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ICO Analysis: Hero

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The current state of cryptocurrency gambling is not yet the best it could be. While we have the option to bet sports at the likes of CloudBet and others, or to provably fairly roll dice at PrimeDice and others, what we don’t have is enough ways to bet against each other. For most people, the concept of sports betting doesn’t extend beyond betting with each other. This is the concept behind Hero, which wants to enable people to, in a decentralized manner, bet with each other on sporting events. That’s how simple it is at the base layer, but there are a few things yet to go over.

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A high amount of untrustworthy and off-shore providers has lowered the trust of people in the current betting market. It is never completely guaranteed that users receive their winnings. All these problems have one common ground—centralization. Centralized systems create excessive risks for users like exploitation of user data, prohibitive legal regulations, vulnerability to manipulation and denial of withdrawals. That is where the blockchain and the HERO coin (‘HERO’) come into play. […] The smart contracts of HERO are designed to not only enable decentralized betting, but to manage whole contests without a middleman. With HERO, there is no need of bookmakers anymore.

It may still be hard to see what they’re talking about. Basically, Hero is going to be a platform that allows people to make fair bets between each other, with no brokers or bookmakers.

What if the community becomes the middleman? […] Here‘s where the blockchain technology comes in place. The HERO Network allows peer-2-peer predictions of the outcome of games to take place independent of middlemen, such as bookkeepers or betting providers. The system relies on an innovative pooling system that makes it possible for players to challenge their friends or the community directly instead of using the services of bookmakers. The objective is to revolutionize the monotonous betting market and to bring back the lost social thought of betting.

Elsewhere in this paper, Hero claim that the system of online gambling hasn’t changed for 15 years. Now, in general, it can be assumed that many things do not change because they simply work. Indoor plumbing, for instance, hasn’t had to improve very much at the base of it. Similarly, one really has to ask: is the current online gambling and bookie system not working? Well, perhaps that’s not truly relevant. Perhaps the question we actually want to ask is: will enough people be willing to try this alternative method?

Enter the Herosphere, which is briefly mentioned elsewhere in the paper, and is an existing community of 200,00 people. In a moment we’ll discuss more about it, but the bottom line is if this community is immediately converted to the token, and they have to buy more of them to place more bets, then it would seem that the token will have a demand out of the gate. This is a positive sign, to say the least, but we’ll have to continue looking here before we can decide if we feel positively or not.

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The above being said, what we conclude, really, is that what we’re dealing with is in fact a situation wherein anyone can participate, and the network becomes the bookie. Anyone can offer bets, however. They give the example of a Twitch streamer who might incentivize the audience and be compensated through the network for offering a contest amongst them.

Herosphere

The HERO Network will first be implemented and tested on the Developer‘s own esports platform herosphere.gg where HERO will be exposed to an existing user base of over 200,000 active players.

While it is not made totally clear if the issue will be forced, one thing that is made clear is that every contest will pay 1% of its proceeds to the network as a whole. This is an interesting scheme which may encourage people to hold the token. If that becomes the case, demand for it will only increase, and ability to meet that demand will decline, as holders just continue to collect their rewards.

If this were to happen and a significant number of coins were kept off market, the price would probably increase just by natural market economics. That would be an interesting way to increase the value of a coin, so it will be a good experiment to watch. In any case, the prospect of a dividend on the token is probably a plus for most long-term investors, but short-term investors won’t be in it long enough to care about that part of it. Nevertheless, as previously described, this coin might see solid gains as a result of people trying to hold it for the dividend.

We know that Hero’s team have successfully run their company at Herosphere.gg since 2014. We see no reason they won’t be able to handle the actual implementation of the software. Instead, we’ll focus our attention on the project itself, in this case.

Hero Token

As stated, all token holders will receive a 1% rake back of everything done on the network. This will incentivize at least a small population of investors to hold long-term, stacking up these gains and riding the charts.

We know that 600 million tokens will be issued, but 2 billion will exist in sum total, which is quite a few, but if enough betting activity takes place on the network, then it won’t actually matter how many coins are out there. Additionally, if a lot of coins are held off the market, then the demand for those that are on the market will float the price a bit higher, at least. Tokens will be around 2 and a half cents at opening, giving room for growth. However, with 2 billion coins in the wind, if the price hits 10 cents, you’re talking about a $200 million market cap. If the price hits $20, you’re talking about many billions. So it’s unlikely that we’ll see an extreme upward valuation, but there will definitely be enough play that you can make something.

Distribution

Only 600 million coins are coming out in the crowd sale. The rest will be held back. They give their various explanations, but this is just absurd. The ICO firms that are coming out are increasingly thinking this is just the time to grab free money. We can’t abide these distribution schemes. If there are going to be 2 billion coins in total, then all of them should be available for sale immediately. It doesn’t matter if that lowers the price, or if the target raise is only several million dollars. The coins should be available to the public, since you’re taking the funds that you get from selling the tokens and using those funds, by keeping the tokens as well, you double dip. By keeping that many tokens, you deeply double-dip.

The Verdict

We definitely don’t like the distribution on this one, despite the following explanation:

A total amount of 2 billion HERO will be created by the Developer. The Developer intends to exchange only 600 million HERO (or 30 percent of the Total Coin Amount) in this Initial Coin Offer for Ether. The remaining 1.4 billion HERO (or 70 percent of the Total Coin Amount) will be used for other purposes. The Developer explicitly reserves the right to exchange the retained portion of 1.4 billion HERO for other virtual currencies or sell it for Euro or any other fiat currency at a later point in time at any marketable price. However, the Developer will commit itself to adhere to the following restrictions in the use, exchange or selling of HERO on the market. Especially, the Developer will commit itself to only exchange or sell such amounts of HERO that, to the best knowledge of the Developer, would not have a visible impact on the market value of HERO.

So, overall, we probably wouldn’t get involved. Although there is a nice dividend, overall, there are problems we’d rather not get involved with – like the above.

Risk

  • Too many coins means that the 1% dividends split amongst all coins is a lot less money. -1
  • Moreover, since 1.4 billion of the 2 billion coins belong to the “Developer,” most token holders wouldn’t get much of the proceeds anyway. -1
  • There’s a risk that people may be comfortable where they are in terms of betting. -1

Growth Potential

  • Gambling is big money. +4
  • The established community is a positive. +2
  • We think this thing will work, the token will just always have a low value. +1

Disposition

We arrive at a 4, or less than thrilled, on Hero.

Investment Details

To get a piece of the 600 million coins being offered for sale, visit Herocoin.io on September 14, 2017 14:00 UTC.

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.



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1 Comment

1 Comment

  1. beaupain

    September 8, 2017 at 1:51 pm

    Thanks for the detailed en clear analysis!

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Analysis

Cryptocurrency Analysis: Ripple Continues Rampage as Litecoin and Ethereum Enter Correction

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Ripple remained in the center of attention in the segment after breaking out to a new all-time high yesterday, and the coin almost doubled in value, climbing above the $0.80 level. The currency concluded a 6-month long consolidation pattern with the move after being the only major on a long-term buy signal in our trend model.

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XRP gave a short-term sell signal today, while turning neutral regarding the long-term setup. Investors now shouldn’t add to their positions, although further gains are still possible, and reducing holdings somewhat is a good idea here. Major support is still found at the prior high near $0.4250 and in the $0.30-$0.32 range.

XRP/USDT, 4-Hour Chart Analysis

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While Bitcoin stagnated, and Bitcoin Cash jumped, Ethereum, Litecoin, Dash, and IOTA has been drifting slightly lower, although the recent gains are still mostly intact, and the basic setup in the segment is unchanged.

Litecoin fell below the $300 level after yesterday’s consolidation, and the coin faced strong selling pressure in the latter half of the session. The currency remains extremely stretched regarding the long-term momentum indicators, and although the short-term uptrend is still intact, a deeper correction is likely in the coming weeks, with key support levels found at $125 and $100, and weaker levels at $260 and $170.

LTC/USD, 4-Hour Chart Analysis

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Daily Analysis: Dollar Falls, Gold Jumps after Yellen’s Final Move

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Wednesday Market Recap

Asset Current Value Daily Change
S&P 500 2668 -0.02%
DAX 13125 -0.45%
WTI Crude Oil 56.65 -0.68%
GOLD 1258.00 1.35%
Bitcoin 16,100 -6.32%
EUR/USD 1.1842 0.73%

The Federal Reserve hiked interest rates as expected today, and although the central bank’s monetary statement was slightly more hawkish than expected, the market’s reaction didn’t reflect the much-anticipated move. The worse than expected Core CPI reading that underlined the low-inflation narrative weighed on the recently strong Greenback, while stocks were unchanged after decision and bonds gained ground as yields retreated.

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EUR/USD, 4-Hour Chart Analysis

The major indices are hovering near their all-time highs with the DOW leading the way higher, hitting a new record for the second day in a row. While volatility Is expected to remain low as we approach the end of the year, market internals and valuation levels are still concerning from a long-term perspective, and stocks outside the US are also negatively diverging. The action in crude oil could be slightly more interesting as the commodity is starting to act in a slightly bearish manner after a grinding multi-month rally.

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WTI Crude Oil, 4-Hour Chart Analysis

The Brexit process is still in the center of attention in Europe, although volatility took a nosedive on the old continent as well, and it’s unlikely that the Christmas period will be much different, given the predictable drop in volumes and trading activity. The date of the next election in the financially and politically troubled Italy has been set to March 4th next year, and the early date caused some turmoil in the countries assets, which dragged the Euro Stoxx 50 lower today, together with the DAX and the other major indices.

Cryptocurrencies

As the total market cap of the crypto-market crossed the incredible $500 billion mark, Ripple, NEO, and Ethereum made headlines with lofty gains in the face of the severely overbought readings elsewhere in the segment. While XRP and NEO are still not overbought from an investment perspective, Ethereum reached our final target for its break-out and triggered a long-term sell signal.

ETH/USD, 4-Hour Chart Analysis

The previously surging IOTA continued its correction, Litecoin consolidated in a relatively narrow range, while Dash, ETC, and Monero scored marginal new highs before turning lower together with BTC. The most valuable coin that has lost some of its momentum “mojo” in recent days fell back below last week’s highs, and that could mark a failed break-out and a start of the deeper correction that seems more and more likely.

BTC/USD, 4-Hour Chart Analysis

Key Economic Releases on Wednesday

Time, CET Country Release Actual Expected Previous
11:30 UK Average Earnings 2.5% 2.5% 2.3%
11:30 UK Claimant Count Change 5,900 3,300 6,500
11:30 UK Unemployment Rate 4.3% 4.2% 4.35
15:30 US Core CPI 0.1% 0.2% 0.2%
15:30 US Crude Oil Inventories -5.1 mill -3.6 mill -5.6 mill
21:00 US Fed Rate Decision 1.5% 1.5% 1.25%
21:00 US FOMC Statement

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Analysis

Technical Analysis: Volatility on the Rise Again, as Ripple and Ethereum Hit Targets

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Ripple has been the star of today’s session in the cryptocurrency segment, as the only major coin on a long-term buy signal in our trend model continued yesterday’s break-out, and surged to a new all-time high. The currency cleared the $0.425 level that marked the top in May, and after the more than 6-month long consolidation phase, it promptly neared the $0.50 level.

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While the short-term momentum indicators are now stretched, the coin is still in an encouraging long-term setup, although the best period to buy already passed. The coin could be dragged lower in the case of the expected broad correction in the segment, but we expect XRP to outperform in the coming period, with support levels found at the prior high and below that in the range between $0.30-$0.32.

XRP/USDT, 4-Hour Chart Analysis

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Ethereum has been the other top coin on the rise, as the second largest digital currency surged past the final range projection target of the break-out two weeks ago at $685 in the aftermath of the launch of the BTC futures on Monday. The ETH token is now also on a sell signal on all time-frames, and we advise investors and investors to wait for the next major correction to establish new positions. Support levels are now found at $575, $500, $480, and $400.

ETH/USD, 4-Hour Chart Analysis

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