ICO Analysis: FundYourselfNow (FYN)
Money is a useless idea unless it is helping people. That you have more representation of value than another person is meaningless unless that person has some need your value can fill. The lender and borrower relationship, one can imagine, is precisely the situation which the earliest forms of money were invented for – how else to keep track of who owes who.
Lending in the modern age is a complex and difficult process. Creditworthiness is based on several metrics, and until the dawn of the internet, those metrics could be the end of great business plans. Venture capitalism hadn’t really applied itself notably to technology yet, so people’s options were down to either a bank or friends and family. Around the time that Bitcoin was invented, companies like Kickstarter as well as “micro-lending” platforms came on the scene. These enabled lots of people with small amounts of money to help fund a business.
In the cryptocurrency world, for a long time there was BTCJam and little besides it. Other projects have competed with it over the years, including BitBond and BTCPop, but the projects with the most volume seem to land on BTCJam. Rife with scammers and low returns, BTCJam has long offered room for improvement and competition to thrive. This is the space we find ourselves investigating with the advent of the FundYourselfNow project, which still has almost a month remaining for investment, the space of cryptocurrency-based crowdfunding.
An immediate red flag is raised, right? These people are essentially crowdfunding a crowdfunding platform – is the snake eating its own tail? Could be that we are in a strange time when we find ourselves analyzing a fundraising effort conducted by a prospective fundraising platform, and the frustrating thing about investments is that there is no crystal ball. Nevertheless, there are only so many points we can deduct on the face for a – shall we say – meta concept – in this case, .25 such points. So if that red flag was raised for you, dear reader, then you can continue on knowing that the ceiling on rating for FYN is already 9.75 for similar reasons.
Conglomerating Businesses and Backers
Before we discuss much about the FYN token or its potential viability, we should identify and go over the business model they seek to capitalize on. FYN is, in essence, taking the flea market, farmer’s market, stock market approach – the fully legitimate approach of the moderate rent-seeker. While not the typical rent-seeking approach, we can think of them like Erhlich Bachmann from HBO’s Silicon Valley – he is not necessary for the creation of Pied Piper, but Pied Piper’s odds of coming into existence were increased by virtue of him.
FYN Value Proposition
This is the value proposition of all of the sites we’ve discussed: projects can find investment dollars and small-time investors (or any non-institutional investors, really) get several advantages over navigating the wild world of potential money vehicles. Getting these people together in the same space and ensuring that there are enough commonalities when they get there is a challenge, a problem worth solving, and whoever does it best will essentially be looking at a percentage of several new technologies moving into the future.
Such lucrative opportunities are bound to break away from the closed doors of Sand Hill Road and into the democratized wealth of the wider world, but this will not become the norm before a company has sufficiently amalgamated enough commoner capital to compete with the types of offers and connections that venture capital can offer. Considering this proposition at all is accepting the idea that some of the most valuable technologies of the future will be funded outside of traditional finance.
The FYN Token
The FYN token will not be required to utilize investment opportunities listed on FundYourselfNow.com, however all projects listed on FundYourselfNow.com will be required to accept a portion of their investment in FYN tokens. The suggested rate for this is 20%. This could give the token some freewheel advantage if it happens to be retaining a higher value than the other tokens being listed, especially if the token is somehow more attractive. Tokens will be redeemable through a buy-back program that FundYourselfNow intends to offer once every six months, and tokens that are bought back in this fashion are permanently destroyed from the blockchain.
The FYN team incorrectly assess the way cryptocurrencies work in the following passage from their whitepaper:
A gradual reduction in token supply will eventually increase on the token value, benefiting all token holders. In addition, the top 100 token holders will be part of the FYN VIP exclusive club. VIP club members have exclusive access to buy into upcoming promising projects featured on the FYN platform (normally at a discount), during their pre-sales period. If the pre-sale quota is not filled up, we will open it to all FYN token holders. We plan to make pre-salesparticipation exclusively using FYN tokens only.
This assessment leaves out a fundamental, all-important truth about ICOs: the value of nothing is precisely nothing, $0.00. So if the FundYourselfNow project retains no value, then neither should any token purchased from it. It’s crazy to think, but this is a real possibility with almost every ICO out there now. To leave this out of the equation and not even add a caveat note about it is almost deceptive.
They further expand on the idea of reducing supply by stating that FYN tokens which are committed to a project are “locked up.” While this can be made the case through programming, this situation also makes FYN tokens less desirable to project creators, if it’s true that they are unable to derive any value from them for at least twelve months. It’s like funding a business and saying, “And here are some gold bars you can sell, nevermind the crazy valuations of gold at the moment, we’re going to count this as a full investment but you won’t be able to realize anything from it for at least a year.” That’s not going to work for the project leaders.
Of course, the simple logic of this underlines the child-like nature of the project as a whole: there are a lot of brilliant ideas, but not a lot of thought given to the overall execution of them. While it’s true that in technology, if you throw enough money at something it is bound to produce something, it is also true that bad seeds almost never yield good fruit. There are serious problems with the FundYourselfNow system from the start, and little is done to address them. In essence, the platform can take off quite divorced from the value of the token – and the token itself is what we’re here to analyze, not the prospects of the business.
As to the prospects of the business, they’re probably okay, but we’ll get to that in a moment.
The value proposition of the FYN token is the following:
- A company (which must exist at redemption time) will redeem your tokens every six months.
- You get bonus tokens now in the ICO, which later can amount to extra investing leverage.
- Potentially other advantages for token holders later.
But overall, you’d still be competing with other investors in the marketplace. Buying the token doesn’t buy you special access to anything much, except potential profits. Now we have to talk about those potential profits, because as earlier mentioned, this is a viable market/industry. But the question we must assess at this point is whether FundYourselfNow is part of the future for it, or if it will just pave the way for the actual unicorns in the space.
Also, importantly, 28% of tokens will never see the market. 8% go into a mysterious (undefined anywhere) “reserve fund” while 20% go to the FYN team themselves. In cases where tokens are being sold publicly, it’s important to note that such withholdings are subject to the market – they should immediately be zeroed out and removed from the market capitalization of the coin. Thus whatever valuation they come out with, at least 20% is potentially as good as gone. There’s a lot of moral hazard in selling tokens and giving some to yourself for free at the same time. Perhaps a more equitable situation would be where these firms were forced to re-purchase their own tokens with the proceeds until they had the specified % rate. Plus, another 12% go to the advisory board, past, present, and future, with little oversight for token holders on how that gets doled out.
Note that 12.5 million tokens will be generated in total, meaning a sum of more than 2 million tokens outstanding, unknown – not much different than fiat currency, in this regard.
Can FYN Do It Best?
FundYourselfNow’s business plan is to develop a top-notch platform for creators and investors to meet each other, with the added benefit of its own in-house token. They intend to re-invest at least 30% of profits per year, with 70% being available for the buyback program.
70% of the profits made from FYN platform will be distributed to investors, via a token buyback program. The tokens bought back will be burned to reduce the overall FYN token supply. This program will be executed every 6 months. The remaining 30% profits will be re-invested to grow the company.
All of the proceeds from the token sale will go to getting the company going, and little detailed information is provided anywhere regarding this.
The FYN Team
Headed up by Jack Ser, recipient of the 2015 Management Consultant of the Year Award by the Singapore Business Advisor & Consultant Council. Ser currently operates his own consultancy, Pinnacle One, a sort of all-in-one shop for the web and finance.
Ser’s previous cryptocurrency projects are zilch, however core Ethereum developer Zheng Junyi “is a crypto-enthusiast who started mining bitcoins in the early CPU days and ETH since genesis.” Junyi “will be responsible for coding secure smart contracts capablity and backend optimizations for the platform.” Zheng Junyi is not to be confused with Junyi Zhang [https://github.com/Junyiz], who has a well-established Github profile, nor the Junyi Zheng who went to UC Berkeley. Instead, if you’re researching Zheng Junyi, he is the developer whose only development shows up under FundYourselfNow. Unfortunately, development chops are of major importance, especially on the money part, and it would be better if this developer’s work were more accessible.
On the advisory board, they do list Dana Coe, who runs Bitlox, a hardware Bitcoin wallet that is a competitor of Trezor. His experience might offer insight on competing in a market already heavily dominated by a competitor.
It is good to see new efforts in the space of cryptocurrency crowdfunding. When legitimately done, these products offer investment opportunities that would never, ever be available to regionally middle class and wealthy people around the world who are, in fact, globally poor. This means that for the first time in history these people have real, easy access to the global economy of investing – they have legitimate tools and means to improve their own station, with very little or even nothing to start with. When there is no minimum ticket price, the whole of the commons can show up – and hopefully everyone will be the better for it. In short, this type of platform is exactly the kind of thing we want to see cryptocurrency projects doing.
Additionally, FYN has the benefit of being regionally well-positioned in Asia, having a mostly native team and a competently multi-lingual communications team.
On these points, we credit 3.5 each.
- Ideas not fully developed – hazard of FYN undesirability. (-1.5)
- FYN token not fully necessary for the platform to thrive/unclear as to why token need exist. (-2.0)
- Market is abuzz – other outfits with the same purpose will be covered here in the near future. Crowded markets can mean less for a given vendor. (-0.5)
Nevertheless, the token will probably do okay once exchanges decide to list it. If the VIP access feature (top 100 token holders) holds any value, people will periodically want to reach this status. The reduction in supply will equate to a value increase, if the tokens are being traded. At an initial price of just under .01 Eth (~$3) each, this would mean significant growth. Yet, we struggle to find this being a legitimate opening price for the unpredictable future value of this token. We must then sadly deduct another 0.25 for serious uncertainty.
7 – 1.5 – 1.0 – 0.5 – 0.25 = 3.75 out of 10.0 on the safety scale.
The FundYourselfNow ICO funding round runs until July 31st. Beginning on the 4th, the rate of FYN tokens per Ether will drop from 120 to 100. At time of writing, their website claims that around 5000 Eth have been collected. Participation requires registration [https://www.fundyourselfnow.com/ico/public/login] at their website, which is unusual since the Ethereum platform basically makes such a registration unnecessary. By doing so, you agree to some terms. Here are notable ones:
3.2 From time to time Fund Yourself Now may hold a poll to elicit the opinion of Token holders. Poll results will be taken into account in decisions made concerning the financial or technical direction or implementation of FYN Platform. However, the outcome of a poll will not, in any circumstances, be binding on Fund Yourself Now or enforceable by Token holders. Only valid Token holders are authorised to participate in a poll.
3.5 There are no guarantees that FYN Platform will be delivered within any particular timeframe, or at all (see clause 5).
3.6 By donating to Fund Yourself Now, and to the extent permitted by applicable law, you agree to not hold any Fund Yourself Now liable for any Loss arising out of, or in any way connected to, your failure to properly secure and keep private your email address and any password used in connection with Crowdfunding.
5.2 Fund Yourself Now reserves the right to change the Commencement Time or the Closing Time in its absolute discretion. Any such changes will be published on the Website.