Blockchain Invest Club complete review of PEP Network

PEP Network

Blockchain Render Protocol for personalizable Content Marketplace

Date of analysis: 10.05.2018

Details

Website
Token Symbol: PEP
Token Type: Utility (ERC 20) Sector: Social Media Current Stage: MVP

Currencies Accepted: BTC, ETH Exchanges: Not disclosed
Legal jurisdiction: British Virgin Islands KYC: yes
Restrictions: excl. of US, Chinese, S. Korean citizens
Minimum Personal Cap: 3,000 USD (pre-sale)
Maximum Personal Cap: -

Total Number of PEP: 600,000,000
Available for Token sale: 50%
Initial Token Price: 1 PEP = 0.1 USD
Token Sale Hard Cap: $30M (including pre-sale)
Token Sale Soft Cap: -
Funds Allocation: 40% — R&D, 30% — Marketing, 30% — Other Team Vesting period: 24 months with 6 months cliff

Project Description

The ecosystem boasts of a marketplace which enables direct trade between its participants. Content is represented by personalizable avatars, stickers & animations for messaging and other use cases. The content is sold at creator / owner’s price without bearing any commission or hidden charges. For scalability of the platform, it also aims at a global consolidation of “Render Farmers” who are willing to participate in distributed runtime rendering by contributing their idle CPUs, GPUs on their local devices. Render farmers will provide computing power.

Project Tracking

Development of the project started from foundation of Mobigraph Inc. in July 2015, which raised ~950k USD investment from business angels as Mark Lin and Shirish Phatak. Currently Mobigraph Inc. is working under PEP Network in partnership with AI software companies as TouchPal, Kika Tech and start-ups in AR, AI as SwipeStudio and 4lio. Team has presented its MVP QUGO in 2016 and its enhanced version XPRESSO in June 2017. XPRESSO is tested by audience with over 120K of monthly active users. The near goal for MVP considers wallet integration XPRESSO and partnership with 1 keyboard, targeting 2m users by June 2018.

Market

The market is primarily driven by booming visual and animated content use in multiple sectors: messaging, VR and AR, chatbots, advertising etc. All this is supported by steady increase in number of mobile messengers users and average time per person spent in social networks.

Team

Team is represented by 13 members with highly diversified experience: software development and engineering, mobile apps enhancement, marketing, product development, etc. Founders themselves are patent owners and have strong IT background with over 5 years of professional activity across major IT companies, but have no previous experience in blockchain-based projects. Currently the project is under guidance of 5 advisors.

Token Economy

Overall number of PEP tokens is limited by 600,000,000 with Hard Cap of 30,000,000 USD. 50% of tokens will be distributed during pre-sale & ICO stages. All unsold PEP Tokens during the ICO (included bonuses) will be transferred to Reward and Incentive Pool and locked for 6 months. 15% of PEP Tokens are allocated to the team. PEP Tokens allocated to the team will be locked in a smart contract for a 24 month vesting schedule with 6 months cliff.

Risks Overview

PEP Network is expected to face various risks, among which the biggest are: tighter competition with other players (iMessage, Bitmoji and Bobble), insufficient development of the ecosystem (involvement of artists, developers, renders and users) and potential regulatory issues of blockchain-based projects (additional licensing procedures). Finally, the latest comments of SEC include more intense focus on legal status of ICO`s and tokens, which may negatively affect wealth of token holders.

Project Description

The ecosystem boasts of a marketplace which enables direct trade between its participants. Content is represented by unified stickers for messaging and other animated content. The content is sold at creator / owner’s price without bearing any commission or hidden charges. For scalability of the platform, it also aims at a global consolidation of “Render Farmers” who are willing to participate in distributed runtime rendering by contributing their idle CPUs, GPUs on their local devices. Render farmers are the ones who will provide computing power.

The problem

▪ Habitual emojis and stickers are getting outdated, boring, and lack on personalization and self- expressions. The problem was partially solved by Mobigraph, but the require further work.
▪ Lack of unified marketplace for self-expression and personalized content.
▪ Biggest social networks have their own closed sticker stores which limits the user choices and creators’ freedom.
▪ Many clients don’t have the processing power they need to make more content quickly.
▪ Existing marketplaces are designed for only one-use case (messaging), whereas actually there are lot more use cases that involves personalization and expressiveness. Mobigraph alone cannot address all the use cases without embracing all the stakeholders including developers, creators and consumers together through a connected system. Thus the need for an ecosystem arises.

Solution for all participants

For users: The animated content is fun, entertaining, and easy to process.
For content creators:
▪ Content ownership and copyright.
▪ Selling in different sales channels.
▪ Transparent rewarding system. The Price is set by Owners
For Developers:
▪ Facilitates custom apps to integrate and access content marketplace for developers.
▪ The tech that can convert images, text and animations to gifs is developed to be lightweight.
For render farmers: Distributed rendering capability utilizing idle CPUs and GPUs for Render Farmers thereby ensuring fair allocation of remuneration for all participants. Excess power provided by render farmer is cheaper source of computing power.

Key R&D at the moment

▪ Content Creation Pipeline
▪ Real Time 3D Rendering
▪ Selfie to 3D avatar
▪ AI based User Emotions
▪ AI based Face Detection

Business Model

PEP Token is a utility token which offers access to PEP Network content and services. Participants use the services/ tools provided by this ecosystem to express themselves and also to create personalized content. To do so, they need to subscribe to use services and the payment for the same would using PEP token. With PEP Network content and services participants can create, curate, trade, distribute content across the ecosystem.

The use of Blockchain is reasonable

Copyright Protection: all content transaction details including copyrights for content would be recorded on blockchain as its immutable.
Fast global transactions: All the contents are sold at owners’ price and the transaction takes place between the seller and buyer without any other hidden costs other than gas charges. Blockchain ensures secure and fast transactions. The Owner gets the payments for every transaction.
Distributed Rendering: Breaking up complex rendering jobs into smaller tasks and distributing them over the network.

Project Tracking

Market Overview

The market at which the project is aimed covers several segments: personal messaging, chatbots, ads, AR/VR and other sectors with visual/animated content. The market dynamics is fundamentally driven by 2 key trends: the increase in mobile phone messaging app users together with average time spent online and disruptive growth of visual and animated content in messaging.

Steady increase in mobile phone messaging app users (1.4x by 2021)

As of today, the most significant growth drivers are affordable smartphones and inexpensive mobile Internet tariffs. Besides significant increase in total number of app users, the time in the Internet per user is also expected to grow. According to GlobalWebIndex, today people in the whole spend online ~1 billion years in a year.

Africa, Middle-East and Asia are still the most underpenetrated markets (see chart below). Most of the new users to mobile messaging are expected to come from China, India, the US, Indonesia and Brazil. These countries also represent the highest number of messaging app users in total. The rise of such apps has been staggering with a majority of mobile device users in APAC, LatAm, Europe and North America now using such apps, whilst just four years ago that was not the case in Central and Eastern Europe and North America.

The booming age of visual and animated content in social media

Visual content is on the rise because it’s fun, entertaining, and easy to process. Platforms have emerged in messaging and social media that intelligently integrates emoji, stickers, and GIFs to enrich conversations and transform monetization models.

As pointed out by visme.com, these are some innovative approaches to visual content that most likely will gain popularity: cinemagraphs, progress gifs, visual metaphors, negative space, bitmojis, mixed media infographics, meta images. Digital stickers’ market in particular is detailed in the chart below.

Target market segments (besides messaging segment)

Source: Statista, Polar, IronPaper, Markets&Markets, Business Wire, Businessinsider.com. Note: market size is estimated for the whole sector, not for animated content.

AR / VR

Augmented and virtual reality (AR/VR) promises to change the way we live, consume, interact with digital environments and each other. The AR/VR market is forecasted to become a multibillion dollar business in the next decade and to have sweeping demand. Nevertheless, the lack of compelling AR/VR/3D content, its labour intensive production and imperfect quality hinder the evolution of AR/VR industry and AR/VR mass adoption.
PEP can bring 3D avatar holograms with personalized content in AR and VR providing unified platform and studios for content creators.

Merchandise

With a majority of brands adopting an omnichannel strategy (selling on their site, on Amazon, on Facebook, etc.) there becomes an increased need to differentiate each selling channel. Given the limitations of selling on channels you do not own (Amazon, Facebook, etc.), your website becomes the hub for increasing engagement and conversions in a controlled way.
Customers are looking for experiences from webstores, ones they cannot get on Amazon or Facebook. And this is where visual merchandising comes in.

Ads

Many brands have been turning to their customers for help and accessing the wealth of visual content being created on social platforms. Audiences on each channel have different expectations of content, so brands need to be more thoughtful and so necessity of personalization arises.
With PEP brands can get closer to users with brand and user personalized content.

Chatbots

Projections show growth over the forecasted period as chatbots reduce operating costs for enterprises. Chatbots can work in segments such as marketing, payments and processing, and service. Within the global chatbot market, approximately 45% of end users prefer chatbots as the primary mode of communication for customer service inquires.
Today’s most chatbots lack the personalization. PEP is able to bring that personality using our 3D avatar tech.

Competitivity picture: Lack of unified platform

Biggest social networks:

The largest social networks develop own stickers and offer them for sale. Due to size power are able to promote their own products by forming trends and boosting popularity of concrete sticker packs.
Rather few social networks provide opportunities for direct cooperation with content creators (source: Rusbase):

• Telegram: attributed for both professional and unprofessional content creators. Professional artists, cooperating with Telegram, are able to earn ~$80 per sticker.
• VK: Entrance barriers (most of content is created by illustrators who have been working with VK for several years). Non-transparent rewarding system, moderation from social network.

iMessage (link):

Apple’s attempt at building a platform that allows third-party developers to market their software to the sizable iPhone user base (one of the most popular type of mini mobile application is the “sticker pack”). iMessage turns the texting app into a platform, and introduces a number of new features, like effects which let you decorate the screen with animation and sound, pixelate messages with “invisible ink,” link previews, handwritten notes, quick responses via tapbacks, emoji suggestions, and more.

Bitmoji (link):

A widespread (>100M downloads) mobile application that allows users lets you create fun avatars of yourself and use them in messaging applications. The service is integrated with Facebook, FB Messenger, Gmail, Snapchat, Slack. Personalized avatars can be treated as ticker’s substitutes. The quality of the product makes it a strong enough competitor for PEP.

Bobble (link):

Similar to Bitmoji. Works in compatibility with platforms such as Facebook, Snapchat and Whatsapp Messenger.

Other Non-blockchain platforms:

• Sticky AI — an app from the startup behind Prisma, which turns selfies into stylized and/or animated stickers for sharing to your social feeds. While Prisma gained viral popularity last year, netting its Moscow-based makers around 70 million downloads in a matter of months, its core feature has been rapidly and widely copied — including by social goliaths like Facebook.
• Quidd lets users collect virtual stickers, cards and toys from their favorite shows.Users buy emoticons and stickers from the service, seeking to assemble complete sets of stickers.

Team

Team Overview

• Whole team is represented by 13 members with highly diversified experience: software development and engineering, mobile apps enhancement, marketing, product development, etc.
• Founders themselves are patent owners and have strong IT background with over 5 years of professional activity across major IT companies, but have no previous experience in blockchain- based projects.
• Project is under guidance of 5 highly professional advisors with competence in entrepreneurship, technology, strategy. Although only 2 out of 5 advisors have experience of participation in blockchain-based projects and are affiliated under the common project, they joined blockhchain- projects in 2017.

Founders

Udayakumar Kadirvel,
CEO & Co-Founder

Experience: Developer and engineer of software products with over 9 years of professional experience and across international companies (Consultant at Motorola Mobility, 2000–2004; Head of Graphics at Samsung, 2003–2012). Owner of 2 patents in the scope for facilitating communication. Since October 2015 with Mobigraph Inc. (PEP Network).

Education: Bharathiar University, Computer Science, 1996–2000.

Siddhartha Vinnakote,
CTO & Co-Founder

Experience: Developer and engineer of software products with over 6 years of professional activity across international companies (Chief Engineer at Samsung, 2007–2013; Software Engineer at Hewlett-Packard, 2006–2007). Owner of 2 patents in the scope for facilitating communication. Since July 2013 is Co-Founder at Mobigraph Inc.

Education: BIT Bangalore, Computer Science, 2000–2004; International Institute of Information Technology, Information Technology, 2004–2006.

Sujith kumar CR,
Chief Strategist & Co-Founder

Experience: Developer and engineer of software products with over 9 years of professional activity across international companies (Senior Software Engineer at Hewlett-Packard, 2003–2009; Senior Chief Engineer at Samsung). Owner of 2 patents in the scope for facilitating communication. Since 2012 with Mobigraph Inc.

Education: Not disclosed.

Subrhmanyam AS,
CPO & Co-Founder

Experience: Responsible for mobile platform enhancements with over 5 years of professional activity at Samsung (Engineer at Wipro Ltd., 2005–2007, Engineer at Samsung, 2007–2009, Lead Engineer at Samsung, 2009–2012, Chief Engineer at Samsung, 2012–2013). Owner of 2 patents in the scope for facilitating communication. Since April 2013 with Mobigraph Inc.

Education: SJCE, Information Technology, 2001–2005.

Executives

Govind Malehithlu,
COO & CBDO

Experience: Business developer and sales manager with over 20 years of professional activity in complex with over 7 years of technical background and current board membership at BOON TECH (Sales & Support Engineer at PLC — Tech Care, 1996–1997; Program Manager at Global Edge Software, 1997–2004; Business Development Manager at Cyber Professionals, 2004–2007; Business Development Manager at California Software Labs, 2008–2011; Director of Sales at Alten Calsoft Labs, 2008–2015; Senior Director of Sales at Alten Calsoft Labs, 2008 — until now). Since June 2016 with Mobigraph Inc.

Education: Mangalore University, Computer Science & Engineering, 1991–1995.

Palanikumar Thangapandian,
Cloud Expert & Blockchain Beginner

Experience: Technical background with over 10 years of professional activity at Hewlett-Packard (Member Technical Staff at Acsys Software India Private Limited, 2000–2002; Senior Software Engineering at Hewlett-Packard, 2003–2008; Associate Technical Specialist at Hewlett-Packard, 2008–2010; Technical Specialist at Hewlett-Packard, 2010–2015). Since June 2015 with Mobigraph Inc.

Education: Bharathidasan University, Chemical Engineering, 1995–1999; Birla Institute of Technology and Science, Software Systems, 2015–2017

Rakesh Nanda,
Creative Director

Experience: Illustrator and fil maker with over 7 years of professional activity as freelancer (Art Director at SchoolCounty Pvt. Ltd., 2011–2012; Freelance Illustrator and animation film maker, Mumbai, 2010 — until now). Since October 2013 with Mobigraph Inc.

Education: IIT Bombay, Animation and Film Design, 2008–2010.

Sanjeeth Boloor,
Head of Marketing

Experience: Marketer with over 18 years of professional activity across such brands as Toyota, Microsoft, Wipro. Since July 2017 with Mobigraph Inc.

Education: National Academy of Legal Studies & Research (NALSAR) University Hyderabad, Media Laws; Mangalore University, Mass communication; Pondicherry University, Marketing.

Advisors

Eduard Dzhamgaryan,
Strategic,Marketing & Crypto Advisor

Experience: Entrepreneur across various industries with over 20 years of professional activity, started participation in blockchain-based projects in 2017. Previously acted as an Advisor at MicroMoney (Lending, received 35% of Hard Cap via Public Sale), currently is an active Advisor at 2 blockchain- based projects (excl. PEP Network): ICObox (ICO Consulting, ICO Advisor), TravelChain (Travelling, received 10% of Hard Cap via Public Sale). Since December 2017 with Mobigraph Inc.

Education: Altai State Technical University, 1989–1994; Academy of National Economy under the Government of the Russian Federation, 1999–2001.

Andrey Verbitsky,
Token Economy Architect

Experience: Product manager with over 15 years of professional activity across tech companies, started participation in blockchain-based projects in 2017. Currently is an active Advisor at 3 blockchain-based projects (excl. PEP Network): ICObox (ICO Consulting, Advisor & Token Economy Architect), dApp Builder (Coding, Senior Advisor) and CURAIZON (Healthcare, ICO Advisor). Also acts as an Advisor at Crypto Lawyers Corporation, which is a company providing legal consultations for ICO and blockchain-based projects. Date of joining to Mobigraph Inc.

Education: Leningrad Electrotechnical Institute LETI, Computer Science, 1989–1996; St. St. Petersburg State University, Behavioral Economics.

Mark Lin,
Cloud & Security Advisor Infrastructure Manager at EverString

Experience: Specialist at app integration with over 14 years of professional activity across IT companies (incl. Yahoo! and ALHABET Inc.). Previously had no disclosed experience of participation in blockchain-based projects and currently has no additional blockchain-based projects. One of business angels that invested 950k USD in Mobigraph. Date of joining to Mobigraph Inc. is not disclosed.

Education: Stony Brook University, Computer Science, 1996–2000.

Marc Richardson,
Advisor on Brand Partnerships GM at Kika Tech

Experience: Specialist in public relations and business development with over 5 years of professional activity over IT companies. Previously had no disclosed experience of participation in blockchain- based projects and currently has no additional blockchain-based projects. Works at Kika Tech Inc.,which is one of the key PEP Network partners. Date of joining Mobigraph Inc. is not disclosed. Education: Clark Atlanta University, Mass Communications, 1995–1999; Georgia State University, Film Production with minor in Journalism, 2001–2003.

B Dweik,
Business Strategy Advisor Director of Marketing Lattice SemiConductor

Experience: Product developer with over 10 years of professional activity across IT companies (incl. IBM and Epson Electronics America). Previously had no disclosed experience of participation in blockchain-based projects and currently has no additional blockchain projects. Has experience of making a start-up. Date of joining Mobigraph Inc. is not disclosed.

Education: Northeastern University, Electrical & Computer Engineering, 1993–1996; Regis University, Business, 2001–2003.

Token Economy

Issue of Tokens and their Distribution

The overall number of tokens is limited by 600,000,000 PEP with Hard Cap of 30,000,000 USD (incl. Pre-sale).

All users of the PEP Network platform will be able to gain tokens:

• By buying during pre-sale.
• By buying during the ICO.
• After the completion of the ICO, purchasing PEP for ETH, BTC will be available via exchanges.
• As a payment after a successful purchase transaction.
• As a payment after a successful rendering service.

The price of PEP will be set according to its current price on exchanges.

Pre-sale conditions are following:

• Limited by 2,000 participants.
• Minimum personal cap is 3,000 USD.
• KYC is mandatory to participate.
• US, Chinese, S. Korean citizens are excluded from pre-sale & ICO.

Risks Overview

Business Risks

Tighter competition with other players
Other players also captured the trend of personalization and animation of stickers, which means that PEP Network will face competition. iMessage, Bitmoji and Bobble are deemed to be the biggest rivals of the project, because these projects share similar concept of customized stickers and extending emotional expression. Bitmoji is especially competitive, given higher presented quality of stickers and integration into Snapchat with over 300m of monthly active users. Although the biggest competitive advantage of PEP Network is expected to be compatibility with all messaging platforms.

Insufficient development of the ecosystem
Success of PEP Network requires top notch functioning of the complex ecosystem, including artists, developers, renders and users, which may hinder the project realization. The ecosystem has not been not integrated into cryptowallet, yet; team did not disclose any major renders and artist studios. Nevertheless, XPRESSO has potential for further development, the ecosystem requires a lot to do.

Lack of partners with big audience
Targeted steady increase in users requires partnership with anchor participants of the developing ecosystem, including artist studios, renders and developers. Currently the project has only 2 disclosed partnerships with steady operating companies (TouchPal, Kika Tech) that does not meet needs of future growth. Further conclusion of partnership agreements is deemed to be essential.

Regulatory Risks

Tighter regulation of blockchain-based projects
Blochain-based projects may be a subject for tighter regulation in the near future, leading to potential losses for investors. Recent comments of SEC include more focus on ICO and tokens legal status, that may have negative impact on token holders. However, the project does not raise financing among citizens of the US and China to be more compliant with their regulatory bodies stance.

Inability to comply with licensing procedures
PEP Network business model is dependent on messengers, which potentially may become a subject for tighter regulation. As of the date of Tokens sale, there are no statutory requirements requiring Company to obtain any licenses and permits necessary for the sale of the Tokens, but the risk that such legislative requirements may be enacted in the future cannot be ruled out. In this event, possibility of sale and further use of Tokens will depend on the procedure of issuing such licenses and permits, and on compliance with their terms.

Technical and Technological Risks

Blockhain code associated risks
PEP Tokens are released on Ethereum blockchain (ERC 20). In this regard, any malfunction of the Ethereum protocol may lead to a restriction in the use of Tokens and / or to the fact that Tokens or the platform will function in an unforeseen manner.

Security issues

While all the transactions will be executed via PEP Tokens based on Ethereum open-source blockchain-based platform, promoted security standards are designed to guarantee safety of transactions. In a couple with depositing system and the IIC concept, risk of any systematic fraudulent activities is mitigated. However, hackers or other groups or organizations may attempt to intervene in a smart contract or Tokens in various ways, including, but not limited to, virus attacks, DDOS attacks, concerted attacks, network attacks, and denial of service attacks, and others.

Other Risks

Lack of experience in blockhain-based projects among founders
Despite founders have strong IT background, they have no previous experience in building start-ups. Although the team is under guidance of 5 highly professional advisors providing expertise of managing projects at early stage. Moreover, Mobigraph Inc.

Independent Analytics from Blockchain Invest Club

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