GoNetwork — ICO Review
Token: GoToken
ICO Start Date: Q1 2018
“A highly scalable, low cost mobile first network infrastructure for Ethereum”
TOTAL 13 / 25
1Business opportunity: 4/5
Rationale behind the project:
GoNetwork has observed and pointed out the main challenges Ethereum was facing:
- Scalability of the network transactions
- User mass adoption
GoNetwork (that has been created by the founder of a mobile gaming app developer called Infinidy) wants to help Ethereum solve these issues thanks to mobile accessibility and interoperability. How? Through a fast, cheap and scalable mobile first off-chain transaction network for Ethereum.
A. To prove that it works, they have a strong use case they want to implement: a platform — GoExchange — to allow users to seamless trade and purchase of virtual goods across game ecosystems and between users (virtual goods correspond to virtual money that you can use only inside the app — fidelity points to buy new avatars in Hearthstone or to unlock specific levels at Candy Crush etc.) on a secondary market (only black markets so far).
A few figures to bear in mind to understand why the use case is strong:
- Mobile app economy grows at 37% every year and could reach 6.3 trillion dollars in 2021.
- Mainly in-app purchases and virtual goods.
- Virtual goods are nearly 10% of the total app economy.
- By 2021, the average app user will spend more than $1,000 each year on app-related offerings (study by The Boston Consulting Group).
For the use case, they are going to use an existing list of apps (all Infinidy games and dubsquad.me apps = 15M+ downloads).
B. They also want to create a debit card to be able to use the GoTokens to purchases apps etc.: this will be called the Pocket card.
So here we notice that the scope is actually pretty large for this company but will be embodied by a concrete use case, which is a pilot and will give an idea of whether the project is likely to succeed.
Token:
- ERC20
- Used as a fee to create and close contracts (that will be enforced by the exchange platform) and are indicative of the underlying gas costs to create a State Channel (see the next Section to understand what a State Channel is).
- Network effect: the more users will use the service, the more value the token will have.
Competitors: Traditional online payment providers (Paypal, Stripe, etc.) other blockchain companies focused on Mobile (Monetha, CryptoPay) and card providers in the crypto-space (TokenCard, TenX etc).
Questions:
- Let’s assume that the platform works for the existing pilot database of games and apps, how to extend this to the whole panel of games and apps that exist in the App and Play Stores? How to convince Riot Games or other app developers?
- Very ambitious project, isn’t there a risk to lose focus?
- This ICO reminds us of other similar ICOs… aiming to disrupt huge gaming/social media industries while being a traditional and existing actor in these industries(Kik, Unikoin). They thought they had the expertise to lead the projects thanks to their established reputation… ICO-connoisseurs seemed to disagree since they have not backed them a lot…What would prevent this ICO from following the same path?
2Technology: 2.5/5
Whitepaper: https://gonetwork.co/GoNetwork_WhitePaper.pdf
GoNetwork is going to use State Channels, which is a classic way to reduce the workload issues on the blockchain. It allows a minimal number transactions on-chain to facilitate a series of balance transfers between parties off-chain effectively at no cost. Basically, you accumulate off-chain transactions between 2 actors (nobody other than the two actors have access to the deposited tokens in the state channel’s smart contract + no one can change any of the value transfers contained therein) before sending the output to the blockchain.
Since the channels suffer traditionally from on-chain transaction latency at creation time, GoNetwork implements an incentivization scheme to reward actors based on the longevity of their state channels.
Regarding the cost, State Channels amortize the cost of transactions based on the number of off-chain transactions completed off-chain. Thus, in typical high-frequency workflows, the cost of transactions will be several orders of magnitude lower than running the transactions on-chain.
For the P2P mobile networking, they are still trying to come up with the best technology (are currently trying to develop DTLS method). This is definitely still work in progress and we would need more information on this.
Here, we see no major roadblock in the execution of the strategy. However, nothing really new differentiating them from the others + no clear plan to create the P2P mobile networking yet.
Regarding the debit card, they already managed to build a prototype even though we don’t know much about it (except in this article https://devpost.com/software/pocket-t1fmg5): it is a bit light!
3Team: 1/5
- Rashid Khan: CEO: engineering background. No track-record in blockchain…
- Amit Shah: CTO: No track-record in blockchain…
The company Infinidy was founded in 2010 and ha been developing app games since then (Happy Park, Zombies vs Aliens).
Bad:
- The real issue is that they have absolutely no experience in blockchain. Even the advisors do not. This is really scary!
- They were supposed to launch the ICO in Q4 2017 (in the WP)… but it won’t happen until Q1 2018 minimum.
Good:
- Beta in Q2 2018.
- Strong experience in how to run a business (CEO and founder for 7 years).
- Winning Team at ETHWaterloo, World’s Largest Ethereum Hackathon, (we are still wondering how they won as they have no experience in blockchain).
4ICO details: 2/5
- 50m tokens (out of 100m) available during the ICO.
- Hard-cap: $30m (rumors)
25% of the tokens go to the team, which is high but in the range of other ICOs we have looked into.
No more information so far.
5Community & Communication: 3.5/5
10K members as of end of December on Telegram.
11K followers on Twitter as of end of December.
Medium (https://medium.com/@gonetwork). Not very active though.
6Verdict
- Short-term: negative
- Long-term: neutral
The Whitepaper is very detailed on the business side and many studies have been conducted to prove the value of this industry. No doubt this is huge and can bring millions if disrupted. However, the project is very (too?) ambitious and the team has no track-record. They have NO experience in crypto-currencies. We are not confident enough in their capacity to deliver based on the roadmap they have set. In the past all the ICOs tackling the gaming/social media industry (supposedly easier to disrupt since youth is embracing the change) have failed in getting ICO-connoisseurs support: Kik, Unikoin whereas they had claimed to be a traditional player with deep knowledge and many years in the industry. But expertise in blockchain and strategy to implement and disrupt the market are not easy to acquire…
Appendix to understand the flows and the business model:
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