ICO Review On Quantstamp

ICO Review on Quantstamp (12th November 2017)

“Quantstamp is the first scalable security-audit for the Ethereum network”

Disclaimer: The contents of this document is purely for information purposes only. Therefore, this information should not be construed as financial advice. I am not your financial advisor and it is recommended you do your own research. Investments into crypto currencies and into initial coin offerings (ICO’s) are very high risk. You should only ever invest money can afford to lose and your standard of living should not be compromised.

The Overview…

“Quantstamp is a protocol that solves the smart contract security problem by creating a scalable and cost-effective system to audit the smart contracts written by software devs on the ethereum network.”

Quantstamp aims to connect developers, investors and users via proof-of-audit. By enabling automated checks on smart contracts this will combat security risks on the ethereum network. Verifiers who manage and identify security vulnerabilities are automatically rewarded in the sweep. A native token (QSP) will be used on the platform for the purposes of delivering computation fees to verifier nodes and bounties for finding the weaknesses.

The Project…

“Our vision for auditing is simple: more automation, higher security and lower cost.” Richard Ma, Quantstamp Co Founder.

The Team

Quantstamp formed operations in early 2017 out of Vancouver, Canada. The whitepaper, out since April, outlines a clear vision of its purpose and the problem their network will solve. Quantstamp’s team consists of experts in the security field from companies ranging from Google, Amazon, Tower Research, Experian and the Canadian cryptologic national agency. They have been supported by a strong advisory board from the fintech/blockchain industry. This includes Cryptocurrency Expert David Drake, Chairman at LDJ Capital and Blockchain Community Advisor Min Kim, ex-Tim Draper/Cryptonomos.

The purpose

By nature the appeal of blockchain and the decenteralised nature of its concept brings an embedded idea of trustlessness. This is the belief of wholeheartedly trusting in the quality protocol and the people who write the smart contracts — the transfer of value conducted between two parties. Ethereum has been the standard in blockchain technology allowing people to upload and run code on a global virtual machine (Ethereum VM).

‘The number of contracts on Ethereum has exploded to over 2 million that collectively hold over 12 million Ether. This means that potentially $1.6 billion USD worth of Ether is currently vulnerable to exploitation’ J Martinez, Medium Post

The underlying problem with smart contracts is that they aren’t very secure and can be exploited very easily. There have been notable stories in recent times of how hackers have been able to steal millions in ethereum from just by abusing a bug in its smart contract. Other occasions where reported with hackers exploiting bugs in the Parity multi-sig wallet further getting away with significant sums.

Ordinarily, the security (and trust) falls upon those software developers responsible for writing the smart contracts on the ethereum protocol. Sadly, there is a belief that these developers have not been very security minded leading to (unintentional) vulnerabilities of the smart contracts. Furthermore, hiring a security company to audit the codes (of the smart contracts) is both costly and impractical with the growing number of contracts.

Qauntstamp have positioned themselves as the first (and only as we speak) scalable security protocol system aiming to audit all projects on Ethereum network with the aim of being integrated eventually within the Ethereum protocol. They have created a cost effective automated system to find smart contract vulnerabilities whilst rewarding those verifier nodes with fees through their native QSP token.

The Roadmap

The Token Generation Event/ ICO…

Qauntstamp is launching a token generation event to raise capital for the continued development of its network.

Presales has (at time of writing) been oversubscribed with the know your customer (KYC) process already started. The total cap for the pre-sale is $11 million. It is divided according to Proof-of-Care. Tiered levels if bonuses were given dependant timing of participation.

They will be having a main sales round with fund raising goal set at $19 million with details yet to be disclosed. The main round will take place this November. There will be an individual cap on contributions during the main round. The cap depends on the number of participants on our whitelist. There will be no bonus during the main round. More information will be announced as part of the due process for a token sale. The minimum contribution for the pre-sale is 0.1 ETH.

Token Ticker: QSP
Total Token Supply: 1,000,000,000
Available during Token sale: 650,000,000
Total Fundraising Goal (Hard cap): $30,000,000
Pre-Sale Fundraising: $11,000,000
Pre-Sale Event: 9th Oct — 9th Nov
Pre-Sale Tokens Distribution: Proof of Care / Form to be completed
Caring level 1 ($3M): 1 ETH = 10,000 QSP (unchanged)
Caring level 2 ($4M): 1 ETH = 7,000 QSP
Caring level 3 ($4M): 1 ETH = 6,000 QSP
Main Sale Fundraising: $19,000,000
Main Sale: November (TBC)
Main Sale Tokens Distribution: 1 ETH = 5000 QSP / No POC applies
Token Release Date: TBC
Exchanges available on: TBC
Whitelist: Yes

Of the total token supply 65% will be allocated for the main sale. The distribution of the fundraising (total goal $30 million) from the sale is outlined below.

Quantstamps’s legal counsel are confident that the QSP token will not be considered a security. More details here: https://goo.gl/7npjvz.

Assessment

Quantstamp are bringing an automated security audit protocol to tackle a much needed problem of security risk on the ethereum protocol during ICO’s. The team already have a working product which was recently used for the first time by Request Network during their ICO event on the ethereum protocol (in early October). From early evidence the event went smoothly and no security issues were reported.

As first mover into the space, with no other notable entrants, they are at a significant advantage of being the main go to platform for scalable security-audit for smart contracts. This will give them scope to dominate the space and deliver their ambition of being embedded within the ethereum protocol.

The team and advisors are of very strong calibre. The team have a bright and highly educated team developing the project. Alongside the team, dominant blockchain advisers were enlisted on the project during its infancy stages.

The token metrics also appear to be well thought out on the surface with 65% of the supply being made available to the public. The Proof of Care (POC) criteria used for the pre-sale event has been well accepted in space as its purpose is to filter out those large institutional investors (referred to commonly as ‘whales’ in the space). However, there has been concerns around the rather generous presale bonus to those falling under to 1st tier of the proof of care bonus as they get 10000 QSP per ETH. Mainsale ICO metrics are 5000 QSP per ETH. Therefore, there is concern that these presale investors will likely dump their holdings for instant ROI. As a consequence, all other investors will likely much lower ROI on early disposable and the impact it can have on the price being suppressed for long term investors could unwelcoming.

The Quantstamp team have been fairly active via various medium including Twitter, Telegram and Medium. However, the community has played a bigger part in building up hype around the project. As a result, the are already fully subscribed for their pre sale and main sale (whitelist). It is therefore expected Quantstamp will achieve their fundraising goal.

There are a few potential negatives/issues to consider. Although they have first mover advantage in the space, there likely will be copycat projects forthcoming. The impact of these cannot be yet factored. However, should future project deliver a better and improved solution than this could have a negative impact of Quanstamp and its growth/ROI for investors.

The other consideration is whether Ethereum itselfs decides to implement security with its protocol therefore completely negating the need for Quantstamp. However, this may not be a concern as the Ethereum project could and would likely adopt the likes of Quantstamp as it might be more cost effective to do so.

ICO Rating

The key aspects of an ICO when considering it as a potential investment rests in key areas known as the Key Value Measures (KVM). These measures have proven to be fundamental factors in analysing the potential success of an ICO both in the short term and long term.

A maximum score of 5 can be achieved for each KVM with the overall average providing a % value of the project. This is this then referenced against a buy signal barometer.

Key Value Measure (KVM) Grading

  • Concept Value: (5)
  • Development Value: (4.8)
  • Blockchain Value: (5)
  • Management Value: (4.7)
  • Marketing Value: (4)
  • ICO Value: (3.3)
  • Overall Average KVM: (4.5)

Quantstamp’s overall score is 90% and a Strong BUY .

ICO Return on Investment (ROI)

  • Short term ROI: Medium/High
  • Long term ROI: High
  • Risk Grading: Low
  • Interest/Demand: High

Rating Summary

There has been a lot of hype behind this project leading up to the ICO. This can be attributed to the value of the proposition to the ethereum blockchain space. Both presale (fully subscribed) and main sale (whitelist) have been in high demand. It is very likely the ICO fundraising is successful and reaches it’s targets fairly quickly. For those who will seek to make a quick ROI by offloading their tokens on exchanges upon release, could potentially see a medium (to high) ROI due to high early demand. The only concern regarding this would be the high resale bonuses issued which have been controversial. If these investors were to offload their holdings they stand a better chance to gain more than main sale ICO investors due to market suppression of the Quantstamp token price.

Qauntstamp have a working which has already been used in the space. They have first mover advantage (due to lack of competition) in a key area of smart contracts security-audit. The fundraising goal is reasonable in view of the project and its roadmap. With a strong team and a clear roadmap, the potential ROI for long term investors is high.

END

If you have reached the end then thank you for getting through my first of hopefully many posts delving into the space of crypto currencies, blockchain and financial technology as a whole. I will be posting further ICO reviews on projects that interest me for the time being.

I will have a website launching soon. You can follow me on twitter where I try to be regularly active.

Constructive feedback would be much appreciated.

Regards,

Mo @CryptoYuge

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