Honest Perlin ICO review

Note: this is an English translation of the Russian article we wrote recently with an in-depth analysis of the Perlin IEO.

Website | White Paper | Discord | Medium | Github | Testnet

The review was created by “Avocado Approves” community with the support of Golden Borodutch Telegram channel. For the convenience of readers, the review is divided into six parts: product, advisors, team, partners, legal part and conclusion. We’d appreciate if the project team answered the questions in bold publicly.

Worth noting that everything written below only represents the personal opinion of the author, which fully complies with the Fair Use laws and the First Amendment. It’s is in no way trading advice, and all the information was gathered from public sources.

Product

Perlin is a DLT Protocol based on DAG, designed to create fast and cheap decentralized applications.

DAG is an analog of blockchain, only with faster and cheaper transactions. It has no miners; all nodes are checking nodes and only used once in the process of transferring transactions. DAG use such projects as IOTA, Byteball, and NANO.

Perlin has been around since the spring of 2018, and initially, its main product was a decentralized cloud computing marketplace similar to Sonm, Golem, and Ankr. But already in July 2018, Perlin shifted the focus to a general-purpose protocol with an Avalanche-based consensus. The project team did not give up the idea of cloud computing and turned it into one of the company’s products based on the protocol.

Avalanche is a consensus algorithm that helps leaderless nodes make decisions about the transaction order in a DAG. Avalanche and the AVA consensus family are considered faster, more reliable, and more efficient than bitcoin consensus. But it is only in theory.

But a year later, in the spring of 2019, Perlin gave up Avalanche because of its incompatibility with smart contracts. Instead, the project took the selection mechanism of DAG nodes from the previous version of Avalanche (Snowball) and built its consensus on the basis of PoS. On its Medium blog, the project said that the protocol code was rewritten from scratch ten times because of such critical changes.

It is noteworthy that the AVA consensus group has not yet published its code, has not completed its development and does not have specific deadlines. The only thing that is completed so far is a number of scientific publications. Perlin though already promised the launch of a functional mainnet supporting the promise with those publications only.

The Perlin Protocol consists of four components:

• Wavelet — the Protocol itself: a combination of Snowball, Proof-Of-Stake, S/Kademlia, and Gossip. More details can be found in this article about the project;
• Noise — P2P network stack for decentralized applications;
• Lens — web interface to a Perlin node’s API;
• Life — WebAssembly VM built for decentralized applications and smart contracts.

Perlin promises to develop three products using the protocol as the basis:

1. Cloudify, a cloud computing marketplace for dApps, it could also be described as a decentralized virtual supercomputer;
2. Clarify, a value chain management tool for better traceability;
3. Certify, an authentication and ownership tracking tool for products and assets.

Now let’s move on to the questions about the product. We ask the team to go down to the level of their future users and answer all questions. If it turns out that the questions already have answers in the White Paper, the community will be grateful if the team rephrases them in a more straightforward language.

1: Wavelet — DAG Protocol

On July 1, 2019, the Perlin Github account published a safety audit report of the Perlin protocol prepared by the DAG-ONE auditor team. Neither in the report nor on the Internet did we find information verifying the existence of these independent auditors.

• Where can I find the DAG-ONE team?

On its Medium blog, Perlin mentions that three advisors from various universities conducted a safety audit for Noise, Life, and Wavelet software.

• Could you publish the reports from all of them?
• If you are developing your own cryptography, why use pBFT? Take Tendermint, that already makes better use of pBFT.
• Perlin nodes select a semi-random number of validating nodes only once for transactions. Why it is semi-random and why once? Doesn’t this violate the decentralization and security of the network? Also, doesn’t that mean that there may be transactions taking an indefinite amount of time?
• Did you freeze tokens for PoS voting? If so, how many and to what date?
• How do you solve the problem of centralization in Proof-Of-Stake?
• What is the punishment mechanisms for malicious nodes?
• How are Perlin smart contracts different from Ethereum smart contracts, besides supporting different languages?
• How long does it take to finalize a transaction on smartphone nodes?
• How will smartphones store the state of the entire network?
• Do smartphone nodes participate in the consensus? If so, what will they do if the connection is lost? If not, it turns out that this is a regular staking, and smartphone nodes are just a marketing move?

2: Cloudify — cloud service

The cloud marketplace service has two distinctive features:

1. Diodon, a cryptographic hash function that allows you to determine if the leased capacities have a certain number of processors and RAM.
2. Homomorphic encryption that ensures the confidentiality of the data transmitted from the applications deployed on a hosting computing instance.

• What is the principle of Diodon? How will it check the GPU?
• The project team claims that they have applied for a patent for Diodon technology. Where can we find proof of that? When will the source code of Diodon be published?
• Homomorphic encryption is very slow. How do you solve the problem of data encryption speed? Is the source code of your implementation of the homomorphic encryption public?
• How will you build your marketing strategy to attract device owner and cloud users?
• What kind of containers do you intend to use? How do you intend to secure those containers from attacks threatening with their removal?
• Can you or the cloud user hack the GPU resources of the device owner’s node and DDoS it? If not, how is computing power protection technically arranged? If protection is enabled by monitoring system calls, how much will it load the resources of the device owner’s hardware?
• Will hackers be able to rent a virtual supercomputer on your decentralized platform and use it for illegal actions? If that happens, won’t it lead to the blocking of the site by the state authorities?
• Perlin claims that there are customers who will use Cloudify to research cancer treatment. However, why should they decentralize? Why would they bother with tokens? Ans who are these clients?
• What’s the formula behind the cost of using Cloudify?

3: Clarify and Certify are databases to certify products or assets and track their value chains

The team claims to have already launched this platform and is providing it to several large corporations.

• Can you prove that your product is already working? How did you introduce it to your clients?
• Can you share links or contacts of companies you’re already working with? We could contact them and confirm the information.
• What is the difference between Clarify and similar blockchain projects?
• Who are your main competitors?
• What financial model will the platform have?
• Is it possible to pay with fiat, not Perlin tokens?
• What are those corporations paying you with?
• How will you get companies to buy your tokens on exchanges?

General questions on the project:

• Did you hold a referendum with investors before shifting the main focus of the project from a cloud service to a protocol? If so, where can we find evidence of that?
• Why did you decide to change the direction of your project?
• Why do you need an ICO if you have already received much money from funds and pools?
• What are you going to promote the product after the token sale? Can we see your media plan?
• Why have you failed to launch the mainnet several times already? What is the chance you fail to meet the next deadline too?
• The approximated cost of the project according to various estimates varies from $150 000 000 to $260 000 000. Who conducted the evaluation, and what exactly did they evaluate?

Perlin testnet is live and will continue to run up until 2020, meaning Certify and Clarify services won’t be launched until next year.

• What is Smart INCOs?
• When will Cloudify launch?
• Why does it take so long to develop Clarify and Certify?

Advisors

The project has 14 advisors, five of whom are hedge fund founders. We reached out to all advisors to confirm their participation in the project. The review will be updated as responses are received.

• Vincent Zhou, founder of FBG Capital. We reached out to rote Zhou via LinkedIn and still waiting for an answer.
• Taiyang Zhang, CEO of the previously completed Republic Protocol ICO. We reached out to Zhang via LinkedIn and still waiting for an answer.
• Howard Wu, co-founder of Dekrypt Capital. We reached out to Wu via LinkedIn and still waiting for an answer.
• Michael Arrington, co-founder of CrunchFund and founder of TechCrunch. His Arrington XRP Capital Fund added Perlin to its portfolio. We reached out to Arrington via LinkedIn and still waiting for an answer.
• Rob Eldridge, managing partner at Tapas Capital, former CFO for Asia and Emerging Markets at Amazon. We reached out to Eldridge via LinkedIn and still waiting for an answer.
• Jack Yi, founder of LD Capital. His organization added Perlin to its portfolio. We reached out to Yi via Telegram and still waiting for an answer.
• Stephen Banfield, partner at Withers KhattarWong LLP law firm. We reached out to Banfield via e-mail and still waiting for an answer.
• Taylor Sittler, MD, a researcher in the field of breast cancer, professor at UCSF School of Medicine, co-founder of the Color Genomics medical software. Sittler might be somehow connected to cancer treatment research using Cloudify. We reached out to Sittler via LinkedIn and still waiting for an answer.
• Addison Huegel, advisor to several blockchain projects, media director and managing partner at Elevator Communications, LLC, a PR firm. We reached out to Huegel via LinkedIn and still waiting for an answer.
• Michael Migliero, former CEO of the Fractional Media marketing platform and Director of DSP at the MZ gaming platform. We reached out to Migliero via LinkedIn and still waiting for an answer.
• Igor Luksic, former Prime Minister of Montenegro, South East Europe public sector director at PwC. We reached out to Luksic via LinkedIn and still waiting for an answer.
• Joshua Lind, Ph.D. Student at Imperial College London and software engineer intern at Google. He replied to us via LinkedIn that he advises Perlin as an academic/technical Advisor on a wide range of issues in the areas of security, privacy, and blockchain. The amount of his time devoted to the project is confidential, Joshua said.
• Dimitris Papadopoulos, assistant professor at the Hong Kong University of Science and Technology. We reached out to Papadopoulos via LinkedIn and still waiting for an answer.
• Foteini Baldimtsi, associate Professor at George Mason University. We reached out to Baldimtsi via LinkedIn and still waiting for an answer.

During the month of waiting, only one of the advisors has answered. The review will be updated as responses are received.

• Can you ask the other advisors to answer us?

Team

The project team consists of 16 people. We will not focus on each of them, we’ll review only the three founders of Perlin.

Dorjee Sun — CEO

• LinkedIn points out that he was the Director of seven small Australian and Singapore companies.
• Sun has run Carbon Conservation company for more than 12 years. Carbon Conversation is engaged with resolving fires and haze problems arising from land burning in Indonesia. The company’s website does not have an SSL certificate or active visitors. However, thanks to work in this company, Dojree got on Wikipedia, in one of TIME magazine’s issues from 2009, starred in the 2008 documentary The Burning Season, and generally left a strong information footprint on the network.
• Since June 2015, he’s a mentor and teacher for Entrepreneurship to Ph.D. and advanced students.
• Young global leader at World Economic Forum (WEF). But we found no confirmation.
• Member of Asia Society, an educational organization dedicated to promoting mutual understanding among peoples of Asia and the United States in a global context.
• He claims to be the Chairman of a charity organization called Nexus Singapore Philanthropy Conference, but we could spot him in the list of chairpersons.
  In the fall of 2017, he starts advising 6 different ICOs in strategy and logistics: Devery, Loki, Ren, Airbloc, Quadrant, Santiment (formerly Sun was the COO at Santiment). He also advised Blue Frontiers, a floating islands project that hasn’t much developed since 2017.
• Sun also was a community manager at Power Ledger ICO in Asia.

Given the number of current positions and projects Sun is committed to, it becomes clear why the development of Perlin lingers.

How many hours a week does Dojree Sun work on Perlin?

Besides, it is claimed that Sun is a co-founder of 17 companies in the fields of biotechnology, education, nature conservation, agriculture, philanthropy, technology, and financial innovation.

What are the titles of these companies and what have they achieved?

Kenta Iwasaki — CTO

• In 2011, while studying at school, he released a game for Android called Bitracker. The game had more than 50,000 installs and has now been removed from the market.
• In 2015, he founded a software outsourcing company providing development, design, and marketing services. Kenta also claims that he developed a marketing automation service. Still, we could not find any evidence of his website working in the web archive. Iwasaki shut down the company in 2016.
• For three years he worked as a senior developer in Magario, an international software company.
• For nine months he was a robotics engineer at DJI, a big player of the drones and cameras market.
• For another nine months was an artificial intelligence researcher at Naver Corp, the company behind Korea’s most popular search engine and Line messenger.
• Iwasaki is the founder of Velcron, a decentralized cryptocurrency exchange, where he was the CTO for eight months. He also wrote several technical articles about it, but the exchange never launched.
• His article “Synthesizing Handel-esque musical pieces using Novel Corpus Extraction Methods with deep-recurrent neural networks using the Leap Motion Controller to translate sign language to speech grid optimization of large-area OLED lighting panel electrode” won HKUST President’s Cup.
• He’s active on Github, where he develops his own products and tools.

Iwasaki has participated in at least ten hackathons, winning eight of them with his Open Source projects. Projects are different: from Android application for pre-ordering food (victory in BitwiseHacks) to a decentralized analog of Kuberneters (victory in ETH Denver).

It seems as if Iwasak carried the team’s load on this project: he is the most active contributor to all repositories, he writes most of the articles, he works on the documentation, he wrote the White Paper, too, and he also actively answers questions in Discord.

How many hours a week does Kenta Iwasaki spend working on Perlin?

Ajay Prakash, head of product

• In 2014, he founded Real Skills Education, an educational institution that teaches soft skills.
• He is a managing partner at Qubit Capital (Previously Qubit Protocol), a venture fund, which does not have a website or any information footprint.
• For half a year he was a marketer at REN, a blockchain project.
• For four years he was a product manager and marketer in three small Australian companies.

Here’s what Ajay wrote about himself on LinkedIn:

Ajay is a Forbes 30 Under 30, serial entrepreneur who has started 8 companies which have raised over $US 50M to date and secured global investors/partners such as Lion Co. — the largest F&B giant in the southern hemisphere, Kakao — the largest internet company in South Korean and Bitmain, the largest cryptocurrency company in the world.

In fact, all of the above is mostly about Perlin; he only got listed on Forbes.com for being a Perlin co-founder. We found no companies founded by Prakash, besides Perlin and Real Skills Education.

• What other 6 companies did Ajay Prakash found?

Next, we have seven developers and the rest of the team.

• Heyang Zhou, senior core developer, student of Nanjing University of Aeronautics and cosmonautics. Zhou doesn’t indicate any experience of working in companies. Zhou is active on Github and programs in Rust, C++, C#, TS, Python and a number of projects appreciated among the community, such as WebAssembly framework, a portable WebAssembly core, and a Rust library.
• Ahmad Muzakkir, senior core developer. We didn’t find any information about Muzakkir. He is active on Github, but mostly in Perlin repositories, where he programs in Rust and Go. His repositories are directed-acyclic-graph, demonstrating an implementation of the directed acyclic graph (DAG) in Go, a news-scraper, and a fuel prices scrapper.
• Andrii Ursulenko, senior core developer. He has about 8 years of experience as a Golang and Python developer in Ukrainian IT companies. He is active on Github in Perlin repositories, but he doesn’t have any stand-out works of his own.
• Pisuth Daengthongdee, senior web developer. He is barely active on Github. Daengthongdee participated in hackathons with two Open Source projects.
• Claudiu Filip, senior web developer. Judging by his LinkedIn, he has been working as a web developer for about seven years. He is active in Perlin repositories on Github. He programs in TS, React, and Angular and publishes minor developments of his own.
• Theon Ho, developer. He is hardly ever active on Github, but has several web applications of his own. At Perlin, he started as a community manager; three months later became a frontend developer and a year later a full-stack developer. Before Perlin, he used to work as a manager at Real Skills Education for two years, and before that he taught Scratch, Python, and MCreator to students.
• Yaya Lu, frontend developer. Her Github account is empty, and she doesn’t seem to be a programmer. On her LinkedIn Lu only listed her volunteer experience and internships in the field of robotics. Now she is studying for a Bachelor’s Degree in Software Engineering.
• Anup Malani, partnerships global lead also working on compute pricing strategy, transaction validation, and token policy. Malani is trained as an economist and a lawyer. In addition to Perlin, he has six more active positions in other companies.
• Vincent Ward, designer.
• Sean Colquhoun, technical writer.
• Ali Kurtze, business development manager.
• Darren Toh, community manager.
• Joanne Huynh, strategy and finance manager. On her Linkedin, she also mentions being a Perlin co-founder, but the Perlin website does not back it up.

Is Joanne Huynh a co-founder of the project? Who legally owns the company anyway?

Earlier the project also had a founder, who is notorious for being a scammer, Mirza Uddin, but he was fired later. The team didn’t announce the reason and avoided answering questions about it. Rumor has it Uddin was fired for unethical behavior.

• Why was Mirza Uddin, a co-founder of the project, fired?

The development team has the experience; the management team though doesn’t seem to have much expertise in administration. None of them has ever launched IT products that would have users.

• Who in the project has experience in launching and scaling products up to 10,000 users?
• Who in the project has experience in developing homomorphic encryption?
• What are your plans on expanding the team?

The incompetence of the team also shows in their relations with the investors. Members of crypto-communities complained that they were humiliated and banned for asking questions on Perlin’s Discord [1|2|3|4].

We’ll develop this issue further, and this section we’d like to close with a quote from Dorjee Sun’s answer to the question about the toxic attitude toward their community:

Partners

Let’s start with the strategic partners.

The list isn’t completed, Perlin claims that there are a dozen more partners

• The International Chamber of Commerce (ICC), a non-profit organization that makes rules governing the conduct of business across borders. ICC has authority to resolve disputes between companies and set rules of conduct. Supposedly, Perlin will implement its technologyinto ICC member companies and associations.

Did ICC member companies agree to that? Why did ICC decide for these companies?

Why does Perlin partner with ICC and not with the companies themselves?

Why would ICC members need Perlin blockchain?

• Enterprise Singapore, a Singapore analog of ICC. The questions we have to this partnership are mostly the same as above.
• Dubai Chamber of Commerce and Industry. The questions repeat.

John W.H. Denton AO (ICC Secretary General), Hamad Buamim (Dubai Chamber President & CEO), Dorjee Sun (Perlin CEO) & Satvinder Singh (Enterprise Singapore Assistant CEO).

• Asia Pacific Rayon, an agricultural company. Asia Pacific Rayon uses Perlin Clarify for their delivery management, Follow Our Fibre. Although, judging by their delivery monitoring, the service has been down since May 2019.
• Telkom Indonesia, a telecommunications monopolist in Indonesia. Perlin and Telkom Indonesia partnered up to host a hackathon.
• NITI Aayog, a political analytical center of Indian Government. Perlin and NITI Aayog partnered up to host a hackathon.
• The National University of Singapore. Perlin and the university partnered up to host a hackathon.
• DX.Exchange, a cryptocurrency exchange with tokenized assets. Perlin promises to share his customer base, help with promotion, and the asset tokenization.

How exactly do you help the exchange? What do you get in return?

• Diginex, a digital financial services and blockchain solutions company. The nature of the partnership is not clear; there haven’t been any press releases.
• Storj — decentralized cloud storage. The nature of the partnership is not clear; there haven’t been any press releases.
• MakerDAO stablecoin backed by a smart contract platform on Ethereum. The nature of the partnership is not clear; there haven’t been any press releases.

What is the nature of your partnership with Diginex, Storj, and MakerDAO? Is there any evidence of these partnerships?

What other product/strategic partners do you have? What companies are you planning on partnering with?

This is probably the most outstanding thing about the project; there are 84 strategic token holders listed on the website.

We won’t elaborate on them all, as many funds did have added Perlin to their portfolios.

The project team claims that they have more than 200 funds and institutional investors. Also, according to the team, they have attracted an average of $35 000 000 (Perlin team isn’t unanimous about this) in the three early rounds:

• Seed Sale (December/January 2017/18): the price of Perlin token is 4 cents with 12 months freeze.
• Strategic Sale (April/May 2018): the price of Perlin token is 12 cents with 6 months freeze.
• Private Sale (June/July 2018): the price of Perlin token is 20 cents with 3 months freeze.

As you can see, the terms for the last round leave much to be desired. Moreover, during the ICO, the price is most likely to reach 25 cents, which is outrageous. Freezing is long gone, the token price will fall heavily at the listing, and IEO won’t be possible because the funds wouldn’t allow it. It is also likely that the funds themselves will rash to list the token on the exchanges.

• If investments in previous rounds were accepted in ETH, can you give a link to a smart contract proving money transfers? Is it possible to see how many money was collected? When did that happen? Did you swap ETH for fiat immediately or leave it as it is?

In total, the project planned to attract $200 000 000. Most likely, these figures will be revised. The team is planning an IEO after the launch of the mainnet that is scheduled for next year.

• How did you use the invested money? Do you keep financial records? Can we see them?

At the end of the last section, we mentioned how the team treats the investors. As you may have noticed, the list of token holders mostly consists of flippers, crypto funds looking for short-term gain by selling their tokens when it reaches an exchange. The sale agreement already gives the flippers more than a fivefold increase, which means they’ll dump tokens during the upcoming listing for IEO. That possible dump alarmed the investors of more recent sales, so they asked the team what they should do to secure their money.

What they got is a pretty harsh statement from Dorjee Sun, the CEO and founder of Perlin.

Legal part

There is no legal information about the project anywhere, and the project team ignores questions about its registration.

According to our colleague from CryptoSherlock review, Perlin says:

Hey @stsoen the mgt team feels we’re already very transparent and quite high profile, so there’s no need for us to share these kinds of detail to prove anything.

Conclusion

Everything you need to know about the project:

• Perlin raised a lot of money and wants more. Some might think, that they will use the money for growth and scaling, but it’s likely to be poured down the drain of infinite development and rewriting everything from scratch.
• They pulled their forces apart on four complex product, but none of the products have a unique selling proposition.
• The development has been underway for more than a year, many deadlines have been failed, and they still need another year.
• Many team members are committed to other projects or research.
• The tokens of early investors are no longer frozen. The sale agreement gives them a fivefold increase already. There’s no point in waiting for favorable terms for IEO or any growth after the listing.
• Legally, Perlin is murky. There is no openness or transparency, even though the team thinks otherwise.
• All this shows the lack of experience of the management team. The founders are well versed in marketing and Fundraising, but not in launching marketable products or communicating with investors.

That’s all. Feel free to clap or rant in the comments if you see errors in the text. Thank you!

Update — August 8, 2019:

Binance Launchpad announces IEO Perlin.