Apr 192017
 

TaaS Crypto Research

TaaS (Token-as-a-Service)is a new crypto-asset (crypto-token on Ethereum), which is a closed-end fund for the cryptocurrency industry broadly. This means there is a fund management team that invests in promising new crypto-assets, crypto-tokens, meta-tokens, app-coins, or protocol tokens (whatever you want to call them), and shares the profits with its token-holders. TaaS will invest in existing crypto-assets and also in new ICOs (Initial Coin Offerings). In fact, TaaS itself is currently undergoing its ICO to fund the initial capital.

TaaS of course is not the first project looking to invest into the emerging market of ICOs and crypto-assets. Many different projects are trying to do the same, from ICONOMI (which was an ICO like TaaS and raised over $10 million) to Blockchain Capital.

However, they all differ in their approach – either the fund structure, or the types of investments. For instance, ICONOMI does a buy-back to return money to shareholders and there is no fee structure disclosed, which means investors don’t know how much they’ll lose out on operating expenses of the fund. Blockchain Capital is a tradeable and investable token, but its investments are more venture capital based rather than crypto-asset based.

With these in mind, let’s look at where TaaS fits into the picture.

Existing Financial Industry Structure

If you look at the largest investment banks in the world today, like say Goldman Sachs, you’ll see they have a very active research division. If you look at the largest hedge-funds today, they have their internal research division that forms buy-side research at these firms. These sell-side and buy-side research is an integral and important part of the financial industry.

The ICO and crypto-asset industry is very nascent indeed. Bitcoin, the grandfather of all cryptos, isn’t even a decade old. However, the market is adding billions of dollars worth of capitalization in months. Today, the market stands at around $25 billion, with the dominance of Bitcoin on the wane (relative to the total market size). Research in this area is just getting started.

The problem with many of the funds in the industry is that they are flying blind. They do not have a solid analytical and data foundation on which to build the investment thesis. Without this foundation, unfortunately, investments look like speculation. Instead of targeted investing, funds are involved in spray-and-pray strategies that doesn’t help the ecosystem grow.

The Investment Decision Making Process

It goes without saying that crypto is a fairly recent and unique asset class, which means the strategies that work for equity investors will not work carbon-copy with crypto-assets. However, we can take lessons from the existing financial industry.

The minimum level of due-diligence that any fund manager in the crypto space needs to take is to read the whitepaper, understand the product, understand the team behind the project, and look at the token structure, i.e. what is the use of this token. This first step itself is a big deal of research for most investors.

However, one cannot stop there. There are many other research questions to answer. What’s the potential market size? What are the valuation assumptions? What are some past deals with similar ideas? What kinds of ratios are existing tokens in this industry selling for? What’s the crypto-market capitalization for this and related ideas? What are the risks being faced by the industry?

To answer the above questions, one needs data and human judgement. However, getting the data is the first step. Today, there are very few avenues for investors to get this data about the market they are investing in.

How TaaS is Different

Enter TaaS. Instead of being just another fund management platform, TaaS is building the ecosystem from ground up. Instead of first doing the picking of ICOs/crypto-assets, TaaS is asking the meta question – what kinds of questions do I need to answer to make a good investment decision? To this end, TaaS is building a crypto data and research platform, aka the Bloomberg of crypto, in the form of Kepler. I predict this will usher in an era of new products in the crypto-research space, which is at a cross-roads now and very much needs these products.

Kepler can be subscribed to by outside fund managers as well. In the absence of such a product in the marketplace, the TaaS team is building one for the industry – an ambitious step but a step in the right direction nonetheless. After all, investments and research should always go hand in hand.

The TaaS ICO is ongoing now. Check out the site and other details at http://taas.fund/

Bitcointalk forum profile.

Photo Credit: Leo Hidalgo

Apr 012017
 

Lunyr Decentralized Knowledgebase

Lunyr is a new crypto-economic asset built on Ethereum, aimed to get the economic incentives right for distributed online knowledge sharing. Lunyr has built a clever set of incentive schemes that could potentially help it provide much higher quality information than other similar sites, including the likes of Wikipedia.

Today, Wikipedia represents one of the best known successes of large-scale knowledge sharing collaborative networks. In fact, it has been such a massive success that it killed the 244 year old Britannica Encyclopedia because the traditional model just couldn’t keep up with the frequency of updates and the addition of new information by Wikipedia. Run in a completely voluntary fashion, Wikipedia highlights that it is possible to create collaborative knowledge networks in today’s interconnected worlds.

Scratch a bit deeper though, and you’ll see a host of problems with the Wikipedia model, from errors to outright hoaxes. A large part of the reason for this is that neither the contributors nor the editors who later check the articles have any financial incentive. Economics, after all, trumps many other human systems of collaboration. As Adam Smith said,

It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. ~ Adam Smith

Lunyr aims to create a better knowledgebase using people’s regard to their own interest.

Beyond Wikipedia

Lunyr aims to create a new kind of collaborative knowledge system, but this time around, they want to do it based on providing economic incentives that may remove the issues plaguing the Wikipedia model. Another benefit of the Lunyr system is that it is not limited to just the creation of written content.

The vision is to be able to expand the system to much beyond that. With the advent of technologies from Artificial Intelligence (AI) to Virtual Reality (VR), Lunyr aims to create powerful APIs that plug into all these systems that require information and knowledge.

This is a powerful feature, since it is likely that in the future, machines (machine learning/artificial intelligence) will be the primary customers of information and knowledge, rather than humans. Data, after all, is overtaking the written word already. It is only a matter of time before machine intelligence consumes more content than us sapiens. How then will they consume this information? They will also need to ensure the information is accurate, and that not anyone can change the ‘facts’ via which the algorithms operate. Lunyr provides a possible solution to that problem because there is economic incentive system built into the system to prevent such abuses.

Lunyr works by creating a completely decentralized knowledge sharing database. Contributors can create new articles, and get paid for their efforts. Editors can edit, make changes, and accept/reject articles and get paid for their efforts. There is also a dispute-resolution system, which is needed in decentralized networks because not everyone may agree with a certain point. The monetary value of the network is through advertising. There are less chances of corruption in a decentralized decision-making process like Lunyr than with a centralized model like Wikipedia through advertising.

The below is the timeline for the launch of Lunyr. Note that the Lunyr ICO is currently ongoing, and you can get 44 LUN per ETH right now. The project has already raised over $300,000 in the ICO. Note that since there is no bonus for early participation, it is expected that the Lunyr ICO will continue to see traction until its end, and likely attract a large portion of the funds towards the end of the ICO rather than the beginning.

Lunyr Timeline

Check out the project here.

ETH Address: 0xC059456BB0E2e9A2ACD5a4c8384b29a89E1a3642

Mar 112017
 

TaaS Fund Management
TaaS (Token As A Service) is a new crypto project that is filling the increasing demand for crypto fund management. There is a lot of investor appetite for easy access to crypto as an asset class. We are seeing this niche get crowded of late – ICONOMI, Melonport, etc. are all involved, in some way, to help investors gain exposure to the new crypto asset class, and satisfy their demand. TaaS is a promising new project that is aimed to allow investors to reap the gains from good cryptocurrency investments. TaaS is separating itself from the rest of the crowd in many different ways that we’ll discuss below. Also, the TaaS ICO will start soon, so keep an eye out.

TaaS ICO and Structure

TaaS will sell a maximum of 101 million TaaS tokens in its ICO (Initial Coin Offering) that will go on for a month. No additional TaaS tokens will ever be created in the future. Also, the token sale structure is set up in a way that the tokens have a fixed price (of $1) and any tokens not sold in the ICO will be burned. The ICO will start on March 27th 2017.

Interestingly, the team has refused to hold on to any TaaS tokens in the future, i.e. all the TaaS tokens that will ever be created will be sold to the general public. This is different from many other projects that usually hold on to a certain percentage of tokens sold in the ICO, so they can ride the price up if it pops after the ICO.

There are bonuses for the ICO, but the bonuses are not based on duration as many other ICOs do. Instead, the bonuses are based on how much has been raised already till that point. The following is the bonus structure.

TaaS ICO Bonus

How Does TaaS Work?

The details of how TaaS works is outlined in its official whitepaper. TaaS is an Ethereum-based token which is structured as a closed-end fund. A closed-end fund pools investments from investors, invests the funds in the market, and distributes the returns back to the original investors. In the case of TaaS, 50% of all the returns earned on the invested money is sent back to the original investors. 25% is invested back into the fund, thus raising its AUM (assets under management) and thus the NAV (net asset value) of the closed-end fund. The remaining 25% is distributed between operational expenses (15%) and a reserve fund (10%). The reserve fund is used to handle investor fund outflows during the life-cycle of the fund (remember it’s a closed-end fund).

Therefore investors in TaaS have two distinct sources of return –

  • Earnings distributed via earnings, to the tune of 50%.
  • Increase in NAV of the fund, which means each TaaS token represents a higher amount of money in the ‘pot’.

Of course, there are the usual elements of earnings growth and speculation that will also drive the market price of the TaaS token.

Fund Transparency

TaaS is handling the problem of transparency in two distinct ways –

  • For the payouts themselves, the team is building a smart-contract platform that will ensure fair payments to all investors, with a minimum of 50% of profits sent to the investors.
  • For the transparency of the fund and its holdings, the team is building a Cryptographic Audit (CA) technology. This technology will allow the investors in the fund to monitor and track the history of the closed-end fund and what types of cryptocurrencies (blockchain assets) the fund bought and sold over a period of time.

The transparency at the fund level is unprecedented in the world of closed-end funds, whether they invest in regular markets or blockchain assets/cryptocurrencies. The team wants to make this one of the distinguishing features from some of the other projects involved in crypto fund management.

How TaaS is Different

In addition to building a closed-end fund, the TaaS team is building a complete portfolio management tool that also combines an analytics platform. This is called Kepler. This is already in private beta and the current timeline for Kepler’s launch is end of 2017.

TaaS has some similarities to the ICONOMI.PERFORMANCE fund, in that it is run at management’s discretion (the management team makes the decision on what crypto-assets and ICOs to invest in). However, in the ICONOMI.PERFORMANCE fund, different investors buy ICP tokens (i.e. investors that want hedge-fund like exposure to crypto) and different investors get the fees from that fund, i.e. ICN investors. However, in the case of TaaS, the fund is owned by the token holders, and 50% of the total profits are sent to these token holders. Management uses a part of the funds to manage operating expenses. The structure of a closed-end fund is therefore simpler. This is more appealing to ICO investors. Finally, ICONOMI doesn’t have any tools for transparency. The team announces new investments on a blog post. However, neither the ICN investors nor the ICP investors know the timing of trades, or can audit the trades. This is in contrast to TaaS which wants to make transparency a cornerstone of its fund offering.

Melonport is also in the same asset-management niche, which aims to build a fully decentralized fund management platform with the help of Polkadot. However, the focus of Melonport is more towards providing the tools of fund management to any crypto hedge fund manager. Melonport doesn’t itself do any crypto investing on behalf of investors. On the other hand, TaaS has an actual management team in place that will do the research and analysis necessary to make intelligent investments.

The ICO starts soon. Check out the site and other details at http://taas.fund/

Bitcointalk forum profile.

Photo Credit: TaxCredits

Feb 272017
 

Edgeless Casino Ethereum
Edgeless is a blockchain-based casino built on Ethereum. It pitches itself to be a casino with 0% house edge, when games of skill are played with 100% accuracy. It makes money when players make mistakes, for instance, not everyone will play blackjack accurately all the time. Edgeless plans to launch with games of both skill (like blackjack) and luck (like roulette). It is using a scheme that uses 2 random numbers, with one of them being generated by the user himself, only after a number has been generated and committed by the house. This way, there is no way for the house to cheat. The smart contracts that power Edgeless are also open for everyone to evaluate.

Blockchain based gambling is of course nothing new. There were several early successes like Satoshi Dice for BTC and today there are several BTC gambling sites which accept Bitcoin. However, with Ethereum-based gambling, there is additional logic that can be embedded at the smart contract layer to further reduce trust.

Edgeless ICO

Edgeless is having its ICO, starting on 28th February 2017 at 3pm GMT. The ICO is structured with weekly bonuses, with an additional power hour bonus. Crypto-enthusiasts can participate in the ICO by sending their Ethereum from a wallet whose private keys they control (like MyEtherWallet). If you only have Bitcoin, you can buy Ethereum on exchanges like Coinbase or Binance.

The regular price at the ICO is 1 ETH = 1000 EDG (Edgeless tokens). However, investors who get in during the power hour (first hour of the ICO, which is 3pm to 4pm GMT) will get 1200 EDG for 1 ETH. Investors after the power hour but within the first week will get 1100 EDG for 1 ETH, and investors in the second week will get 1050 EDG for 1 ETH.

The Edgeless team released a big FAQ about the project, ICO, goals, team, etc. that investors should read before investing any money in the ICO.

Like some of the other ICOs, Edgeless is staying away from the US market. This is to ensure that the company doesn’t get in any trouble with the law and regulations, which are overly burdensome and onerous for businesses catering to Americans. In addition, American law doesn’t take well to gambling operations, even if Americans want those services. Therefore the ICO will have IP restrictions on who can participate, with Americans being excluded. It is a pity, because there are many Ethereum investors and enthusiasts in the US.

The Edgeless token is also a little different from the other recent ICOs in that there are no ‘dividends’. Instead, all token holders will enter a lottery-type system which collects 40% of all fees collected on the platform. The rest goes to the development team.

Other Ethereum ICOs

Edgeless plans to raise between 370,000 to 440,000 ETH, depending on the timing of money received during the ICO. At current prices of $14.7 per ETH, this translates to $5.44 million to $6.47 million. The company hopes that recent successful ICOs on Etherum have whetted investor appetite for bigger ones. Just in February 2017, Santiment raised its goal of 12,000 ETH in a matter of a few hours. Then, Dfinity raised around $3.9 million with a $1 million goal. Finally, Melon sold out its ICO of $2.9 million in under 10 minutes.

Edgeless hopes that investors will be willing to invest more money into its ICO, with the attraction of capturing a part of the gambling market. With an average expectation of $6 million, its ICO will be one of the largest ones in 2017 thus far, if it is successful. Investors can get more information about Edgeless ICO from the official crowdsale website. Check out the homepage here.

Disclaimer: US citizens are not legally allowed to participate in Edgeless Project crowdsale.

Photo Credit: World Poker Tour

Feb 142017
 

Dfinity Final Seed ICO Raise
Dfinity completed its seed ICO yesterday with a total amount raised at 3.9 million CHF. The project had a soft-cap for the ICO at 1 million CHF and an additional 24 hours from this time before close. This soft cap idea is a new one in crypto ICOs. At the end of the ICO, i.e. 24 hours after the soft cap was reached, the ICO closed with around 3.9 million CHF total raised. The soft cap of 1 million CHF was hit in only 75 minutes from the start of the Dfinity ICO.

An Interesting Way to ‘Cap’ the ICO

Dfinity tried an interesting way to cap the ICO. Instead of a hard cap, i.e. the ICO closes the moment the Ethereum contract receives the maximum amount of money defined in the contract, Dfinity opted for a ‘soft cap’. The soft cap was implemented as follows – the ICO closes 24 hours after the soft cap is reached. This has an advantage that investors don’t need to wake up at ungodly hours to meet a 15 minute ICO window, which happened with some hot tokens last year like the FirstBlood token. Such ‘insta-sale ICOs’ are bad for the project as they tend to concentrate the tokens in the hands of a few whales instead of distributing them widely to the community.

Of course, the flip side of this is that investors don’t really know the price of the token they are getting until the end of the ICO, which makes return calculations hard. For example, if investors place a risk-adjusted value of $2 million in this round, there is no way to know whether to invest or not, because the ICO might raise more or less than that amount. With a 24 hour window, it was at least mitigated though.

The team has promised up to 78% allocated to investors in this seed round, and a subsequent “main” round.

Blockchain Nervous System

Dfinity has created some interesting ideas, most notably the Blockchain Nervous System. This allows the token holders to vote and change important economic parameters. It also is a back-stop against bad behavior, or bad bugs, like preventing potential The DAO type situations. If the majority decide, they can pretty much do anything, although proposals come at a cost. This has a very different dynamic to the ‘code is law’ principle followed by Bitcoin and Ethereum Classic. It is a softer version of that.

Although Dfinity claims not to compete with Ethereum, it offers a Turing complete language to write smart contracts and applications in. The technology developed with mutually benefit Ethereum and Dfinity, but there is also definitely a competitive element. Dfinity will provide value to the token holders by bringing in projects and apps being built on it, which would otherwise have been built on Ethereum, likely. Dfinity also believes that some of the technology being developed by the team will help Ethereum. Collaboration among crypto projects is always welcome as it moves the whole ecosystem forward.

April 2021 Update

Dfinity has made tremendous progress since we first wrote about the fundraise above. VCs like A16Z have been all over leading several rounds of funding for the company and foundation. A lot has changed in the crypto landscape in the last 4 years, and the rise of Ethereum and the ecosystem around it has been a gamechanger for a lot of potential applications of blockchains.

Dfinity still wants to differentiate itself from the Ethereum ecosystem. It has moved its marketing messaging from “Blockchain Nervous System” to “The Internet Computer”. Although several apps seem to be being built on it behind the scenes, we don’t know too many details. The Dfinity team has now promised to launch the network on 7 May 2021. See the official tweet below:

One question we get asked a lot from early supporters of Dfinity is how the ICO/pre-sale investors will be treated.

Here’s the answer from the team:

This was posted by Dominic Williams in April 2018. The “ICO” investors (ICO in scare quotes because after the bad practices of many ICO projects in 2017, no respectable project wants to use that phrase) are the “Seed fundraise contributors” who would get 24.72% of the Dfinity network. Given the private valuation of Dfinity is already in the billions of dollars, the seed investors should see a healthy return on their early bet on the team and project, even in BTC or ETH terms (hopefully).

Back of the envelope calculation is as follows:

~$4 million raised for ~25% of the network, which means seed investors got in at a valuation of ~$16 million.

Assuming a fully diluted valuation (FDV) of $1 billion, that is a return of 62.5x in USD terms.

The price of BTC on Feb 12 2017 when the ICO/presale took place was just around $1000. This means that in Bitcoin terms, you would break even around an FDV of $16 million * 55,000 / 1000 = $880 million (current BTC price of $55,000).

The price of ETH on Feb 12 2017 when the ICO/presale took place was ~$11.40. This means that in Ether terms, you would break even around an FDV of $16 million * 2635 / 11.40 = $3.69 billion (current ETH price of $2635).

We always calculate returns in BTC/ETH terms since that’s what crypto investors index to. So if you put in Ether into the Dfinity presale, then at around $4 billion fully diluted valuation, you should break even.

If you want to trade Dfinity at launch, make sure you have your Coinbase and Binance accounts ready. Given the scale of launch, it is likely that the largest exchanges will start listing Dfinity right away.

Feb 142017
 

Santiment ICO
Santiment ICO presale (first round of the ICO) sold out within 2.5 hours, raising its target 12,000 Ethereum (ETH) during this time. The ICO presale had a lower limit of 4,000 ETH and an upper limit of 12,000 ETH. Unlike the recent Dfinity ICO seed round, the cap was a hard cap and therefore investors who weren’t able to get in during this time were out of luck. The presale ICO cap of 12,000 ETH, which was under $150,000 when the ICO closed, would be considered to be on the low side.

The contract, and its associated transactions can be viewed on the Ethereum blockchain.

About Santiment

The santiment project is a ‘crowd sentiment data platform for crypto and blockchain assets’. The value of the token comes from its use on the platform. The token is required to pay for services on the network, while contributors to the platform earn the token.

The project aims to help crypto traders improve with better data. For instance, users can play crypto games in simulated environments before putting real money on the line. In addition, the projects aims to develop better visualization tools than what exist today in the market. The platform’s data might also become useful for researchers looking into the crazy crypto markets.

The value proposition of Santiment depends highly on the community, and indirectly on the data produced by the users. The data generated by crypto markets may not be as easy to analyze as regular markets. However, crypto traders are an active bunch, and their ranks are growing. Santiment might tap into their natural tendencies to trade (or perhaps over-trade) and generate the data required.

Investors and Follow-up Rounds

Given the small maximum size, only a few investors were able to get the Santient tokens in the presale ICO. Notably, the ICONOMI.PERFORMANCE fund invested in Santiment. This would be ICONOMI’s third investment in the cryptocurrency space, after Golem and Byteball. This is an interesting move, because there was no prior indication to the market that ICONOMI might be interested in this ICO. That might be a deliberate move, given the small cap.

Some investors are looking forward. The project will use the funds raised today for its whitepaper and a minimum viable product (MVP). The creators estimate a time frame of 3 months for this.

Also, investors might like to know that this was just the presale to the main token crowdsale that will likely take place after the whitepaper and MVP are released. However, investors who were able to get in on the presale will get a 54% ‘bonus’ in terms of price.

 

Feb 122017
 

Dfinity 1M CHF Raise

Update: Dfinity seed round raised 3.9 Million CHF at close

Dfinity, a new crypto ICO, raised its target of 1 million CHF (Swiss Francs) in just under 75 minutes. The Dfinity seed round started at 6:00pm GMT on 12th Feb 2017 and ended at 7:15pm GMT on the same day. Due to the soft cap of the round (see below), the seed round ICO will go on until around 7:15pm GMT on 13th Feb 2017.

This was for its ‘seed’ round. Dfinity will have another round of funding in the future as well, as part of its ICO efforts. Due to the earlier stage of the seed funding (and thus a higher risk of investment), there is a bonus to invest in the seed round compared to the follow-on round.

The project raised an impressive amount of money in a quick time. It is possible that institutional funds have invested a good amount of money in this project.

Dfinity ICO Soft Cap

Dfinity ICO is also unique in having a ‘soft cap’ on the amount of money raised instead of a hard cap or no cap.

In hard cap ICOs, the ICO ends whenever a certain threshold of funds is  reached. This presents problems if the ICO is ‘oversubscribed’ i.e. if many people want to invest in the ICO. For example, SingularDTV put a hard cap of $7.5 million on its ICO. However, it was sold out in under 15 minutes. This causes the token distribution to go to speculators more than the believers and early adopters of the project. This can be quite problematic when the purpose of the ICO is as much to create that initial set of users and early adopters as much as it is to raise money.

In no cap ICOs, there is only a time limit up to which an unlimited amount of funds can be raised. The biggest problem with this model is that investors don’t know how much the tokens they are buying are worth, because it depends on how much the total funds are going to be raised in the future. This can present situations like The DAO which would have been a worthy experiment at $5 million raised but not at $100 million raised.

Dfinity is structuring its ICO as a ‘soft cap’, which means they will allow 24 hours after the goal is reached as the cut-off. This will prevent ‘insta-ICO sellout’ situations like FirstBlood and SingularDTV tokens. Therefore the Dfinity ICO will still be open for the next 24 hours after reaching the 1 million CHF goal.

About Dfinity and the ICO Token

Dfinity is a project similar to Ethereum (although they say they don’t compete with Ethereum) in that it allows the execution and creation of arbitrary smart contracts. The biggest difference is that instead of the smart contract code being the ultimate authority (and having situations like The DAO when a bug in the contract code can cause a loss of funds), Dfinity has a group consensus process it is calling the Blockchain Nervous System (cheesy name). There are many limitations on using it, but it can be deployed for special situations that would prevent issues like The DAO.