STO Review: A Quick Look at VMC (VMC.AI)
Overview
VMC.AI is one of two companies listed on STO Analytics with upcoming STOs.
VMC.AI is planning on developing VMC Core, a permissioned blockchain based on Hyperledger Sawtooth technology, along with VMC GO, a mobile transportation marketplace.
A dual token model approach will be taken, with the VMC-ST (the Security Token) along with VAI (a stablecoin used for exchange on the VMC platform).
The Security Token
The VMC-ST will derive its value through transaction fees on the VMC Core blockchain.
The Tokenomics
The whitepaper (and lightpaper) do not describe the transaction fees in detail.
Some quick math shows us that these transaction fees would either have to be pretty high, or a substantial transaction volume would have to be reached to make back investments.
- Hold for : 3–6 Months, Receive 10%
- Hold for : 0–3 Months, Receive: 5%
- Hold for : 6–12 Months, Receive 20%
- Hold for : 12 months or longer, Receive 40%
Taking a 6–12 month token hold time, VMC-ST holders would be entitled to 20% of transaction fees.
If an investor were to invest $10,000 USD into VMC-ST, at a hard-cap raise of $5 Million, they would own 0.2% of the tokens.
If a 3% transaction fee was charged (high for a blockchain-based service), and VMC somehow captured a $1 Billion dollar market, the investor would be entitled to (20% of txn fees)*(3% txn fee)*(0.2% share in network)*$1 Billion = $12,000 (per year).
Of course they could be planning on charging higher fees or capturing more than a billion-dollar market, but would you bet on it?
Red Flags
- Inconsistencies in their token sale numbers
The token sale claims a hard cap of 5 million Euros (due to small offering exemptions). However, 25,000,000 available tokens (private sale) at a 30% discount from .20 Euros, would be (25,000,000)*(0.14) = 3.5 Million Euros, plus 20,000,000 tokens in the public sale = 4 Million Euros. I’m not sure if they plan to selling less during the public sale, but if so, they should update their pie chart to reflect that possibility…
Furthermore, above you can see where it says 30% bonus for private sale, but on the website it says 42%. Simple inconsistencies like these can mean huge liability for investors and the company.
2. Counting on People Coming to their Platform
The white/lightpaper mention the adoption of VMC through companies and transportation building on top of their blockchain framework and protocols. It does not mention marketing and I am always wary of projects that do not count on having to tell people about what they have created.
3. Competition
With a reliance on transaction fees to provide value to the token holders, it will be tough to compete with platforms that charge much lower transaction fees.
Summary
When looking to invest in Security Tokens, it is important to look at what assets they are backed by. This STO is highly speculative and rely on the company capturing a significant portion of the transportation market while building many different elements. Simple inconsistencies across documents are big red flags for me. I would like to see a much higher degree of transparency, especially in regards to revenue and projections.
As always, none of the information or statements in this article constitute investment advice.
Thanks, and let me know what you think!
— Tokenizer
