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ICO Analysis: Kik’s New Token Kin

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To date, we’ve raised $120.5M from Foundation Capital, RRE Ventures, Spark Capital, SV Angel, Tencent (maker of WeChat), Union Square Ventures, and Valiant Capital Partners.

Translation:

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We have acquired and mostly burnt off about an eighth of a billion dollars. We do not currently have a relevant revenue model, and our prospects for future funding rounds are not getting brighter as a result.

Then, in the Whitepaper, we get their excuse:

As a company, Kik has been searching for a sustainable monetization model that does not compromise user experience or privacy.

A Niche Token (Kin) Without A Promising Niche?

Kin’s Team

Great idea. Maybe it will make the platform huge. The trouble is, for this vision to work, the platform has to become huge. If a split minority of chat users are on Kik as opposed to the myriad of other options, then the actual utility and value of a Kin token are not going to be exponential, it’s going to have a cliff at best.

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Rather than opt for mass display advertising or the selling of consumer data, Kik has decided to adopt a decentralized organizational model. Its goal is to encourage the development of a digital services ecosystem that is fair and open. Kik prefers to be a participant rather than a landlord in this user-first economy.

Translation:

We don’t want you to see us as rent-seekers.

Fine. So you want to create a system and act within it. Why then should it be a Kik system? In terms of cryptocurrency plays, a more broad-based strategy is going to have a higher chance of flourishing. You’ve already admitted so far in this Whitepaper that the base concept of your “currency” is to put your Kik Points system on the Ethereum blockchain. You can do that without a token sale. You can just issue tokens to Points-holders, and convert the system.

By creating a Kik-only token, you run the risk of an industry-wide token launching which serves all the rest. Therefore, from a consumer point of view, if (when) such a token were launched, it would seem more valuable from the very first moment, because it would not “lock them in” to a specific platform, although in this case by “lock in” we mean “require significant effort to exit.”

Kik seems to understand this, and they address it a few paragraphs later. They insist that creating an ecosystem of valuable goods and services is paramount, and then go on to say that Kin is intended as a general purpose cryptocurrency. Again, if this is the case, why tie it to Kik at all? Why not simply have Kik spearhead its adoption, but separate everything else, hoping that a consortium of industry peers join in? Would anyone you know prefer a gift card to a specific store or a Gift Debit Card that can be used at any store? Other companies will now have to overcome the “not-invented-here” syndrome, if any of them decide to integrate Kin at all. More likely, they’ll create their own alternatives, meanwhile, someone else will create a master token for all of them. Kik could have done everyone the courtesy of getting its peers on board. Tencent invested in them, despite offering a similar, competing project. Tencent’s involvement would already make this token more attractive if they were involved in this part of it.

In character, Kin is a pure cryptocurrency of fixed supply. It is fractionally divisible and long-term non-inflationary. However […] only a small portion of the Kin supply will become liquid in the near future, as most of the Kin supply is reserved for the Kin Rewards Engine. […] Like other cryptocurrencies, units of Kin are fungible and transferable, and they will be expected to trade on cryptocurrency exchanges.

Fine. Great. Newcomer, please understand: this does not mean a thing! Kin gets a full 4 points guaranteed based on Kik’s backing in terms of likelihood of trader profit, but this backing is also its biggest drawback. Further, the method of distribution is wonky. Let’s get into that now.

Kin Distribution – “Rewards Engine”?

As shown above, “most of the Kin supply is reserved for the Kin Rewards Engine.” That makes it requisite to understand what the heck the KRE is.

The goal of the Rewards Engine is to create incentives for digital services and applications that create vibrant services within the Kin Ecosystem. It will accomplish this by periodically unlocking a specific amount of Kin and distributing it among ecosystem partners, favoring digital services in which the Kin cryptocurrency is highly utilized.

So, you’re going to have a board of people (the Kin foundation) who get to decide where the funds are allocated, and allocation will focus on “digital services in which the Kin cryptocurrency is highly utilized.”

We can see what they are going for here, but the trouble is that this method still lacks significant incentive for the rest of their industry to get on board with Kin. Instead, it will propel more disparate services and services that are Kin-specific. The walled garden only gets higher walls with this model. The “open governance” terminology used here could be seen as a ruse – this is something akin (pun intended) to the iTunes model.

One of the most compelling features of Kik Points was that users were not required to purchase them. […] Instead, millions of mainstreamers were able to earn Kik Points simply by performing valuable actions. As Kik expands its economy to include cryptocurrency that holds real value both inside and outside of the chat application, the economic possibilities for users are vastly enhanced. This makes it possible to transform attention, curation, and creation into real-world value simply by having a smartphone.

Again, you’re not doing anything to create a real promise of “economic possibilities.” You are raising money from the crypto-economy, and you are creating a tradeable asset that could generate dividends for Kik users, but you have to trust that such services will actually arise. That people will actually trade Kin tokens. That a competitor who is universal in nature will not simply remove the brand-specific parts of Kin and usurp it. You have to trust all of these things to accept that there will be an expanding Kik-based economy. Facebook would have a better shot at it, as would Google or Tencent.

The Kik Saving Grace

Kik wants a warm and fuzzy economy where users can come in and provide value in exchange for Kin tokens. They want initial investors to underwrite this. And, for whatever reason, it will probably work. Beginning at the intangibility of cryptocurrency, everything in this market is topsy-turvy. There is no reason to suspect that Kik will fully fail, at least not in the same way that some ICOs do. The token’s chart will not be a vertical line, but a short-term gain can probably be taken before later price rises, as the token gets added to exchanges.

In China, many daily goods and services are paid with mobile technologies, and one of the biggest ways of doing this is through WePay. Given its corporate nature and industry interest, Kik could certainly make this happen in the US with its Kin offering. One can imagine checking out at a Millenial-specific shopping outlet like PacSun for example using kins on their smartphone. This real world utility will always lend value to a given token.

Of course, Kik doesn’t note such a vision in its whitepaper. Their vision is all digitized, meaning we’re likely to get what we’re paying for here: a weak answer to a big opportunity.

Nevertheless, we need to be objective. Just because the author thinks this is an undercooked, badly executed idea, does not mean that those who are executing it are going to fail. The winds of the market will likely carry this one.

Kin Distribution and Fundamentals

In order to finance the Kin roadmap, Kik will conduct a token distribution event that will offer for sale one trillion units out of a 10 trillion unit total supply of Kin. The proceeds of the token distribution event will be used to fund Kik operations and to deploy the Kin Foundation.

What did you just say?

Kik is openly admitting here that they are not solvent, despite raising many millions of dollars! Here is the size of their team:

Kik has not yet undergone an initial public offering, so the details of their finances are unavailable. What we do know is simple math. Less than 100 people, more than $100 million, less than ten years. Something is not right here, but that’s beside the point. The point is that Kik is dipping into the honey pot here and quite flagrantly. Companies must provide value to the economy or fade away. What we see here is a company which normally gets its free money from those who have large supplies of it, attempting to do the same from those who have smaller supplies of it.

1 trillion coins enter the economy, and these coins can be traded openly in exchanges. Whatever value they hold on such exchanges will be tempered by a 90% plus-minus based on the murky, unavailable supply. The open governance model is meant to answer these concerns, but it really doesn’t. Let’s see what we have in terms of reassurances:

As of the conclusion of the sale, the distributed Kin will constitute the entirety of the available liquid supply. Another three trillion Kin will be preallocated to Kik as the founding member of the Kin Foundation and subject to a long-term vesting schedule. In exchange, Kik will provide startup resources, technology, and a covenant to integrate with the Kin cryptocurrency and brand.

Again, none of this matters. It all contributes to the same problem we’ve identified: the entire concept relies on Kik encompassing a huge swath of communication preferences, much larger than it does today, in order to not be dwarfed (by virtue of network) by something superior.

Using Hype Bubbles to Our Advantage

So it’s clear by now the author is not a big fan of this idea. That doesn’t mean we can’t make money from it. Truth is, if Google or anyone else were doing the same thing, we’d still see the same problems, but the idea of user attrition would be lessened since virtually everyone already has a Google and Facebook account.

Kik is dreaming big and that’s great for them, but investors need to take caution in calling this a long-term hold. Hype bubbles are carried purely on the steam of those who stand to gain from them, so after a time, that steam will dissipate, and downward pressure will latch onto the token like an octopus. As such, if you’re going to go in on Kin tokens, get out while they’re still actually liquid.

The Verdict

This rating is going to confuse some people, so let’s clarify why it’s so high. As stated earlier, although the rating system here at Hacked is still in development, we generally lend some free points if big outfits are behind something. Their potential for failure is lessened by virtue of experience and rescue capital, and being known entities, they have more on the line than those not even in business yet. As such, Kin gains 4 base points for being backed by Kik.

Being the first of the chat apps to achieve this in a pure cryptocurrency way earns it 2 novelty points. A quarter-point is deducted from this for the ease with which another platform could precisely copy the entirety of their platform.

Kin gets another 1.5 points for hype value. The odds of being able to actually achieve ROI if you are cognizant and attentive are significantly higher than other ICOs as a result of the widespread hype – panic selling is done with greater caution when so many good, promising things are said about a token.

The author allows a full point for his own instinct and lends .25 from this reserve, out of the belief that those who truly want to will manage to take profit from this investment.

4 + 1.75 + 1.5 + 0.25 = 7.5.

Investment Details

Kik has decided to be mysterious about the actual launch of the token creation event. They have a mailing list, and that’s about all the information that is available:

A supply of 10 trillion dictates the on-boarding cost will probably be low, but, again, there’s little to no details on that. We’ll have to update you on that. As the community manager says above, if you want more information at investment time, you’ll have to subscribe.

Featured image from company presentation.

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2 Comments

2 Comments

  1. cryptoverde

    June 28, 2017 at 8:21 pm

    appreciate the review

  2. virtualevil

    September 2, 2017 at 3:44 pm

    THIS, is the value I get from being a Platinum member. Just as I was losing faith I come across this excellent review.

    Thank you for analysing this to the level you have, I must say I was deep-diving into a lot of the hype. A lot of it checks out, but now I think I am of a similar opinion to yours that this is likely a short term gain prospect.

    Can I ask will you be giving some buy/sell recommendations on this if this is indeed an opportunity to profit?

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ICO

ICO Analysis: The Game Machine

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In recent years passionate gamers have been exploited by huge game development companies that hold a monopoly over the industry. The recent EA Star Wars Battlefront catastrophe brought a lot of attention to an issue that gamers are all too familiar with.

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Gamers have to dig deeper and deeper into their pockets to pay for the expansion packs, DLC, and additional features that are excluded from the main game. And these games aren’t cheap.

It’s increasingly becoming apparent that there are fundamental issues with how the gaming industry works today. Fortunately for gamers, the blockchain is already beginning to form a new paradigm in the way games are funded, developed and purchased.

The Game Machine is an open source platform that seeks to decentralize the gaming industry. It aims to provide sleek software that will empower gamers and game developers alike.

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How are they planning on doing this?

The platform has four foundational layers that are stepping stones for this innovative new project. The first layer is the game machine client. It will work as a wallet to store and send Gamefuel tokens and will come with a built in mining interface so that all users can participate in securing the Game Machine’s blockchain.

The second step is to develop their “Rise Machine” that will allow members of the Game Machine community to invest funds into games they see promise in – funds that go directly to the developers so they can create their game independent of the EAs and other oligarchies.

This is perhaps the most powerful innovation suggested by the platform. It gives everyone from the small game studios, with a only a few developers, to the prominent developer, who wants to deviate from the script, the chance to create and sell great games to the community at a fair price when they otherwise could not.

The third layer of the platform is the “Ads Machine” a decentralized advertising market that will live inside the Game Machine client so that game publishers or advertisers can market their products to a gamer specific demographic. Advertisers have been experimenting for years with in-game, native advertising, and it’s a powerful use case for the game machine, just as a stand alone feature. Expect this element of their platform to bring in huge revenue if they can build up their user base.

The last layer of development in their platform is the “Exchange Machine”. This will simplify the process of buying and selling tokens for gamers who use or hold multiple ingame currencies. This way, gamers can sell their Gamefuel and easily move a variety of coins in and out of the game machine.

Token

The Game Machine team is using an Erc20 token called GMIT, which stands for Game Machine Initial Token. Each token is currently valued at 2,500 GMIT per ETH, or $0.32 USD. The token will be tradeable for actual Gamefuel at a ratio where 1 Gamefuel= 0.5 GMIT. Thiswill occur once the platform officially launches in May or June of next year.

The GMIT token is issued by Game Machine OÜ, incorporated in Estonia. A total of 140 million tokens will be created during the various stages of the token sale. The pre-sale has already been conducted and an equivalent of 751 Ethereum were invested, which means roughly 1,870,000 GMIT have already been bought. There are bonuses for early investors during the crowdsale where day 1=+15%, day 2=+10% and day3 =+5%.

There is also another coin that can be mined called GMC or Game Machine Client token, which will be exchangeable for GMIT tokens before the official platform launch at a ratio where 1 GMC = 0.0002 GMIT. The GMC token is given to miners who are being rewarded for securing the network during the Game Machine’s beta testing stage so they can earn Gamefuel. The official Gamefuel token will have its own blockchain that runs on two key components, Limited Proof of Work, and Proof of Authority. Limited proof of work is an energy friendly implementation of the traditional proof of work protocol that bitcoin uses.

Proof of Authority is used to enable faster confirmations of crowdfunding transactions where the authority level of a user confirming transactions is determined through analyzing metrics such as time of use, the amount of purchases and sales of games on the platform made and how positive or negative the feedback of other users were about their contributions to the platform. This can also include how long they have been mining for and how fast. One can imagine this is useful for fending off bad actors that might just try to crowdsource Gamefuel and then commit an exit scam without contributing anything. This blockchain is inspired by the Scorex 2 framework devised by the Scorex foundation, which was also implemented by the Waves decentralized exchange platform.

Team

The three co-founders of Game Machine have over 17 years of combined experience in project development, IT consulting,  video game marketing and development.

The entire team consists of 19 full time employees who are busy working on many different parts of the Game Machine platform. If that’s not impressive enough then look at the history of two of the co-founders Taras Dogval and Alexandr Isaev who were both previous board members of Hakk, which is an interactive agency that has done marketing for huge European companies such as Volvo, Tallink Silja Line and Neste. The other co-founder Maria Suvorina has six years of experience in marketing and promoting games on computers and phones. She’s worked for companies such as Suricate Games, TMA and AminiLab.

Although these companies aren’t that well known, most of their work is out of the public’s eye, and they have actually made contributions to famous games. Aminilab for example has participated in development for games such as Alone in the Dark, FIFA, Dragon Age, Mass Effect, Doodle God and Doodle Devil.

Verdict

The Game Machine is an extremely ambitious project that, if successful, will truly revolutionize the industry. The team behind the platform is experienced, has a great track record and is big enough to polish and refine the Game Machine into a fantastic platform for gamers and developers. However, the existing industry players already have huge advantages when it comes to funding, marketing, development and most importantly building a big reputation and brand awareness. It’s difficult to predict if a community driven effort from gamers and developers combined on an open source platform, will be enough to break into the existing market and convince everyday gamers to switch to an entirely new platform.

Risks

  • One risk for this project is the quality of its design in terms of how friendly the user interface will be. If the platform is too difficult for technically illiterate people to use then it will not have wheels to get going anywhere. -1
  • Another threat to the game machine is the plethora of other competitors that are already working on blockchain innovations in the gaming industry. For example, Enjincoin is an existing game development company founded in 2009 that recently completed its ICO, raising $20 million to kick start a platform that boasts features very similar to the ones offered on Game Machine. -2
  • Besides the long list of other game-based ICOs that have been launched this year, there is also stiff competition from massive conventional gaming markets. In addition, newer platforms such as Steam have already attractive hundreds of millions of users. -2.5

Growth potential

  • The Game Machine has a lot of potential for quickly stacking up a big user base, and one reason is due to the strong alignment of incentives between gamers and game creators. The traditional game development giants on the other hand are ignoring what their consumers and even some of their own developers have had to say about how games should be created, distributed or sold. Instead of focusing on quality and a fair deal for customers, these development companies have opted to lined their pockets instead. This is why gamers and developers would flock to the Game Machine overnight if the platform works well. +3
  • The project’s potential for increasing the value of the underlying gamefuel token is actually quite immense in scope. Just the crowdsourcing and kickstarting mechanism built into the platform would induce a scenario where a large sum of people would continually purchase gamefuel tokens to lock into smart contracts. Once enough gamers are participating in this process the money locked in gamefuel tokens at any given time will only rise, thus reducing the supply of tokens in circulation and consequently increasing gamefuel’s value.+3
  • With the plans to integrate a digital advertising market directly into the platform, gamefuel has a secondary source of revenue because advertising slots on the game machine platform can only be purchased with gamefuel.+3
  • The “Exchange machine” that’s built into the Game Machine client is a nice approach to sourcing liquidity that will allow many other game based cryptocurrency holders to sell their tokens to purchase gamefuel. Attracting a wide range of gamers who are interested in different blockchain based gaming platforms is a unique approach to marketing that many readers may not have considered as a form of advertising. +2

Disposition

The Game Machine is a solid project overall; the team is large, has experience and will have raised additional funds to expand their efforts once their crowdsale is completed. That being said, stiff competition from new and existing gaming avenues, not to mention luring a dedicated gaming community to an entirely new platform. These risks must be weighed carefully before entering into Game Machine. As such, this ICO has been granted a score of 5.5 out of 10.

Investment Details

Unfortunately, the presale period of the Game Machine ended a few days ago; however, the final crowdsale period will open for everyone to participate from Dec. 14 through Jan. 31, 2018..

There will only ever be 140 million gamefuel tokens created in the ICO, and 70% of them will be available for token sale participants. The rest of the tokens will be divided into portions and used to fund various parts of the project:

  • 14.2% token storage for starting in-game items withdrawals.
  • 1.4% for bounty program.
  • 1.4% for advisors.
  • 4.5% for referral program.
  • 7.1% for team.

The team’s portion of tokens is utilized to pay for development and split in the following arrangement below.

  • 10% Legal maintenance.
  • 5% Operating expenses.
  • 35% Marketing and PR.
  • 50% Development of a product.

You can learn more about their token and ICO here.

Featured image courtesy of Shutterstock. 

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ICO

ICO Analysis: Gimmer Token

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The impeccable rise of algorithmic trading has ushered in a new wave of do-it-yourself (DIY) algorithmic trading bots. With the success of these DIY bots in traditional financial markets, it was only a matter of time until they entered the cryptocurrency market.

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For algorithmic trading, volatility creates opportunity sets. And with cryptocurrencies still trading in an inefficient market, volatility runs rampant. This level of volatility creates an ideal environment for even the most rudimentary algorithmic trading strategies. However, there is a lack of DIY automated trading bots that are available for use by amatuer cryptocurrency traders. With this in mind, Gimmer is looking to take advantage of this need.

According to the company’s website, “Gimmer offers easy-to-use advanced algorithmic trading bots that require no programming skills, no previous trading experience and no in-depth knowledge of cryptocurrencies.”  

Essentially, Gimmer is hoping to position itself as the leading DIY algorithmic trading bots for individual cryptocurrency traders. While the company may never be the “Quantopian” of the cryptocurrency space, Gimmer does provide a novel solution for amateur traders.  

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Token

The Gimmer token (GMR) will be implemented using the Ethereum ERC20. While GMR tokens will be visible in participants’ ERC20 wallet, the tokens will not be tradable until the close of the public sale on January 31, 2018. GMR tokens will issued starting from January 3, 2018. GMR holders generate value from the token as a form of payment for the rental cost of Gimmer’s trading bots. For users, the rental cost scales proportionately to the level of sophistication desired – more sophistication equals higher return (at least in theory).

According to the whitepaper, 45% of the funds raised will go towards development and operations, 35% towards marketing and acquisition, 15% towards the founders and team, with the remainder of the pot (5%) going to legal and compliance.

Gimmer Tokens are valued at 1 Ether (ETH) per 1,000 GMR (plus applicable bonuses). The total amount of tokens to be sold is capped at 100,000,000 GMR. However, an additional 6,000,000 GMR will be created for advisors, reserves, and the team, with another 4,000,000 GMR created for bounties.

The company has not yet stated its intention to list the GMR tokens on any major crypto exchanges.

Team

Gimmer’s core team consists of two senior developers, a global macro hedge fund manager, and a creative design veteran. As compared with the majority of ICOs, Gimmer’s team is in-line with the relative standard – the quality of team meets basic expectations.  

The company’s CEO, Philipe Comini, is a senior-level UX/UI designer who is also balancing two other jobs (according to LinkedIn) – typically, not a good sign. The company’s CTO, Persio Flexa, is also a senior developer who recently launched 2 other start-ups – again, not a good sign. The company’s COO, Paul Lindsell, is a creative design veteran with over 12 years experience that is seemingly committed to his role – not balancing multiple jobs. The company’s CIO, Masaichi Hasegawa, is currently a global macro hedge fund manager and an executive of a shoe manufacturing company – the third C-suite executive of Gimmer to balance two other jobs.

The rest of Gimmer’s team consists of a marketing director, a user experience director, two developers, a customer researcher, a commercial director, and a journalist.

Verdict

Gimmer presents a highly speculative buying opportunity for investors interested in short-term capital appreciation.

Creating profitable algorithmic trading strategies is incredibly difficult. Hedge funds typically employ a large staff of mathematicians, experienced machine learning engineers, data scientists, and the like – Wall Street refers to them as “quants.” Quants typically hold a PhD in finance or quantitative mathematics and have years of hands-on experience with both statistical analysis and engineering (Python and C++). Does Gimmer employ any quants? No, not even by the slightest measure.

Overall, Gimmer’s DIY algorithmic trading bots are likely just a novel tool-kit for amatuer cryptocurrency traders, nothing more, nothing less.

Risks

Gimmer provides no data on slippage modeling, meaning users have no idea of all the transaction costs that are associated with a higher frequency of trading (including: fees, commission, and slippage). These costs can be significant and add up quickly. -1

Gimmer’s core team does not seem to be dedicated (balancing multiple jobs) or qualified in any sense. With Gimmer’s team lacking any real trading platform experience, unforeseen issues with their algorithms may lead to sizable losses for users. -1.5

Gimmer provides no data on latency, meaning users do not know if the company’s algorithms are deployed to proximity-based execution servers in attempt to achieve low-latency performance no matter where the user is located. For all trading strategies, latency must be measured and managed in order to maximize the probability of success. -1

Growth Opportunity

Provided that Gimmer’s trading bots run successfully without any technical glitches, users could benefit from enhanced risk management protocols, thereby insuring their principal investment through more downside protection. +2

Copy trading techniques could benefit novice traders, as they can publicly see high level information such as start date, running period, currency pairs and percent gained. Based on the public information, users can copy seemingly successful trading strategies and rent the same bots. +3

Automated trading strategies will allow a larger pool of traders to invest in cryptocurrencies. Since the market is still subject to large, volatile price swings, more passive traders could use Gimmer’s platform to execute automated trades (based on pre-set parameters) without having to monitor the market on a day-to-day basis. +2.5

Disposition

While algorithmic trading in the cryptocurrency space is a smart strategy, Gimmer lacks the sophistication of even the most basic trading platforms. The biggest concern beyond Gimmer’s lack of sophistication, is the pedigree of the core team. With no quants on staff and a couple UI/UX designers creating the algorithms, technical issues are likely to occur. And with that in mind, faulty algorithms or platform glitches could easily lead to the loss of principal investment for users.

For amateur traders interested in novel tool to play around with, Gimmer is a great choice. For veteran traders with solid programming and statistical skills, move on to a better platform.

Against this backdrop, we believe that a score of 4.0 out of 10 is warranted.

Investment Details

  • Type: Crowdsale
  • Symbol: GMR
  • Pre-ICO Sale: November 24, 2017
  • Public Sale: January 3, 2018
  • Payments Accepted: ETH

Disclaimer: no position in Gimmer at the time of writing.

Featured image courtesy of Shutterstock.

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ICO

ICO Analysis: Lendoit

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Lendoit is a next-generation peer to peer decentralized lending platform based on Ethereum, which connects lenders and borrowers all over the world using the advantages of smart contracts.

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The Lendoit platform provides professional scoring and verification, APIS for each country, a loan marketplace where lenders set rates on loan applications, a default market where failed loans can be traded, syndicated loans, and the ability to sell a loan to another lender if needed. Lendoit will be the only lending platform on the market that does not take collaterals. The company believes that, “in a world of crypto micro-loans, managing collaterals is not sensible.” In their view, this is “like lending USD by using EUR as collateral.”

Because there are no collaterals, the Lendoit platform combines four methods to mitigate the chances of lenders losing money: Smart Compensation Fund, Syndicated Loans, 3rd party scoring/verification from local companies, and a collectors market where debts can be sold.

The following is a simplified guide to Lendoit’s loan process.

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  1. The borrower applies for a loan by filling out an application. This takes about three minutes.
  2. The borrower uploads any relevant verification (i.e. government-issued photo ID) according to their particular country’s regulations.
  3. Lendoit sends the loan app and verified information to verified scoring providers to receive a score for the current loan.
  4. Lendoit will publish each smart loan contract in the blockchain and marketplace.
  5. Lenders Tender is a process of raising loans for funds requested by the borrower.
  6. The borrower can now withdraw the funds using his or her wallet.
  7. When the date to pay back the loan arrives, the borrower receives a notification.
  8. The borrower now repays the funds with interest to the smart contract.
  9. The lender withdraws his money in the same currency he loaned it.
  10. The lender receives interest in the form of LOAN tokens, the amount based on an automatic conversion algorithm put in place by the Smart Conversion Contract.
  11. The Smart Compensation Fund Contract helps lenders recover a small portion of their money, if the borrower fails to pay. The amount is not confirmed, but it seems like it will be around 20-30%.
  12. If the borrower fails to pay the interest and the loan becomes defaulted, the smart loan contract is offered to a collectors tender. The collector who wins the tender buys the debt, which minimizes the loss of funds for the lenders.

Lendoit has an alpha version of its platform available here. It is not very impressive yet. The real technology (smart contracts) has yet to be created.

They plan to release the beta in Q1 of 2018, and the fully operational version Q3 of 2018.

The Token

  • Symbol: LOAN
  • Platform: Ethereum
  • Presale: Dec. 13 – December 27, 2017 (125 million for sale. 1 ETH = 13,000 LOAN). Must register for whitelist in order to contribute.
  • Token sale: Jan. 18 – Feb. 18, 2018 (475 million for sale. sale starts at 1 ETH = 12,000 LOAN)
  • Total Supply: 1 billion
  • Hard Cap: 50,000 Eth (currently $22 million USD)

The LOAN token plays several roles. Here are a few of the most important:

  1. Lenders can use any ERC20 currency to loan, but must hold 10% of whatever amount they loan in LOAN tokens. For example, a lender wants to loan someone $1,000 ETH must hold $100 worth of LOAN in his account.
  2. Borrower must use LOAN to publish the Smart Loan Contract.
  3. All the fees charged on the platform are paid in LOANs.
  4. All the interest payments will be paid to the lenders in LOANs. This will take place automatically via the Smart Conversion Contract.

The Team

The company is located in Israel but incorporated in Gibraltar. The company maintains a large global team that extends far beyond its in-house operation. However, after researching the four co-founders of the company, nothing particularly striking stands out. One would have expected a more impressive track record for those launching a platform of this magnitude.

Seven advisers are signed on to the project, including Richard Titus and Michael Terpin. They also have eight developers, which is fantastic, as it shows they really are trying.

The team picture (above) leaves a lot to be desired, as it is not very professional.

The Verdict

This project has great long-term potential. Its biggest challenge is going to be whether or not it can successfully build the various forms of smart contracts it proposes to launch. There are no known smart contracts in existence that can do what Lendoit promises its contracts will be able to do.

Risks

  • The concept of not needing collateral to receive loans could be a disaster. Why would lenders want to use this platform when the possibility of getting stiffed is so high? They can just use one of Lendoit’s competitors to guarantee their returns. -2
  • The project faces legal hurdles galore. Sure, the plan is to be decentralized, which could reduce certain regulations, but the company is going to be verifying borrowers’ identities in great detail. I could see governments clamping down on projects such as this one if enough lenders start getting ripped off. -2
  • The technology required to run this platform does not exist yet. The demo/alpha provided as an example of is extremely basic. It’s a strong possibility the team fails, and this never gets off the ground.  -2

Growth Potential

  • The company has several partners, including Bloom, Hive, RSK, and Wings. I tried to dig deeper into these partnerships but didn’t find anything substantial. These seem to be decent projects, and LOAN can use each to grow.+2
  • Some of these other new lending ICOs have done pretty well so far on the markets. SALT token, for example, is extremely hyped. One of the main differences between SALT and LOAN is that SALT requires borrowers to put up collateral, while LOAN does not. One would think this would bring more borrowers to the platform +2
  • If they do what they claim to be able to do – build these genius smart contracts – they can change the lending game permanently. In this way, the sky is the limit. +4
  • The team has put a great deal of emphasis on development, as evidenced by the number of developers they have on board. +2

Disposition

As previously stated, the most important aspect of this project is the technology. Can they build these contracts? According to the roadmap, we won’t see the beta version for two or three months, and we won’t be able to judge if the contracts are fully functional for at least six months. This has long-term potential, but a rocky short-term.  Against this backdrop, we assign a score of 4 out of 10.

Token Details

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