Ferrum Network — Research Report

dbcrypto
dbcrypto
Jun 6 · 8 min read

Ferrum Network (‘Ferrum’) is an emerging blockchain startup aiming to solve key roadblocks to large scale adoption of blockchain networks. Interoperability, speed and cost are the focal points of Ferrum’s ecosystem.

There are two distinct components of the Ferrum offering.

  1. A DAG-based network purpose-built for interoperability and fast transactions, and
  2. A vertically integrated set of financial products allowing users to buy, sell and trade crypto-tokens

Later this year the team plan to host a sale of Ferrum Network Tokens (FRM) to the public, which will be used as fuel for the Ferrum Network.

This report will outline Ferrum’s offering and ecosystem, and anything else we feel you should know about this project.

Problem

As mentioned, one of the core focus points for Ferrum is on interoperability, or the lack thereof in the crypto-markets.

There are hundreds of competing blockchains; many with similar characteristics, and equally as many with distinct unique-selling-points. Ferrum understand that in a multi-token world, there is value in facilitating interoperability across these distinct networks.

Aside from simply interoperability, cost and speed, the team also propose to address other residual issues facing crypto-participants:

  • FIAT gateways
  • OTC trading and counter-party risk
  • Ownership of assets and keys

Ferrum assert a vision to be the first interoperability network to facilitate seamless transaction and exchange of crypto-tokens (regardless of original blockchain) and FIAT currencies easily, quickly and at low cost.

Solution

Ferrum are building a vertically integrated ecosystem, comprising several distinct products. The Ferrum Network itself is a DAG-based infrastructure, that will support the various services that are live and yet to be built (we won’t delve into the DAG design in this report).

You may read elsewhere that Ferrum plan to build a decentralized exchange and cold-wallet as part of their suite of products. This is true, however Ferrum have recently revised their plans amidst community feedback and current crypto-market conditions as they approach their sale phase, and will narrow their scope to focus on the Kudi Exchange and Unifyre wallet.

Kudi Exchange

As mentioned, a FIAT gateway called the ‘Kudi Exchange’ has been built and launched in beta during early 2019. This is a live product in West Africa; it is a FIAT-CRYPTO product based in Nigeria.

This locality serves as a great test market for Ferrum Network as according to Ferrum’s sources, the crypto-demand in Nigeria is the highest in the African continent.

As of May 2019, the exchange has publicly launched; a great milestone for the team. Further, the co-founder Ian Friend makes a note that 10 businesses have been signed up for ‘Kudi Business’ which is something we would like to learn more about and follow into the future. Enterprise adoption is an exciting area for these types of recurring service-based products.

The solution and proposition makes sense for the locale. Demand for US dollars and Bitcoin is relatively high compared to other nations in the region. Sending and receiving money through the Kudi app is easy and fast. The challenge now for the team is to establish consistent and meaningful growth in the region.

Kudi Exchange allows users to purchase digital assets with FIAT, or even send FIAT currency peer-to-peer without a financial institution intermediary, and at no cost.

Unifyre Wallet

The Unifyre Wallet is the second piece of the puzzle for the initial phase of products built by Ferrum. This wallet will be non-custodial, and built for secure storage, and simple trading functionality. The wallet will not see, hold or store user private keys.

Another functional purpose of this wallet is to facilitate safe OTC and peer-to-peer trading. This function is called the ‘Direct OTC Trade’ function. The safety benefit of Unifyre as opposed to traditional OTC trading, is the elimination of counter-party risk. As a user initiates a direct trade, the other user will need to accept or reject the transaction prior to initiation. If the user rejects the trade, it can simply be rolled back.

This is opposed to the obvious drawbacks of peer-to-peer trading in a crypto-token setting, where on-chain transactions cannot be withdrawn once broadcast to the network. The value is clear to the users involved.

The proxy token system

Ferrum propose a system whereby users can convert native tokens like Bitcoin, Ether and others to a proxy token ‘Fe’.

Simply put, this allows for fast transactions within the Ferrum Network infrastructure with minimal costs, whilst avoiding congested networks and large transaction fees.

Of course, a user can convert their proxy tokens back to the original token when desired.

To unpack the methodology of the process, we can follow the whitepaper (p.18).

To transfer value (v) from network (x), to Ferrum:

  1. Lock or destroy v in the external network x
  2. 2. Present the proof from Step 1 to the Ferrum Network. This allows you to create v of Fe(x)

To export the value back to the original network, the following procedure is followed:

  1. User destroys v proxy tokens Fe(x)
  2. Ferrum network validates that Step 1 has happened and unlocks v tokens from external network X
  3. User transfers the unlocked tokens to their address in the external network

The proxy tokens are pegged to the value of the original token. Through this process, users can know that their proxy tokens in the network are backed by the original token’s external value.

Investor’s AI Assistant

This component of the Ferrum offering does raise the eyebrow. An AI assistant that will skim and monitor external sources such as Twitter and the Telegram messaging app for conversation regarding certain crypto-tokens.

We understand how easily and often Twitter has been and can be used for manipulation of opinion and sentiment, even outside of the crypto-space.

Telegram messenger is a very common place for blockchain startups to host their large community conversations. In this medium we have also seen coordinated attempts to sway sentiment either positively or negatively.

It is worth highlighting this feature, as it’s unclear what value a user would derive from this kind of an automated assistant bot.

Competition

The Ferrum offering is not contained to a single use-case or protocol. There are several moving parts that make up the ecosystem.

From an interoperability focus, there are several notable competitors:

From the perspective of the Unifyre Wallet produce, the many popular hot-wallets will compete in some capacity.

Partners / Investors

Ferrum Network Token

FRM is a utility token that will fuel the ecosystem. It will be used to pay for fees on the network, in a similar fashion to many other ‘gas-type’ utility tokens. Beginning as an ERC-20 token, the team will migrate across to mainnet FRM in Q4 2019.

The private sale for the FRM token is scheduled for June 2019, and public raise tentatively set for Q3 2019. Prior, a seed round sale was completed in November 2018.

Token basics • CODE: FRM • TYPE: ERC20 • TOTAL SUPPLY: 331,718,750 FRM • MAINNET: Q4 2019 • ALLOCATION TO PUBLIC RAISE: 23% • PRICE PER FRM: $0.016 • HARDCAP: < $2M USD

Allocation/Use of ICO Funds R&D/Hiring Developers 60% Operations 25% Marketing 10% Legal 5%

Ferrum are introducing ‘The Reserve’ as part of their token distribution process. The Reserve will represent 17% of the total supply, and is divided into two separate components: time and milestone-based.

Before breaking the two components down, it is important to understand that tokens allocated to each component of The Reserve will remain locked for a minimum of one year.

Time-based release Fifty-percent of The Reserve will be gradually unlocked over a period of 4 years. Taking into account the first year lock, 8.5% of tokens will be in circulation 5 years post-IEO.

Milestone-based release This component of The Reserve will release tokens from a smart contract based on pre-defined milestones. The specifics have yet to be announced, but are expected to be based on user targets and transaction-based goals.

Finally, when FRM tokens are used to execute a transaction on the network, the tokens are burned.

To date, Ferrum have held a single seed round of fundraising in November 2018. Private sale round is scheduled for June 2019, with plans for a public raise in Q3 2019.

Team

- Naiem Yeganeh [Co-founder & CEO]

PhD in Computer Science, and a working history at both Microsoft and Amazon as an engineer. Naiem’s most recent role outside of a blockchain context is at Bloomberg, as an engineer in an AI and machine learning position.

- Ian Friend [Co-founder, COO and General Counsel]

Ian’s work background is in law and as an attorney at several firms in the US. At his most recent role in the legal industry, he co-founded the firm’s blockchain and digital assets arm. As part of this position, Ian worked closely with blockchain entities in the NYC area and has a grasp of all regulatory and compliance developments in the blockchain space.

Advisors

Roadmap

Source: Ferrum website

Both the Infinity DEX and Sub-Zero Wallet are listed on the roadmap, however as mentioned are not a focus for the team at this time. They have indicated that resources will be focused initially on the Kudi Exchange and Unifyre Wallet products.


Summary

Ferrum Network is an emerging blockchain startup aiming to solve key roadblocks to large scale adoption of blockchain networks: trading of crypto-tokens and peer-to-peer cryptocurrency exchange.

The project is designed to address these issues through their DAG-based network, FIAT-CRYPTO exchange, and Unifyre non-custodial wallet.

Focal points are interoperability, speed and cost. These will be addressed through the Ferrum Network itself, proxy tokens and the Ferrum Network Token (FRM).

The team have adjusted their raise and are listening to the community.

Public sale is planned for Q3 2019; we will need wait and see if the team can deliver on their promises, including future products Sub-Zero cold-wallet and Infinity DEX.


Website https://www.dbcrypto.io

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This report was written using publicly available information. Thank you to the Ferrum Network team for supporting our work and sponsoring this report.

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