ShipChain Mainnet launch in July. Builders will win this race.
Q2 2020 looked like the end of a cycle and the beginning of the next one in the crypto sphere.
Looking back at 2017–2018 ICOs, followed up by a memorable altseason, where a supposedly good idea depicted in a well crafted whitepaper were good enough to raise millions of dollars (Shipchain undoubtedly rode that opportunistic wave too) and timely listing on prominent exchanges guaranteed triple digits returns, it is an understatement to claim that the crypto sector was not so efficient at granting the right valuations to the thousands of startups out there (did somebody say Dentacoin?).
Few years later, one can relate to that Loom article [1] rightly stating:
Too many projects raised too much money under suspect pretenses, then mostly squandered funds in efforts to pump or prop up their tokens.
Indeed many (most?) projects didn’t meet expectations (in the expected timeframe at least), burning many investors, who learnt their lesson and may never come back, while on the other hand, gamblers developed an addiction for easy gains (or volatility?) and now slowly lose it all in day-trading and pump & dump schemes…
This left us with a space where the biggest scams now pump the hardest [2] while awareness and recognition of legit builders, when not met with ‘crypto marketing standards’ [3] such as heavy presence on social media, and leveraging tools like airdrops & bounties, fell into the abyss.
More importantly, the crypto market is also constitued of hundreds of projects that actually sit in between those two extremes: the ones who, despite having the right idea and a decent attempt to execute it, may still fail, for giving more importance to their short term token value than to two critical aspects that would though determine their future: regulatory compliance and a sound balance sheet (or a robust plan to get one).
History doesn’t repeat but often rhymes… and one can easily see the ressemblance between that state of affairs and this now old dot-com bubble quote [4] from Michael Hartly, founder of CheapTickets, going after his unprofitable competitor Priceline whose valuation reached close to 10 billion dollars on its first day of trading in 1999.
“We’ve got a policy here at CheapTickets,” founder Michael Hartley groused. “We need to make money. It hurts our valuation.”
By now, you’ve already guessed in which bucket we would classify Shipchain, whose market cap is now a fraction of the 30m$ raised in a presale in late 2017 to develop a Track and Trace logistics web and mobile platform, that intends to leverage public blockchain and IoT technologies (if you do not know Shipchain, this FAQ is worth a read [5]).
Like every young startups, Shipchain did mistakes. Its whitepaper raised expectations as high as the amount of money it raised, and one knows that managing these expectations over a multi-year timeframe is an arduous task, which Shipchain’s cofounders have not managed to master. Now, the point of this article is to highlight that they may still have set priorities and made decisions that give them today a higher chance to deliver their plan and meet these expectations in a time frame where other projects may no longer exist.
1) No compromise with regulatory compliance
Shipchain actually never conducted its ICO [6]. All of the tokens allocated to this purpose got sold out in the presale (with a minimum cap per investor) and people who missed out got a small airdrop of SHIP tokens, which got negative press at the time: following a full KYC/AML procedure was required to participate to both the presale and the airdrop. For an Airdrop really? [7]. Yes, and if Shipchain’s co founders had not done this, their startup may not exist anymore and the SHIP token may be worthless! Here is why.
Indeed few months later, as a “rapid response to complaints” (from competitors, old enemies, disappointed investors? we will never know), Shipchain got caught into the operation “Cryptosweep” intending to crack down on ICOs carried by startups registered in the USA in 2017 and 2018. [8]/[9].
Few months later, the C&D was vacated after “ShipChain argued a lack of jurisdiction in a two pronged argument: the company maintained throughout the dispute that it did not believe its SHIP tokens were securities, and also said that the cryptocurrency was not marketed to or purchased by any South Carolina residents.”
It is considered since then that Shipchain’s rigor and careful stance regarding the regulatory framework in the US is what took them out of trouble this time and gave them a strong argument to reassure customers worried about the regulatory uncertainty surrounding cryptocurrencies. [10]
2) A lean company and #build mentality
At the top of the 2018 altseason, it was common knowledge that seeking listing on public exchanges like Binance, Huobi, Coinbase (which arguably could present a risk for the token to be considered a security as per the Howey test [10]…) was costing millions of dollars to the startups who considered that building liquidity for a utility token was a higher priority than giving it a use-case as soon as possible.
Allocating its funds primarily to development instead, Shipchain never spent a penny in listing fees, built its modest heardquarters in peaceful Greenville in South Carolina far from Silicon valley’s exhorbitant wages, and spent most of 2018 and 2019 pushing code (when following github commits [11] or chatting on Gitter [12] was the most reliable way to hear from them after Shipchain decided to close its Telegram for the reasons outlined in this article [13]).
This #build mentality and preference over short term #hype naturally came with critics that it drove both token value and liquidity down to oblivion but one can argue that such drop was inevitable once taken for granted that product development would take years (2 and 1/2) before the token could be given a true utility. Besides, other projects, even some hyped ones, ultimately experienced similar drops.
Unpopular opinion: controlling their burn-rate by running a lean business, essentially focused on building, and consequently standing a chance to exist and be relevant on a multi-year time frame, was still most probably the best way to protect SHIP’s investors’ initial investment and prospect of future returns.
3) A respectable code of conduct
We can look into this from a different angle. On the token side, one glance at Etherscan [14] and the knowledge that the first 2 wallets will solely be allocated to bootstrap, promote and enhance the Shipchain DPoS sidechain (the Validator rewards pool being one application for these tokens) enable anyone to spot that no individual or team members holds more than 1,4% of the SHIP total supply and the clean transaction history of these wallets help to demonstrate Shipchain’s ‘no insider trading’ internal policy.
One can also look at how Shipchain decided to act during the COVID-19 pandemic, by notably donating its idle computing power to the Folding@Home program helping to find a vaccine [15].
On the transparency side, despite their closure of the Telegram channel, the Shipchain team remained available through Gitter and always responded positively to community request for AMA sessions (2 of them were held in July 2019 and January 2020, next one most probably in July 2020).
With regards to true company and its cofounders’ personal values, there is nothing better than personal connections to form a judgment but if you do not have this, take a look at Glassdoor comments [16] or check for yourself below how Shipchain’s CEO decided to close its monthly newsletter, couple of weeks from reaching one of their biggest milestone (mainnet) [17]. Small details that tell a lot.
4) Networking: From gaining visibility to becoming indispensable
One does not start a revolution alone and that statement certainly applies to the mission of introducing new technologies in an industry known for its fragmentation and to a certain degree, its resistance to change.
Shipchain’s CEO John Monarch understood that and attempted to contribute (do note the choice of verb here —the ones only looking for hype usually use other verbs) to various consortiums from World Economic Forum [18] and United Nations [19], to more recently the Baseline Protocol [20] and BiTA [21].
These efforts are crucial for 2 reasons:
1- The vision of handling logistics data on multi-modal transport in a trustless way relies on a very diverse set of actors to collaborate with the same platform/technology, which ultimately implies the industry needs new standards.
2- While contributing to set these standards, Shipchain can leverage its first mover advantage (or expertise) in a few areas, like the EDI (re)formatting, IoT integration and important for the token holders, sidechain building on top of Ethereum. Risks are too high that the industry would ultimately move on without Shipchain and its solutions otherwise.
5) Roadmap: Set the path and stick to it
After all, being successful is all a matter of doing the right things, in the right sequence, isn’t it? For example, there is nothing wrong in building liquidity but what’s the point of it, if the utility token is not being used yet and no one needs it? Utility tokens are new assets, whose regulatory foundations are still wobbly. It would be foolish to doubt that people bought SHIP in prospect of a profit, but how could they if taking a few unfortunate shortcuts was ending up with a SEC crackdown? This is a message that the Shipchain whitepaper and team did not manage to convey properly: the presale marked the first day of a several years long challenging journey where taking the right actions in the right sequence would make or break the end goal (step 8 below).
Although the chosen steps of that journey did not turn out to be ideal for short term token valuation (this is a euphemism I may say), Shipchain set a path to deliver their promises, and to date have actually followed it:
1- Set realistic goals: developing a dapp and associated APIs or a PoS/dPoS sidechain are 2 different projects. Attempting to address both would have been bound for failure, hence the early scouting of available platforms for the sidechain and selection of the Loom SDK, still the only one to date that achieves full EVM compatibility and interoperability with more than one public blockchain (even COSMOS did not deliver that yet).
2- Shipchain sidechain Testnet (launched in Q2 2019)
3- Shipchain Track & Trace, dApp development (web and mobile) and first customer onboarding [22]/[23] Q4 2019 / Q1 2020
4- Shipchain side Mainnet July 2020 (initially planned for March but delayed due to movement in Loom’s team [24]) securing SHIP’s status as a utility token powering a decentralized blockchain (dPoS consensus in the first year).
5- Token governance and sidechain maintenance. A non-profit foundation was announced few months ago (tentative name: Openscale). Charter and legal registration are under way. This setup will segregate legal status between Shipchain Inc. a US-registered dApp developer and the foundation, in charge of maintaining, promoting and educating the industry and crypto market about the Shipchain Network/Sidechain (who ultimately will run more than one logistics dApp, developed by various entities) and its token.
6- Tokenomics fine-tuning (gas cost etc) in a democractic and decentralized manner through the foundation. We highly recommend these two articles to understand better the parameters that would define the supply and demand mechanism of the SHIP token [25]/[26].
7- Network effect: virtuous circle created by actual use of the Shipchain sidechain whose native token is the SHIP token (like ETH is for Ethereum) raising additional industry and market visibility & interest, themselves triggering more direct activity as well as speculation of future utility.
8- Actual demand for the utility token > Free circulation of SHIP tokens on exchanges.
What every utility token holders are waiting for are normally steps 7 and 8, but shaddy activities now common in the crypto space (which either got people rekt or very wealthy for very wrong reasons) made most people forget that steps 1 to 6 are required prior to these two final steps, often (rightly this time) depicted as such:
Closing words
Make no mistake, even for people who understood why the 5 concepts and 8 steps described above are important, investing in utility tokens remain a very risky business (potential rewards being equally high) and the journey is still as long and full of challenges as it is exciting for anyone willing to contribute to the 4th industrial revolution [27] and possibly net out on way a profit for one’s efforts.
All in all, Justin Cronin’s words, American author born in 1962, are the best ones to sum up what Shipchain has been doing over the past couple of years: real courage is doing the right thing when nobody’s looking.
Now remember:
