ICO Analysis: Enjin Coin
We like when entrenched or existing players in industries see the power of the blockchain and identify their own opportunities within it. This is what we see with Enjin, who launched their online gaming-centric content management system in the same year that Bitcoin was getting off the ground. Enjin therefore gets the benefits of extolling its own virtues before pitching a new idea: millions in monthly revenue across over a quarter-million gaming communities around the globe.
While we have to avoid the fallacious idea that just because an idea worked in fiat sytems it will work even better on a blockchain, it is encouraging to know that the people approaching the project in question are deeply familiar with the subject matter. We lent Rex additional points on these grounds, being that their progenitors are established property development professionals and Rex is meant to serve that demographic. In the case of Enjin, they really took some time to find the right tool set for their task: they’re building a Bancor Protocol token, not just any ERC20 token.
The idea of Enjin’s ENJ token is not necessarily a new one. Brock Pierce originally made his real money from a firm that allowed people to sell virtual goods acquired through gaming. What Enjin would like to build is a system wherein players will be able to seamlessly do this, enabling content creators and players to have a much better experience when it comes to the dollars and dimes of gaming. Everyone agrees that game developers and studios should be paid, even subscriptions in the cases where ongoing content and services are in order. What is debatable is whether it should be a zero sum system when it comes to the digital goods and services offered inside of such a platform. It would seem that cryptocurrencies, native to the same way in the same way that massively multiplayer games themselves are, will fit right in to service the need of a solution.
Enjin will develop tools that enable game publishers, game servers, and communities to manage virtual goods and in-game items across multiple platforms. Monetization using Enjin Coin will be a key focus with robust features and toolsets provided. Great benefits will be gained by utilizing a decentralized platform and the supporting frameworks.
Building on Bancor
Enjin says on the token ICO page that they will be using Bancor to issue the tokens, but they don’t mention much in their whitepaper about their thinking here, or how this makes things better. In any case, Bancor is an established way of issuing tokens. It’s one of the purposes of the Bancor protocol, and one of its use-cases.
Nevertheless, having just enough technical grasp of what is going on with Bancor and Enjin, we can deduce that Enjin is using Bancor for its enhanced smart token capabilities. Bancor explains smart tokens, in part, in the following way:
Smart tokens are compatible with the ERC20 standard and can be used by any softwarethat supports this standard, such as Ethereum wallets. However, smart tokens offer additional functionality not available to regular tokens. Each smart token holds a reservebalance in one or more other ERC20 tokens, thereby enabling anyone to exchangebetween itself and any of its reserve token(s). The smart token’s smart contract issuesnew tokens (expanding the supply) to anyone who purchases it with any of its reservetokens, and withdraws tokens from the reserves (contracting supply) for anyone choosingto liquidate the smart token.
Presumably, ENJ, along with BNT and ETH, will act as base currencies for tokens issued within the Enjin platform.
But Who Needs It?
Enjin are good at identifying their market above all others. This harkens back to our earlier assertion that the best blockchain technologies will derive from those who are already familiar with the industries they intend to disrupt. In Enjin’s case, they’ve been able to install themselves as a medium between game publishers and their communities. In many ways, their company, at over 8 years old, has already outlived many of the games people probably first encountered them through.
Their goal is to produce a platform on which developers, community members, and players will be able to freely transact in digital goods and services related to interests they are already engaged in. Their first target market, although obviously they can expand to new games easier through native integrations, is an existing, global community of players already willing to spend money in a similar fashion.
They are entirely serious about this last aspect, with several developer tools built into their roadmap, one of which being a plugin for Unity, which is a popular engine on which modern video games are built.
The Unity C# SDK will allow creation of transaction requests, reading account balances, creation of subscriptions, and querying toplists.
There are a few other developer tools they speak of implementing right away. Making it easy for developers is a primarily important thing in the early phases. However, Enjin will already see some adoption regardless of this because it will be leveraging existing communities and relationships built over many years.
So far, so good. Where the rubber meets the road is in both the economic purposes and design and design of the ENJ token. We must now get to the heart of that.
Enjin Token (ENJ)
The Enjin platform itself can be seen as a sub-Ethereum, although it is technically sub-Bancor, protocol. Within it, an unlimited number of other tokens can be generated by the individual participant games and communities. These tokens can be used in a variety of ways. One important thing that we must determine before deciding on ENJ is whether or not they ever intend to go full ENJ. Meaning, will they always accept alternative payment methods for developers getting into the network? If so, there would also be a dilution of funds by virtue of arbitrage as well as attrition.
The answer to this question is made in part in the following statement:
Enjin Coin features will be integrated across the entire Enjin CMS platform and natively supported by over 250,000 existing gaming websites.
They go on to stress that it will be much cheaper for developers to accept payments through Enjin Coin and while this may be rue, it is not the confidence builder we’re looking for. We need systems that force the issue, or else the tokens are only a maybe sort of proposition. The systems that will yield more valuable tokens for token investors are those which build demand by having utility. Enjin’s token platform, and the many tokens that can be issued upon it, have such utility, but they are not going to allow themselves room to grow their network effect. A simple fix to this is forcing other payment rails off the site, and only competing with new platforms that want to integrate Enjin Coin in addition. This would create a more valuable token for competitive purposes, anyway.
Nevertheless, they do list out a number of interesting and valid use cases for the Enjin Coin:
- Promotion on Enjin platform, perhaps within games there.
- Payment gateway with almost no cost for usage.
- Donation and reward setups for players and customers.
- Automated payments.
We have confidence that the Enjin team are far more than capable of completing their technical goals. To this end, they have developed a UI concept which they share in their whitepaper:
In total, the sale will allow for the creation of 1 billion ENJ tokens. Since this is not a mineable currency, this appears to be all the tokens that will be created. The presale has been ongoing, and during this time a total $4,143,821.96 had already been raised at time of writing. Adding confusion to the issue, their bonus structure works opposite to the normal way, such that:
$2,000,000 USD and over receives a 50% bonus.
We won’t let this distract too much from the core values of the coin, which outweigh the one setback. Additionally, only 20% of the coins are being held back, whereas in many recent ICOs we have seen ratios as high as 50%, which can be problematic in determining an actual price on something.
The crucial part of a tokenized system is missing, but this doesn’t mean it can’t be repaired level. The author’s gripe with the system is simple enough: Enjin Coin will only be an additional payment option in the Enjin platform. But it will be a competitive one, and the decision to force the issue is at the discretion of a company which might benefit from that handsomely.
- Without sufficient motivation, which is to say lack of choice in order to participate in the Enjin platform or any of its games, people will still often choose other payment rails even where Enjin would actually work out better for everyone involved. -3
- Push-back from companies like Steam could add up to a mighty, unforeseen force of competition. -1
- We like building this on Bancor, which is steadily gaining momentum in terms of value, as people begin begin to realize its potential and things are built on its protocol. Like Ethereum or anything else, Bancor’s value relies on the tokens beneath it, which in turn will benefit from the stability provided therein. A similar effect is had on Enjin by its own design, and since it comes on board with a quarter-million compatible platforms, we see dollar signs. +3
- The variety of developer toolkits will likely add up to actual integration, especially if some of the reserved tokens are used to incentivize user demand through bounty campaigns. Such campaigns could focus on getting developers to build on Enjin. We can foresee a company like Enjin being wise enough to do as much. +2.5
- The cost of platforms continues to goes down, the adoption of games continues to rise. Enjin will be positioned to profit from the nexus of the rise of both gaming and the blockchain. +2
- As exhaustively noted heretofore, this company knows what it is doing. That it already has a community to leverage money from, which already willingly pays it money through other means, means that it will be able to extract more value via the blockchain, and provide more value as well, since there will be fewer fees yet more possibilities. +2
We arrive at a solid 5.5 for this initial coin offering, with room to go either way depending on developments of the actual rollout. This won’t take long to see, since the company backing it will certainly deliver something.
The presale is ongoing. The total coins generated will be 1 billion. Please follow all instructions carefully when reviewing this ICO and do your own additional research before sending money anywhere.
Further investment details are available at https://enjincoin.io/.