Quantstamp Deals Memo

#notadvice

Original attraction

I first heard about Quantstamp when the Bread ICO got hacked. In multiple Telegram channels, people were saying “should have used Quantstamp.”

What I love

Product

There is a huge need for the product. Quantstamp is a decentralized, semi-automated (fully automated in the future) security audit protocol for smart contracts.

Whether tokens and cryptocurrencies thrive/survive or not, there will be exponentially more smart contracts in the future. A lot of them involve finances, and one of the benefits of a smart contract is trust (or that they’re trustless, more accurately). If they have bugs or get hacked easily, there is no trust. This protocol is a must for a future with blockchains and smart contracts.

Team

The team has an incredible background- specifically in testing software and helping people write better software- and a surprising passion for doing that with smart contracts. They convey their enthusiasm well in their white paper, which is clear and realistic.

What I like

Community

The community is supportive, knowledgable, and level headed. I’ve been using Telegram channels (official and unofficial) as a signal when judging token projects. The good projects have clean, informative discussions, and the bad projects are filled with negativity, spam and scam links.

Future vision

The team is looking towards the future and to contribute to the evolution of a greater idea. This is another indicator I’ve been using lately. I got it from Ray Dalio. The Quantstamp team is doing the right thing. From the whitepaper:

Our strategy is to create a foundational protocol that could be eventually incorporated directly into the Ethereum platform and to create a safe environment needed for the first Ethereum killer app.

That says a lot- enthusiasm/excitement, evolution of everyone, vision/big thinking, lack of ego, etc. All good things.

Risks

Token Velocity

It costs QSP to audit a smart contract, but there’s no “built-in” reason for anyone to hold QSP. They can buy it right before they need to spend it, then spend it. If no one holds it, it won’t appreciate in value.

Quantstamp is trying to create incentives to hold QSP through their Proof-of-Caring program, which rewards participants with airdropped tokens based on a proprietary algorithm (which involves holding QSP at your registered address). I like the fact that Quantstamp is addressing the issue, but I’m not sure whether an “artificial” program is a good idea or a distraction. I’m leaning towards good idea- mostly because if the token has no value, the protocol won’t evolve- but I still think it’s a risk to the token’s value.

This might be mitigated further if third party services that generate smart contracts can interact with Quantstamp via API. In theory, they would hold QSP to cover automated transactions… as long as they can’t purchase QSP with the same API.


This is seriously not investment advice. I typically own shares or tokens of what I’m writing about, but by the time you read this, I may have sold them or completely changed my opinion. It’s important that you come to your own conclusions about this stuff, and it’s important to take full responsibility for understanding the risks in any asset.