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ICO Analysis: ZeroTraffic

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ZeroTraffic is offering a cryptocoin smartphone-based application to help reduce recurrent traffic congestion.

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The way ZeroTraffic works is by utilizing gamification to reward commuters who travel off-peak times with the goal of reducing peak traffic volume. Studies have shown that just a 5 to 10% reduction in traffic volume can significantly reduce congestion and help traffic flow faster.

By incentivizing users to travel using alternative routing schedules, ZeroTraffic has the goal of saving users time and offering them a way to earn prizes, while also helping reduce the traffic load for everyone else.

ZeroTraffic plans to offer non-monetary incentives such as points, badges, levels, and status, while working with sponsors and media who can award fuel, product discounts, and recognition.

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The benefits of ZeroTraffic go beyond saving a few hours of travel a week. ZeroTraffic aims to create the end result of an effective tool that can influence driver behaviour with very low operational costs. This is something many major cities have struggled and fail to do for decades.

If you’ve ever been brave enough to get behind the wheel of a car around rush hour time in cities such as New York City, Los Angeles, Miami, or Austin, you can understand the potential of ZeroTraffic.

On average, traffic congestion costs Americans $124 billion dollars a year in direct and indirect losses, and the number is expected to rise to $186 billion in 2030. A conservative estimate for the traffic costs in Canada are around $4.6 billion annually.

Zero Traffic utilizes a virtual transponder application (a GPS-enabled smartphone app) to calculate the metrics used for the award points people get. The parameters are based on exclusion zones, home and work addresses, and congestion zones defined by transportation authorities.

Team

ZeroTraffic is owned by the parent company Array Systems Computing Inc. with headquarters in Toronto and Ontario, Canada.

Array Systems Computing Inc, founded in 1981, has played an integral role in the field of Intelligent Transportation Systems (ITS), and is the builder of the COMPASS software used by MTO to manage incidents on all the highways in Ontario.

The CEO and President, Stuart Berkowitz founded Array Systems in 1981 while he was a Ph.D student at the University of Toronto. Additionally, Berkowitz has a BSc in Computer Science from Cornell, and a MS in Mathematics from the University of Illinois. Berkowitz has experience operating and selling Array Telecom Inc to Comdial in 1998, and VoiceGenie Technologies Inc to Alcatel in 2006.

ZTT Tokens

The ZeroTraffic platform is based on the use and ownership of ZTT tokens.

Investors with a minimum of 1250 ZTT become a “Deputy Mayor” and can buy a specific district they are able to advise the ZeroTraffic team on the congested regions.

Image from TrafficZero Whitepaper

Investors can specify the center of a circle of any size greater than ½ km radius, with the smallest circles costing 1250 ZTT (the coin which can be purchased using Ether). Investors are capable of selling the ZTT, or hold onto them to get a district dividend of up to 4% based on territory size. In a post on Reddit, the team stated that after 5 years they may even offer a buyback option at the market price.

This is interesting because it allows people to take specific ownership of improving traffic patterns in their communities; a direct incentive for the daily commuter.

The pricing for the ZTT ICO is tiered based on weeks away from the end date, with the first week price at around 250 ZTT/ETH, with the price increasing at around 26% per week and 3.6% raised ZTT in multiples of $4M.

Distribution

ZeroTraffic plans to offer up to 80,000,000 ZTT in the sale, with a total maximum token supply of 300,000,000 ZTT. The minimum ZTT offered in the sale is 4,000,000.

The fact that ZeroTraffic set a total maximum token supply is a favorable quality, but 300,000,000 is a fairly large maximum token supply.

The 80,000,000 ZTT offered in the sale add up to a lofty goal of about $91,200,000 based on the Ethereum price of around $285.

ZeroTraffic Progress

The ZeroTraffic team plans to roll out its project in 12 months in four separate phases:

From the Zero Traffic whitepaper:

  1. Implementation phase: will last 8 months. During this

Phase, the virtual transponder application and the gamified ZeroTraffic website will be implemented.

  1. Evaluation Phase: planned to be of 2 months duration. The readiness of the system for release to the public will be evaluated during the evaluation phase. Updates to the virtual transponder app and the gamified ZeroTraffic website will be made as needed.
  2. Production Roll-Out Phase: planned to be of 2 months duration. ZeroTraffic

will be rolled out over all territories over this period. Updates to the virtual transponder app and the gamified ZeroTraffic website will be made as needed.

  1. Operation Phase: ZeroTraffic: will be fully operational and supported across all territories. Data and results will be collected and analyzed. Improvements will be made to the virtual app and the website as necessary.

The Verdict

While I do believe that ZeroTraffic is tackling a substantial problem and potentially lucrative investment opportunity, it seems that the team really does have its work cut out for them. On the basis that the ZeroTraffic team can execute everything they are aiming to, they will do a great service to their investors, commuters, and society in general.

That being said, there are a few important things to note.

Risk

  • One of the greatest risks in my opinion is that the ZeroTraffic site and whitepaper constantly reference the importance of hitting 10% of commuters in order to achieve behavior modification. It seems that they’ve locked themselves into a “chicken and egg” problem, where initial users and investors won’t see the direct benefits other than a potentially beneficial change in their personal traffic patterns. Objectively, 10% is a very big chunk of the millions of cars on the road during rush hours. -2
  • People may be locked into their commuting schedules. There isn’t much ZeroTraffic can influence if many people need to go to work and leave at the traditional 9 to 5 time. -1
  • Lack of marketing experience on the team. While the ZeroTraffic team does have some significant firepower in building and innovating the project, I don’t see any substantial marketing force that could help them reach massive user adoption. -3
  • The history of the parent company is mainly linked with providing software solutions to government institutions, and the government adoption route can be an incredibly red-tape laced process, especially for a Toronto-based company trying to tackle traffic in some of the most densely populated cities in the United States. -3
  • The use of non-monetary incentives for commuters might be slightly on the idealistic side. The whitepaper claims that the gamification aspect of offering points, badges, levels, status, etc will be “addictive like computer games because we will seek to put users on a dopamine treadmill.” While this may be appealing to some users, ZeroTraffic needs user adoption on a much more massive scale and the preference for non-monetary rewards could be a bit overemphasized. -2

Growth Potential

  • I’ll be the first to say that I absolutely abhor traffic, and I’m far from being the only one. It’s an antiquated dinosaur approach to work commuting and is reflective of one of the biggest inefficiencies in society. It’s not only an issue limited to a handful of countries either. Traffic is a global nuisance. There has also been extremely limited efforts to change this by government agencies. We’ve gotten to the point that entrepreneurs such as Elon Musk are planning to dig underground tunnels just to minimize the problem in select cities. That’s why the growth potential for ZeroTraffic is huge. +3
  • Although the huge maximum token supply of 300,000,000 ZTT makes me a bit uneasy in terms of capital gains, I like the idea of a 4% annual dividend based on territory size. +3
  • If executed properly, the gamification aspect can be a gamechanger. ZeroTraffic essentially provides commuters an interesting incentive to travel at a different time, and it gives investors the opportunity to own a small district and take a small piece of responsibility for their community. +3
  • I’ve yet to see any schematics of the app, but from what I’ve read in the whitepaper it sounds like it’s going to be a very user-friendly “set and forget” sort of app. It also utilizes the fact that nearly everybody has a smartphone, and aims to modify user behaviors using this at an extremely cost effective rate. +2
  • It could save governments a ton of money. Building roads and using tolls is an extremely expensive and unpopular way to deal with the increase of traffic. The ZeroTraffic team also has experience in dealing with government institutions. +2

Disposition

We arrive at a +2 of 10 for ZeroTraffic. The concept, team, and massive traffic problem they are looking to tackle give ZeroTraffic a ton of positive points. However, at the other end of the spectrum, there are a lot of things that the team has to execute in order to achieve substantial success.

Investment Details

The ICO ends in 22 days. To see more details on the ongoing sale, go to https://www.zerotraffic.io/crowdsale.

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3 Comments

3 Comments

  1. jagrmeister

    September 23, 2017 at 10:44 am

    A 6 is a seriously high score when it comes to Hacked; I’m not sure this ICO warrants it.

    >Investors with a minimum of 1250 ZTT become a “Deputy Mayor” and can buy a specific district they are able to advise the ZeroTraffic team on the congested regions.

    So you pay tokens just to be able to “advise” the company on busy regions? You pay to do work for them? This instance is just an example of the entire project’s inability to understand human nature and incentives. While it’s everyone’s goal to reduce traffic, it’s not clear how everyone contributes financially to make it happen; the logical path is to work with municipal governments and agencies but that is a long sales cycle and city planners have a lot on their plate besides business development with an app like this.

    People will not take alternative routes for virtual badges; at least not enough to reach critical mass described above.

    This whole project seems poorly thought out; more like an undergraduate student’s paper for an urban planning course, full of noble intention but lacking practical business sense.

  2. cryptonoob

    September 25, 2017 at 5:44 am

    Seriously 300M tokens and a 250 ZTT / ETH ratio is an enourmous deal breaker.
    And you give it a 6 ?

    • Alex Moskov

      September 26, 2017 at 10:50 am

      After further analyzing the scoring gradient, I updated the ZeroTraffic score to a +2, that should be a bit more accurate.

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ICO Analysis: Spectre

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Blockchain has come a long way in eight years, with 2017 signaling the start of a paradigm shift in mainstream understanding of the technology. Blockchain-backed currencies have caught fire over the past nine months, partly in anticipation of major disruptions in the financial industry as a result of the distributed ledger. Blockchain’s appeal has helped drive a $175 billion cryptocurrency market, where tokens are available instantly via public exchanges. Already today, brokers like Coinbase, Bitfinex, Bitstamp and Poloniex have tens of millions of traders accessing the digital currency market.

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But online trading of financial instruments is nothing new. The forex industry has expanded rapidly over the past 15 years, attracting millions of retail traders into the fold. This highly competitive environment has led to a consolidation of sorts, with major brokers in North America, Europe and Asia emerging as the go-to source for online trading. They’ve spawned an entire community of white labels and affiliates designed to drive foot traffic to those respective platforms.

Although the online trading industry is still maturing, it is not immune from disruption. As demand for digital assets continues to grow, intermediation is one of the first things that could get left behind.

That’s exactly what Spectre is looking to accomplish through its forthcoming ICO. Spectre, or the Speculative Tokenized Trading Exchange, is the world’s first broker-less trading platform fully equipped with an embedded, decentralized liquidity pool.

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Spectre is essentially trying to put an end to the brokerage industry as we know it. This desire isn’t exactly baseless, either. Have you read the reviews of the average online broker? Or the fact that they manipulate prices to keep traders in the red over the long term? Suffice it to say, many traders are pissed, giving Spectre plenty of scope to make bold proclamations about what it intends to accomplish.

SPECTRE, which is built on the Ethereum blockchain, removes the broker out of the picture entirely, thereby disrupting the current model and empowering the trader. SPECTRE’s aim is to disrupt the digital options and classic retail FX/equities trading industries and lead a paradigm shift. (Whitepaper)

Spectre intends to reshape online trading by upending shady brokerage practices like price manipulation, withdrawal delays and sudden IP bans. It seeks to create the first trading environment with no middleman or salesy account manager luring clients to trade more than they can afford.

It should be noted from the outset that Spectre allows traders to fund their accounts through cryptocurrency, but does not facilitate crypto-to-crypto trades. Instead, it allows you to access traditional financial instruments, such as FX, equities and options through the Ethereum blockchain.

The Token

The Spectre token utilizes smart contracts to create a more transparent environment for traders. Smart contracts will govern all transactions on the trading platform, thereby eliminating any need for brokerage intermediation.

Spectre will have two types of tokens in circulation, each trading separately on different exchanges to ensure continued compliance with regulations. One of the tokens pays out dividends that are calculated by the growth of the liquidity pool and buyback program. The other, utility token does not pay dividends, but is essential for in-platform privileges, such as higher payouts, access to all assets and trade indicators as well as the Spectre Financial Education Academy.

As an ERC20 compliant token, Spectre can be stored on any Ethereum wallet that supports the protocol. The tokens can also be traded on all major cryptocurrency exchanges.

The token may be purchased only through Ethereum. Investors can convert other cryptocurrencies into ether using ShapeShift.

The token pre-sale will begin Oct. 27 and last until Nov. 5. The ICO will commence on Nov. 17, and run for 24 days until the maximum cap in Ethereum tokens is reached. Spectre says the cap is a security measure and not a goal.

A total of 240 million tokens will be available. Any unsold tokens will be burned, with investors receiving a greater proportional share of tokens.

The Team

Spectre is headed by Karan Khemani, a serial entrepreneur who has extensive experience in finance. His career includes stops at J.P. Morgan Chase and Goldman Sachs. He also has a pair of degrees from the London School of Economics.

Spectre’s strong personnel is one of its most defining attributes. In addition to Khemani, the team employs experts in financial engineering across the forex, equities and digital options markets. Full-stack developers and blockchain experts are also retained to re-purpose existing trading platforms for the Ethereum blockchain. Developer staff are also responsible for token engineering and audit.

The London-based company has a full-fledged management team with the following roles:

  • CEO
  • COO
  • CFO
  • CTO
  • Technical Architect
  • R&D Director
  • Blockchain Consultant and Auditor
  • Solidity Developer
  • Trading Education Associate
  • Digital Marketing Manager

From the homepage, investors can navigate to each team member’s LinkedIn account for further information.

Verdict

Spectre is a thought-provoking concept that could have major implications for the online forex industry. If it succeeds, we could be looking at a more transparent market for FX and related investments.

Of course, there are important risks to consider when weighing the potential benefits. I believe the team would agree that these risks cannot be overlooked.

Risks

  • Competition in the online broker industry has never been fiercer. Depending on how you define “online trading,” most of the major FX platforms using MT4/MT5 have been around for more than a decade. (Online discount stock brokers like E*Trade have existed for more than three decades). Although none of the existing brokers offer Spectre’s decentralized liquidity pools, they do have deep pockets, millions of traders and attractive programs. They also have a track record of being malicious. How will Spectre convey its advantages to retail traders who have little background in blockchain or who haven’t yet appreciated the concept of tokenized balance sheets? Moreover, how will it deal with the parade of attacks against it, both by FX brokers and their minions? Kay, if I were you, I’d start patrolling the message boards asap for fake reviews.  -4
  • Transaction speed on the Ethereum blockchain has been cited as a concern among industry participants. Spectre’s success can mean millions of transactions processed on the ETH blockchain, which could result in processing delays. If this occurs, the company says one option is to migrate to a side-chain to ensure transaction continuity. -2
  • Given that liquidity is denominated in ether coins, currency volatility could have a significant impact on returns. If history is any indication, no cryptocurrency is immune from volatility. -2

Growth potential

  • For starters, Spectre isn’t some abstract concept, but a full-fledged trading platform you can test out right now. Simply go to the Registration page and open an account. I’ve created a Demo account and set Donald Trump as my avatar (Donald Trump avatars are included in the platform). Of course, the decentralized liquidity pool and tokenized balance sheets will come much later (the company’s Roadmap goes until Q2 2019).+3
  • Spectre’s business concept is as disruptive as they come. We can literally write ten paragraphs about how the platform will disrupt the industry, but the important thing is that traders will no longer be at the mercy of the broker. Not for fees, withdrawals or real market prices. +4
  • The team is as solid as they come. No, really. The author hasn’t come across too many ICOs that are run like a full-fledged corporation. +4
  • Spectre is applying for a regulatory license in 2018 with the FCA or another EU MifFID offering jurisdiction. There doesn’t seem to be anything impeding its successful bid. What’s more, the company has cleverly devised a way to overcome U.S. exchanges that do not welcome dividend-tokens due to SEC rules. In those jurisdictions, the company will list its utility token, which does not pay dividends. +3.5

Disposition

Having spent many years dealing with the online forex industry, the author admits to having a natural bias for Spectre. That’s not to say its success will necessarily sound the death knell for online brokers, but it will certainly force them to get their act together – something they have struggled to do since Web 2.0.

That being said, investors should back Spectre if they believe in the idea. It’s my hunch that many FX traders will gravitate toward this concept.

Against this backdrop, we are happy to give the Spectre ICO 6.5 out of 10. The author’s own conviction is higher than that based on the concept alone.

Investment Details

  • Type: Crowdsale
  • Symbol: SPEC
  • Pre-Sale: Oct. 27-Nov. 5
  • Opening Sale: Nov. 17, 2017
  • End Date; Dec. 12, 2017
  • Platform: Ethereum (ETH)
  • Total Supply: 240 million SPEC
  • Payments Accepted: Ethereum (ETH)

Featured image courtesy of Shutterstock.

 

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ICO

ICO Update: Polkadot

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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.

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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:

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[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.

The Token

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.

The Team

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.

Verdict

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.

Risks

  • 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 

Growth Potential

  • 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

Disposition

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.

Investment Details

  • 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. 

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ICO Analysis: Lydian

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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?

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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.

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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.

The Team

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.

Verdict

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.

Risks

  • 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.

Growth potential

  • 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.

Disposition

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.

Investment Details

  • 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. 

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