Mimo & TenX — A Valuation Thesis

Hi, I am new to the Mimo & TenX community.

I felt Mimo’s decision to go ahead with PAR was a pretty smart strategic move and after reading the white paper, I felt intellectually compelled to know more before giving it a go and locking some collateral. But the white-paper (as of the time of writing) provided no info on the team. That’s when I went digging and found the TenX Community Forum.

Clearly, a lot of FUD and the negativity from the original community scared me a little. But I held off my reservations and spent a fair amount of time going through all the information I could find through the deep abyss of the web.

Coming in purely from a non-biased viewpoint. here is my logical breakdown and analysis, based on verifiable public data:

1. 2017 ICO & Current Treasury

TenX was probably one of the most promising projects from the 2017 ICO mania era. It raised significant capital (which it still holds till today) and more importantly, I believed it did a great job in engaging its community. From what I can find, it seems like the product offering was solid, worked well and address many pain points for users.

Also, as far as I can tell, their treasury management looks really solid. Looks like they cashed out a significant percentage at the top and had strong fiat balances for the 2018/2019 bear market.

Right now, on two of the main addresses that they have publicly publish, following the crumbs, I can still see at least:

30,000 ETH (around 40+ million USD) ~ 0x185f19B43d818E10a31BE68f445ef8EDCB8AFB83

3800+ BTC (180+ million USD) ~ bc1qltscvfhgvrq72qvhu08t3yytc4wmelzwzdgr0g

And it seems like it has not been touched for quite some time, which tells me that they probably still have quite a fair bit of fiat left. So that means at the time of writing, excluding fiat, TenX still has over 200 million USD in un-deployed treasury capital. Meaning they have more than when they started with in 2017. I simply cannot see how this is a bad thing. And it will still continue to increase into the billions. This truly is a war chest, that could last decades.

2. Founders — Past & Present

Seems like founder fall out was extremely damaging to the team and the wave crest/wire card situations didn’t help either. Both of this would have ordinarily killed most teams but perhaps owing to the vast amount of capital raised and deeply engaged community, they probably made the call that they could go for another swing. Before I move on to Mimo and what I believe may be the business model the team at both TenX and Mimo are looking at , I want to give you my personal opinion on the team/founders or at least what I can tell.

Of the four founders, I believe the main area of contention is probably between this Julian guy and Toby guy. To me, I think it’s pretty clear, one looks to be a seller kind of guy, the other a builder kind of guy.

Currently, Julian has Cake Defi/Defichain. (I will refrain from sharing my own analysis since that’s not the focus here). As of this time of writing, he posted a video explainer answering questions in regards to his time at TenX and it looks like he does try to be as transparent as he claims to be. I have some doubts regarding his claim of not knowing where the funds are since majority of the treasury/funds are publicly traceable. The narrative seems intentionally vague. Also, I can see why TenX garnered massive attention back in 2017. He would have been a suitable candidate when it comes to grabbing attention and raising funds. Though a red flag for me is that he isn’t a builder, isn’t an engineer as he clearly admits and points out in the video. He was chiefly in charge of marketing and biz dev. The same goes for his current role in his current project.

What about Toby? Other than a few short clips here and there, I pretty much cannot find any information about this guy. Though it’s pretty evident from digging around that he was probably the main builder. So definitely code over content kind of guy.

I believe that kinds of explain the shift in tone in the recent years. Now, I concede, a nearly abandoned forum filled mainly with the desperate cries of frustration from token holders doesn’t exactly build confidence for an incoming potential speculator like myself. But say what you want, as a developer myself, I can relate to long stretches of quiet , intensive builds , making sure everything works great before dropping it on the world. Perhaps management figured a better way to turn things around would be to build rather than talk. Granted, deafening silence and abandonment absolutely sucks no matter how you look at it.

Rationally, I would argue that the most solid and valuable projects in our space that have yielded the best returns have come from builders not sellers — and these project/protocols took long stretches of time.

Maybe that’s what the current team is heads down on. And if that’s the case, I am pretty curious what comes out at the other end. And it looks like it’s more likely that this theory might be right. Why do I say so?

3. Exit Scam?

Firstly, if TenX was really looking to make an exit scam, they would honestly have done it by now. Why go on to spend precious capital and build Mimo if your intention was to run away with the funds? And also, other than Mimo (which looks pretty well build) it seems like TenX is coming back or rather working on something else too. https://twitter.com/Quantstamp/status/1362835802137366529

Crucially, they are a registered legal company based in Singapore and if there was any place worse to run an exit scam, it would be Singapore. I am confident that if there was legitimate reasons for the local authorities to initiate an investigation into TenX, they would have done so by now. A couple hundred million in funds doesn’t easily go unnoticed.

Granted, they don’t actually need to run away. They could in theory, just take their time, issue high salaries to the executive team and founders, live a comfortable life and meanwhile burn a couple million in funds for hires to work on projects they will never intend to release. To be clear, I am not dismissing this as a tangible possibility, this is very much a risk that exist. Though looking at the facts and their current activities, I deem it highly unlikely.

4. Potential Strategy & Business Model

So finally, we come to my break down. What might they possibly be trying to build and in theory at least, how valuable might the tokens (old or new) be?

Starting with Mimo, i think it’s pretty clear, a decentralised EUR stable token paired with the whole typical DEFI playbook. Lending/borrowing and decentralised governance. All of which you expect in 2021. What is not that clear however, lies in the nuances. For one, I like the safety reserve mechanism and from some of the documents fillings I can find, they mentioned on their site: Backed by a regulated company.

This right here is a massive advantage in their playbook. As I mentioned, if Mimo’s corporate structure and TenX’s corporate structure are somehow legally linked with all compliance issues addressed, then it could mean that Mimo may potentially have access to the same treasury and also EUR region banking licences that TenX obtained. The likelihood of this is pretty high since it was TenX that filed for the Mimo trademark ~ https://uspto.report/TM/90283251

This could be huge. It might mean they have a head-start from a corporate/compliance point-of-view and in our space, first mover advantage is everything. If you can rapidly get as many users as possible using your stable coin, it’s exponentially more likely for euro focused exchanges to use PAR as their stable coin pairing of choice. why? because FUD. If Mimo can credibly prove their legitimacy in terms of regulation and financial audit, they could have a higher probability of convincing euro based users to adopt them. Not to mention, they just started their airdrop for their PAR tokens, because they have the capital to deploy. In principle, all they got to do is lock up a couple thousand ETH from their treasury as collateral, airdrop that to every early adopter that wants in, and last but most important step, get at least one major EUR focused exchange to adopt a useful pairing like BTC-PAR & ETH-PAR and boom, that’s the playbook. If they can get over the adoption tipping point, the intrinsic value could be massive.

AND if TenX’s previous product track record serves any form of technical precedence, if somehow Mimo’s protocol is built properly by the same people and doesn’t become susceptible to hacks/exploits unlike most DEFI protocols currently, I give them a really good chance. Maybe if they became the EUR version of DAI/MKR, this will be an extremely good long term bet.

The governance token for Mimo could be pretty valuable, but if you just looked at MKR as reference, one could make the argument that at best, the overall value for a DEFI governance token is strongly tied to total value locked in the protocol. So growth velocity is pretty linear and overall returns take prolong stretches of time. MKR serves as a good example. Other than governance, I find it hard to come up with more meaning use for the tokens. Could still make you good returns nonetheless. I guess I don’t know enough at this point to make a better analysis in terms of value creation.

So if you have read up till this point, I am sure you are curious what my thoughts are in guessing what TenX might potentially try to do and what value could the old tokens possible have?

Let’s break it down and take a step back. TenX’s original mission was to make crypto spendable anytime anywhere. Sounds great right? In theory yes. In practise no. Personally, no one is going to convince me to unload my HODL bag especially considering it’s volatility. BUT WAIT. HOLD ON A MINUTE.

Mimo’s is focused on a EUR stabled coin backed by crypto collateral. so users can stay long crypto.

TenX’s original mission?? SPEND CRYPTO. Which means SPEND PAR.

YES. My theory or rather anyone could have made the same analysis is this:

TenX will somehow reintroduce a new card/app/wallet to bring back spending. And elegantly, they will merge the back end with Mimo. Letting the two interface seamlessly. Let people in EUR-focused markets spend EUR pegged PAR in the real world through a card/app/wallet.

From what I can find, TenX was granted a E Money license for European Economic Area. So they have direct insurance rights at least for EUR region. Back then, this was significant. But in recent times, many others have caught up but most either require transactions in BTC/ETH directly or some form of USD peg.

From my perspective, the main value proposition for users right now would be if spending in EUR denominated value is very useful for them. From a user adoption case scenario, this would probably be the main advantage. Not a bid deal for long time crypto users familiar with BTC/ETH denominated transactions but this simple difference is massive for new crypto adopters. Spending in EUR, backed by your crypto gives strong confidence and hopefully builds strong customer retention.

Critically, if TenX finds a way to decentralise not just Mimo but also the PAY/TENX tokens, I believe the potential would be tremendous. Imagine the whole value chain from borrowing to spending, all decentralise?

This is a game changer. Have you traveled to another country and at point of purchase, constantly struggle with conversion? Imagine EUR focused users doing their daily shopping in values familiar to them? Where they are not constantly having to convert from USD to EUR. Small detail, HUGE difference. If it’s stable and decentralised, adoption will follow. But that remains a big if.

And the final kick? Somehow bring back the rewards program they had back then. Remember I mentioned in the MKR case study that the governance token value is usually linked to the Total Value Locked? So there are quite clear upper valuation limits.

BUT what if the PAY/TENX token derive their value from something way more valuable?

TRANSACTION VOLUME.

In fact, this was always the original intention as they laid out in their very first white paper back in 2017. Imagine if somehow they get most of the steps I mentioned previously absolutely spot on? If thousands of user trust the Mimo protocol and use the TenX product offering to transact daily? Get their coffee, pay for fuel or bills ? And are comfortable doing so because they are spending on a stable coin? Volumes and value transacted might be massive.

If the tokens receive even just a small percentage of value transacted in fees, imagine how much they could be worth. Besides that, other than just spending alone. I have no clue what other feature they might introduce but perhaps, even a fee subsidy structure.

Even crazier but not an impossible stretch would be that if the tokens gain enough value somehow to represent a significant enough value, Mimo could allow users to deposit PAY/TENX tokens as collateral. Then, as collateral, there is yet more financial incentive for the tokens to gain value.

Lastly, it seems TenX still has a research and development team — CoBlox/COMIT. And they seem to be pretty active, last I checked. Atomic swaps/monero? Perhaps some form of DEX with anonymous transaction features? The GitHub looks convincing so I will take a wait and see approach. As to how they intend to integrate with everything else? I have some ideas but let see what they build in the near term first.

Perhaps this is why the community manager mentioned that unless Mimo gains momentum, there isn’t much financial incentive for new Mimo users to adopt old, seemingly worthless tokens at this point. I hate to say it but I agree. Still, that doesn’t stop me or us from speculating and getting in early though.

Humour me this, but it seems like such an elegant value loop.

1. Issue PAR, backed by ETH/BTC/USDC + other collateral. Pegged to EUR
2. Get exchanges to list meaningful pairings. BTC-PAR, ETH-PAR so EUR users have a meaning way to hold interim positions for trading.
3. Issue new Token to decentralise governance and incentivise adoption. Because what’s DEFI without the the DE.
4. Integrate and merge Mimo services with relaunched TenX product. Maybe card/app/wallet or more.
5. EUR Users can spend PAR in familiar way since it’s EUR pegged. Game changer. ( I know there are other EUR stable coins, but PAR should be first decentralised or at least they claim to be.)
6. PAY/TENX token holders somehow have access to the fees generated from the value transacted/other forms of earnings.
7. PAY/TENX token gain meaningful value proportionally to value/volume transacted
8. Mimo allows users to deposit PAY/TENX as collateral.
9. PAR is minted and the cycle repeats, hopefully fulfilling a positive loop with ever increasing value.

Seems pretty far fetch given the current state of things but, never say never in the land of crypto. And admittedly, I get that my thesis hinges on some fairly huge assumptions.

1. They deliver solidly on Mimo and ensure contract exploits are mitigated to the lowest possible.
2. They redeploy TenX products and not suffer another wire card again. (Direct issuance solves this)
3. COMPLIANCE AND REGULATION. This is the single biggest risk on the horizon and is also the reason why I believe they brought in another person,(NON-FOUNDER) as CEO. Apparently, compliance and license is his game. Given my thesis, it makes sense.
4. The elephant in the room: PAY & TENX. Honestly, I know back then they mentioned it was due to compliance. But honestly, figuring how each one will be used is something I am not confident of taking a guess at. I simply have not enough information. Maybe they burn their own stash, making it completely decentralised? Maybe PAY is for utility/fees as part of a loyalty program and TENX is earnings/governance? Honestly, I have no clue.

5. Token Valuation

Even if we took a conservative value estimation of daily/overall transaction volume for Europe, the numbers seem pretty good. In 2018, the rough overall volume transacted on credit, debit and pre-paid cards was around 3 trillion USD. Given that we are more or less living in the covid era,

I estimate that overall physical spending would probably still be lower. But online and digital payments should make up for that.

Let’s be extremely optimistic and say TenX + Mimo do a great job in convincing many EUR crypto users to adopt them and say they capture 0.001 percent of a 3 trillion purchase volume, that already gives them a theoretical valuation of 3 Billion USD. Given meme coins like DOGE, I really do not think this is an impossible valuation, especially considering the extreme euphoria and speculation that hasn’t even arrived yet.

Let’s take it one step further and give it a 50 percent cut. So 0.0005 percent of purchase volume in Europe alone, taking us to 1.5 Billion. Even at the time of writing this, I have to scroll to rank 50 and beyond for coins below 1.5 Billion valuation. And that’s now, when we near the peak of this cycle, I think it’s pretty clear many in the top 100 will be well above the 1 billion dollar valuation mark. And given TENX’s current treasury of 30,000+ ETH and 3800+ BTC, it’s only set to appreciate massively. Disregarding everything else, even just a treasury/balance sheet play will already be valuable.

200 Million USD in treasury vs 20–30 Million market cap (as of writing)? Do the math. That already makes the existing token way undervalued.

I get it.

4Holding the tokens mean nothing from a legal/shareholding/ownership point of view. But it isn’t difficult to imagine that they could deploy that liquidity and value back into the tokens. I mean, what is to truly stop them from buying back from the open market? And even then, they could burn tokens and reduce supply. In my viewpoint, there are many many ways to create value.

Even in this most simplistic example where they build nothing, we can make a fair value argument of at least 10X in value of the tokens.

Keep in mind that Market Cap and Real World Spend Volume are 2 very different values. Purchase volume represents real value transfer.

Why would the tokens have any value? Hypothetically, users could have lower fees, rebates if the token is somehow utilised within the ecosystem. Rewards could be paid in the form of PAY/TENX tokens and I do not rule out the possibility that the tokens could provide some other form of utility function within a hypothetical suite of products. I am aware that owing to compliance concerns, TenX introduced the TENX tokens on a one to one match with PAY holders. The idea behind this was that based on earnings, financial positions, cashflow or capital gains, rewards could be paid out in PAY. I believe this is still true and ongoing.

In more recent times, I believe the information communicated was that there was intention to actively decentralise the tokens. If this is the case, it would make for a really interesting case study. If you could somehow efficiently build a decentralise platform where everything from borrowing to spending is secure, I am willing to bet that at minimum, some people will be willing to give it a shot.

So while it is a set of rather complex factors, I would rationally make for the case that in one way or another, either one of the 2 tokens might be reasonably valuable.

So taking an extremely conservative estimation of 1.5 billion USD, dividing it by the total current supply (not even circulating supply) of PAY tokens. (Listed on some decent exchanges, and seems to still retain a tiny amount of liquidity, most importantly, it gives me a current market valuation )

1.5 Billion / 202 Million PAY tokens = $7.40 per PAY token.

Current token price as of writing? = $ 0.1 ~ 0.2 per PAY Token

Potential Return = 74X to 37X.

Most people would take that shot.

You could make the argument that the tokens don’t represent any legal hold or ownership of the company so this thesis is irrelevant but that narrative is also true for 99 percent of all other crypto projects.

That’s not even considering the TENX token, which isn’t even listed and somehow has only 134 million total supply, which apparently was meant to be one to one with PAY. So I am not sure what happened there.

Here’s one more factor to consider. On the surface, it might seem that 4 tokens is extremely messy and confusing. PAR, PAR governance token, PAY and TENX. But if you look at it another way, it’s also a way to diversify and hedge against any sort of compliance risk. If they release/burn control of their own tokens, then with everything decentralised, I think that makes a compelling case. If you have the capital to deploy, why put all your eggs in one basket?

Typically, Total Value Lock is not the best barometer of value, many of the projects out there constantly use TVL as the main reason for value but logically speaking, even if you added no new users, your TVL would still probably increase in a bull market since the underlying collateral is appreciating. That however doesn’t lead to more value created or more activity within the product.

In this thesis however, actual transaction/purchase volume is a completely different ball game. Once PAR is spend, that value is realised no matter what. In the bullish scenario, underlying collateral appreciates, users can afford to increase spending, directly increasing fees generated which increases the value of the token and once again, the cycle repeats. In the bearish scenario however, realised spend is locked value regardless. Users might reduce spending due to decrease in collateral value but it’s not like they can reverse their spend on their daily shop, so transacted volume remains. This is another positive point.

Clearly, things are obviously not that simple to execute. But as far a big picture goes, I like to think we have a hidden gem right here.

Crucially, as of right now, the tokens are as good as forgotten, ghost tokens. Liquidity is small but it’s not that difficult to get a small amount. Pretty certain that a moderate amount of interest and volume will be all it takes to trigger significant volume upwards.

Obviously, the risk here is immense. As some token holders have pointed out, in theory, there is certainly nothing stopping TenX in abandoning the old tokens altogether. However, I would like to believe that the team has fully considered the negative consequences in taking that option. Being one of the largest ICO back in 2017, in theory, there should still be many small individual token holders. One can only imagine the potential uproar and dissatisfaction this entire group could cause, severely undermining both TenX & Mimo’s long term ambition.

6. Conclusion

To sum it up. Let’s be real. Most people get into crypto not because they believe in the tech, but because they see it as the best chance they have at making meaningful, life changing gains. There is so much speculation so much buzz. And I am no different. I am approaching this as a neutral party who before recently, was not exposed to Mimo or TenX. So no, unfortunately, I cannot relate to how it feels to be a part of a community that seems to have been left on the shelf for far too long and no, I cannot say that I know any of the people working on this personally. All factors considered, the risk to reward ratio looks really good at least when considering the current valuation.

So this could all just be me taking a shot in the dark. But in crypto, it’s fair game.

More often than not, having sufficient capital can make or break a team with a solid product and plan. And in this case, my confidence in my analysis is very high simply because a war chest of 30,000 + ETH and 3800+ BTC is no trivial amount. And it’s anyone’s guess how much fiat they have left. With proper burn rate management, I think time is on their side. Always remember, immense capital allows for exploration. In an alternate universe, TenX could also just directly switch to investing in other projects or even just acquiring them completely. If they do the right thing, token holders should be able to benefit from this too. Crypto is full of characters. You have the silent builders or you could have the passionate evangelist. Maybe the time horizon will not be as immediate as some other projects simply because communication doesn’t seem like their thing anymore but perhaps long term, this might be a good bet.

I would like to conclude my analysis with one last point. Yield farming, NFTs and everything else happening is immensely exciting and for some, extraordinarily profitable. But don’t forget, as much as we would all like to cheer together and sing kumbaya as we step away from the old world, most of the meaningful changes in our life still happens in the “old world”.

Like we say in crypto, Don’t trust. Verify. I took a good hard look at the facts I could gather publicly and this is what I came to.

If this team plays their cards right, and becomes an efficient value mover and creator between the two worlds, well then, let’s see what happens. Old world adoption, spending and utility paired with efficient DEFI with credible fiat on-off ramp and solid compliance? I will take my chances.

Let me know what you think.

Twitter@DecentraliseDCP