standoff and the stability in Treasury yields, today investor sentiment shifted yet again.

Negative news regarding the US-Chinese trade war, which is very likely to intensify before the US midterms, dismal European car sales, and continued worries with regards to the Italian budget and the Brexit process all acted as bearish catalysts.

DAX 30 Index CFD, 4-Hour Chart Analysis

Although European markets followed the lead of Wall Street and rallied today in early trading, the major indices are already well below their intraday highs, after turning back from the first levels of resistance. The DAX ran into resistance near the 11,850 level, below the crucial 12,000 level that could be the line-in-the-sand in deciding the long-term outlook going forward.

The German benchmark, the FTSE 100, and the EuroStoxx 50 are all in strong declining trends, and with the most important Asian markets also under strong short-term selling pressure, the US markets have a steeper and steeper mountain to climb should they resume the bull market.

Nasdaq 100 Futures, 4-Hour Chart Analysis

The Nasdaq opened slightly below yesterday’s cash close, underperforming the Dow and the S&P 500, and since then sellers have been in control of the market. The Russell 2000 that has been showing the way for the broader market lately is deep in the red as well, and we still think that risk assets are facing a prolonged correction if not an outright bear market.

Treasury yields are stable before today’s most important release, the minutes from the Fed’s latest meeting, but the dynamics of the quantitative tightening (the shrinking balance sheets of the global central banks) are likely behind the faltering of global risk assets.

VIX Pulls Back as Dollar Attempts Rally

VIX (US Volatility Index), 4-Hour Chart Analysis

The US Volatility Index fell significantly amid the bounce in stocks, hitting the key 17 level yesterday after plunging below 20, but the chart of the measure still confirms the regime change that would be consistent with a prolonged bearish period. While the bounce could still continue, forming a more complex pattern, the volatility-conditions could very important to judge the stability of the market.

EUR/USD, 4-Hour Chart Analysis

Forex markets continue to experience heavy trading, and today the US Dollar is trying to gain back momentum after its recent correction. Although the worse than expected housing data (building permits and housing starts both missed expectations) could have been bearish catalysts today, the Greenback held on to most of its early gains.

Should the reserve currency form a swing low and continue its broader rising trend, emerging markets could be back in the crosshairs, and risk assets would face another problem. All eyes are on the support zone near 1.15 in the EUR/USD pair, as a move below that would be a bullish sign for the USD, and it would warn of a test of the August low near 1.13.

ChartBook

Major Stock Indices

S&P 500 Futures, 4-Hour Chart Analysis

Dow 30 Futures, 4-Hour Chart Analysis

FTSE 100 Index CFD, 4-Hour Chart Analysis

EuroStoxx50 Index CFD, 4-Hour Chart Analysis

Nikkei 225 Futures, 4-Hour Chart Analysis

Shanghai Composite Index CFD, 4-Hour Chart Analysis

EEM (Emerging Markets ETF), 4-Hour Chart Analysis

Forex

USD/JPY, 4-Hour Chart Analysis

GBP/USD, 4-Hour Chart Analysis

EUR/GBP, 4-Hour Chart Analysis

AUD/USD, 4-Hour Chart Analysis

Commodities

WTI Crude Oil, 4-Hour Chart Analysis

Gold Futures, 4-Hour Chart Analysis

Copper Futures, 4-Hour Chart Analysis

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 377 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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