CRYPTO investment journal Market Insights · 2017. 12. 11. · great performance. We believe a new equilibrium will also be formed – deteriorating ICO performance will lead to less

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CRYPTO investment journalWEEKLY

Market InsightsThe big winner this week continues to be Bitcoin, rising 9% from $5,500 to around $6,000. This is at the expense of other cryptocurrencies, causing Ether to drop by 6% to $305. It looks like the capital inflow of Bitcoin is fuelled by people selling off altcoins.As a result of the capital flight, tokens and ICOs are performing poorly in recent weeks. Even anticipated projects such as AirSwap and Request are at below ICO price shortly after trading. There are a lot of uncertainties now, so we want to share our thoughts on the state of ICOs.As more and more people are experienced with ICOs, it is becoming much harder to flip for a quick profit comparing to just 2-3 months ago. There are a few reasons contributing to this:-Too many ICOs coming out every day, which makes it hard for a project to stand out and attract attention.-Oftentimes people can get the tokens after ICO at a better price.-Token prices are currently depressed – only 30 tokens are above $70 million market cap. If a $35 million ICO doubles, it is already one of the top 30 most valuable tokens.Therefore, we are becoming more selective

when it comes to our rating – that’s why you are seeing more neutral or negative ratings from us. We understand that this is boring, but we need to be patient until the market turns around. It is better to be safe than sorry.However, over time, quality ICOs can still deliver great performance. We believe a new equilibrium will also be formed – deteriorating ICO performance will lead to less people participating, which leads to fewer projects receiving funding, which in turn creates more projects lowering hard cap to attract funding as well as inducing a higher return for ICO participants.Going forward, we expect that projects will lower their hard caps on average. Perhaps only spectacular projects will be able to raise $30+ million in the future.At the same time, some existing tokens are trading at an attractive valuation. There are many tokens trading at a sub-30 million valuations and the upside for some of those projects can be substantial.Remember, crypto asset prices are very unpredictable. When the market is gloomy, it often provides an attractive entry point for above-average return.

Russia Issuing ‘CryptoRuble’:https://cointelegraph.com/news/breaking-russia-issuing-cryptoruble

The People's Bank of China inches closer to digital currency:http://www.chinadaily.com.cn/business/2017-10/14/content_33235955.htm

Ethereum’s Byzantium Hard Fork Upgrade Successful:https://www.coindesk.com/ethereums-byzantium-hard-fork-is-running-smoothly-developers-say/

48 Firm Including HP Enterprise and Sberbank (Russia’s largest bank) Joins Enterprise Ethereum Alliance:https://entethalliance.org/hewlett-packard-enterprise-47-organizations-join-200-member-strong-enterprise-ethereum-alliance/

Reuter Special Report: Backroom battle imperils $230 million cryptocurrency venture: https://uk.reuters.com/article/us-bitcoin-funding-tezos-specialreport/special-report-backroom-battle-imperils-230-million-cryptocurrency-venture-idUKKBN1CN35K

LedgerX Bitcoin Derivatives Trades Past $1 Million Following Soft Launch:https://cointelegraph.com/news/ledgerx-bitcoin-derivatives-trades-explode-past-1-mln-following-soft-launch

Articles From Platinum Crypto Academy

Analysis of Mercury Protocol ICO

Analysis of Spectre ICO

Developments in the Cryptocurrency World

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What does the company/project do?The Mercury Protocol is a suite of smart contracts that enable a more secure, more private social network to form on the blockchain, instead of isolating the network in centralized servers.By creating a tokenized social ecosystem, applications can leverage tokens to incentivize meaningful interactions while users can utilize them to gain access to premium services.When applications build on the Mercury

Protocol, they can charge GMT tokens for premium services or award it to active users for positive participation.Dust, the messaging app created by the company, will be the first application to utilize the Mercury Protocol. Broadcast is on the pipeline and will be the second app integrating with the protocol. Any application on the protocol can communicate with another application on the protocol.Here are few screenshots of Dust after the integration of the Mercury Protocol:

SUMMARYProject name: Mercury Protocol

Token symbol: GMT

Website: https://www.mercuryprotocol.com/

White paper: https://www.mercuryprotocol.com/files/Mercury_Protocol_whitepaper.pdf

Hard cap: US$24 million (public crowdsale ICO contributors own 60% of total token supply if hard cap is reached)

Conversion rate: Total token supply will be 1 billion if hard cap is reached

Maximum market cap at ICO on a fully diluted basis: US$40 million

Bonus structure: No bonus

Presale or white list: Need to register on their website in order to participate

ERC20 token: Yes

Crowdsale date: October 25th around 9am PST (please refer to Mercury Protocol’s website for the most up-to-date information)

Token distribution date: Immediately after contribution

Analysis of Mercury Protocol – Future of Communication Platforms

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Note: Raiden follows a Dutch auction method to value the project.Please refer to their blog post for more details about the auction.

PROJECT OVERVIEW

What are the tokens used for and how can token value appreciate?

GMT tokens are used for unlocking premium services for applications built on top of the Mercury Protocol. The following are proposed use cases for the protocol within Dust:

1-to-1: ConversationsCross platform messaging + content

Encrypt messages

Large file size

Extend lifetime of a message

The company has a messaging app, Dust, since 2014. According to the white paper, it averages over 20,000 daily active users and 200,000 messages sent per day. This is in comparison to the 5 million messages sent per day number in July 2015, meaning that the app is in decline.

According to App Annie, Dust is around rank 500 in the social networking category in the US for the iOS App Store. It is not a successful app. In the graph below, you can see Dust’s ranking in the App Store over the years:

Below is the future roadmap for the project:

Q4 2017Complete oracle implementation Decentralized governance launchRelease Broadcast to the market

Q1 2018Complete state channel implementationOpen-source Mercury ProtocolMercury Protocol hackathon

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HOW ADVANCED IS THE PROJECT?

1-to-Many: AnnouncementsIncrease reach by boosting distribution

Send content to a targeted demographic

Premium interactions (e.g., special likes or comments)

Many-to-Many: DiscussionsDecrease queue time to send a message

Premium message types (Add visual flair, inline polls, etc.)

Community-driven moderation

Users are rewarded GMT for being active on these applications and networks. This creates an ecosystem that encourages active participation on the apps built on top of Mercury Protocol.

As GMT tokens are needed to perform different functions for applications built on the Mercury Protocol, the more usage those apps have, the more valuable GMT tokens should be.

Mercury Protocol is developed by Radical App International, which is the company behind Dust. There are 15 members in the team. Bios of the key team members are listed below:

Ryan Ozonian, CEO and Cofounder – Serial entrepreneur. Prior to starting Radical App, he founded Mention Mobile, a gaming startup.

Rohit Kotian, Chief Technology Officer – he worked with Ryan Ozonian in Mention Mobile prior to joining Dust/Radical App.

Billionaire Mark Cuban is an investor and advisor of the project. Nick Tomaino, Founder of 1confirmation, a cryptocurrency fund backed by Mark Cuban, is the other advisor of the project.

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TEAM

Good ICO structure – there is no bonus/discount to ensure a level playing field.

The messaging app industry is large. WhatsApp was acquired by Facebook for $19 billion back in 2014. Snap Inc. also has a market cap of $19 billion as of October 16, 2017. If Mercury Protocol is successful, the upside can be substantial.

The company already has a functioning product, Dust, for a few years.

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OPPORTUNITIES

According to the white paper, the biggest differentiation of Mercury Protocol over currency players (Messenger, WhatsApp, WeChat, etc.) is that it does not collect user information and monetize it. However, we are not sure how many users actually care about this, as long as they can use all the necessary functions for free and enjoy the user experience.

Since the messaging industry is large, it is very competitive. The industry also enjoys enormous network effect, so most users would not want to try a new messaging app when none of their friends are using it.

If Dust and Broadcast are not popular after integrating with Mercury Protocol, it would be difficult for third party developers to take the plunge and build applications on top of Mercury Protocol.

The project will implement state channels and oracles – looks like it is a pretty complicated project and may face a lot of challenges during development.

The use case is rather limited compared to Status, its closest competitor. Status’ use cases include running dApps, sending payments, storing cryptocurrency, which cannot be done by the Mercury Protocol.

CONCERNS

Overall, we are neutral about this ICO both for its flipping potential and long-term potential.

Our thoughts on buying the tokens for flipping and investing for the long term are as follows:

For flipping Neutral. Even with Mark Cuban as an investor, the project is not very hyped. Neither the Telegram nor Slack channel are very active. However, the hard cap is relatively low so it has the potential to be filled quickly.

Note: There is no gas or contribution limit for registered participants so you probably want to set a high gas in order to have a high chance for your transaction to go through.

For long-term holding Neutral. If the project is successful, it can tap

into a multibillion industry. With a detailed development roadmap, the team looks like they know what they are doing.

However, Dust is an old and unsuccessful app and we don’t believe integrating the Mercury Protocol is going to help turn it around. It is unclear how different Broadcast is from Dust.

The project has many uphill battles to fight – the substantial network effect enjoyed by the dominant players, and building/reviving messaging apps and make them successful.

If the protocol is proved to be good, other messaging apps will add the same functionalities and let people use it for free. We believe it is going to be difficult for the model to work.

For more information about the ICO, please visit the following links:

Website: https://www.mercuryprotocol.com/

Whitepaper: https://www.mercuryprotocol.com/files/Mercury_Protocol_whitepaper.pdf

Blog: https://medium.com/mercuryprotocol

Subreddit: https://www.reddit.com/r/MercuryProtocol/

AMA with Mark Cuban & the Mercury Protocol team: https://www.reddit.com/r/ethereum/comments/75tz0d/im_doing_an_ama_tomorrow_with_the_mercury/

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CONCLUSION

Project name:Spectre

Token symbol: SPEC-D / SPEC-U

Website: https://spectre.ai/

White paper: https://d1zzssn32v8b7a.cloudfront.net/media/spectre_whitepaper_v_2_3.pdf

Hard cap: US$30 million (public crowdsale ICO contributors own 50% of total token supply if hard cap is reached)

Conversion rate: 1 ETH = 2,000 SPEC-D or SPEC-U

Maximum market cap at ICO on a fully diluted basis: US$60 million

Bonus structure: During pre-sale, 33% bonus for the first $15 million and 22% for the remaining $15 million

Presale or white list: Presale open for registration

ERC20 token: Yes

Crowdsale date: Pre-sale from October 27 to November 5, 2017 / Public sale from November 17 to December 10, 2017 (please refer to Spectre’s website for the most up-to-date information)

Token distribution date: Distributed Immediately after contribution and tradable 24 days after the end of ICO

What does the company/project do?

Spectre aims to bring transparency and remove the middleman for trading in the binary options and foreign exchange (FX) industries.

Spectre is building a trading platform that enables users to bet on the direction of financial assets using cryptocurrencies. It is similar to a gambling platform except the underlying assets are traditional asset classes like FX and options.

The traditional digital options and FX trading industry are riddled with fraud. For example, brokers would manipulate prices and even refuse or delay client withdrawals. By utilizing blockchain technology, conflict of interest can be reduced because the middleman is removed.

A key feature of Spectre is the utilization of a liquidity pool. This way, users can trade even when there is no counterparty taking up the other side of the trade. This way, liquidity can be guaranteed. There are three sources for the growth in liquidity pool:

a) peer 2 peer trade matches (losses and wins drive revenues)

b) trader losses

c) DApp store revenues driven by 3rd party apps which use the pool

Eventually, other dApps can be connected to the Spectre platform so that users can trade using those dApps.

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SUMMARY

PROJECT OVERVIEW

Analysis of Spectre – Speculative Tokenized Trading Exchange

The idea of Spectre was conceived in Q4 2016. The public alpha was released in Q3 2017 where users can trade with play money. You can try the alpha on their website.

Here is a video demo of the alpha (video is 7:02 long): https://youtu.be/p9FRoc0CNyM

Below is the future roadmap for the project:

Q4 2017 – Public beta with testnet integration

Q1 2018 – dApp smart contracts, dApp and

servers security audits

– Mainnet integration

– Product launch

– Trademark application

Q2-4 2018 – New asset classes and trade types

– MU MIFID compliant regulatory license (FCA,

CySEC, BAFIN or other)

• Forex & CFD trading

Q1-2 2019 – Automated order matching

– dApp store

HOW ADVANCED IS THE PROJECT?

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There are two types of tokens being offered in the token sale: dividend token and utility token. ICO participants need to specify which token(s) to get and in what proportion.

Utility TokenToken holders receive in-platform privileges which increases their chances of capital gain through time. These privileges are:

1-5% higher trade pay outs

All trade expires on smart option contracts

All assets (not just a few per asset class)

All trade indicators (not just the ones found in the MVP)

Exotic trade types (smart option contracts such as knock-in-knock-outs, barriers, ladders and more)

Spectre Financial Education Academy (SpecED)

There is also a token buyback program for utility tokens where 3% of fees generated on the system will be used to buyback and retire the utility tokens.

Dividend TokenSpectre pays out normal dividends and special dividends to dividend-token holders. Normal dividends are paid as a 2% volume fee on trader’s wins or losses in the system at the end of each month.

Special dividends in the system are paid at the end of the year and only when the liquidity pool has experienced growth above a set threshold. If indeed pool growth exceeds pre-set, end-of-year targets, any excess growth above these targets is going to be paid out at a 70/30 basis to dividend token holders and Spectre management, respectively.

Initially, the dividend payment works on “pull” function, meaning that dividend token holders will login to spectre.ai and pull the dividends that are entitled to them. Eventually, it will move to the “push” function which means as long as the tokens are stored in an ERC20-compliant wallet, holders will receive dividends in Ether there.

Since the buyback/dividend for both tokens are tied to the usage and trading volume of the platform, the more usage and trading volume the Spectre platform has, the more valuable the tokens should be.

What are the tokens used for and how can token value appreciate?

2012. The key members of Spectre are also senior management of Neuchâtel.

Other than Spectre, Neuchâtel also has other products: Blue Sky Binary which provides financial education and algorithm design, and Bugscore 360 which provides discreet, big-data performance management solutions.

The bios of key members of Spectre are as follows:

Kay Khemani, CEO – previously Executive Director at Goldman Sachs and Associate at JP Morgan in the research department.

Jai Sankar, CTO – previously CEO of Credo Infotech, Senior Software Specialist at Mindtree.

Zisis Skouloudis, COO – previously worked as Account Manager and IT Operations Manager at Evoiki Group.

TEAM

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Financial trading is a large market and ripe for disruption. If Spectre gains traction, the potential is substantial.

Spectre allows other dApps to use its platform for trades, further increasing the project’s reach.

The use of blockchain makes sense for the project as it automates many processes and makes the entire experience more efficient.

The company has a lot of information about the project from the white paper and other documents, indicating that the team has put in a lot of thoughts into the business model and execution.

OPPORTUNITIES

The two tier token system can be confusing to some participants and future token holders – we believe it would be a cleaner and simpler structure if only the utility tokens are issued.

The project operates in a heavily regulated industry of financial trading. Spectre may need to get the necessary licenses/regulatory approvals in each country before allowing citizens of those countries to trade. Those approvals take time and Spectre may not be able to accomplish the milestone within the timeline that the roadmap prescribes (Q2-4 2018).

Users are still betting against the house in the sense that Spectre’s management are directly incentivized from the growth in liquidity pool. It is in the Spectre’s interest for users to lose money (in non peer-to-peer trades) so that it can grow its liquidity pool to generate more trading and receive year-end dividends. Therefore, the conflict of interest is not completely removed in Spectre’s model.

CONCERNS

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Overall, we like this ICO for its flipping potential but are neutral about its long-term potential. There is a bit of game theory going on for this token sale. Because participants can select either dividend of utility token, we believe most would select the utility token since it would most likely be tradable in more exchanges and have more liquidity.

However, all the dividend tokens together will receive a portion of trading fees, therefore, if only very few dividend tokens are minted, those tokens can be very valuable as each dividend token will get a bigger piece of the pie.

Our thoughts on buying the tokens for flipping and investing for the long term are as follows:

For flippingGood. The team, progress, idea, and market awareness of the project are all above average. The hard cap and ICO structure are also fair as long as participants get in at pre-sale stage.

For long-term holdingNeutral. We believe regulations will be a challenge for the project. The project has a lot of upside potential, but since it is entering in such a competitive and lucrative industry, it is expected that there would be a lot of competition coming up.

CONCLUSION

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For more information about the ICO, please visit the following links:

Website: https://spectre.ai/

Whitepaper: https://d1zzssn32v8b7a.cloudfront.net/media/spectre_whitepaper_v_2_3.pdf

Blog: https://medium.com/teamspectreai

YouTube: https://www.youtube.com/channel/UCiP9p9LJLLZ48724nkOvetw/feed

Documents

CRYPTO investment journal Market Insights · 2017. 12. 11. · great performance. We believe a new equilibrium will also be formed – deteriorating ICO performance will lead to less