ICO Analysis: Starbase
We recently reviewed FundYourselfNow, which is a crowdsale platform. Now comes Starbase, a similar play but for the purpose of pooling, matching, and finding talent for various jobs.
Starbase is both an open and closed source project. Starbase.Inc will do technical consulting by providing a crowdfunding/sourcing platform which enables you to issue conditional tokens from templates.
So, different from FundYourselfNow, Starbase will allow the issuance of your own tokens – in the same way that Antshares and Ethereum do. There will be some necessity for this platform to justify its existence, being that crowdfunders have the freedom to simply use Ethereum, Waves, Anthsares, or any of the other platforms which allow people to issue their own tokens. Simply recreating a functionality in an alternate setting, without the name recognition and economy backing it, is the lowest form of rent-seeking and least likely to prove out as a novel concept/successful project. The network effect is such that branding and even good business tactics are less important than what the critical mass of people is already doing.
Of course, offering the tokens is only part of what Starbase is about. Their other value addition is that they will act as a magnet for individuals with skills that companies are seeking. Companies have the option of paying for jobs in Bitcoin, Ethereum, or their own tokens.
Starbase is a token based crowdsourcing platform. Core teams can post works and supporters can do them for a payment in Bitcoin, Ether, or their issued tokens. Generally this kind of job is not long term, but in duration of 1 week to 6 months. For example, software development, translation, logo design, web/mobile design, movie making, online consulting, financial advice, legal advice can be posted to Starbase with the relevant payment information.
Sites which help crowdsource talent are nothing new, but the industry is expanding. In 2016, revenues in that industry were around 1 billion dollars – a 37% increase since 2012. The leading company in that space is Upwork, which many of our home-office readers will be familiar with. Upwork takes in between 5 and 20% of its freelancers’ revenues, so there is a lot of room for competition. Other plays in the industry, like Fiverr, have a strict 20% model. Therefore if we find that Starbase intends to offer freelancers a better deal, overtime the rules of the network effect could place the best available talent in its shed – but this would be a long-term transition to say the least. Is the offering and hte novelty of Stardust enough to shake up the market and get a share? Let’s find out.
The Novelty of Stardust
The addition of the crowdsourcing to the crowdfunding model adds an element of novelty to this project. While both functions can successfully be accomplished by other, existing means, there is a lot of opportunity in making such processes much easier than they are currently. Most business people have no interest in learning how to do a smart contract, and most would prefer not to have to hire special people just for this task. A platform which is self-serving might be better for many firms, and could help to hasten the integration of the blockchain into daily businesses. Nevertheless, these statements are not meant to insinuate that Starbase will be the one to achieve this, or that it will be a success. However, the project does gain a few points for innovation and novelty here. 5 to be exact. Now let’s move on.
If the revenue of crowdsourcing companies was around 1 billion last year, and the average take is around 15%, then the actual money moving through the crowdsourcing market is closer to 10 billion dollars. Capturing even 1% of this market is significant revenue, and moving up the points scale means good returns.
75% of the tokens will not be on the market, so token holders are in line to receive a proportional amount of the remaining 25% of profit that is derived in the future by Starbase. As such, if profits were 100,000 dollars in the first year, 25,000 would be available for distribution to STAR token holders. If all tokens are sold, this is a total of 250,000 million tokens (not mentioning later inflation), or a dividend of about .0001 USD per token.
The total payout to token holders has an upper limit of 1000% of the initial raise. The initial raise is intended to be at least 1 million dollars, so the maximum amount they are looking to pay token holders is 1 billion. Now we have a hard profit figure to deal with, if everything goes right: 1bn/250mln = $4 total realized value of the token in terms of dividend. Actual value of the token as traded on exchanges will be different, but this is (if the math is done correctly) the most you could hope to make from the company directly.
In addition to the 45+30% tokens that Starbase withholds from public sale, they receive a daily 0.000685% inflation payment for “development and operation.” This inflation increase the total token supply, which lowers the above figures concurrently.
What this all adds up to is that the two primary ways to earn from Starbase both involve activity on your end. You cannot enter this simply as an investor looking to buy, hold, then sell, as you will likely not maximize your potential by doing so. Instead, to really profit in Starbase you will have to 1) utilize the tokens within the Starbase economy and 2) time your token selling with the maximum remaining possible dividend.
This situation, all in all, really detracts from the perceived and future value of the STAR token. We deduct a full 2 points on these grounds.
Without deeper investigation, we could leave Starbase at a 2 out of 10 and call it a fair assessment. The plan is detailed, but it ultimately does not provide enough potential revenue for the risk involved.
The risk of Starbase is clear as day: it could very well be a nonstarter and never gain any traction at all against entrenched industry magnates like oDesk. Crowdfunding is more than handled across the cryptocurrency industry, so without a real successful launch of the crowdsourcing part of the platform, it’s dead in the water. Further, from an investor’s point of view, there are a lot of variables and even in the best situation, dumping at a high is probably the only foreseeable outcome that is profitable.
Due to the growing crowdsourcing industry and the novelty of the platform, we replace 1.25 points.
The outcome of this author’s analysis, on a scale of 0 to 10 in terms of safely getting a return, is as follows:
5-3+1.25 = 3.25
In terms of ICOs, Starbase intends to run theirs for awhile. Their minimum goal in order to commence operations is 1 million dollars. While the whitepaper lists 1 billion coins being generated, the crowdsale page says that the total amount of STAR tokens generated will be determined when the sale is open. It seems they will continue to run the sale until $25 million has been garnered, and bonuses are given earlier in the sale. Instructions on how to invest are available on the website. Denominated in Yuan, the current rate appears to be about 20 cents USD per token. This means that if the above calculations prove true, your potential per-token profit is perhaps as much as 2000%, but for that a very Utopian view about the prospects of Starbase is necessary.