Thunder Core review and valuation analysis

Project name: ThunderCore

Website: https://www.thundercore.com/

Telegram — https://t.me/thunder_official

White paper: https://docs.thundercore.com/thunder-whitepaper.pdf

Hard cap: TBA

Bonus structure: TBA

Private sale / white list: TBA

ERC20 token: No

Timeline: Unconfirmed whether the project will have a public crowdsale or not

Token distribution date: after mainnet launch (scheduled for Q1 2019)

Idea

ThunderCore utilizes novel protocol architecture that supports high throughput and low confirmation time during normal conditions and switches to the slow chain in the worst-case scenario. Slow chain provides security from the 50% attack and operates as a standard PoW blockchain. Thunder strives to break through blockchain trilemma by utilizing the fast path and slow chain to become one of the first decentralized (500 committee members), secured against 50% attacks and scalable to more than 1000 transactions per second blockchain protocol.

Thunder proposes a novel approach to scaling that comes with a higher level of security, consistency and liveness proved by rigorous scientific research. Blockchain protocols using on-chain scaling solutions such as sharding (for example, Zilliqa and QuarkChain) are secured against 1/3 attack. While Thunder that’s able to achieve comparable throughput and scalability also offers protection from 50% attack. Thunder combines slow-chain which functions similarly to Ethereum PoW with fast-path which is coordinated by a committee of stake holders and a central authority called accelerator or leader. Under normal conditions when ¾ of the committee agrees on a state, accelerator doesn’t misbehave and is not under attack fast-path is used and confirms transactions very fast. However, in worst case scenario the slow path (that is secured against 50% attack) is used to prevent adversary from hacking the network. As long as majority of stake holders are honest slow chain will remain secured, so you don’t have to trust accelerator or voting committee, you need to trust only the majority on a slow chain. In classical PBFT consensus networks in case the leader is corrupt, or the committee is stuck the protocol enters recovery mode which is very complex and inefficient as it works in an asynchrony model when the network is not aware of maximum delay. Thunder instead of recovery mode uses classic blockchain and a grace period to determine on the cut off block when the slow path starts to be used. Being able to smoothly switch to slow chain and then get back to the fast path is one of the key value proposition of ThunderCore.

To become a committee member, you have to stake Thunder tokens in the slow chain, Thunder will subselect 500 nodes (by the amount of tokens staked) and those nodes will change from time to time. Key responsibility of nodes is to vote on a state in a fast path. Accelerator or leader will be chosen by the size of the bid it made to become a leader. The worst thing the leader could do for a network is to slow it down (in case slow path activated) or the leader could become a victim of DDoS attack which will also activate the slow chain. Accelerator should be well-resourced to fight against DDoS and be willing to pay the most for the role to be incentivized to provide the best possible service. Leader and committee will receive rewards that come from the transactions fees and pre-minted pool of tokens. Initially Thunder will rely on Ethereum as a “slow-chain” and single accelerator however in the future Thunder plans to implement its own slow chain and support sharding where every shard will have its own accelerator in order to promote competition between accelerators and improve service. First Thunder release will be fully compatible with EVM and support direct migration of existing dApps. The team hasn’t published governance and incentivization models yet.

Core team

Chris Wang CEO

Education: PhD in computer science from Carnegie university

Previous experience: Chris worked for several years in Google then he founded social gaming company Playdom (which was his third venture previous 2 were unsuccessful) in 2008 that reached 47 million monthly active users and was sold to Disney for 563M USD in 2010 however just two years later Playdom was closed. There is not much information on reasons for that however Chis blamed Facebook for gathering dominance in social gaming niche and Disney for inability to retain engineers. After deal with Disney Chris assembled a portfolio and invested in such companies as Alibaba and Etsy before IPO.

Elaine Shi Chief scientist

Education: Mellon University PhD

Previous experience: associate professor of Computer science at Cornell university, recipient of several prestigious fellowships and scientific awards, author of Thunderella protocol paper. Author of the first course on smart-contracts and co-auther of the first peer-reviewed publication on Bitcoin and decentralized smart contracts

Jianqing Zhang Core engineer

Senior Software Engineer — UBER (1.2 years)

Staff Engineer — VMWare (1.6 years)

Security researcher — Intel (5.2 years)

Chris Li Head of engineering

Invented first in the world USB isochronous transfer in virtual machine (patent granted)

CTO of Hover camera

Stage and roadmap

Thunder Token has launched a testnet already. Dapp developers can start coding on the Thunder Token platform. Testnet explorer is also launched, you can check it out here https://scan.thundercore.com/. Mainnet is scheduled for Q1 2019, we think Thunder chose right timing giving testnet at least 6 months to run before the mainnet is launched. We think Thunder will be well prepared for the mainnet launch in Q1 having several big dapps developers on-board.

Token utility and valuation

Three key use cases for Thunder Token are staking in escrow on the slow chain to become member of voting committee on the fast path, bidding to become accelerator of the fast path and paying transaction fees on the fast path and slow chain. The more Thunder tokens you stake the higher chances to be elected as a member of voting committee, same logic applies to accelerator — the higher the bid the higher the chances. The more Thunder network is used the higher the value of a native token will be as more participants will need native tokens to pay fees and more nodes will stake tokens to become voting committee member or accelerator.

Thunder token has value and there are mechanisms to ensure that network participants are incentivized to accumulate Thunder tokens and therefore decrease the velocity rate of a token (here is a great article on token velocity by Kyle Samani). We assume that Thunder token will have 1.5x annual velocity comparing to existing competitors and x2 quarterly velocity after the network launch. Considering Thunder efforts to attract dapp developers and current progress we assume that Thunder will be able to achieve 10% of average yearly transaction value of its competitors at the end of the first year after mainnet launch. We also assume that Thunder will be able to achieve 4% of average quarterly transaction value of its competitors 3 months after the mainnet launch. Those assumptions are on a high side and represent our bullish views on Thunder Token.

*estimated

This is not a financial advise but simply our rough estimation (full of assumptions) of what might be the value of Thunder token network considering the yearly metrics of Thunder competitors. The formula is following = estimated yearly or quarterly transaction volume/velocity yearly or quarterly.

Hardcap and other token sale metrics are not published yet, however in the recent interview to CNBC Elaine Shi (co-founder) said that the latest round valuation of Thunder was 200M USD. We cannot come up with token valuation as the issuance model of Thunder tokens is not released yet. There will be lockups for both team’s and investors’ tokens.

Investors

Key investors in Thunder Token:

ChainFund (fund index 1.79 #2 in our leaderboard). ChainFund is one of the most prominent crypto funds in space that invests in infrastructural projects lead by the experienced blockchain researchers and entrepreneurs. ChainFund seems to be long-term investor, their portfolio consists of long-term projects with slow liquidity post-ICO. ChainFund managing partner is a regular guest at CNBC crypto trader show.

#hashed (fund index 1.06) — one of the biggest Korean funds. Recently we noticed #hashed investing in many projects (that we believe are average), however currently #hashed has high fund and possess wide portfolio of projects and business bonds that should help Thunder to secure partnerships and accelerate adoption.

Alphacoin fund (fund index 0.6). Have mixed portfolio between projects with fast and moderate liquidity.

Kosmos (fund index 0.59) — very wide portfolio however a lot of average projects there, probably may use “fast in, fast out” strategy.

Connect capital (fund index 0.3). Relatively wide portfolio, most of the projects had fast liquidity after ICO, probably “strategic flippers”.

Arrington XRP (fund index 0.03). Even though the fund index is low, bigger part of Arrington portfolio consists of projects with slow liquidity and the fund managing partner possess knowledge and bonds to help Thunder grow

Competitors

Thunder seems to position itself (at least initially) as a scaling solution to the Ethereum especially as they will utilize Ethereum as the slow chain for Thunder token. There is a number of teams working on both layer 1 and layer 2 scaling solutions to Ethereum and several direct competitors to Thunder launching their mainnets Q4 2018 (for example, TomoChain). Scaling solutions and off-chain infrastructure have lower valuation comparing to stand-alone public blockchain protocols and we think that Thunder will move towards building its own ecosystem after all the variables are tested and the developers who initially built on Ethereum but were searching for an alternative switched to Thunder. Being interoperable with Ethereum is a “fast path” to some sort of adoption but to compete Thunder need to build its own ecosystem of libraries, tutorials and developers. We think one the closest competitors to ThunderCore is Zilliqa that offers developers scalable solutions for dapps. Thunder offers smaller throughput however Thunder is secured from 1/2 attack while Zill offers protection from only 1/3 attack. Thunder is also directly compatible with Ethereum which should also help to achieve faster adoption comparing to Zill or Quark.

Hype

Thunder is focused on building awareness about their tech among dapp developers rather than retail ICO investors. Just recently they conducted first meetup in San Francisco and plan to do more. We think that Thunder marketing strategy is better for long-term success of the project than blowing up hype among retail ICO investors by giving away tiny allocations for “proof of shill”.

Token sale terms

There is no ERC-20 Thunder Token. Native token will be issued together with the mainnet launch scheduled for Q1 2019. The team hasn’t published token sale metrics yet. Subscribe to Thunder telegram channel for the updates. Two things are published: total supply of Thunder Tokens is set at 10 billion, the latest private fundraising round valuation is 200M USD.

Pros and cons

+ Thunder protocol achieves high throughput and fast confirmation time while being secured from 50% attack (unique feature as competitors are secured only from 1/3 attacks), Thunder testnet achieved 1200 transactions per second with sub-second confirmations operating 100 consensus nodes (in a fast path mode)

+ Thunder is robust to 50% attack: in case a leader is corrupt or is under attack Thunder switches from fast path to slow chain which is resilient to 50% attack and operates as a traditional PoW blockchain (initially Thunder will use Ethereum as a slow chain)

+ There is a rigorous research accomplished by experienced in cryptography professors Elaine Shi and Raphael Pass behind the Thunderella protocol (which serves as a foundation for Thunder protocol) and that’s what differentiates Thunder from many other competitors. Even though the idea behind the Thunder Protocol may seem relatively simple its consistency and liveness are proved by the rigorous research rather than blockchain 4.0 marketing

+ Team possesses both technical and business skills to deliver on time and achieve fast adoption. Thunder CEO Chris Wang is a successful entrepreneur who knows how to build 563M USD company from scratch (even though it didn’t live long after the acquisition by Disney there are no allegation against Chris and it looks like it’s not him to blame for Disney failure). Chief scientist — Elaine Shi is one of the most well know cryptographists in space, engineering team consists of experienced employees who previously worked on senior positions in Fortune 500 companies or innovative startups.

+ Testnet is live, mainnet scheduled for Q1 2019 so the public testnet will run for 4–7 months which is good and longer them many other protocols go for. We think there will be plenty of dapps at a launch date ready to support Thunder token liquidity and price

+ Thunder supports direct migration of EVM dApps with little or no modification what should drive adoption of the protocol

+ Thunder team is actively engaged in promoting Thunder among dApps developers to whom they offer high level of scalability and throughput, low latency and highest possible security level of the protocol

- We think that Thunder token is too focused on scaling the Ethereum rather that developing its own ecosystem, currently they position themselves as a scaling solution to Ethereum. The competition among protocols built to scale Ethereum is very high while Ethereum itself may implement layer 2 scaling solutions at the time Thunder Token mainnet is live (scheduled at Q1 2019)

- Valuation is on a high side however lock-up structure should provide smooth launch for a Thunder token on exchanges

- There is no information about the governance model, token distribution and inflation rate therefore its hard to assess how decentralized the network would be and forecast Thunder token value and velocity. We will be looking closely to publications on governance model and nodes incentivization mechanism from the Thunder team to update this report.

Conclusion

Short-term score: N/A

We do not assign short-term score to projects that plan to issue tokens more than 6 months away from the research date

Long-term score: A

We think that Thunder is among very few projects that is not just whitepaper with dozens of unproven assumptions. Thunder has already functioning testnet that developers could start building upon and rigorous research that proves Thunder protocol consistency and liveness in the long-term. We do like the idea behind Thunder and think it could become one of the best choices for developers of a very broad spectrum of dapps (with the exemption of dapps where thousands of microtransactions per second are needed)

Thunder has already achieved 1200 transactions per second with sub-second confirmations operating 100 consensus nodes in testnet and being secured from 50% attacks, that’s not 1M tps promoted by some whitepaper protocols however combined with convenient developers’ tools it should be enough to attract lots of dapps.

We think that Thunder is one of the projects that will be in top 100 by capitalization in 2019 (not a financial advice, just an opinion) and estimate its valuation at roughly 1,4B USD at the end of 2019.

This article is written for education purpose only, the information contained is not financial advice. Always do your own research before making any investment decisions.

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