ICO Analysis: Suncontract

Suncontract is a concept whose time is quickly approaching – a peer-to-peer marketplace for renewable energy. The push to renewable energy is global. According to Bloomberg, over 70% of the more than $10 trillion projected to be injected into new energy sources will go to clean energy by 2040. Analog energy sources will become less and less common, demand will increase with the rise of electric cars, and so renewable energy will become the new norm.

The project itself is incredibly ambitious as far as ICOs go. It involves dozens upon dozens of challenges – legal hurdles, building the network, interconnecting generators, interfacing with outdated electricity grids, and so forth. It is monumental in scope, and therefore needs a suitably high amount of raised capital to get off the ground and running – which assumes it does not hit some governmental brick wall down the road. For all the goodness there is in this concept, we immediately are entering a heavily-regulated industry where said regulations vary widely.

Let’s see how they handled the hurdles so far.

At the time of writing, Suncontract had already reached its second milestone in fundraising. At this level, they are committed to launching the marketplace itself on a national level. So, all of the hurdles mentioned above will be attacked regardless of future fundraising with a minimum of 5,000 Ether raised.

The Suncontract Team

Our team has been active both on energy and IT markets for years . We are well aware of opportunities and have the knowledge and innovative ideas for new perspective services that can be implemented with blockchain technology.

Okay, such an assertion bears some investigation.

Beginning at the top, we have CEO Gregor Novak, a Slovenian, who has spent his entire career in one form of utility or another. He has obtained an economics degree from the University of Ljubljana within the last year, and is apparently applying it to his latest venture. In 2004, he became the CIO of a Slovenian power outfit called Borzen. He then worked in several other energy-related firms.

CFO Mojca Bajec is currently working on her doctorate in economics. Her other experience is relatively limited, although tangentially related. Having spent so much time studying theoretical economics, there may be a period of adjustment in which her college education is applied to real life, but it appears that she will have the opportunity nonetheless – as earlier stated, the firm has already raised two of its funding milestones.

In charge of the most important part, the energy ecosystem, is Dr. Klemen Stopar, also Slovenian, who is a bit elusive at first, but we did find this trove of publications by him. These are mostly pertaining to electricity subjects, but the author does not speak sufficient Slovenian. In any case, Stopar is basically a digital ghost, which could be problematic only in the context that he is to blame for some later problem.

Regionally, they have four operators – one in the Massachussetts, one in China, and one in MENA. These people will be important later on, but many more will be necessary, so investigating them at present is a waste of time. Instead, let’s see who is building the blockchain for Suncontract.

Developer Andraž Verdev’s software contributions aren’t readily apparent, and the only user account to make any commits to the Suncontract Github repository is apparently anonymous as well.

The Suncontract Market

The elements of the Suncontract ecosystem, as described on pages 11-13 of the whitepaper.

The Suncontract team envisions a world where people can easily buy and sell energy at more competitive rates than currently available to them. Industrially, this will create a number of opportunities for everyday people to earn money, as well as save money. Such propositions have massive potential, but their execution is all important.

They define their market as having two primary participant types: producer and consumer. This is simple enough. They say that consumers will access the marketplace through a mobile application, registration through which is necessary to consume energy from the platform.

Small-time producers who currently sell to major traders and energy grids, a common practice throughout the world (people run a few solar panels on their house and get a discount on their energy bill) don’t have a lot of leverage in how much the energy is worth. They’re not free to just take it elsewhere – currently. This is the problem that Suncontract is really seeking to solve – let people with greater means earn by selling energy cheaper to those with lesser means. Cryptocurrency enthusiasts obviously know one market that is always in demand of more efficient, inexpensive electricity: miners.

In the whitepaper, all of these things are described from a high-level view, with very little information on specifics of how it will be done. This is problematic because anyone can write a whitepaper with a bunch of crazy ideas in it. The ideas have to have some workable solution. So we’re really making a bet on the team itself, and unfortunately, they’re not very well-known quantities west of Slovenia. As regards the technology itself, we can sum up the whitepaper by saying:

A mobile application will magically enable people to buy and sell renewable energy for SNC tokens. One feature of this system is that SNC tokens will be immediately convertible to fiat currency. Another feature is ease of use.”

But that is all we get out of it – nothing in terms of how this will actually be conducted. The process itself does not sound simple – rather, it sounds like a logistical nightmare. In short, the Suncontract concept may not be best done, at scale, by just one entity. Perhaps Suncontract is only some of the earliest to the table, but for the table to ever be set and the feast to be had, a serious consortium of able, connected individuals will need to be assembled. We’re not seeing that here, but they do have some funds to focus on talent acquisition later.

The Suncontract Token (SNC)

SNCs will be emitted at a rate of 10,000 per Eth raised. An unlimited amount can be invested, but the most they are planning for is 60,000 Ethereum or 600,000,000 SNC (capped at 100,000/1bn). 20% of this figure, whatever it is, will be “appointed to the team of developers, advisers, escrows, bounties and other costs of token sale execution.”

As has been a trend in ICOs, the firm is double-dipping here. They keep 100% of the Ethereum raised, then they take 20% of the tokens at market time as well. Nevertheless, the distribution of the Eth raised looks like this:

One can easily imagine the legal slice of this pie eating the whole thing unless the pie so massive it could swallow a few Sub-Saharan governments. This lack of foresight costs a point to Suncontract. Suncontract only spends a moment addressing this:

Rules for trading, purchasing and supplying, contract signing, invoice issuing differ from country to country . Therefore, a business process with a user friendly interface that is compatible with national regulatory framework will have to be accomplished .

Nevertheless, they are already committed to achieving this goal, so this should be noted thoroughly by investors.

The tokens will be transferable and tradable on exchanges, and at a starting price of just 0.0001 Eth each, they’re likely to see quick growth.

The Verdict

Risk

  • Huge project, potentially impossible.
  • Great idea but potentially explosive in cost, particularly legal costs.

Growth Potential

  • Limitless. Renewable energy demand will steadily increase as long as human beings are residents of Earth, and high seas raise all ships. If successfully implemented, the platform will progressively return more value ad infinitum until it is somehow made obsolete.
  • Given the unknown territory they’re moving into, SNC tokens could actually have a lot of volatility for a long time. Savvy traders could make real gains by timing their trades around announcements by Suncontract – such announcements have two effects on people, either they make them more bullish or they concern them. If SNC runs into notable roadblocks, confidence may stumble, providing buy-in opportunities. Then when Suncontract has successes, gains occur. So, regardless of the actual fate of the project, the token itself could yield a lot of one-off, short-term gains.

For pursuing big ideas, which often are either 0 or 100 in terms of profitability, we lend 7.5 points from the top. For having at least two highly qualified individuals on staff, we lend another .5 points.

Also for pursuing a big idea without sufficiently budgeting for the legal nightmare it could be, we deduct 1.5 points. For having a lack of deeply experienced cryptocurrency staff, we deduct another 1.5 points.

Hence, we land on a safety rating of 5.0 out of 10.0 for Suncontract. For the purpose of this rating, it can best be interpreted as, “you’ve been given all the red flags and all the shiny parts too, but now you’re on your own.” The biggest reason for this is that it is hard to recommend something with so many possible pitfalls. We see the idea, we see that it’s possible, we’re just not sure it’s going to pan out.

Investment Details

You can enter the Suncontract crowdsale now. For the next week, you will get 1,500 bonus SNC tokens for every Eth you invest. After that, this bonus will reduce to 1000, then a week after that to 500, then a week after that the real rate of 10,000 SNC per Eth will only be honored. Go here to get started.

Featured image from Shutterstock

Author:

Website: http://phm.link

P. H. Madore has covered the cryptocurrency beat over the course of hundreds of articles for Hacked's sister site, CryptoCoinsNews, as well as some of her competitors. He is a major contributing developer to the Woodcoin project, and has made technical contributions on a number of other cryptocurrency projects. In spare time, he recently began a more personalized, weekly newsletter at http://ico.phm.link