Market Analysis of Internet Computer (ICP)
Internet Computer was designed to build a new generation of “Internet Computers”, “Decentralized Smart Cloud”. It extends Internet capabilities through a new blockchain network and provides a public computing platform. On this platform, fast, scalable information systems (such as enterprise systems and Internet services) and DeFi services can be built directly without the need for intermediaries or traditional IT.
A celebrated project created in 2016, Internet Computer is another blockbuster project coming online after Polkadot and others. It supports an infinite capacity of intelligent distributed systems in cloud computing and third generation blockchains, and is highly compatible with existing Ethereum applications. It brings a series of cutting-edge cryptographic and distributed system innovations, including Threshold Relay, probabilistic slot protocol, USCID, etc. to be able to achieve the milestone, that is, 3–7 seconds for the final confirmation of public chains, which is 50–200 times faster than the current network based on PoW (Proof-of-Word) consensus mechanism. At the same time, the blockchain nervous system is introduced in the governance mechanism, and this algorithm is used to govern the network, to upgrade the network without forks, and to reverse hacker attacks.
The NNS (Network Nervous System) is the noteworthy part. It is Internet Computer’s ICP (Internet Computer Protocol) autonomous system, which is responsible for the management from economic model to system upgrade, and then to the absorption of independent data centers.
Anyone in the world can submit a proposal to NNS. If the proposal was adopted after voting, it will be implemented immediately. The whole process is fully automatic, enabling the network to adapt and develop in real time.
NNS can perform tasks at any time, such as upgrading the node machine to update the protocol, repairing the application safely, adjusting the economic parameters, or creating a new sub-network blockchain for expansion purposes. It operates within Internet Computer’s protocol and can carry out the above upgrades and modifications without stopping the blockchain operation or breaching its security.
The NNS (Network Nervous System) allows any user to use the ICP to create voting neurons. Similar to a savings account, neurons set an exit cycle in which the length of is configured using a “dissolve delay”. The voting power of the neurons, and the voting rewards they can claim, are directly proportional to the number of ICP’s staked in the neurons, the length of “dissolve delay”, and the “age” of the neutrons.
Neurons can vote either manually or automatically, which is a follow model rather than delegate, and they can automatically follow other neurons in a form of liquid democracy.
Neuron holders are placed in a cryptoeconomic game, where they are incentivized to vote for “pass or reject” proposals. Holders, by configuring neurons, follow governance, economic, and security experts, automatically vote in the ideal way, thereby increasing the value of ICP in the long run.
Currently, the Internet Computer ecosystem includes: Infrastructure, Fleek; Web3.0 Social Network Store, Canistore; Decentralized cryptographic communication software OpenChat, decentralized social media distrikt, capsule.social, and CanCan; Nearly 20 projects which include a decentralized version of Reddit, dscvr.one, and Fleek., a well-known DApp quick hosting service. DeFi eco-projects such as Enso Finance, Tacen, and SailFish.
The total initial ICP issued was 469,213,710 (approximately 469 million), of which:
- 9.5% allocated to early contributors
- 24.72% allocated to seed sale investors
- 6.85% allocated to venture capital firms
- 4.75% allocated to pre-sale investors
- 1.25% allocated to community members who have offered their long-term support in the project
- 52.93% allocated to the Foundation, team and partners to fund R&D and operations, offices, technology acquisitions, community programs, employee incentives, partner incentives and other long-term needs
In June 2018, Internet Computer conducted an ICP airdrop of $USD 35 million to early community members.
According to the $102 million financing that Andreessen and Polychain led in August 2008, they were then valued at $2 billion.
On October 1, 2020, Internet Computer published the governance system and the token economy model. This led to a project valuation of $9.5 billion.
III. Secondary Market Situation
ICP (IOU) first landed on the MXC Exchange’s Space M event on Jan. 30, 2021 at a draw price of 9 USDT, and on the same day listed on MXC Exchange at an opening price of 10 USDT. Current (May 10) price of ICP1 in MXC Exchange’s Innovation Zone is 508.68USDT. Previously, the highest price reached 780USDT.
On May 11, at 00:00, ICP began Genesis distribution, with a total supply of 469 million pieces. Earlier, Coinbase announced that it will also list ICP.
IV. Financing Situation
Internet Computer raised about $195 million.
Seed Sale: In February 2017, about $4.2 million was raised at a price of $0.0362 per token, accounting for 24.72% of the initial ICP release.
Venture Capital Firms: In February 2018, $1.8978 per token was invested in A16Z and Polychain Capital of $61 million, which accounted for 6.85% of the initial ICP issuance.
Pre-sale rounds: In August 2018, it received $102 million in investment for $4.5765 per token, led by A16Z, Polychain Capital, followed by SV Angel, Aspect Ventures, Village Global, MulticoinCapital, Scalar Capital, Amino Capital, KR1 and members of the Internet Computer community. This account for 4.75% of the initial online allocation on the main network.
V. Practical Scenario Analysis
Supply and Demand Analysis
ICP is a practical token native to the network and plays three key roles in the network:
1. Promote Network Governance: Can be locked to create neurons, and receive incentives by participating in network governance through voting.
2. Production cycles for computation: ICP can be converted to “cycles”, that is, gas token that plays the role of powering the computation and is burned when used.
3. Reward for participants: The network will create new ICPs to reward people who do important work and enable the network to function, including providing “voting rewards” to the neurons that participated in voting; Provide “node rewards” to service providers running node machines.
The market risks of ICP comes from:
Compared with the opening prices of the primary and secondary markets, ICP has the following risks of dumping in the case of high price increase and gradual unlocking:
- Gradual cash out by seed sales, venture capital firms and pre-sale sales
- Possible cash out by team members and early community members