DENT Token Sale Review: Putting the cat among the (telecom) pigeons?

Company: DENT
Website: https://www.dentcoin.com
Year: 2017
Country of incorporation: Hong Kong
Ticker: DENT
Token Sale launch: July 12 2017
Token Sale end: July 26 2017
Cap: 45000 ETH

Whitepaper: https://www.dentcoin.com/whitepaper


The DENT project has a revolutionary aim: to democratise mobile data. The ICO project is well under way, and is going to last until the 26th of July. In theory, this is a logical step forward for the industry. DENT is attempting to commodify the mobile data market, by creating a global exchange where the data can be traded and donated among the participants. This creates greater flexibility and avoids waste. For example, many users have unused data that disappears at the end of every month. Why not trade this data, instead? This is a tried and tested approach, established by a number of other industries. One example is digital advertising, which moved from the direct purchase of ad spaces by publishers on a case-by-case basis, to a marketplace where ads are bought in bulk via exchanges. Who doesn’t like seamless transactions in a unified marketplace? That’s what the DENT token promises to deliver for mobile data.

However, the success of this simple yet radical idea is not guaranteed. Trading data between different providers is much easier with eSIMs, yet the technology has not really lifted off — yet. Mass adoption of eSIMS in the next few generations of smartphones would make all the difference to DENT’s future success. Were the DENT project to gather a critical mass of users, this could put crucial pressure on the telecoms industry. But the telecoms industry is likely to fight back, as the project would almost certainly decrease their profit margins. Like any revolution, the DENT token would be most successful with a high adoption rate. Yet it’s far from certain whether a sufficient number of users will decide that it’s worth getting involved.

PROs:

The sharing economy has been applied to a diverse range of industries, including advertising, transportation, and property rentals. Uber and AirBnB are just two companies to have shown just how successful this approach can be. The trend towards seeking market efficiency shows no sign of stopping. The creation of a unified marketplace allows for the use of automated bidding and smart trading algorithms. This eliminates efficiencies, which brings costs down for users. More value for money is always going to be popular with consumers.

Looking to the future, the DENT project makes a lot of sense when seen in the context of the Internet of Things. The interconnection of everyday objects will lead to a greater demand for mobile data. When not only our phones and laptops are giving and receiving data, but also our fridges, toasters and cars, the mobile data market will have to adapt. The re-shaping of the market could open up new opportunities for DENT. The idea of democratization may also then become more appealing.

There are also strong ethical principles underlying the project. Some will see democratizing the market as a principled aim in itself. But the DENT project has also ensured that its currency can be used for humanitarian goals, such as combatting inequality and poverty. This is because DENT not only allows users to trade data, but also to donate it. In some countries, the price of mobile data is still prohibitively expensive if available at all. Through DENT, users can donate to these places, aiding developing economies and those most in need.

CONs:

The biggest uncertainty is around the adoption rate. Will the DENT project attract enough users can they do so with sufficient speed? The project needs to gather a critical mass in order to put pressure on the telecoms industry. Achieving this kind of collective bargaining power won’t be easy. A few million users scattered across the globe won’t have a loud enough voice. For a high adoption rate, DENT needs to be able to offer immediate, attractive gains for as many potential users as possible. However, mobile data prices are steadily decreasing in developed economies. This means the potential gains from using the platform might also decrease. If the costs of mobile data drop too low, the benefits of trading the data might become insignificant for many consumers. This is where companies like AirBnB and Uber have the advantage. There are big savings to be made in property renting and transportation. With the mobile data market, the risk would be that the potential savings might prove too small.

There will also almost certainly be some resistance to the project. The telecoms and mobile carriers are not likely to let DENT succeed without a fight. They have to protect their profits, and an open and unlimited marketplace for mobile data is not in their interests. In many cases, telecoms have adjustable rates, where the more data you buy the less it costs per unit. The existence of a secondary market for data will create incentives to buy the high-end packages with cheaper data per unit to re-sell, while the demand for less expensive data packages will collapse. Telecoms is a powerful industry. The success of DENT relies, in part, on how this industry reacts to the newcomer on the block.

It’s also important to keep a watch on global legislation. A couple of weeks ago, the EU scrapped roaming charges within its borders. This affects all countries within the European Union, simplifying the creation of a unified data market. Unfortunately for DENT, this means there is no incentive any longer to trade data within the EU. Users travelling in the EU, particularly businessmen and women, were supposed to be one of DENT’s core demographics. The change in EU law is thus a significant blow for the project.

DENT also has the benefit of clarity, but has a weak team with no real telecom experts behind the project. The DENT team is strong with tech experts, traders and smart contract engineers. What they lack is telecom veterans and VoIP traffic traders, who know the inner workings of the mobile data market. The lack of lobbyist and regulatory experts is also worrying. For a successful investment, we need to see industry insiders disrupting it from within using their expertise and insider knowledge. What we have instead are tech people creating something without any real life application.

Finally, there is the issue of token sale structure. The total number of tokens stands at 100 Billion, with 70% to be sold through the crowdsale. This is a record high supply of tokens, which is not always a positive thing. We have seen in the past how a lack of scarcity with other ICOs has limited the potential increase in market value. This might prove detrimental for short term investors.

Tokenguide Conclusion

From our perspective, DENT resembles an amateur attempt to disrupt an extremely well-established market. The cornerstone of the project’s value proposition is that DENT will be able to gather enough support to have a strong footing in negotiating with mobile data providers. To put it lightly, this is going to be very difficult. A good analogy would be to imagine that car drivers united to trade petrol, competing against oil corporations and demanding lower prices. We’re observing a number of outsiders who are promising to disrupt mature industries such as Insurance, Banking, Remittance, Payments etc. In the case of DENT, this is basically a bunch of telecom newbies making very loud assumptions. The idea that you can piggyback infrastructure that was build by a few companies and force them kill their own margins is ridiculous. If the idea would be brought in by telecom industry veterans and seasoned VoIP traffic professionals, and would be siloed for a specific geography with a strong partnership pipeline it would make sense to look at this ICO. Otherwise, it is fundamentally a shallow value proposition based on naive assumptions and trying to ride ICO hype. Independent of the price development after the listing, we believe this is a sub-par token with no actual value attached to it.

We would like to remind you that all opinions expressed in this piece are our own and are based on the research our team conducted independently. It is not an investment advice. If you are serious about participating in an ICO, token sale or crowdsale of any kind, we strongly recommend that you conduct your own due diligence by familiarizing yourself with the projects, their background, white papers and the market(s) in which they operate. Stay safe!

Tokenguide Team


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