Metronome ICO Analysis: The Juice Is In the Backstory
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Disclaimer: I’m not a licensed financial advisor and this review is not intended as investment advice. It is for reference only. Buying crypto-assets is very risky and you should seek the advice of a licensed professional before purchase.
VERDICT
An uninspiring project bogged down by unnecessary risks. Pass.
MARKET | UNKNOWN
Metronome’s product is a cryptocurrency. One way to derive demand and growth rate is to analyze the market cap and CAGR of a basket of the top five, 10 or 20 coins. That’s a quick option that overstates a weak correlation and ignores systemic trends. It’s as accurate as watching monkeys throw darts, but less entertaining.
STRATEGY | AVERAGE
Of course, Metronome isn’t just offering a new cryptocurrency. It’s offering new features. These features are valuable to the extent that they solve urgent and expensive problems. Let’s take a deeper look:
Two conclusions can be drawn here: 1) Metronome is tackling many problems, and 2) there’s not a lot of hurry to solve them.
If that weren’t troubling enough, consider that Metronome’s product is comprised of four smart contracts. That’s it. Metronome is not building or managing a blockchain. In fact, it requires a contract-enabled blockchain to secure its contracts. It plans to launch on Ethereum and eventually reach ETC, Rootstock and Qtum. Unless Metronome can patent, copyright or otherwise protect its contract code, it’s unclear how it can sustain a strategic advantage.
PRODUCT | UNKNOWN
Because Metronome consists entirely of four smart contracts, security is the most important product feature. As of mid-December, the team has not published its contracts for public audit. Since the contracts are Metronome’s only IP, it may not do so until launch.
All we can do for now is to speculate about the contract features. Let’s start with subscriptions. The owner’s manual (Metronome’s version of a white paper) only describes a weekly frequency for subscriptions. It would be a bizarre choice to enable subscriptions but limit them to a single frequency. I’ll give Metronome the benefit of the doubt and assume that “weekly” is just an illustrative example. The ambiguity around mass pay, however, is less forgivable. The manual promises mass pay but omits implementation specs. Should we just believe it will be a big, beautiful capability?
TEAM | POOR
Metronome has fielded an All-Star team. But along with All-Star skills, key players bring All-Star scandals and skeletons.
With a 50K+ Twitter following, CEO Jeff Garzik is effectively the Taylor Swift of crypto. He was an early contributor to the Bitcoin Core codebase, and in 2013, he became one of the first engineers to draw a salary from Bitcoin development with a role at Bitpay. He later founded Bloq, a blockchain-focused firm that develops software, advises enterprises and incubates commercial projects. Garzik’s streak seemed unstoppable until this summer. That’s when he was expelled from the Bitcoin Core repository for championing Segwit2x, a controversial solution to Bitcoin’s scaling problem. It’s probably fair to assume that Garzik’s ambition is fueled by the bitterness of being exiled from the community he helped to build. That’s good news for Metronome. A motivated leader is more likely to get things done.
Chairman Matthew Roszak is the company’s peripatetic fundraiser. As a venture capitalist with two decades of experience, he can command the attention of professional investors. It’s unclear how else he will serve the company’s early-stage needs. Roszak has no operational responsibilities and still manages his own fund.
Finally, there is Peter Vessenes, Metronome’s “Chief Cryptographer.” Like Garzik, he was an early Bitcoin champion who parlayed his knowledge and network into other ventures. One of these was CoinLab. CoinLab’s claim to fame is trading multimillion dollar lawsuits with Mt. Gox, the Bitcoin exchange that folded in a spectacular bankruptcy. Mt. Gox’s customers allege that CoinLab illegally confiscated over $5 million USD of their funds and has refused to make amends.
Despite his title, Vessenes is probably not developing Metronome’s cryptographic protocols. (If you believe otherwise, I have some Ana tokens I’d like to sell you.) So, what will he do? Metronome recently announced that Deluge Network, a new Vessenes project, will be handling BTC purchases on the company’s behalf. It’s one thing to rely on the counsel of an ethically compromised professional. It’s another thing entirely to put him in a position to repeat his transgressions. This deal alone should send prospective supporters running.
ICO | POOR
Instead of issuing tokens in stages with bonuses sprinkled throughout, Metronome is seeding its network with a weeklong reverse auction. The MTN token’s starting price will be set to 2 ETH (about $1,300 USD at mid-Dec ETH/USD pairs) and decrease by 0.0001984320568 ETH ($0.13 USD) every minute. The auction can end in one of two ways: either all MTN are issued, or the auction period expires. After the initial auction, Metronome will mint new tokens through 24-hour auctions every day ad infinitum, which is Latin for “until the SEC says otherwise.”
The company suggests that this distribution design will keep professional investors from hoarding MTN and stave off speculators. The problem is that the only people willing to buy MTN at launch will be investors and speculators. That’s the Faustian bargain every token issuer makes. For this reason, Metronome’s token distribution needs simplicity more than egalitarianism. Scroll through the company’s Telegram group and count for yourself how many motivated buyers are struggling to understand the token’s pricing. That’s a hell of a way to launch a project.
Here’s one last, exasperated note: The company has set aside 20% of the initial token supply for the founders. Twenty-five percent of it will vest once the auction closes. In other words, 5% of the proceeds (25% of 20%) will go immediately to the founders to spend as they please. Chew on that for a minute. If Metronome raises more than $60 million USD, each of its three executives will pocket at least $1 million USD one week into their project’s lifetime. You’re welcome to draw your own conclusions about their level of commitment after the auction.
BONUS | A script to simulate the results of the initial supply auction
Below is a Python script that simulates Metronome’s initial supply auction. It outputs a CSV file where you can analyze minute-by-minute results. In this simulation, the auction begins with the sale of one token. Each minute, the number of tokens sold is incremented by one. This outcome is unlikely — it would generate over $7 billion USD — but it’s an easy way to understand the auction design. I encourage you to adapt the script and run your own simulations. Also, please let me know in the comments if you find any areas that need correction or improvement.
import csv
def auction(supply, auction_minutes, ceiling, floor, reduction_amount, non_public_allocation, fx_rate):
""" Yield auction results minute by minute
"""
tokens_sold = 0
token_price = ceiling
tokens_remaining = supply * (1 - non_public_allocation)
while all((token_price > floor, tokens_remaining > 0, auction_minutes > 0)):
tokens_sold = min(tokens_sold + 1, tokens_remaining)
proceeds = tokens_sold * token_price * fx_rate
token_price -= reduction_amount
tokens_remaining -= tokens_sold
auction_minutes -= 1
yield (auction_minutes, tokens_sold, token_price, proceeds, tokens_remaining)
def main():
starting_supply = 10000000
non_public_allocation = 0.2
eth_ceiling = 2
eth_floor = .0000033
reduction_amount = .0001984320568
ethusd = 600 #<--------- CHANGE TO CURRENT ETH/USD PRICE
auction_minutes = 10080 # 60 seconds * 24 hours * 7 days
file_name = 'metronome.csv' # supply full path and filename
header = ['auction_minutes','tokens_sold', 'token_price', 'proceeds', 'tokens_remaining']
with open(file_name, 'w', newline='') as f:
wrtr = csv.writer(f)
wrtr.writerow(header)
for minute_data in auction(supply=starting_supply, auction_minutes=auction_minutes, ceiling=eth_ceiling, floor=eth_floor,
reduction_amount=reduction_amount, non_public_allocation=non_public_allocation, fx_rate=ethusd):
wrtr.writerow(minute_data)
if __name__ == '__main__':
main()THANKS
Many thanks to Christie Lewis for her feedback and insights on payments.
