ICO Review — Digital Developers Fund

Summary

Symbol DDF

Crowdsale opening date 10 Jul 2017

Crowdsale closing date 10 Aug 2017

Country of origin Cayman Islands

Introduction

DDF is a fund focused in investing in high growth digital assets such as domain names and crypto currency. DDF holds over 1,350 premium domains such as Swords.com, Audits.com, Exhibitions.com or PR.uk.

My View

Very few ICOs can give such a great opportunity to be part of a investment fund which is specialized in investing in digital assets. With seasoned management team and experienced asset manager DDF is trying to bring the traditional fundraising of an IPO via an ICO. The same thing can be viewed through their investor prospectus which is mature in highlighting their strengths and also the areas they want to grow. And also in form of the ICO though they are not giving people a stake in their fund but surely by providing dividends and quarterly reports they are giving a stake in the growth of DDF.

Who Should Invest

The biggest value for this ICO is that this is cypto currency and digital asset focused, hence this asset is not only good for speculative buying but also as medium to long term investment for retail and institutional investors alike. But if an investor is looking for a technological value proposition in the form of these tokens being part of a platform or if the DDF tokens give any kind of equity in the development fund then they are mistaken. The real gains investors will get once DDF gets listed in exchanges and based on the key investments and growth of the fund the token value is determined rather than pure speculative trading for which it will may take early to mid of next year to be clear.

ICO Details

Through an Ethereum-based ICO, DDF will raise up to 249,000 ETH (as of June 13th, about $90m USD).

Total Cap of Token: 250,000,000 DDF Tokens
1 Ether will purchase 1,000 DDF Tokens.

Company’s sale of DDF Tokens will

  • begin on July 10, 2017, at 12:00 GMT+2 and
  • continue until the time that
  • 247,500 Ether has been received by Company or
  • or until August 10th, 2017, GTM+2, whichever is earlier (the “Sale Period”).

If less than 5,000,000 DDF Token have been sold by Company during the Sale Period (the “Activation Threshold”), each purchaser will have the possibility to initiate the transfer of the respective amount of Ether submitted to the Smart Contract System from the Smart Contract System’s address back to the address used by that purchaser to transfer Ether to the Smart Contract System.

The Ether that Company receives for DDF Tokens sold to purchasers during the Sale Period will be used as follows.

  • 70% of proceeds for investing in digital assets
  • 15% of proceeds for a reserve fund held in BTC, ETH and cash
  • 15% Administration and Operations.

Company’s Net Profit is used in the following way:

  • 50% distributed as dividends
  • Up to 15% performance fee (see Section 6.2)
  • The remainder is reinvested.

How to Buy

48 Hours before the token sale the address will be published in ICO website. Sending Ether to the ICO Address during the Sale Period triggers a smart contract operation, pursuant to which the Smart Contract System will automatically create and promptly deliver the corresponding DDF Tokens to the ERC20 wallet address from which the Ether were sent.

Restriction

To prevent money laundering participant may be required to in the ICO, verify his identity and/or the source of funds to the Company.
e.g produce the original passport or identification card or utility bill or bank statement or duly certified copies.
For institutional investors you may require to certified copy of the Certificate of Incorporation (and any change of name) and of the Memorandum and Articles of Association (or equivalent).

Few other restrictions may also apply like:

  • The ICO participant is not a citizen or resident of a country, whose legislation conflicts with the present allocation of DDF Tokens and/or DDF in general
  • The ICO participant is not a citizen or resident of the USA

Analysis

Problem

Digital Assets like Domain names and crypto currencies have high barriers to entry and risks due to lack of regulations, technical hurdles and lack of investment instruments.

Value Proposition

Digital Assets are a unique asset class. With high risk, high barriers to entry, they have shown extraordinary returns over the past ten years. An investment of 100 in Bitcoins in 2010 is to day worth over 70m today. DDF established in 2010 as “Domain Developers Fund”, has a solid track record in domain investing. To expand, they are adding crypto currencies and other digital assets to their portfolio.

Vision

DDF is a fund to invest in digital assets, designed to reduce risks and profit from extraordinary growth in the space. Initial fund limit is 250m USD but they expect the capacity to grow very quickly in the next months and years.

Key Points

Digital Developers Fund

Founded as “Domain Developers Fund” in 2010 as Cayman Island Open-Ended Administered Investment Fund, administrated by JP Funds Administration, audited by BDO, regulated by CIMA. Current NAV $3.3m USD; portfolio includes 1,540 premium domains.Current investors include over 50 HNI (High net-worth Investors), investments funds and family offices.

Focus

Their focus is on key digital assets like Domains which is their core stregth area in last few years and now a major part of their portfolio they want to also add is crypto currencies. Other Digital Assets that they want to add to theor portfolio are given below.

Investment Strategy

Their key future investment strategy include

  • Crypto Currency Investments
  • OTC Crypto Currency Investments /Mining Operations
  • Income Producing Domain Names
  • Premium Domains
  • Reserve Fund

Roadmap

The below figure shows as to the major asset classes DDF would be investing:

Milestones

Dec 31st 2017 Q4 dividend distribution

October 2017 List DDF token on major exchanges.

Sept 30th 2017 Q3 dividend distribution

August 2017 List DDF token on COSS.io. and other exchanges

July 30th 2017 Conclusion of ICO

July 3rd 2017 Start of ICO

Team

Michael Marcovici — Managing Director
Davies Guttmann — Asset Manager
Dave Appleton — Technical Advisor
Marco Rodzynek — DDF Advisor
Andras Kristof — ICO Advisor
Gaurang Torvekar — Technical Advisor
Reuben Godfrey — ICO Advisor

DDF has an experienced management team. With a combined experience of 15 years in crypto currencies, 20 years in domain names and 35 years in finance, our team is fit to meet the challenges of digital assets.

Conclusion

With a aim to raise close to $ 90 million dollars via an ICO, if successful, this can be one of the biggest capital raised via crowd funding for an investment fund. And without doubt with some marquee team this ICO is bound to gain lot of traction.

But my concerns are different. As more and more Investment Funds & Hedge funds are turning to ICOs to raise capital that brings the whole growth of crypto currency ecosystem to a full circle. It was because of the non-responsible investment decisions of banks, hedge funds and asset management portfolios the 2008 financial crisis happened. And because of that to give the power of financial value to common man rather than corporates, Satoshi developed the trust-less based blockchain platform and bitocoin crypto-currency system. But today the same financial sector is looking to raise via ICOs and crypto currencies for much needed liquidity as the growth in the traditional markets seems to have become slow.

Despite traditional funds re-brand to be crypto currency friendly but the aims and the ways in which they manage their investments and portfolio raises the question as to what new they are bringing to the crypto currency community in view of a new age fin-tech innovation that this platform, ecosystem and community offers. At best, they can offer the initial liquidity or can be a major player in deciding volumes of a specific crypto currency. But ultimately there is a need of a much more sophisticated investment mechanism based on DAO and community partnership which traditional funds may not offer.

Why I raised this key issue of DDF being a traditional investment offering is because in their experience they have been good at leveraging the potential of buying and selling domain but for me they do not add any real value as far as investment in real business is concerned. At least their prospectus did not mention that. Also, there was no clarity as to how they are going to support the ICOs and the crypto currency ecosystem as a whole. At least Starta supports Eastern European startups, ICONOMI helps in bringing a stable mechanism for investing into a greater portfolio of crypto currencies via a single instrument. But in the prospectus of DDF almost 15% of cash and crypto currencies are to be kept in vault. While this may be fine for high valued relatively stable crypto currencies like bitcoin & Ethereum. But this may not be true for other coins and it is here that the risks of technology change and risks of regulatory impacts comes because of which I feel will the dilute the value of funds that DDF may maintain.

I am a novice hence my above statements may not hold true if there is a credible strategy by DDF to tackle such challenges but unfortunately their prospectus did not reflect a strong strategy. Tough they explained the spread of the investment but not the qualitative depth of that investment and how they will achieve in the crypto currency space.

Also some of the points in their detailed prospectus covered the administrative/legal aspects of managing the fund in more detail than the qualitative aspects which reflected the lack of clarity of the audience that DDF was targeting. Also, some of the points like focus on mining, risks of quantum computing in ethereum platform, risk of mining hacking showed the lack of understanding as to how Blockchain technology works and what is profitable and what is not and what are probably not risks.

Despite all these points if you are a traditional investor and want to get into investing into crypto currency space and want some experienced investment funds to support you them without doubt DDF is one of the best option today.

Reference

Disclaimer: This is not investment or trading advice, always do your own independent research.

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