ICO Analysis: NaPoleonX
NaPoleonX is offering a series of Decentralized Autonomous Funds (DAFs), which will invest in 100% algorithmic solutions proposed by Napoleon Crypto.
NaPoleonX will benefit from 85% of all performance fees that are generated by the DAFs, and 100% of the performance of however it participates in the DAFs.
DAFs are essentially DAO (decentralized autonomous organizations) mixed with performing trading bots. These trading bots are essentially algorithms that buy or sell a given underlying asset (ETH, BTC, S&P 500, etc) to get maximum performance.
These DAFs allow owners to select which trading bots to use from a Napoleon Crypto provided list, and the leverage level. The owner’s review the initial bot allocation through a regular voting process. These bots then give market orders to the DAF.
The edge Napoleon Crypto has it that has already developed a large set of performing trading bots for use.
So, what does a holder of NaPoleonX get? Each subscriber to the NaPoleonX ICO receives some NPX tokens, which gives them access to a platform that allows them to:
- Access the updated audits of several trading bots
- To regularly vote for the eligibility of the new trading bots
- To regularly vote for the creation of new DAFs
- To monitor the token events and performance of each DAF
- To have access to relevant documentation on trading bots
- To access their own account and reporting on DAF tokens.
After reviewing the whitepaper, I found a few interesting things:
- The Napoleon team has a vision to “tokenize” most of the assets on Stock Exchanges. So, for example, you would be able to buy Facebook shares or General Motors shares in cryptocurrency. This is a pretty interesting goal, but I figured that if everyone from dental companies to taxi apps are ICOing, why not.
- The asset management industry has seen significant instances where algorithms and bots have proven to be smarter and more efficient than standard human traders. Additionally, these human traders tend to collect very expensive management fees and eat into the margins of investors.
- Napoleon Crypto offers a “natural hedge”, which means in situations where it’s not necessary to use 100% of the fund cash, the remainder would be left “unused” and kept in ETH in order to hedge the risk. My first reaction is to question how effective it would be to use another cryptocurrency (one that tends to be fairly volatile itself) as a hedge to investments that are potentially much riskier. This could end pretty poorly, and I’m not sure why they wouldn’t opt for using something like Tether (“tethered” to the US dollar).
NaPoleonX is a crypto project of the parent company Napoleon Capital. Napoleon Capital focuses on offering quantitative performance via highly liquid and low frequency (daily, weekly and monthly) quantitative strategies.
The CEO of Napoleon Capital and Co-founder of Napoleon X is Stephane Ifrah. Ifrah has experience in the financial world working for organizations such as BNP Paribas, Natixis Asset Management, and EY. He was responsible for the development of quantitative strategies. Arnaud Dartois, COO, and Jean-Charles Dudek, CSO, also have experience in private equity and asset management. Together, the team has all worked for Tier 1 banks and has managed billions of dollars.
Tokens and Distribution
The NaPoleonX ICO started on September 29, 2017, and will end October 29, 2017. There is an uncapped number of coins for .01 ETH each.
The minimum cap is set at 25,000 ETH, with a soft cap at 100,000 ETH. There is no max cap.
The whitepaper also states that the project has a formal cap of 100,000 ETH, and that hidden cap will also be set up as an incentive for subscribers to not wait until the end of the ICO. If the hidden cap is reached, the ICO would automatically end prematurely. This is done to make sure demand for the token is kept high. I’m not sure what to make of this, other than it could be a very effective way to chip away at any investor hesitations.
The smart contract is a classic ERC20, which is based on OpenZeppelin templates. The whitepaper also claims that the contract will be audited by at least two third party auditors.
The founders and team will also receive a percentage of tokens on a sliding scale based on how much is raised ranging from 15% if the minimum 40,000 ETH is met, or 5% if between 80,000 and 100,000.
The raised ETH will be distributed in the following way:
- Asset management license and operational dedicated infrastructure: 10k ETH
- Set up costs (legal, etc): 2k ETH
- Napoleon Crypto Platform: 4k ETH
- HR Cost: 8k ETH
- Overhead Costs: 5k ETH
- Data acquisition: 6k ETH
- PR / Marketing: 5k ETH
DAF token holders can terminate the DAF if they have over 75% of the voting rights.
It seems that NaPoleonX is another crypto play by another financial institution to raise money to invest more. Whether or not the holding company will be able to make its token holders money, only time will tell.
The whitepaper describes NaPoleonX as “the first 100% algorithmic crypto-asset manager surfing on two exponential trends: the quantitative management wave and the cryptocurrency universe’s expansion.”
NaPoleonX is pretty much like a hedge fund that’s open to any and all investors as long as you buy their tokens to enter the DAF.
The way it works is that “Napoleon Crypto” runs a platform that enables and puts together algorithmic solutions “on an open source scheme.” It then advises NaPoleonX by proposing algorithms to launch new DAFs. NaPoleonX then votes on the effectively launched DAFs. Napoleon Crypto collects 15% of all performance fees.
- This seems like an obvious one, but the success of each NPX ultimately depends on how effective the trading bots are. That’s it. If the bots are performing poorly, holders of NPX don’t really have an incentive to hold onto the tokens. -4
- The “natural hedge” may not be as effective as the whitepaper thinks, and that could be trouble. -1
- If you have noticed, the cryptocurrency market has been booming in the past few months. If there was a time to having an investing edge for high returns, now seems to be it. +3
- If the algorithmic bots are effective, there could be a substantial upside for token holders. +3
- The team has a pretty impressive roster in place, and the team seems to be qualified to execute at least the creation and implementation of the Napoleon Crypto platform and trading bots. +3
We arrive at a +4 out of 10 for NaPoleonX. Ultimately, the success of NaPoleonX falls on how well the bots perform. All the other bells and whistles are negligible, and people buying NPX in the ICO are essentially betting on the technology Napoleon Capital has been and will continue to work on will be effective. There’s something beautiful of having an ICO be so so cut and dry and not based on some ambiguous lofty goals, and I like that. Of course, you should do your due diligence to read the whitepaper and be wary of any voting or token dissolution in the future should you chose to invest.
The NaPoleonX ICO started on September 29, 2017 and will end October 29, 2017. There is an uncapped number of coins for .01 ETH each.