It’s dishonest not to begin this analysis with the author’s gut reaction upon being informed about Viberate: yet another great idea that probably won’t make enough money to succeed. In analyzing new financial instruments, especially volatile ones with no real history, there are a lot of pitfalls to avoid. Common wisdom would have cautioned against an investment into Google, which is why Yahoo! passed on their historical opportunity to purchase the giant in its infancy. Therefore avoiding the “small minded” fallacy is important, but also important is demanding that investments actually have a profit model. In Viberate, on the surface at least, we don’t find a lot of that. Instead, we find a lot of talk about building a community around live music and expanding a database of live acts.
The Viberate business model isn’t quite simple. It’s a 21st century middleman approach. By aggregating venues and acts to perform in them, they create a garden inside of which they can charge for activities.
Viberate is a platform that joins the entire live music ecosystem under one roof. Currently it acts as IMDB for live music, where profiles are ranked according to their online popularity. It is built and curated by the Viberate user community. Our end game is to disrupt the music industry as we know it – by becoming the biggest global talent marketplace.
They themselves speak to the problem this author is establishing, a couple pages later in their whitepaper :
[…] We managed to build the database we have today with the help of over 50,000 contributors and we will always keep it open for anyone to take part in maintaining its relevance. […] Those 50,000 Viberate contributors didn’t get anything in return for their contributions. Now the blockchain technology allows us to reward them for their work with Vibes (VIB) from our bounty allocation.
For their part, Viberate wants to expand the usage of their token beyond just the Viberate platform. They aim for it to be “default token in the music industry” which would mean it could be used in digital music sales, ticket sales, busking, merchandise, and more. To this end, they have a number of potential and untested revenue models. Most interesting among these, and perhaps the emergent winner in terms of the firm’s actual focus, is their Decentralized Ticket Exchange service (DTX).
The DTX will allow people to buy and sell tickets to events via the Ethereum blockchain. Every ticket will be created as it its own ERC20 token that can communicate with the Vibe application itself, meaning that any Ethereum wallet could be taken to an event, or an Ethereum ATM could vend the tickets. This alone disrupts the model of Ticketmaster and several other ticket scalping professionals in a huge way and could represent large revenues if integrated into a few large arenas early on. For reference, Ticketmaster’s parent company is worth over $7 billion.
Another revenue model, that seems most obvious, is the booking commission model. Agents today earn up to 20% of an artist’s take from each event. Viberate can compete with these figures for obvious reasons, offering a better price and a far greater variety of potential venues.
Then there is advertising, which will be hit or miss. Viberate wants to develop partnerships with other sectors of the music industry and sell advertising to its member artists. It could sell it directly or through smart contracts built into the platform, between artists and ad markets. However, one can easily see this aspect being unprofitable or undesirable, since 21st century promotion is a totally different ballgame.
Another probably less valuable feature is paying for access to members of the act, such as the manager. One assumes they intend to expand this to a sort of backstage access situation, but ultimately this is, again, not the sort of thing that will have broad appeal.
Vibe Token Details
Viberate has always been a community project. The initial database of musician profiles was built with the help of over 50 thousand contributors, who got nothing in return for their work. Sometimes being a true music fan and feeling like a part of something big is enough. But we believe that community work should result in sharing the proceeds of its efforts. One of the main purposes of the Vibe is investing into the growth of the service. We will reward community efforts with Vibes from our bounty pool. The pool will be fuelled by the profits from excercising our business models. The below scheme illustrates Vibe’s circle of life.
Viberate tokens will, like many in their class, have real value only within the ecosystem itself. They can be used to buy tickets, book musicians, add musicians to the database, and more. A fixed supply of 200 million tokens will be generated on September 5th, with 60% of them being offered for sale. The initial price is tied to the US dollar, at 10 cents each, with daily tranched bonuses.
The value of the tokens can only increase if demand for access to the platform does, so in a sense, the commitment to the previous community and to running bounty programs is very forgivable. To this end, they are dedicating 5% of the 200 million at the outset to rewarding participating community members who continue to expand the platform. An additional 27% is withheld for awarding early investors, distributing to staff, and future partnerships that may require Vibe tokens.
Vibe tokens will be useful in either the Viberate app or in a standard ERC20-compatible wallet which can be used to transfer them in person, at events or otherwise.
This may be the greatest idea ever to grace the music industry, but that does not mean that there will be financial rewards for investing in it. Disrupting an established industry which has a lot of internal competing interests is difficult and potentially dangerous. Stumbling blocks for Viberate will include simple “didn’t like the color” reactions from legacy parties they are trying to bring on board. The risk in this product is higher than many because it requires a lot of social capital to really get legs. As such, the following verdict can be considered positive in light of all the potential negative factors/headaches that a behemoth, consolidated, and opaque industry can give to a would-be cure-all like Viberate.
Worth a look, and at ten cents a pop, maybe a swing, but probably mediocre in terms of ICO returns unless your motive is pure speculation. In that case, a sell-off point of 30 cents per token seems an easy gain.
- An industry as full of middlemen as live entertainment will significantly resist disruption of this type. Market penetration could be very slow and tenuous, which will take a toll on the value of the tokens. -2
- Too great a focus on community rewards and issues could take time and resources away from developing money-making ventures. The project is overwhelmingly consumer-facing. -1
- Live music isn’t going away, and becomes more valuable as recorded music sales continue to decline. The potential to provide disruptive services which actually benefit the industry they target is great, and even a 10% take of the industry leader in ticket sales (via the DTX product) would equate to almost a billion dollars in annual revenues. +5
- Incoming industry executives will realize the value of products like Viberate and partnerships will likely flourish as a result. We lend another +2.9 for the potential that venues, promoters, and other existing industry actors will carry water for Viberate and make it bigger than it could make itself.
We land on a 4.9 with Viberate, having exhausted its positives and negatives.
On September 5th, Viberate.io will have all the details for investment available. They already have user-friendly guides available, and a mailing list for reminders.
ICO Update: Polkadot
Polkadot’s crowdsale opened just six days ago, but has already generated a staggering $140 million. For investors who missed the boat, there’s still time to get in on the Dutch Auction.
Polkadot is a blockchain technology that its developers call a “heterogeneous multi-chain.” The goal of the project is to overcome the flaws plaguing present-day blockchain architectures (think: extensibility and scalability). The technology makes it easier for blockchains to facilitate accurate transactions that are both anonymous and valid. Essentially, it allows independent blockchains to exchange important information effortlessly.
We reviewed Polkadot’s dizzying whitepaper with keen interest to fully understand what the platform is and how it operates. The 21-page document is one of the most technical to grace the ICO market. This is actually a good thing, as it raises the standard for investors when they go to evaluate initial coin offerings.
Instead of offering an overly simplistic account of Polkadot, we let genius developer Dr. Gavin Wood do the talking. From Polkadot.io:
[Polkadot] consists of many parachains with potentially differing characteristics which can make it easier to achieve anonymity or formal verification. Transactions can be spread out across the chains, allowing many more to be processed in the same period of time. Polkadot ensures that each of these blockchains remains secure and that any dealings between them are faithfully executed. Specialised parachains called bridges can be created to link independent chains.
The blockchain community has known for some time there’s a strong need for cross-chain communication. Polkadot essentially provides a creative commons platform that will allow various blockchains to interact with each other (thank you for the explanation, Stephen Tual). Polkadot will enable these different chains to share value as well as data across existing or future parachains.
Perhaps mainstream investors didn’t see the point of Polkadot 11 months ago when the team released the whitepaper. The growth and widespread adoption of blockchain technology since has likely changed their mind. At least, that’s what we gather from the hugely successful capital raise.
Polkadot promises to deliver pooled security for all parachains, as well as communication between them. These are exchanged on every block, and also enable data and tokens to be delivered.
Polkadot is offering 5 million native DOT tokens via capped crowd sale. This means that the sale will close once a certain amount of ETH has been raised. Unlike other capped raises, the DOT cap is dynamic and changes over time. In other words, DOT prices start high and decrease over time. The speed at which the price declines is fast at first and then more slowly. Early adopters (i.e. in the first hour) received 15% bonus DOTs for their efforts.
The initial cap is set very high to make it virtually impossible for any one person or entity to buy all the tokens. The funds will go toward the development of a new protocol enabling cross-chain communication.
More than half of the 5 million DOT tokens are available. Check here for the latest update.
If you’re an investor, DOT serves three main purposes: governance over the network, operation and bonding. DOTs will carry out vital functions across the Polkadot network, enabling holders to participate in the operation of the system. This includes acting as validator, nominator or fisherman – terms that are described in the FAQ.
Gavin Wood is the brains behind DOT, but he also has a team of 30 developers with backgrounds in systems programming, cryptography and distributed systems. The development crew also consists of Parity Technologies, which created the most advanced Ethereum client and wallet application for developers.
Wood’s various teams are part of the WEB3 Foundation, a nonprofit organization that was set up to advance the field of decentralized web protocols via cryptography.
When it comes to blockchain expertise and experience, very few organizations come close to what Gavin Wood’s crew is doing. This explains why so many people support their grand vision.
Backers of the Polkadot project have a lot to be excited about. That’s because they are investing in an idea, and are happy to see it through over the next two years until the token is released. However, this does not discount the real risks facing the project – risks that the developers have spelled out explicitly.
- As the Polkadot team mentions in its FAQ, regulatory treatment of ICOs is uncertain. Governments have already shown hostility toward ICOs, and there’s no way to know for sure how DOTs will be classified from legal and regulatory perspectives. -2
- Lack of liquidity is another risk that the founders have identified. The Polkadot team will not develop or support any infrastructure that allows for DOTs to be traded. As such, there may not be a secondary market for the token. -2
- As a proof of concept, there’s a two-year lock-in period before. For some investors, this timetable might not work. -1
- Unlike bitcoin, there is no upper limit on the total supply of DOTs. This means it is inflationary in nature. Although some crypto enthusiasts might write this off as a negative, the whole purpose of DOT is to encourage participation. In other words, the Polkadot token was designed specifically for this purpose. -1
- Polkadot promises to develop a system that interconnects various chains, thus addressing the challenges of scalability and interoperability. Suffice it to say, this protocol would be a game changer if it succeeds. Think Ethereum big. +5
- Wood’s team is crazy good, and his success with Ethereum and Parity could very well make Polkadot an important component of the digital currency market. +5
- The Dutch Auction has proven to be a resounding success, with DOT already becoming one of the biggest ICOs of the year (and by extension, ever). Clearly, savvy investors are paying attention. +2
With the benefit of hindsight, the author assigns Polkadot a score of 6 out of 10. Note that this score only applies to investors who are willing to donate two years of their time for a potentially large return.
To be perfectly honest, I am a believer in the project and can certainly justify a higher score. But the two-year lock-in period, combined with the vague economic value, forces the author to temper his expectations – at least for now.
That being said, investing in ideas can be a powerful thing, provided you don’t bet the farm. It’s difficult for any blockchain enthusiast not to love Dr Wood’s vision. Read below:
We envision a Web where our identity and our data is our own – safely secured from any central authority. Our aim is to reshape the existing internet structure into what we are calling Web3: a completely decentralized web.
- Type: Dutch Auction Crowdsale
- Pre-Sale: Ongoing
- Opening Sale: Oct. 15, 2017
- End Date; Oct. 28, 2017
- Platform: Native
- Token Release: Genesis Block (Q3 2019)
- Total Supply: 5 million out of 10 million total allocated to Genesis
- Payments Accepted: ETH
Featured image courtesy of Shutterstock.
ICO Analysis: Lydian
The market for initial coin offerings (ICOs) is exploding, as early-stage startups turn to crowdfunding for capital raises. But there’s a serious problem in this largely unregulated market: how can investors tell the difference between legitimate companies and dubious copycats?
The SAFT protocol, which the author firmly supports, is one way in which the cryptocurrency community is vetting both coin sales and investors. Its proponents argue that SAFTs can create and sustain a self-regulated cryptocurrency market, something that is sorely needed.
Of course, regulators know nothing about SAFT, and are instead pursuing hard bans on ICOs. China and South Korea are the most prominent examples. As it turns out, some of the marketing and capital raise tactics used by ICOs can be downright abusive.
To its credit, Lydian has quickly caught on to the problems plaguing this nascent industry. Its gripe isn’t just with fraudsters, but anyone looking to bullshit their way to an ICO using the unsavory practices of rent-charging, abusing marketing and half-assed campaigns. This isn’t entirely due to neglect.
Lydian’s market research finds that the average ICO spends between $100,000 and $500,000 on digital marketing. Unfortunately, their delivery method is archaic and poorly executed. To make matters even more complicated, companies must continue to advertise aggressively long after the token sale has ended. After all, the end of a token sale is when the work really begins.
The LydianCoin attempts to solve the problems plaguing token raises by offering AI-powered digital marketing services. The coin itself doesn’t have any magical powers; it simply represents a way to pre-pay for the services of Lydian’s parent company, Gravity4. Of course, its services aren’t limited to ICO issuers, but any company in need of marketing analytics.
Gravity4 markets itself as “The World’s First AI Big Data Marketing Cloud.” It currently boasts Fortune 1000 companies and makes use of advanced technology to deliver personalized marketing solutions.
So, why are they launching the blockchain-based LydianCoin? Probably as a way to reduce costs, raise hype and continue to scale up its niche marketing prowess. The company appears to be on to something with its MonaLisa platform, which is itself built on a blockahin. Through MonaLisa, Gravity4 is looking to combat fraud in the advertising industry.
Fraudulent marketing practices are actually a huge deal. Even Facebook has admitted to inflating its ad metrics. (In fact, they came under scrutiny again in September.)
The LydianCoin Token
Lydian (LDN) is an ERC20-based Ethereum token that will form the basis of the company’s forthcoming ICO launch. The token sale will accept bitcoin and ether payments for its capital raise. Early indications are that the LDN token will be valued at $5 USD.
LDN is described as a “value-stabilized cryptocurrency,” which can be negotiated back to Lydian to obtain marketing services that leverage years of aggregated marketing data. This includes marketing placement and customer interaction metrics and disintermediate advertising channels. The end-user is promised superior marketing metrics at a lower net cost. The tokens may be used immediately upon issuance.
The total value of the proposed raise is expected to be $100 million. The company will use the proceeds as reserves against the provision of future digital advertising and marketing services.
Lydian’s pre-sale is currently active, and has raised $10 million in 72 hours. Until Nov. 20, investors will receive a 25% bonus on their investment. The official issuance date is Nov. 20.
For two hours after the issuance date, the token will be available for a 15% discount that drops to 10% over the next 22 hours. From the day after the issuance date through Nov. 27, no bonus will be available.
Lydian’s crowdsale is headed by the executive team at Gravity4. As we mentioned previously, Gravity4 has already delved into the world of blockchain with its MonaLisa platform.
The founder of the company is Gurbaksh Chahal, an entrepreneur with 17 years of experience in digital advertising. He has his fingerprints on numerous successful internet advertising companies, including ClickAgent and BlueLithium, which sold for a combined $340 million in separate deals.
However, the news surrounding Chahal isn’t all positive. In 2014, the executive pleaded guilty to abusing his then-girlfriend. Now, he faces possible jail time for violating probation in another case of violence against women. He is also being sued by four previous employees for harassment and discrimination – claims Chahal says are “baseless” and “frivolous.” (All according to Forbes.)
The company’s Managing Director Grant Allaway and Kevin Huang have a combined 32 years of experience.
Gravity4 has also retained Mazars Ireland as its auditors and added legal advisers Dentons U.S. LLP and Berger Singerman LLP.
Solid team, if you look past the possible legal issues facing the founder.
Lydian is backed by a solid digital marketing company. Its tokens serve a viable business function for customers and vendors in pursuit of customized marketing solutions. For actual investors, the benefits are less compelling. (After all, the token is a reserve against future digital advertising and marketing services.)
That being said, the company faces several legal challenges that extend far beyond the key executive’s past behavior. These need to be weighed carefully to determine whether the $100 million valuation is justified.
The company is also endorsed by Paris Hilton, so take that for what it’s worth.
- The head of Gravity4, Gurbaksh Chahal, has pleaded guilty to domestic violence and faces possible jail time for violating probation. If you’re a holder of LDN, this doesn’t exactly stoke feelings of confidence in the executive team or its direction. Let’s also not fail to mention that the company has four outstanding lawsuits.
- The main purpose of the Lydian token sale is to pay for Gravity4’s services in dollars. So, really, what exactly is the point of the token? There are other ways to obtain upfront or advanced payments for your services. Why go through all the trouble of minting a cryptocurrency?
- The only real value proposition for giving Gravity4 your money is the promise of “exclusive access” to features it is developing in the future. What are those features, exactly?
- Industry experts, once again cited by Forbes, suggest that LydianCoin meets the SEC’s definition of a security. In deeming DAO to be a security, the SEC used what is known as the Howey test. Lydian seems to meet the criteria set out in that test, which could put it in regulatory hot water.
- For all the hype surrounding the ICO, the company makes very little effort to engage the community. There’s a couple thousand followers on Twitter, but no direct engagement model on other channels.
- Lydian’s parent company has a proven track record in blockchain. This is somewhat of a rarity for ICOs, at least the ones the author has reviewed.
- Gravity4 has serious growth potential, especially in terms of scalability. The business model allows the company to grow without risking too much overhead or intermediary costs. The application of AI and big data to marketing has many people excited.
- The token sale raised $10 million in 72 hours, so clearly people are lining up to participate.
As you’ve probably noticed, the author has omitted an individual score on each of the risks and growth drivers. That’s because he believes the risks far outweigh the rewards, but doesn’t feel justified giving a “negative rating.” That’s because Gravity4 seems to have a good business model and something real to offer the advertising community. How does this translate into an ICO raise? Well, it doesn’t.
Although the ICO has sucked in eight-figures in less than three days, that itself doesn’t justify buying it. There are too many red flags involving Chahal and the regulatory circumstances surrounding the “utility token.” The author doesn’t see any long-term benefits to the crowdraise, unless it’s to bank on the cryptocurrency craze.
Against this backdrop, we’ve assigned Lydian a rating of 2.5 out of 10. The token might succeed from a crowdraise perspective, but that doesn’t mean you should buy.
- Type: Crowdsale
- Pre-Sale: Ongoing
- Opening Sale: Nov. 27, 2017
- End Date; Dec. 4, 2017
- Platform: Ethereum (ETH)
- Total Supply: 40 million (20 million to be sold via token sale)
- Total Supply Available for Advertisers: ~800,000
- Token Price: $5.00 USD (with discounts available)
- Fundraising Goal: $100 million USD
- Payments Accepted: Bitcoin, Ethereum, Litecoin, Dash, ZCash, ZEC, Waves, Credit Card, USD wire transfers.
Featured image courtesy of Shutterstock.
ICO Analysis: Datum
Did you know the word Datum is singular for data? I didn’t!
As the name suggests Datum’s business model revolves around data.
The Datum network allows anyone to store structured data securely in a decentralized way on a smart contract blockchain. The DAT smart token enables optional selling and buying of stored data while enforcing data usage rules as set by the data owner.
Nowadays data is an asset which is as valuable as oil and machines used to be in the past. It has become a strategic asset that allows companies to acquire or maintain a competitive edge. User data can find many applications and uses, most important being advertising and research.
“If you are not paying for the product, you are the product.” – Andrew Lewis, 2010.
Internet conglomerates like Facebook, Google, Twitter provide their services for free but in exchange exploit a user’s personal data. Sensitive information like personal emails are accessed by Google to sell information to advertisers. The data ecosystem is now worth billions of dollars, however the most important component of this system i.e the user, is the only one who is not actively involved. Datum is creating a decentralized network where users will have all the control over their data and will get paid for sharing it.
Datum network is based on smart contracts which enable the sharing and exchange of data. Datum client will be a web and mobile based application where user submits the data along with its usage terms. The data gets encrypted and stored in decentralized form using IPFS and BigChainDB. Users will have to pay some fee to the network storage miners. Once buyers submit their requirements, smart contracts match the attributes and release data in exchange of access charges taken from the buyer.
Apple’s Healthkit is similar to what Datum aims to offer. However the data stored on Healthkit is centrally located and owned by Apple, and the users don’t get paid for sharing their data. The team has not given many usecases of the product usage in their short whitepaper apart from a few examples of data monopoly of internet giants like Facebook and Google. Newly launched AirToken also pays users for enabling access to data. The concept of Datum is somewhat different, you can check our review of AirToken here. Companies like Papyrus,Qchain are creating digital advertising ecosystems in which users get paid for sharing their data to advertisers. They are limited to advertising ecosystem, while Datum aims to cover other domains as well, although we don’t exactly know which ones.
Token and Crowdraise
DAT is the only token to be used on the platform. DAT will be used in various stages of the product offering. Users will have to pay DATs to access the network and store data. Data buyers will pay DATs to register on the network and access user data. Third party services of CIVIC, IPFS, BigChainDB will be used in the network.
The ICO will begin on 29th October. The total supply of DAT will be 3 billion of which 1.53 Billion will be available for the ICO. There is a softcap of $5 million and a hardcap of $45 million. One DAT is valued at around $0.03. 20% of the total supply of 3 billion is kept for the team. 60% of the funds raised will be used for development and 15% for marketing.
CEO Roger Haenni is a serial entrepreneur with extensive experience in big data systems. He has cofounded 4 companies one of which includes StockX. StockX is a venture capital backed e-commerce site for global sneaker resale market. The whitepaper lists 8 members in the team and 1 adviser. Adviser Daniel Saito is the cofounder of MySQL. A recent blogpost shows addition of 3 new advisers and a few more team members. The core team has no prior blockchain experience, they have hired 2 Stanford undergrads as blockchain engineers. We give an average rating to the team. The team’s lack of blockchain experience should have been compensated by having more advisers who have worked with the technology.
Even after a user downloads Datum, what is stopping Facebook, Google, Amazon from sharing user’s data. That’s how the internet economy works. Facebook, Google are providing free services to users only because they get the data. The “only users have access to their data” part of the advertising campaign is somewhat misleading. IF very strict antitrust laws come up which prevent internet giants from collecting user info without their permission, then the business model might find value. Atleast for the decentralized digital advertising bit, companies like Papyrus, Airtoken seem to be much better placed. As for the other usecases, there is not much information available. There is a mention of car data, where users will sell data that their car generates using Datum. But then how are they planning to do that? Are they actively seeking partnerships with car manufactures like Dovu does? Overall we feel the idea is good, but the scope is too broad for a single team to handle. We hope the team shares some more details through blog posts etc.
- The scope of the project is too big for small team to handle. Many projects are working on the issue of data ownership, but they are focused on niche segments. -3
- The whitepaper leaves you with many questions in mind. -2
- For a project of this scale a large adviser network is needed. The whitepaper mentions only one adviser. A blog post informing about addition of 3 new advisers was posted on 14th October. Did they add 3 new advisers just two weeks before an ICO where they want to raise $45 million? -0.5
- The concept of data ownership holds a lot of potential. +2
- Datum can definitely scale in usecases like medicine, where something similar to HealthKit can be created. +4
- Tokens used in transactions will be burnt, creating value for token holders as the network scales. +2
We arrive at a score of 2.5 out of 10 for Datum. The score seems valid considering the many underlying grey areas.
The ICO begins on 29th October. You can register for the whitelist here.
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