CommerceBlock ICO Report
Project Summary:
CommerceBlock aims to build a platform for decentralized commerce. This entails circumventing the middleman — mainly banks and other traditional financial institutions that act as trusted third parties. In doing so the cost of engaging in trade should decline. CommerceBlock aims to achieve this using one or more public blockchains, smart contracts and a series of cutting edge technological developments that can be used with these blockchains. The result will be a platform that allows parties to “construct contracts, manage trade flows, engage in multi-party dispute management, issue assets, and hedge currency risk.”
ICO Date: November 28th, 2017.
ICO Schedule and Bonuses:
Total Supply: 1,000,000,000 Commerce Block Tokens — CBT
Pre-ICO: 8% of the tokens will be on the market for the pre-ICO.
ICO: Up to 40% of the tokens will be on the market for the ICO, including all the tokens that are not sold during the pre-ICO. The published exchange rate is 1USD = 16CBT. The team promises to burn any tokens that were earmarked for public sale if they are not sold during the ICO period according to the white paper. This process will be provable, although the white paper doesn’t specify how.
Distribution: 30% of the tokens will remain under company control, 30% will go to partners — incentives for “Enterprise Integration partners. These tokens will not be released until the platform is ready to take them as payment — and 40% will be sold to the public. From the tokens that CommerceBlock will keep, 10% — 30 million CBT — will be released one month after the token sale’s closing date and will be used to cover advisory and token launch costs. The rest will be locked up for a year after the ICO end date, to be released at a rate of 20% — 54 million CBT — per year.
Quick Math: CommerceBlock is looking to raise a maximum of $25 million USD. That fits in perfectly with the published exchange rate and the number of tokens earmarked for both the pre-ICO and the ICO. This indicates that there might not be any bonuses available, unless CommerceBlock is willing to give up on its maximum raise figure, or is willing to increase the share of tokens sold during the pre-ICO and ICO stages. There is no information in the white paper that indicates how much the token will be divisible by.
Project Overview: Beyond the token economics, CommerceBlock aims to open the crypto-economy to more complex financial tools, such as CDOs, derivatives and the trade of other assets that can be put on a blockchain — such as land titles, stock and commodity futures contracts. To do this, CommerceBlock submitted a BIP — Bitcoin Improvement Proposal. Together with this BIP, CommerceBlock will rely on Lightning Network and Sidechains built on the Bitcoin, Ethereum, Litecoin networks and other cryptocurrency networks. Its API will sit on top of it all, serving as an application to leverage public blockchains in a manner that will be user friendly.
Although CommerceBlock is thinking about the integration of a wide array of trade operations on its platform, it is still difficult to think about physical assets changing hands with the help of their platform. It is a platform that is conceptually well-suited to handle non-physical assets instead of goods. Therefore, the word “Commerce” in CommerceBlock, might be misleading to some.
The CommerceBlock platform hinges on development and implementation of complex tools and technologies. Therefore, the roadmap of this project following the ICO is riddled with unknowns. The team itself acknowledges this, which earns them additional points for transparency. CommerceBlock plans to establish its token strategy through the development of research teams by Q1 of 2018. The infrastructure beta should be ready by Q2 2018. Additional research and an alpha design of their “templated in-channel Lightning Network contracts” should be ready by Q3 2018. These goals are difficult to achieve within such a short time frame, especially because they rely on technology that has not been fully developed or implemented elsewhere yet.
Part of the roadmap centers on defining the “token strategy”. CBT tokens should eventually grant the user access to the CommerceBlock platform, but when that will happen is still unclear. Token holders will either have to buy into the project and hold their tokens for an unspecified period until they are able to use them or CommerceBlock switches out to its own blockchain using a token swap. Short term holders will have less incentives to participate in this ICO since the CBT has little appeal in secondary markets, at least in theory. As a general observation, the CBT token should only have real value for those who use it within the platform eventually. Utility outside the platform should be, at least in theory, close to 0.
Team:
Nicholas Gregory — Founder and CEO.
Omar Shibli — Founder and CTO.
Dan Eve — Head of Operations.
Shachaf Rodberg — UX/UI Designer.
Valerio Leo — Full Stack Engineer.
Mohamad Shaib — Generalist Software Engineer.
Michael Pole — ICO Advisor.
Tobias Straessle — Corporate Advisor.
Peter Bergstrom — ICO Advisor.
Mason Borda — Technology Advisor.
Akash Makwana — Marketing Advisor.
Opportunities:
The CommerceBlock ICO offers opportunities for those who believe in the project, are patient enough to wait for the final product and are interested in the ‘blockchainization’ of derivatives and other financial instruments for the world of cryptocurrency. Traders as well as international service providers and their clients should be the future beneficiaries of the project. Those looking for immediate gains in the secondary market, might not find it:
· CommerceBlock has not disclosed any plans to have the CBT listed in any major exchanges.
· The objective value of the token hinges entirely upon the successful development of the platform and the subsequent use of the token within it.
· On the other hand, there might just be enough scarcity in secondary markets initially, given that only 40% of the tokens created will enter the market immediately after the CommerceBlock ICO.
· If there is a critical mass of people interested in the project that cannot gain access to the token during the ICO, they might be willing to pay a premium for the CBT in the secondary market once the CommerceBlock ICO is over.
Challenges / Concerns:
Although the CommerceBlock ICO is quite transparent and honest with its prospective contributors, it is also looking to leverage cutting edge technology that still hasn’t been implemented fully. Additionally, the platform will be limited to trade, contracts and dispute resolution mechanism for non-physical assets on a blockchain, which are mostly cryptocurrencies as of now. This might change, but in the meantime, it narrows the potential customer pool significantly.
A food analogy might help explain CommerceBlock’s situation right now. CommerceBlock is like a space-age, molecular cooking restaurant that seeks to deliver food to astronauts on the international space station, in a manner that does not affect the taste of the food and is economically more viable than the food they consume now. It is definitely not your corner pizza parlor.
As such, this project would have to either invest quite a bit on creating demand for its services or wait until they develop in the market — if they develop at all. It is difficult to see a significant portion of world trade happening on this platform any time soon, especially because it would be nearly impossible to use it to trade physical goods.
It is also difficult to see how the platform will interact with fiat currency — if it interacts with it at all. As such, promised exchange risk management mechanisms will depend heavily on CDOs based on highly volatile cryptocurrency markets. The platform could thus end up compounding cryptocurrency exchange risks for users through CDOs instead of lowering them. This could change if cryptocurrency markets stabilize, but that will not happen in the foreseeable future.
Conclusion: Our short-term outlook for the CommerceBlock project is one of high risks. The CommerceBlock ICO generates high opportunity costs from the perspective of the contributor. There are no guarantees that the team will be able to develop the platform fully or that it will be able to do so within a relatively short time frame. On the other hand, there are other ICOs and other projects that a contributor might also be interested in, with a lower short-term risk factor and greater capability to deliver a functional service in the near future. If token economics — proposed token burns and limited sale amounts during the ICO — and market interest manage to generate enough short-term scarcity, then CBT will have some wind under its sail in the secondary market. Furthermore, if exchanges pick it up immediately, there might be some short-term gains to take for those who would like to use it in the secondary market. Nevertheless, that is a risk, which is why our short-term position on this token is a sell.
Our long-term outlook is radically different. The token and the CommerceBlock platform have a fair chance of long-term success. To achieve it, the team must focus on generating a community of staunch supporters, and it should focus on educating the public about their platform, their aims and how they plan to fulfill their goals. If the project succeeds in planting the seed of its project deep within the psyche of cryptocurrency users, it has a good chance of finding a niche, especially among traders and businesses that provide services for traders. Nevertheless, we don’t expect the project to grow much beyond this niche in the foreseeable future. Therefore, contributors who are patient and believe in the potential that the project has, should understand they might need to hold their tokens longer than expected before they are able to use them and derive value from them. Our long-term position on this token is a cautious buy.
Notwithstanding expectations and scope, this project has a sensible, well structured thought process behind it. The white paper is clear, transparent and honest. Although the project depends more than other ICOs on forces that are out of its control, there might be ways to work around those. Nevertheless, it would be great to have more information about the pre-ICO process, possible bonus structures and ICO end-dates. The CommerceBlock ICO would benefit form a greater degree of communication with the public if it aims to raise funds from a wider contributor base as opposed to a smaller pool of wealthier contributors.
Disclaimer
The above report on CommerceBlock ICO is written by icochaser for informational purposes and not investment advice. we (at icochaser.com) are not paid or sponsored by anyone for this report.
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