Rate3 — Making Cross border payments & credit scoring simpler & cost effective

ICO Ratings at a glance [8 out of 10]

Team — 8/10
Community — 8/10
Project Vision — 10/10
Project Stage — 7/10
Marketing Hype — 7/10

Please do read my update to the story at the bottom

Post success of my first ICO rating Holotoken, I am pleased to bring to present the story of another great team — the team behind Rate3.

What is Rate3?

Rate3 is a decentralised dual protocol for cross-border payment and credit scoring powered by Stellar and Ethereum.

Rate3 aims to solve 2 problems — enabling cross border payments and building credit history. The team is working towards solving this problem by building 2 protocols — Cross Border Payment Protocol (CPP) for payments across borders that enables both consumers and merchants to enjoy zero transaction fees and Credit Scoring Protocol (CSP) for lending loans based on payment history and additional information about consumers.

This means that they will compete with PayPal on payments and established credit bureaus like FICO on credit scoring. In the crypto world, the competition is Storiqa, Monetha, OMG (to some extent). In Credit Scoring, Colendi and Bloom (to some extent) form the competition. Rate3 is miles ahead of the competition, as it combines both payments and credit scoring and has strong tie-ups with leading merchants and partners through RateX. It also works at the protocol level and hence various new partners can be added to the ecosystem.

Team [8/10]

The team is young, made up of individuals with strong pedigree who have spent 1–3 years in other organizations and have built and implemented RateX in the last 2 years.

Most of the founding team members of Rate3 / RateX are alumnus of the prestigious NUS university, which is #1 in Asia and #15 in the world. They have limited experience, but achieved good success, having started their company quite early in their career.

A core element of any team / company is how empowered each individual on the team feels. The CEO can be great, but whether the people who are interacting with consumers, partners, investors know about their company and product in-depth and how they provide service to the people interacting with them. I found interacting with the team members on Telegram a surprisingly pleasant experience inspite of asking possibly 50–100 questions to them. Apart from the tech and idea, this is confidence that the founders are building a company that can scale efficiently. This is a critical element on why I invest in the project.

In my opinion, due to lack of proven background of team members, I give this team a 8 which is the highest I can give. The young founders certainly have the capability to take Rate3 places.

Community [8/10]

For Rate3, the community is a set of app providers, merchants, investors and partners. Based on my understanding of the ecosystem, Rate3 has taken good strides in this area, but needs to significantly expand to deliver to its promise.

App Providers — The Rate3 protocol will be used by RateX / RateS which are products of the same group of companies, but legally a different company. In addition, the team is working closely with DATX (Advertising), Funding Societies (P2P Lenders with a 150 mn loan book) and BramhaOS (for mobile offline payments).

Merchants — The existing products of the company RateX and RateS are already accepted by large merchants like Amazon, Alipay, AWS, Hotels.com, Expedia, Ebay and several more.

Investors — The investors (most of them equity investors) to the company include Signum Capital, Jun Capital Partners, Alpha JWC Ventures, Insignia Venture Partners, CollinStar, Blockchain Ventures, LeekICO and Spartan. The investors are critical as they will provide the much needed guidance to help the team make the right partnerships and grow rapidly.

The team has already completed a private sale and a public sale (through LeekICO) and this is the presale with 20% bonus. The public sale didn’t have any bonus, so getting the tokens now is a good deal.

Edit (16th May) — The public sale on LeekICO has a 20% bonus too, which has been announced by the team, which seems fair and reduces the max bonus in the ICO.

Partners —

The team is working closely with Zilliqa to use their blockchain for the CPP Protocol. Also, the tokens would have a cross chain architecture and will be available on Stellar and Ethereum blockchain (and other blockchains in the future) increasing their liquidity and allowing the team to use the best blockchain.

Project Vision [10/10]

The team has done a great job in distilling and presenting this vision. The problem statement is well-defined, the solution simple and the execution on track.

Both the problems that the team is tackling — reducing cost of cross border payments and building credit history for consumers and merchants dealing in cross border transactions are significantly large and unsolved problems. The solution is simple and well laid out. Accordingly, execution becomes easy.

Project Stage [7/10]

As per the roadmap mentioned in the whitepaper, the project is divided into 4 phases as follows

1. Implementation of the RTE payment protocol (Q2 2018 — TestNet and Q3 2018 — Mainnet). For Q2 2018 — TestNet, here is the detailed status of task completion
   a. Private Testnet — 100% completed
   b. Early Testnet API — 50% completed
   c. POC Integration
   - Payment platform integration — 100% completed
   - Credit Scoring Platform — 25% completed
   - Universal Wallet — 25%
   d. Gather feedback from PoC integrations: 100% completed
   e. Release testnet to public: 100% Completed
   (Completion status as shared by the team on 8th May)
2. Multi-Asset Payment with RTE as medium of payment (Q3 2018 — TestNet and Q4 2018 — Mainnet)
3. Credit Scoring Protocol (Q4 2018)
4. Network Stability (Q2 2019)

I think the team has been modest to describe only the future of Rate3 protocol. There is already an existing application RateX that has active fiat — fiat payments and is adopted by various merchants. Rate3 will allow fiat-crypto-fiat payment and crypto-fiat and crypto-crypto payment in the future using the Stellar network. The existing RateX application has already saved about 275K for the customers that have used the app (Google chrome extension).

Shown below is the RateX extension in action — once you have installed, you can see the green button with X helping you save money on the Amazon website. This is an actual working application (not demo).

Similarly the Rate3 test Chrome Extension is ready and live for use.

The team has a github accessible at https://github.com/rate-engineering

The github has codes for crowdsale contract and the RateX webflow snippets. The core protocol and associated codes are not in the public domain yet. Possibly some of this code needs to become open-source over a period of time to attract more partners. While I have a good understanding of programming, I claim to be no code expert. Having said that, the code that is released looks clean, readable and has appropriate comments in place.

Marketing Hype [7/10]

The team hasn’t marketed themselves well. Again, it looks like the team is focused on building the product rather than marketing. However, I have to say that I am impressed with the level of responsiveness and individual attention with which they answer the question. Personally, I don’t care much about the hype, but some investors do.

Growth Potential [10/10]

Tokens will appreciate in value as they will be used as utility tokens for

1. Consumers — Awarded 1–10% cashback (decided by merchants) for successful transaction completion
2. Network fee to be paid by merchants — 0.5% initially (decided by token participants in the future) for the redistribution pool. In the near future, merchants have to hold RTE tokens as a form of staking
3. Discount on repayment interest rate to borrowers paid by lenders in RTE tokens on submitting more info
4. Lenders pay RTE tokens to access borrower scores — minimal fee per request — say $1-$2 could be assumed

The global eCommerce market is 4.5 trillion USD and the crossborder market is 900 bn USD. This would likely increase over time.

The current volume of spends on RateX is around 500K SGD (370K USD) per month. The early mover advantage is real with merchants like Amazon, Ebay who are unlikely to support 10+ crypto payment gateways in the future. Similarly, as other companies / service providers adopt the Rate3 protocols, the ecosystem will grow exponentially.

I am expecting adoption of Rate3 (through multiple RateX apps and partnerships) to drive this volume up to 30 mn a month in 6–8 months as Rate3 goes live and stabilizes and eventually up to 1 bn USD a month in 2 years (3000X from now, but the base is very small right now — the assumption is that Rate3 will capture 1.25% of cross border market spends).

Here are some back of the envelope calculations — Assuming that the protocol needs 3.5% tokens (3% for cashback + 0.5% for network fee) for every transaction and a 1 bn USD volume monthly, 35 mn USD worth of RTE tokens will be required monthly. Usually, customers keep loyalty tokens for a longer time while merchants buy on demand. Due to staking by merchants, we could potentially see that merchants too may hold on to the tokens for a longer period of time, say 3 months (not fully sure on how staking will work). As per these assumptions, 105 mn USD worth of RTE tokens would be required for the CPP protocol use case at any point in time.

I am not clear on how many tokens would be used for the CSP protocol, but it is likely lesser than the CPP use case. It depends on the amount of enquiries for CSP and the loan disbursal requests. This could become a strong use case over a period of time. I am assuming that roughly an additional 25% of tokens are required for CSP use case, we can say that 25 mn USD of RTE tokens would be required for CSP.

Hence a total of 130 mn USD worth of RTE will be required for actual use.

Assuming investors and traders hold 10–20X RTE tokens in comparison to actual use needs(since they see potential future gains), we could see a marketcap of 1.5–3 bn USD or more over 2 years. This translates to 30–60X gain in 2 years. In the short run (6 months), we could see 5–20X gains based on the progress on protocol development and release, addition of new partners and adoption of the protocols in other applications.

Overall, I see Rate3 become a leader in the global payments space, challenging Paypal and resulting in strong gains for Rate3 tokenholders.

The opinions mentioned in this article are my views to get feedback from readers on my investment strategies. This article is not an invitation to invest and should NOT be construed as such. Cryptocurrencies and tokens are a very high risk asset class. If you intend to invest, please do your own research before further investing and invest only what you can afford to lose. The author is not a financial advisor and the assumptions and calculations used by the author could be incorrect. The author does not take any money, cash or crypto to promote the tokens / currencies, but may be invested in them.

Update 24-Aug-18

1. The roadmap was abruptly changed and there is now a new goalpost which changes the entire course of Rate3. From being a payments and credit scoring protocol, it is now a Tokenization protocol
2. There are now 90K members in the chat due to the Honey program whereas holders are very fews. Others are only in for free money. Nothing to be happy about. Why can’t we just focus on development?
3. At the end it all seems more talk less substance. I wish the best to the team and hope that they stick to the roadmap and deliver on it.