Pledgecamp ICO Review February 2019

Table of Contents

Project Background
 — Market Size & Problem
 — Pledgecamp Solution
 — Team
 — Advisors & Partners
 — MVP/Prototype
 — Token Metrics
Investment Evaluation
 — Short-term Investment
 — Long-term Investment
Pledgecamp Links
Work Cited

An objective review of Pledgecamp ICO with updated token metrics from 11th of February 2019.

Evaluating the investment potential, why the latest token change made it more attractive as a short-term investment and how is it similar to BitTorrent.

Public sale date is 18th of February, 2019.

Project Background

Market Size & Problem

Over $5B USD was pledged to reward-based crowdfunding campaigns in 2018[1]. Research shows that 85% of all crowdfunding campaigns don’t keep to their promised timelines and have delays in production or delivery. Delays can be understood, but 14% of all campaigns fail to deliver at all, and 67% of backers will never back a campaign again.

While so many people are getting a bad taste from crowdfunding, the market is expected to double by 2022 to over $10B USD, and has been growing 30% year over year so far.

Since the dawn of Kickstarter, it has been available for creators in limited countries. Hitting 10 years in business in April this year and still excluding more than half the EU, and not even touching emerging markets.[3]

Project creation is currently available to individuals in the US, UK, Canada, Australia, New Zealand, the Netherlands, Denmark, Ireland, Norway, Sweden, Germany, France, Spain, Italy, Austria, Belgium, Switzerland, Luxembourg, Hong Kong, Singapore, Mexico, and Japan who meet the requirements below.

Worthy to note that finance professors Cumming and Hornuf written in The Economics of Crowdfunding, that current crowdfunding platform profits “depend not on the ultimate success of the venture but on the success of the fundraising campaign.”[2]

Easy to spot that the incentives are misaligned. Backers want the cool product that is promised, while platforms and creators are focused on a successful fundraising campaign as platforms take no responsibility in the promises made by creators. Some would say that more time is spent on planning the crowdfunding campaign than actually planning the production.

Conclusion: The market is already at a significant size while not even being globally available and growing year over year in available regions.

Has clear problems of accountability and incentives for projects as platforms make money on successful fundraising campaigns, and not success of ventures.

Creators are incentivized to focus more on successful fundraising, and less on actually planning out what comes after, and it shows in delay and failure rates, which are 85% and 14% respectively.

Has great potential for accelerated growth if opened to a global market and less backers are left with a bad taste in their mouth.

Points: 9/10

Pledgecamp Solution

It is best to first take the biggest market problem, and see if Pledgecamp has a viable solution to it.

Most people only back one project, because they get a bad experience from the delays, completely undelivered projects or under-delivered products.

Let’s first look at why project creators are delaying at 85% of the projects. Reasons could be inexperience, bad planning, bad business relationships, unexpected issues or flat out scams from the beginning.

Analyzing Kickstarter’s delayed projects and their updates to their communities, “unexpected” is the most overused term, used by all creators falling in somewhere in the five categories above.

Although almost all crowdfunding platforms have campaigns list roadmaps and milestones, no monetary values are assigned to those development milestones, which is purely due to the incentives of the platforms.

Pledgecamp has every milestone assigned a monetary value, a percentage of the campaign funds. Calling it “Backer Insurance”, it’s essentially a smart contract escrow connected to milestones of the project.

Creators will no longer have all the funds at their disposal as soon as the campaign gets funded, which requires creators to spend more time planning, consulting with experts, and taking advantage of the Pledgecamp “Market Network” before launching their campaign.

Let’s talk about the “Market Network” for a second. Creators will have access to vetted vendors, which could include production companies, product development agencies, mentors, lawyers, talented individuals, and so on.

On major platforms today, every project has to start looking on their own for a production company and other partners, which can take longer than expected and gets even harder without knowing where to pay attention due to lack of planning beforehand.

“Backer Insurance” has a direct relationship with the listing fee paid per campaign.

“Backer Insurance” is obviously there to protect backers, and requiring more groundwork from creators is just a nice plus side to it. “Backer Insurance” is powered by a democratic voting system allowing backers to vote if a milestone is completed or even in case of delays, do they believe the campaign creator is capable of delivering results if more funds are released.

In case, the democratic vote comes out negative, backers will be refunded the remaining amount from uncompleted milestones and the funds yet to be received by the creator.

Even though the “Backer Insurance” caps out at 50% of all funds, it greatly increases confidence in backers and adds value to reward-based crowdfunding market.

Now that the biggest problem in the market is addressed. Let’s take a look at what else the Pledgecamp Ecosystem has to offer. We’ll cover all the sectors in the illustration, but in less detail for those already described above.

Pledgecamp Ecosystem

Smart Crowd

“Smart Crowd” is essentially a bounty program capability for campaigns. Creators are able to create tasks that community members can complete and earn PLG tokens for. This could be anything from surveys for market research to translations and marketing activities.

A feature currently lacking from platforms due to the complexity involved without using smart contracts.

Campaign Deposit

All creators must make a refundable security deposit when creating a campaign, which is to fight fraud on the platform and acts as a financial penalty for spam on the network.

The deposit is also in place to ensure transparency as creators will only be refunded if they provide all applicable business ingenuity documents. Each verification action is tied to a fixed amount of the deposit until it is fully refunded, but not all the same requirements apply to all projects.

This way backers can verify the business’ legitimacy and have reason for doubt if any of the applicable requirements are not satisfied.

Backer Insurance

Smart contract powered escrow for campaign funds tied to milestones in development, that is democratically voted on by backers.

Described in detail in the first part of Pledgecamp Solution section.

User Moderation

This one is really interesting, as it is a decentralized platform, users who decide to “stake” their PLG tokens will be given Camp Shares (CS). PLG tokens can be swapped 1:1 with Camp Shares (CS) by sending the PLG to a non-trading “staking” smart contract, taking the PLG out of the circulating supply.

Camp Shares (CS) on their own are not tradable and you must pass additional KYC to be able to perform the switch. Camp Shares (CS) can be transferred back to their original PLG state, but with a 30 day vesting period.

Vitalik Buterin, On Medium-of-Exchange Token Valuations (2017)[3]

Now that’s Camp Shares (CS) description out of the way. Let’s get to the moderation. Individuals who meet the requirements and pass the KYC, and stake a minimum of 10,000,000 PLG (equivalent to $1,000 USD during the ICO) for Camp Shares (CS) will be eligible to become Moderators.

All users can flag violations of Pledgecamp platform Terms of Service, concerns about projects, concerns about other users violating terms, and so on. Moderators are the ones deciding the fates of those projects and users.

Every time a statistically significant amount or rate of flags come in for a matter, a jury of 12 Moderators is randomly selected to decide the fate in 24 hours via consensus mechanism.

The exact description to this mechanism is best read from the whitepaper on your own, but needless to say this governance mechanism is well thought out and incentivized, which I’ll get to next.

The Moderators will be compensated for their time by paying out the listing fees charged in PLG within that month to the Moderators. Payments happen at the end of each month, and are based on the average amount of Camp Shares (CS) held by the Moderator during the month.

Monthly payments are needed to make sure Moderators are worthy of the payment and have been on-duty during the month, as not voting for three times in a period will be penalized with no payout for the period.

The payout proportion for an admin is based on the Camp Shares held on average over the month divided by the amount of all Camp Shares over the month, so if you hold 5% of all active Moderator Camp Shares (CS) you will get 5% of all the listing fees paid during the period.

Global Inclusion

Creators and backers from all around the World will be able to create and back campaigns, and this also includes the 38% of adults worldwide, who don’t have access to the financial system.

We’re keeping this point short right here, but the impact of this is not to be taken lightly.

Hire Trusted Vendors

Pledgecamp is building a network of companies that can help projects deliver to their backers. Creators will be able to find and vet key partners with the histories and reputation of the partners on blockchain.

This is great for projects as previously they would have to go out and find their own partners through trial-and-error, and this where a good portion of those unexpected incidents happen that we covered before.

Track Funds

Funds used with the trusted vendors are easily traceable as they happen through smart contracts. Backers will be able to verify on their own, that funds are being used as promised.

Great way to ensure transparency for the backers and build confidence.

Guarantee Payment

Since payments to vetted vendors are made through smart contracts, vendors can lower the risk profile that is usually involved while working with young startups.

We see this could potentially also make vendors offer lower rates than they normally would at these cases.

Overall this introduces a new dimension to crowdfunding and through healthy competition could offer better prices to creators as there are vendors to choose from.

Knowledge Center

A decentralized knowledge base that is crowdsourced and incentivized by creators or reputation. Creators can learn or ask about crowdfunding specific things or problems they need a solution to in their project.

Creators can incentivize replies with PLG tokens or vendors and users can answer or solve the problems to build their reputation on the platform.

Conclusion: The solution of Pledgecamp potentially solves all the biggest problems in the market today and could very well accelerate the global growth of reward-based crowdfunding. Key values would be forcing and helping projects to plan out their roadmap as Pledgecamp platform is not incentivized by the success of the crowdfunding campaign, but also the delivery to the backers through “Backer Insurance”.

In general the concept is very impressive and thought-out. Creators will be more likely to succeed thanks to vetted vendor network, added accountability and knowledge center to learn from.

The token utility and Camp Shares “sink” for Moderator position, make it a decentralized platform with it’s own governance system to maintain it.

It will be smart to have a credit card integration, like Simplex, for backing campaigns that would convert to PLG in the backend, which would remove all friction and make it viable against Kickstarter.

Points: 10/10

Team

The founding team, Jae Hoon Choi, Edmond Lee, Samuel Pullman, have been publicly working together since 2013, unsure if there was any previous projects they worked on before that together or not, but coming close to 6 years of working together.[4]

Podo Labs campaigns on Kickstarter

Relevant industry experience includes 4 successful crowdfunding campaigns, raising over $2M USD in total, which puts them among the 1% most funded teams on Kickstarter with their company Podo Labs.

Going deeper in the research reveals that one of their successfully funded campaigns has yet to deliver the products. Having searched the community, this has been brought out as a weakness and reason not to support Pledgecamp.

Perhaps if we had personal experience backing that particular campaign, we would also think like that, but if we keep our focus on the Pledgecamp side of things, they most likely learned a lot from that experience.

Without having first-hand experience with all the issues crowdfunding a project, both success and delays, this project would not have a concept as strong as it is today. Not to mention that both Podo Labs and Pledgecamp share the same investors, which is a bullish sign in our opinion.

Conclusion: Team has industry experience of 6 years, capable of delivering results with 4 successful crowdfunding campaigns. While one of the campaigns is still in limbo of delivery delays, which hurts the public perception, but provides a valuable lesson to come up with the concept. Hurts our overall score a little, but is not a deal breaker. Considering that their private investors from Podo Labs are still openly supporting the team.

Points: 9/10

Advisors & Partners

There’s 15 advisors listed on their website, but including all the partners the list would be longer.

Randi Zuckerberg, CEO of Zuckerberg Media, helped build up Facebook from 2004 to 2011 as Director of Market Development and Spokesperson. Played a key role in Facebook’s success and has been an investor in the founding team since 2015, went as far as going on FOX News to support Pledgecamp and has included Pledgecamp in all of her podcasts on cryptocurrencies.[4][5]

Christian Sullivan, seed investor in Yandex (now worth over $8bn) and many other companies, also an investor in Polychain Capital and advisor at Republic.

Supported Matt Currcio, VP of Data at Ripple, and Keith Teare, founding shareholder of TechCrunch

A Korean investment fund FuturePlay and it’s blockchain subsidiary FoundationX are both brought out as advisors as Pledgecamp is part of the FoundationX accelerator, while personally supported by the CEO of FuturePlay as well.

Prince Abdullah Al Saud from the Saudi Royal Family has been an investors in founders since 2015, as is Randi Zuckerberg.

Most of the really big name advisors have done videos to talk about why they’re investing into and supporting Pledgecamp.

Quick look at their partners. The platform is designed by Metalab, once described as Slack’s $2.8 billion dollar secret sauce and also the design partner behind Coinbase, Google’s AMP, Amazon Photos, and Facebook’s Messenger.

They have an engineering partner, MouseBelt Blockchain Accelerator, with over 50 blockchain developers that are helping build Pledgecamp.

They’ve also already publicly partnered with an exchange, BitForex. Recently also added Liquid, a japanese focused exchange from SEA. Both exchanges will host their public sale.

Conclusion: No matter how you look at the list and how they are publicly supporting the project, if this was the baseline for advisor point evaluations for other projects, most projects would get below 5 out of 10. Hard to tell, how they’ve achieved it, but a truly extraordinary achievement on the team’s part with the advisors.

Points: 10/10

MVP/Prototype

The videos of the first prototype were published early October 2018. An updated version of prototype was published 7 days before the sale.

Pledgecamp’s most recent prototype video

Metalab has been working on an updated MVP, which will be privately sent to whitelisted community member for testing.

Conclusion: The MVP is available for the public to explore prior to the public sale. Video walkthrough looked strong, and it’s not the first version that has been released to the public, and shows progress.

Points: 9/10

Token Metrics

The token metrics were recently updated, less than 7 days before the sale, which made the project far more interesting as an investment. They increased the supply and decreased the price, essentially just making the float bigger while keeping the market cap number the same.

Total supply: 1,000,000,000,000 PLG (one trillion)

Price per PLG: $0.0001 USD

Raised in private sale: $17M USD

Max bonus: 15% +-5% (They have never actually published bonus numbers, but this is what we’ve seen shared between investors)

Private sale lockup: Vested (Not stated, but our sources have said 6 months or more)

Public sale cap: $3M USD

Total proportion of supply sold: 20%

Project market cap: $100M USD

Conclusion: While the total supply is huge, the updated price and supply can be extremely beneficial to guarantee liquidity, interest on exchanges, plus offer volatility protection in the long run. The market cap is high for a project during the current market, but the actual circulating supply, private sale low bonuses and vesting, recent performance of low price tokens, still give it a positive score.

Points: 7/10 (Up from 3/10 before tokenomics change)

Investment Evaluation

Overall, very strong concept, real problem, big enough market to justify valuation and fundraise. Platform does not add friction with blockchain and has a self-sustaining governance model.

Main downside is that the hype they built up during September with Randi Zuckerberg going on FOX News died down with them pushing the sale to 2019 Q1, and now finally taking place on 18th of February.

The community was not happy with the delay and team’s updates did not get much attention. After publishing the sale date and details with tokenomics changes, the Telegram group has become a lot more active.

As said, there was a change in the tokenomics, lowering their price per one token, and partnering with BitForex and Liquid for the sale. Giving peace of mind that there is a guaranteed secondary market on those exchanges.

Making an educated guess on the lineup of advisors and changes in tokenomics, this has the potential to be a very high volume token upon release, so A-grade exchanges like Binance or Huobi could be interested in listing it.

Looking at their current partners, advisors, there’s a high chance they have an external market maker, which makes it likelier to be listed on A-grade exchanges and a better investment short-term. But this is just an educated guess.

Short-term Investment

Not going to stop more on the idea, concept, team and advisors, but going straight to market analysis and explanation.

Let’s look at some of the ICOs that came out in the bear market at a low price per token like Pledgecamp will. Holochain sold out $20M+ at $0.00015 USD per token, which is even 50% higher than PLG ($0.0001 USD). Currently listed on Binance, trading at over 7.5x return against USD and nearly 43x return against ETH.

A more recent example, BitTorrent, sold $7.2M USD at $0.00012 USD per token, also 20% higher than PLG’s $0.0001 USD. Currently trading at 7x return against USD and over 6x against ETH.

BitTorrent (BTT token) Market & Returns

Before you think about the project’s market cap based on sold tokens and tokens held by the team, let us show you something.

All of the tokens held by Pledgecamp are either locked or carefully monitored by governance for in-platform usage. About 80% of all presale tokens are locked after the sale is finished and tokens are distributed.

Pledgecamp token release schedule illustrating the release of presale and public sale tokens for the first 6 months. No other tokens are in circulation until launch of the platform or team tokens unlock in 1 year from ICO.

This means the circulating supply will be $3M sold during the public sale, plus 20% of $17M USD sold during the private sale, which is a total of $6.4M USD in circulating supply for at least a month.

This is significantly less than the circulating supply for BitTorrent today. With Bitcoin price at around $3,600, the token price against BTC would be 0.0000000277 PLG/BTC or in other words 2.7 satoshis, which would make it the lowest satoshi coin on any A-grade exchange.

With the current trend of low satoshi coins, like BTT, NPXS, HOT, DENT, NCASH, performing extremely well on Binance. This is an attractive flip opportunity with a good risk to reward ratio as the downside is extremely limited.

As mentioned before, low price in satoshis makes it also more likely to be listed on an A-grade exchange due to massive trader interest and high volume that comes along with it.

Points: 9/10

Long-term Investment

As a long-term investment we should really focus on how the platform is structured to have ever-growing demand for the token and tradable token “sinks”.

The more campaigns creators add to the platform, the more interest and incentive there will be from PLG holders to “stake” their PLG for Camp Shares (CS), which takes PLG out of the circulating and tradable supply making it more scarce.

Camp Share (CS) holders will be earning the listing fees paid by creators for serving Moderator roles on the platform, which was all explain above.

At the same time, all backers, whether they back by credit card or straight with PLG, will have their pledges converted to PLG in the backend, which again locks out the PLG from the tradable supply at least until the end of the campaign has reached all milestones.

With all the additional benefits compared to Kickstarter for both backers and creators, it is hard to find a reason why it would not become widely adopted.

Especially considering the development partners on board, like Metalab and MouseBelt Blockchain Accelerator for engineering.

There is high probability that Pledgecamp will become one of the first mainstream adopted blockchain products thanks to a seamless user experience.

Points: 9.5/10

Pledgecamp Links

Website: https://pledgecamp.com

Telegram Group: https://t.me/pledgecamp

Whitepaper: https://pledgecamp.com/__pdf/pledgecamp-whitepaper_v2.1_190211.pdf

Works Cited

[1] “Crowdfunding — worldwide.” statista, https://www.statista.com/outlook/335/100/crowdfunding/worldwide . 
[2] Cumming, Douglas and Lars Hornuf. “The Economics of Crowdfunding, Startups, Portals, and Investor Behavior”, 2018, p.
[3] Buterin, Vitalik. “On Medium-of-Exchange Token Valuations.” Vitalik Buterin’s website, Oct. 17, 2017. https://vitalik.ca/general/2017/10/17/moe.html.
[4] “Podo Labs”, Crunchbase, https://www.crunchbase.com/organization/podo
[5] “Closing Bell”, FOX News, https://www.youtube.com/watch?v=2pepv_roW64 , October 2011.
[6] RANDI TALKS TECH: Bitcoin, Blockchain & Cryptocurrency 101 (Full Recording), https://www.zuckerberginstitute.com/learn/2018/5/13/randi-talks-tech-bitcoin-blockchain-cryptocurrency-101 , 13 June 2018.

Disclaimer: This is not financial advice and we are not licensed financial advisors.

If you wish to reach us. Our email is: cryptodeepdive (at) protonmail (dot) com