ICO Analysis: Enigma | Hacked: Hacking Finance
user

ICO

ICO Analysis: Enigma

Posted on .

ICO Analysis: Enigma

Introduction

This article was posted on Saturday, 12:02, UTC.

Let’s be up front: Enigma’s team is more likely a problem than not. From our sister site’s Francisco Memoria:

// -- Discuss and ask questions in our community on Workplace. Don't have an account? Send Jonas Borchgrevink an email -- //

While trying to know more about the incident and help other users know about it, redditors found out that Enigma CEO Guy Zyskind’s email had been accessed by the hacker. His email, according to reports, had been dumped on the internet in the past due to other services being compromised. After these occurrences, Zyskind reportedly never changes his password, and no two-factor authentication was enabled.

This is front-loaded for obvious reasons. Due to very simple measures that could have been taken, potential investors have already had their hopes dashed and money taken. This incident, no matter how many ICO publications or analysts give Enigma a high rating and a pass, will affect the funding for Enigma. Whosoever wishes to can simply start campaigning with the hacked information around the beginning of the sale, to remind everyone, erstwhile launching a separate implementation of the same platform.

That out of the way, what is Enigma?

Enigma is designed to connect to an existing blockchain and off-load private and intensive computations to an off-chain network. All transactions are facilitated by the blockchain, which enforces access-control based on digital signatures and programmable permissions.

Does this remind you of anything? Oh, perhaps, the Supercomputer Organized by Mining (SONM)? If so, good. Because from a high-level, the services of this kind offered are indistinguishable, but SONM lacks any of the aforementioned intrigues.

Enigma is also intended to be used as a data marketplace, which is what we’re here to talk about, really:

// -- Become a yearly Platinum Member and save 69 USD and get access to our secret group on Workplace. Click here to change your current membership -- //

Off-chain nodes construct a distributed database. Each node has a distinct view of shares and encrypted data so that the computation process is guaranteed to be privacy-preserving and fault tolerant. It is also possible to store large public data (e.g., files) unencrypted and link them to the blockchain.

Okay, what about Catalyst?

Make no mistake. Things are intentionally confusing and complex in the ICO market. Often, if someone feels humbled, they will give their money over in the belief that the other party will know better what to do with it.

In any case, Catalyst is, among other things, another play in the market information space. Our upcoming review of Red Pulse will illustrate yet another example of this type of product being launched, but here is a very succinct description of Catalyst:

[…] A tool that makes it easier to make educated investment decisions in crypto-assets, based on a data-driven approach. Catalyst is a set of applications and the infrastructure to drive better investment strategies, hence increasing the adoption of crypto-assets.

It is also the “first application on the Enigma protocol.” The Enigma protocol uses the ENG token. All of this is being launched simultaneously, we understand. Assuming the Enigma data marketplace takes off, what we are being presented is a platform that will allow people to build highly-informed trading bots among other applications that rely on real-time information. The data will not be free, it will be paid for in ENG tokens. This is the idea. Not just bots, but anything. We signed up to see what it looks like. After some doing, we got the test bot running. Its algorithm is the buy and hold strategy, and it it outputs the following on the host computer:

We can see how this will come in handy, for many different applications, across industries. Financial markets may be the first to embrace and adopt, but others will follow if the snowball begins rolling. It’s not hard to imagine, if the data is available and affordable, many advanced real-time data consumption applications being developed atop the protocol.

Over-time, it is our hope that the long-tail of data-sets curated by the community would outpace our own ability to generate interesting data. Such a network effect would be highly beneficial to developers using our platform.

So the value proposition is that great applications will have immediate access to quality, verifiable data for many purposes. Financial applications will obviously be the most growth-producing. Now let’s see what we can derive about the token itself.

ENG Token

We won’t talk about the pre-sale that is supposed to be on-going, because we do not want anyone eager to shoot themselves in the foot to go ahead and do so. It will be difficult for anyone to trust a “new presale” announcement, so any such would be a bad metric by which to measure the performance of the funding round.

So we will talk about the actual ICO token generation event, which begins on 9/11/2017 and will yield 100 million tokens, 25 million of which the Enigma firm will retain for its own purposes, another 25 million of which will be given away, and 50 million of which will be available for purchase.

The tokens value will be in incentivizing and paying for data on the platform. Thus, we have a three-level system here – the data market is the bottom layer, Catalyst is the second, and on Catalyst other applications depend in order to provide utility. The last part is crucial to success, and the volume of projects which crop up in that category is a good way to measure the health of the project.

Competitors In The Field Are Active & Possibly Quite Superior

We will be reviewing Red Pulse very soon, but if you have a look at their website, it’s not hard to extrapolate that they could pretty easily expand their own platform to fully encompass everything that Enigma is up to. With all due respect to the actually brilliant authors of the Enigma whitepaper and the company, Enigma might not be the best play in this field. Having your e-mail hacked is potentially forgivable, but less so when it was quite avoidable. Being MIT graduates and technically-minded individuals, that this took place gives rise to the quiet suspicion of a pre-sale scam conducted from inside.

The Verdict

This will be one of the longer verdicts this analyst enters, so that it is fully understood why he is concluding rather divergently from others in his field. For starters, we have to consider all the angles that are introduced when a pre-sale theft/hack occurs. It’s not relevant how guilty the team are, unless they were complicit, but the perception that they are guilty of bad security is prevalent. In our own Hacked.com community, more than one regular ICO investor has already stated there is no coming back from this. We have to account for pessimism and its ability to take an in-progress funding round to an eventual refund round.

Risk

  • The team were not prepared to start this project. Calling yourself “an MIT-bred team of experts, backed by top-tier investors,” MIT being the birthplace of hacking and one of the leading genius incubators in the world, was essentially daring hackers to see what they could see. They would have been targeted anyway, but some preparedness could have gone a long way. All of the above firmly in mind, we score Enigma a 0 in terms of team quality. Under the current model, this means a negative carry of 4 points. Off the top.
  • Building on the above point, it will be difficult to get developers or companies excited to work with a company that already has horrible optics in the technosphere. Without these applications, you have nothing here. -2
  • In the event that applications are built, they will need data. Again, the reputation is going to make this a less attractive place to collate and sell data than others. -1

Growth Potential

  • This analyst is cautious to suggest that this project will take off, however, the potential for growth is there. In the cryptocurrency world, we’ve seen companies recover from worse, but we’ve also seen companies do much worse. The thinking of many in the community will be that we should probably not enable Enigma to do much worse.
    • This being the case, there is still a lot of potential in this platform. Whitelabeling the applications is a possible way to avoid the negative name recognition in the short-term, for development teams who still want to build on Catalyst. We can foresee at least a few of these doing so, and so we feel okay giving some points back: +5. (Idea can work.)
  • They have some software that works. It’s very basic. It would have been preferable that they built a fully-fledged product to offer in addition, of the sort that others are expected to build down the line. We see the reason that they rushed to market as a matter of timing, so we forgive that too. +4
  • Although we assert that they may not have personally been prepared to conduct the ICO phase of their project, we can say that they are motivated to achieve their milestones, and this is encouraging for a token holder. +2

Disposition

Numerically, for the present time, we land on a score of 4/10 for Enigma. When the sale has begun and the market begins to speak, we can move this needle in either direction. The author welcomes feedback in this regard. Again, no change to this score will be made before the market has begun to speak on the subject.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



Feedback or Requests?

P. H. Madore

P. H. Madore

http://phm.link

P. 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

Comments
  • user

    AUTHOR embersburnbrightly

    Posted on 6:11 pm August 26, 2017.

    I continue to really enjoy your reviews, and the fact that you evaluate coins looking at them from many different multiple angles; even re-evaluating and updating scores at different points in time as seems appropriate. You are a true asset to this site.

  • user

    AUTHOR NoHomeJerome

    Posted on 12:00 am August 27, 2017.

    You haven’t included in our analysis (and score) the fact that they announced they will fully refund the $500K stolen with the hack. Do you think this fact is relevant and should influence your assessment in either direction?

    • user

      AUTHOR P. H. Madore

      Posted on 12:44 am August 27, 2017.

      Well, it can be taken both ways. That money is obviously coming from somewhere that it could have been better used. That they’re giving it back is good for the people who were robbed, but it doesn’t do much, no, to move the needle upward for them, in this viewpoint. However, the market could be more forgiving, like I said, and if I notice that, I’m going to upgrade some because for the many reasons I mentioned it is a solid idea. Unfortunately my confidence is low that people will race to get these tokens.

      • user

        AUTHOR NoHomeJerome

        Posted on 9:21 am August 28, 2017.

        I mostly agree with you. However, based on some observations around the pre-sale it went pretty well (easily reached the $20M target) and investors didn’t seem too worried abut the hack. (even before the refund of stolen funds was confirmed). So, I assume optimism still greatly out-weights the security lapse. I assume for the $10M of the public ICO demand will outweigh supply.

  • View Comments (4) ...
    Navigation
    The team:
    Dmitriy Lavrov
    Analyst
    Dmitriy Lavrov is a professional trader, technical analyst and money manager with 10 years of trading experience. He covers Forex, Commodities and Cryptocurrencies. He is among the top 10 most Read More
    Jonas Borchgrevink
    Founder
    Jonas Borchgrevink is the founder of Hacked.com and CryptoCoinsNews.com. He is a serial entrepreneur, trader and investor. He shares his own personal journey on Hacked.com. // -- Discuss and ask Read More
    Mate Csar
    Analyst
    Trader 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 Read More
    Mati Greenspan
    Analyst
    Senior Market Analyst at Etoro.com. // -- Discuss and ask questions in our community on Workplace. Don't have an account? Send Jonas Borchgrevink an email -- // Important: Never invest Read More
    Rakesh Upadhyay
    Analyst
    Rakesh Upadhyay is a Technical Analyst and Portfolio Consultant for The Summit Group. He has more than a decade of experience as a private trader. His philosophy is to use Read More
    Pamela Meropiali
    Account Manager
    Pamela Meropiali is responsible for users on Hacked.com. // -- Discuss and ask questions in our community on Workplace. Don't have an account? Send Jonas Borchgrevink an email -- // Read More
    Joseph Young
    Journalist
    Joseph Young is a finance and tech journalist & analyst based in Hong Kong. He has worked with leading media and news agencies in the technology and finance industries, offering Read More
    Friday Market Recap Asset Current Value Daily Change S&P 500…