Huobi Global Research Monthly (Vol. 7)
Abstract
National regulatory agencies are actively exploring new ways of regulating cryptocurrency. Regulatory agencies in the United States, the United Kingdom, the European Union, and Australia have all made statements, emphasizing the importance of cryptocurrency and crowdfunding supervision, but the details of the policies are still in the discussion stage; JP. Morgan strengthens the application of blockchain technology in its commercial fields; Cryptocurrency such as Monroe became a hotbed of crime; India intends to impose tax on cryptocurrency transactions. The Huobi Cryptocurrency investor sentiment index this month was 79.3 points.
The number of primary market projects has decreased and the number of exchanges has increased. The number of crowdfunding projects for the month was 235, a decrease of 14.9% from the previous quarter; the average amount of crowdfunding has increased to 8.28 million US dollars; after financing, project’s on-line rate has increased by 37.4%, but the chance of fell on debut is as high as 70.3%;
The total market value of the global blockchain assets dropped sharply, and the market share of Top100 assets increased. Global blockchain assets increased to 1639 this month, and the total market value fell to 335.218 billion US dollars, a decrease of 30.26% from the previous quarter. The market capitalization of Top100 blockchain assets was 309.058 billion US dollars, a decrease of 24.61% from the previous quarter;
Platform projects have become more competitive, with obvious head effects. In May, the number of platform projects in Top 100 reached a total of 27, which was the same as last month, among which projects yet to go online on Mainnet accounted for 37%. EOS, IOST and aelf ranked the top three in the code update number. In terms of market capitalization, the market capitalization of Ethereum and EOS alone exceeded US$10 billion, which accounted for 71% of all platform projects, and the market value of 19 projects was less than US$1 billion, accounting for only 9% .
The number of blockchain infrastructure projects and the market value increase the most in application projects. Two new blockchain infrastructure projects emerged this month, with a total market value increase of 15.99% and remains the highest growth rate for two consecutive months. The market value of payment items was US$ 25.805 billion, accounting for 53.41% of the market value of Top100 application projects, Social, Internet of Things projects rank the top three for three consecutive months; the average increase in the market value of Internet of Things projects is the largest, an increase of 31.46%
1. Cryptocurrency Market Updates
1.1 Important News of the Month
【United States】Speaking to CNBC, Securities and Exchange Commission (SEC) commissioner Robert Jackson noted that current ICO market requires security regulation. He noted that current ICO market is “the space has been full of troubling developments…and that Investors are having a hard time telling the difference between investments and fraud.” Like SEC chairman Jay Clayton, Jackson said he has not yet seen an ICO token which does not look like a security. Jackson said SEC might step up its regulation of the space more broadly in the future in order to protect investors who are getting hurt in this market. In the future, SEC will be thinking about ways to make ICO investments work the current securities law. (May 1st)
【United States】JPMorgan is exploring the creation of a new blockchain-based system for working with debt。In an exclusive conversation with Finance Magnates, a source from JPMorgan Chase has confirmed that the firm is developing a blockchain-based syndicated debt trading platform to be used internally. The platform will initially be tested in the firm’s commercial bank; if successful, the platform will spread to the firm’s other “sub-banks.” (May 3rd)
【United Kingdom】 CryptoUK, a self-regulatory trade association for the UK cryptocurrency industry, addressed several Members of Parliament (MPs) to advocate for favorable regulations in the sector. The association set out its proposals in writing to the Treasury Select Committee’s inquiry into cryptocurrencies today. The inquiry intends to examine the role of digital currencies in the UK, including risks connected to their usage by consumers, businesses, and the government. (May 2nd)
【Europe】The Council of the EU has reached a political consensus on amendments to the 4th AML directive and, among other changes, introduced a definition of “virtual currencies”. After it comes in force, providers of exchange services between virtual and fiat currencies, and custodian wallet providers will have to comply with the AML directive. (May 16th)
【Australia】Australia’s financial regulator is cracking down on deceptive and misleading initial coin offerings (ICOs), citing “a serious breach of the Australian law.” As a result of the regulator’s inquiries, some issuers have halted their token sales or are modifying their structures. (May 1st)
【Japan】The FSA — Japan’s equivalent to the SEC — are said to have discouraged exchanges from listing Monero (XMR), Zcash (ZEC) and Dash (DASH). These cryptocurrencies are often cited by authorities as being associated with the digital underground, where they are allegedly used for money laundering, drug dealing and other illicit activities. (May 3rd)
【South Korea】South Korea’s government is widening its probe on cryptocurrency exchanges, particularly the use of corporate accounts which the regulators say can lead to money laundering. This announcement follows the prosecutors launching an investigation on the country’s largest crypto exchange, Upbit. (May 10th)
【South Korea】The Korean Blockchain Industry Association, formed with 33 South Korean exchanges, has revealed a set of rules for 14 of its exchanges. The organization was formed in December of last year, where it was announced that famous cryptocurrency exchanges Bithumb, Coinone, Upbit and Korbit were also members of the self-regulatory group. The first rule follows South Korean government’s anti-money laundering rules. (May 19th)
【India】According to people with direct knowledge of the matter, the Indian Central Board of Indirect Taxes and Customs is working on a proposal to impose an 18% tax on cryptocurrencies. The proposal will be considered by the Goods and Services Tax (GST) Council once finalized. (May 23rd)
1.2 Huobi Market Sentiment Index
Huobi’s Market Sentiment Index was 71.7 for the month of May, a 5.1% decrease from last month. Specifically, the short-term Market Sentiment Index was 70.4, a 5.5% decrease from April; the mid-term Market Sentiment Index was 82.7%, a 5.1% decrease from April; the long-term Market Sentiment Index was 89.5%, a 4.5% decrease from April.
Huobi’s Market Sentiment Index ranges from 0–100, with 50 points representing market neutral.
A total of 1,044 valid responses were collected this month. The questionnaires were distributed from May 25 to 31 on domestic/foreign platforms such as WeChat, Twitter, Telegeram and etc. to both individual and institutional investors around the world.
2. Primary Market Updates
2.1 Huobi Market Sentiment Index
Overall Situation of Projects：The number of completed crowdfunding projects decreased from the previous quarter, and the average crowdfunding value for projects was approximately USD 8.28 million. In May 2018, a total of 235 projects in the primary market completed crowdfunding, and this number decreased by 14.9% from the previous period. Among them, 67 projects disclosed crowdfunding amounts totaling US$555 million; in April, 276 crowdfunding projects were completed, including 70 projects disclosed crowdfunding value totaling 549 million US dollars; in May, the disclosed average crowdfunding amount is 8.28 million US dollars. In April, the disclosed average crowdfunding amount is 7.85 million U.S. dollars.
Financing Value Analysis：Projects under $10 million crowdfunding value dominate the largest section. Compared with April, the percentage of projects with crowdfunding value under 10 million in May increased by 4 percentage points, and the percentage of projects with a crowdfunding value between 10 million and 50 million US dollars decreased by 4 percentage points. The percentage of projects with crowdfunding value above 50 million US dollars remains unchanged.
Crowdfunding ranking: Among the 67 projects that disclosed their crowdfunding value this month, the top three projects in terms of financing amount were Flashmon, Patron, and KELTA, respectively financing 72 million, 40 million and 37 million U.S. dollars, of which, Flashmon and KELTA did not go online on exchanges. Patron went online on one exchange.
2.2 Project Progress after Financing
According to the statistics being disclosed, the on-line rate of the crowdfunding projects this month has increased by 37.4% from the previous month.
Cases of fell on debut: In April, a total of 27 projects were recorded for their crowdfunding cost and ICO price. Among them, 19 projects’ closing price was lower than its crowdfunding cost, and the rate of fell on debut was 70.3%. In April, a total of 21 projects were recorded for their crowdfunding cost and ICO price, of which 16 have closing price lower than its crowdfunding cost, with a 76.1% rate of fell on debut.
Change in value within one months: A total of 27 of the 235 projects that completed ICO in May were recorded for their ICO cost and the price of the transaction after went on-line on exchanges; as of June 4, 2018, there were 8 (accounting for 29.7%) projects with a positive increase. 19 projects (accounting for 70.3%) had a negative increase. The biggest gainer was SEELE, which rose by 695%; followed by Libra Credits, which rose by 120%; Phantasma 112%; the biggest drop was by XYO Network, which dropped by 74.4%.
2.3 Noteworthy Projects
SEELE（SEELE）
Brief Introduction：
Seele is a fourth-generation blockchain. There are still many unsolved problems along the development of blockchain. For example, safety, energy consumption, and transaction speed cannot all be taken into account at the same time. In terms of performance, it cannot meet the requirements of large-scale production deployment and does not support the level of service diversification. Seele aims to solve these problems in the future.
Project Characteristics：
- Seele created "Neural Consensus Algorithm." It converts consensus issues into asynchronous request processing and data ordering based on "microreal numbers" in large-scale environments. Not only does it ensure safety and low power consumption, but it also ensures strong linear enhancements, and performance speed up linearly as the size of the node increases.
- Seele also created the "Heterogeneous Forest Network." The Heterogeneous Forest Network consists of different subnets. Each subnet can be viewed as a hierarchical tree that can meet the needs of different service scenarios without interfering with each other. In addition, resources and assets are defined, stored, transmitted and converted on the value internet through cross-chain protocol interactions.
Current Situation of Token：
As of June 4th, the closing price of SEELE has risen by 699% relative to its ICO cost; the current market value is US$169 million; five exchanges such as HADAX have launched Seele.
Libra Credits（LBA）
Brief Introduction：
Libra Credit aims to help borrowers achieve global encryption to encryption and encryption to statutory loans (depending on regulatory approval). In order to increase acceptance and promote adoption, initially Libra Credit will act as a loan guarantor for financial institutions (ie, banks, funds, etc.) and private investors (ie, high-asset people, encrypted communities).
Project Characteristics：
- Wide-ranging financial network cooperation relationship to better cover the value chain required for loans;
- A two-way credit risk assessment model based on artificial intelligence;
- The source and use of multi-channel funds and encrypted assets will increase the liquidity of financial assets more efficiently and safely.
Current Situation of Token:
As of June 4, the closing price of the LBA rose by 120% relative to the cost of crowdfunding; seven exchanges such as HUOBI.PRO have launched LBA.
Phantasma（SOUL）
Brief Introduction：
Phantasma is the next-generation messaging protocol built on the NEO blockchain. It is a decentralized, fast and secure protocol. Phantasma is a new platform for defining storage specifications and protocols that send messages from one source to one or more destinations through smart contracts. With Phantasma, you can implement email, chat, file transfer and other message-based systems on the blockchain.
Project Characteristics：
Blockchain: Phantasma will be released initially on the NEO blockchain. The team intends to use NEOX for cross-chain interoperability and eventually split Phantasma into its own blockchain. This will be the best way to achieve the highest efficiency of the network.
Smart contracts: The main function of the Phantasma smart contract is for messaging protocols. The smart contract system also handles content storage and token trading as network fuel.
Software Development Kit: The team intends to release the SDK so that anyone can use Phantasma to develop their own Dapps. The SDK is a key component of the extended ecosystem.
Current Situation of Token:
As of the 4th, the closing price of SOUL rose by 112% relative to its cost of crowdfunding;
3. Secondary Market Updates
3.1 Overall Situation of Blockchain Asset Market
In May 2018, the total number of blockchain assets in the world was 1639. Compared with April, the number increased by 2.26%; the market value of the global blockchain asset was 335.218 billion US dollars, which was 30.26% lower than that in April; The market capitalization of blockchain Top100 in May was 309.058 billion U.S. dollars, down by 24.61% from April. The total market capitalization of Top100 accounted for 92.2% of the total market capitalization of the global blockchain, which was a 3% increase from April.
Ten fastest rising cryptocurrency in May 2018:
Between April and May, 2018, MyBit Token (applied) had the largest increase among the top 10 currencies in terms of market value of Top100 assets, which was an increase of 172.81%; Platform-type projects rose significantly, and All Sports (applied) ranked second, which increased by 141.61%; Huobi Token (exchange currency) ranked third, an increase of 63.22%.
Ten fastest decreasing cryptocurrency in May 2018:
The biggest drops among Top100 this month are all between 45% to 50%.
3.2 Asset Classification and Analysis of Major Assets
Analysis of Market Value of Four Major Assets:
The overall market value of the Top100 projects this month has declined significantly, mainly due to three reasons: First, the oversold rebound last month has basically ended; Second, the overall market sentiment of “wait-and see” is prevailing; Third, most of the project progress is slow, there is no actual application landed to support the market value.
Statistical Analysis of Four Major Assets:
In May 2018, there were 22 currency assets, which increased by 2 compared with April; 28 assets on the platform, which decreased by 1 compared with April; 48 applied assets, decreased by 2 compared with April. 3 assets in Asset-backed Token, increased by 1 compare to April.
Average Market Cap of Four Major Assets
In May 2018, the largest decline in the average market value of four major assets of the Top 100 project was Asset-backed tokens, which fell by 33.12% compared with the previous month; currency projects fell 26.11%, and the average market value of applied assets fell 21.1%; platform assets fell the least, a decline of 16.81%.
4. Blockchain Platform Projects Analyses
4.1 Overview
Blockchain Platform Projects refers to the projects that focus on the development of the underlying technology of the Blockchain network, with tokens representing the right to use the platforms or the right to participate in the platforms. Like Bitcoin and Ethereum, these platforms sort out the Blockchain logic, allowing dApp developers to focus on core app logic.
Currently, a Long Tail Effect is evident in the realm of Blockchain platform projects, and we similarly expect the best project(s) to win most of the market shares in the future. The core competencies of such Blockchain platform projects are two-fold: advance technologies in the realm of Consensus Protocol, Interoperability, Sidechains, Compatibility or/and Scalability; and complete technological ecosystem with supports to/from developers community and organizations.
Huobi Research will closely monitor the development of Blockchain platform projects and provide timely updates and in-depth analyses on their technological developments as well as ecosystem constructions.
As of May, there are 27 blockchain platform projects among top 100 cryptocurrencies with largest market caps.
4.2 Platform Development Progress
Estimated MainNet Launch Time:
Among the 27 Blockchain Platform Projects listed above, 10 projects have yet to launch their MainNets. There is no MainNet launch in the month of May.
GitHub Code Activity:
For Blockchain Platform Projects with GitHub communities[2]，EOS, IOST and aelf are the top 3 active projects in the month of May, submitting 946 commits, 435 commits, 326 commits respectively. NEM, ICON, Hcash, FSN and Dragonchain submitted 0 commit this month.
4.3 Influential Projects on Facebook and Twitter
Across all social media platforms, Facebook and Twitter have the largest number of cryptocurrency followers. On Twitter, there is altogether 2.2M followers for Top 20 Cryptocurrency projects; the number is 291K on Facebook.
For Blockchain Platform Projects, Ethereum is the project that received the most attention on the Internet, reaching a number of 536K followers on both Twitter and Facebook. Other projects like Bytom, aelf and Hcash have only 10–20k followers on both platforms.
4.4 Market Performance
A Long Tail Effect is evident for the market caps of Blockchain Platform Projects, as there are only 2 projects (ETH and EOS) with market caps over 10 Billion USD, accounting for 71% of the overall market cap for all 27 top-performing Blockchain Platform Projects, with 19 projects with a market cap lower than 1 Billion USD, only accounting for 9% of all 27 projects.
The overall market cap of 27 top-performing Blockchain Platform projects has experienced a decrease in the month of May, down to 96.46 Billion USD from 1152.04 USD in April. Dragonchain experienced the largest decrease of the month, down to 143 Million USD from 264 Million USD in April, a 45.7% decrease in a month. Ontology was up 50.96% in a month, the largest increase in market cap this month. Ethereum has experienced a decrease of 7.92%, from 62.76 Billion USD in April to 57.79 Billion USD by the end of May.
5. Blockchain Application Projects Analyses
5.1 Overview
In the month of May, there are overall 5 Blockchain Application Projects with their respective market caps making the Top 100 Cryptocurrencies list. From April to May, Applications Projects in the category of data services, entertainment, internet of things each have one project left out of the top 100 list, while 2 infrastructure projects climbed up to the top 100 list.
5.2 Market Cap Analysis
In the month of May, total market cap for payment solution application projects amounts to 25.81 Billion USD, the most among all application categories (53.41% of overall market cap for all Blockchain application projects of Top 100 Cryptocurrencies). Followed is social networking projects, accounts for 5.42 Billion USD and 11.22% of overall market cap. IoT (Internet of things) application projects accounts for 5.10 Billion USD and 10.56% of overall market cap. Payment solution, social networking and IoT applications are the three categories with most overall market cap for 3 consecutive months.
Blockchain infrastructure applications experienced the largest gain in their overall market cap in the month of May, a 15.99% increase compared to April. However, the overall market caps of all other application categories have experienced decrease to varying degrees, with the overall market cap for data services applications experienced a decrease of 53.14%.
As in April, Payment Solution applications have the highest average market cap (5.16 Billion USD). IoT applications rank next at 2.55 Billion USD, with Social Networking applications rank third at 0.93 Billion USD.
Comparing to April, average market cap of IoT applications experienced the largest gain of 31.46% among all application categories. Payment Solutions applications experienced a gain of 2.15%, and all other applications experienced decreases to varying degrees this month. Average market cap of Artificial Intelligence applications experienced a decrease of 35.90% compared to the end of April, with that of Social Networking applications experienced a decrease of 33.90%.
Huobi Research
About us:
Huobi Research of Blockchain Application (Huobi Research) was founded in April 2016 and started research and explorations in various aspects in blockchain area since March 2018. We cover blockchain technology research, industry analysis, application innovation and economic model explorations etc. We aim to establish a research platform and to offer theoretical foundations as well as judgements of trends in blockchain to the public, ultimately promoting the development of the entire industry.
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