How will the Quantstamp crowdsale play out?

If you’re not familiar with the Quantstamp crowdsale coming up in November, my question to you is — where have you been? This thing is all over social media. It’s quickly becoming one of the most hyped crowdsale’s of the fall, and for good reason. The idea behind Quantstamp is solid, and the proof-of-caring idea they are using to promote the presale is catching on like wildfire.

In their own words “Blockchain networks are secure, but smart contracts are not.” Quantstamp aims to solve this problem by using their protocol to audit smart contracts on the Ethereum network.

What’s unique about Quantstamp is the Validator Node they have developed. The validator node is a heavily modified Ethereum node containing an analytical toolkit — it is already up and running and Quantstamp used it to audit Request’s ethereum smart contract earlier this month. Where ethereum handles the network and transaction protocols, the Quantstamp nodes handles the validation protocol for security audits and adds it to the data fields of transactions.

How will a Quantstamp audit work exactly? A brief synopsis from their whitepaper details it like this: “the developer submits his code for a security audit via the Quantstamp Ethereum smart contract directly from his wallet, with the source code in the data field, and by sending QSP tokens. Depending on the security needs of the program, the developer can decide how much bounty to send. Then, the smart contract receives the request, and on the next Ethereum block validation nodes perform a set of security checks to validate the smart contract. Upon consensus, the proof-of-audit and the report data are added to the next Ethereum block along with the appropriate token payout. The report classifies issues based on a severity system from 1–10; a 1 is a minor warning, a 10 is a major vulnerability.”

There is already strong evidence that we are going to see more regulation come into cryptocurrencies. Governments and investors are going to require more evidence that digital assets and the smart contracts associated with them are tested and safe. Quantstamp as a first mover in this space could become adopted as the default for auditing and providing proof of smart contract security. This could become a booming business for them as more regulations are passed, and I would suggest that the Quantstamp token could be an excellent long term hold.

The team, although perhaps publicly less known than other teams, has strong credentials. Team members include Professors, PhD holders/candidates and quantitative portfolio managers. Several members have experience working in the tech space with companies like Amazon, Google, and Microsoft. By all accounts a strong and capable team.

In the advisory space, Evan Cheng, Director of Engineering at Facebook, is on board with Quantstamp. He also advised Cindicator.

Now, let’s talk about the financials behind the Quantstamp crowdsale and how this might play out from an investment perspective.

Quantstamp is planning to raise a total of $30 million USD, $11M from their presale and approximately $19M from the main crowdsale. This is a market cap I can definitely invest in. I’m not a big fan of pouring money into these projects with $100M+ market cap, but Quantstamp’s $30M is fine considering the scope of the project.

They are taking a unique approach to the presale. The allocation amount and bonus each whitelisted individual gets is based on proof-of-care, or in simpler terms, how much love they show on social media. According to Quantstamp this can be done by “writing a blog post, reaching out to different corners of the internet, reviewing [the] project, making a quick youtube video or podcast, reviewing the pros and cons of [the] whitepaper, or by inviting people to join [them] on telegram”. This approach has certainly worked well for them and they now have over 9000 people on their telegram —

The presale bonus levels are structured like this:

  • Caring level 1 ($3M): 1 ETH = 10,000 QSP (unchanged)
  • Caring level 2 ($4M): 1 ETH = 7,000 QSP
  • Caring level 3 ($4M): 1 ETH = 6,000 QSP

In the main crowdsale Quantstamp tokens will go for 5000 QSP per 1 ETH. The crowdsale will have individual caps so that everyone on the whitelist can participate and no proof of caring will be needed for the main crowdsale.

For the individuals who score caring level 1 in the presale, that’s a 100% bonus over the main crowdsale — if you hadn’t noticed.

My thought is this — with that large of a bonus being handed out on a 3M dollar allocation, it’s likely a large number of presale participants who got in at caring level 1 will take some profits when QSP hits exchanges. For that reason, I think Quantstamp will NOT be a good ICO to flip if you’re not in on the Caring level 1 allocation.

For the majority, this is a buy and hold type of play. The team themselves are vesting their tokens for 3 years, which indicates to me that they believe this token will have value far into the future. As more regulations come into the crypto space this token could be widely adopted and appreciate greatly in value.

For me personally, if I get the caring level 1 tier I will take the full allocation. But I don’t think I will participate if I’m allocated to Tier 2 or Tier 3. In that case I will take a wait and see approach and try and pick QSP up after the main crowdsale is over and it lands on exchanges.

Overall, I am bullish on the prospects for Quantstamp in the long term.

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