Token Report: ‘China’s Ethereum’ Surges
Every Monday, we cover the news of the past week in crypto assets and offer a list of upcoming token generation events (TGEs) to watch, pulled from the Token Tracker, where we never miss a current or upcoming token sale. Check it out on our new corporate site.
This week an all-time token sale record was broken by Filecoin, a decentralized storage project that raised 200 million USD in the first hour of its sale in addition to 52 million USD from accredited investors in a private pre-sale. Despite a warning from the U.S. Securities and Exchange Commission last month on the potential regulatory limits that may be put on token sales, TGEs continue to push forward. This week we’re watching three:
Last Week in Crypto Assets
- NEO, a cryptocurrency formerly known as Antshares, has seen an 8.7X jump in price over the past month. The currency, sometimes called “China’s Ethereum,” is a public blockchain protocol on which smart contracts may be developed and tokens minted. Ethereum is known for its developer accessibility, but NEO aims to do one better, co-founder Da Hongfei told Forbes, by allowing a longer list of programming languages. On Monday, the currency leapt past a 2 billion USD total value, up from around 260 million, 30 days ago.
- A week after releasing a clarifying statement on the sale of digital currencies in the country, Singapore’s monetary authority (MAS) along with the Commercial Affairs Department and Singapore Police Force issued a warning on Thursday to prospective token buyers to be “mindful of potential risks of digital token and virtual currency-related investment schemes.”
- Bitcoin crossed a $4,000 price threshold on Sunday, leaving the Bitcoin Cash fork in the rear-view mirror following its Segwit transaction speed update.
- Filecoin’s much-anticipated token sale broke the all-time highest token sale raise on opening day Thursday by raising nearly 200 million USD in just one hour, plus another 52 million USD in a pre-sale. Its servers had experienced hiccups throughout the first hour of opening at 15:00 EST, with the team deciding to pause the sale just one hour and 10 minutes after opening. The sale remained paused until reopening on Saturday at 14:00 EST. Filecoin’s sale will remain open until Sept. 7.
- Cryptocurrency exchange Bitfinex announced on Friday it is suspending verification requests for all U.S. individuals, due to increased regulatory oversight of TGEs. Bitfinex also laid out plans to restrict certain customers from trading certain ERC20 digital tokens that may be deemed securities by the SEC, beginning at noon UTC on Aug. 16.
The Week Ahead in Token Sales
Open Date: August 15, 08:00 PST
Hard cap: 24M USD
A new blockchain protocol project, 0x, opens its token sale Tuesday, aiming to facilitate peer-to-peer exchanges of ERC20 tokens on Ethereum and interoperability among decentralized apps (DApps). DApps can be built on the 0x platform to access public liquidity pools or create their own and charge transaction fees on top of the resulting volume. For end users, 0x aims to build a platform for a variety of consumer-facing applications.
In its documentation, 0x says that “Ethereum smart contracts have failed to generate significant volume due to inefficiencies in their design that impose high friction costs on market makers.” It proposes to replace existing on-chain order books via smart contracts as well as state channels to reduce costs and improve efficiency by taking some transactions off the blockchain, including one-time transactions. In 0x’s protocol, the blockchain will be used for trade settlements only. Users in a state channel can pass cryptographically signed messages to each other, accumulating state changes without publishing them to the chain until the channel is closed. 0x’s developers call their protocol a “hybrid implementation … off-chain order relay with on-chain settlement.”
0x currently has eight projects building atop its platform: District0x, Aragon, Melonport, Augur, Maker, OpenANX, Dharma and ChronoBank. An alpha version of 0x has been live since January 2017.
0x’s token, ZRX, will be used as a form of payment from market participants generating orders to the hosts that maintain public order books. It will also be used to govern the protocol’s update mechanism in order for smart contracts to be improved over time. The ZRX sale will run for an unspecified amount of time, with a hard cap of 24 million USD. There was a mandatory registration period from Aug. 9 to Aug. 11 for those who intend to purchase tokens; those who did not register cannot participate. The 0x team will fix an equal, individually-assigned purchase cap for all buyers of ZRX in the first 24 hours of the sale so as not to encourage rush buying.
The founders of 0x are Will Warren, an applied physics researcher at New Mexico’s Los Alamos National Laboratory, and Amir Bandeali, a former fixed income trader at Chicago trading firm DRW. Supporting Warren and Bandeali are two engineers, a designer and a director of operations. The project’s advisors include: Fred Ehrsam, founder of CoinBase; Olaf Carlson-Wee, founder of cryptocurreny hedge fund Polychain Capital; and Linda Xie, product manager at CoinBase.
Open Date: August 17, 20:00 EST
Hard cap: 20M USD
Decentraland is a public virtual reality platform for users to create their own virtual worlds, in which they can monetize content and applications. Users, or “landowners” in the Decentraland universe, hold control over the content published to their “land,” which is a digital asset stored in an Ethereum smart contract. The project plans to develop capability for users to communicate with one another on the platform.
Ownership of virtual land in Decentraland will be facilitated by its ERC20 token, MANA. MANA will be used to acquire new parcels of land as well as to purchase various in-world goods and services. Decentraland will reward those who set up shop in Decentraland in order to get the network going, and once a community is established will hold contests for the creation of art, applications, games and experiences which will reward those who hit certain milestones.
Decentraland first began as a proof of concept, titled Stone Age, for allocating ownership of digital real estate to users on the blockchain. In late 2016 Decentraland’s developers began Bronze Age, a 3D virtual world divided into land parcels. The version of Decentraland that the token sale will help fund will be called Iron Age, and it aims to add a social experience onto existing layers of land ownership and content creation. It foresees use cases such as advertising, content curation based on users’ shared interests, gaming application development and the collecting and trade of digital assets.
There are several risks. The first is latency in content distribution via P2P graphical network: loading and retrieval times may be slow. Another potential issue involves the filtering of graphic, violent or otherwise inappropriate content which may be difficult to do on a decentralized network. Decentraland expects a market to emerge in which users could select filters on the type of content that is being distributed.
Decentraland’s token sale opens on Aug. 17 at 08:00 EST and will end on Aug. 26, capped at 20 million USD. The initial price of the token will be 24 USD per 1,000 MANA. The sale will be accessible via a Chrome extension for desktop only, and it will accept bitcoin, ether and altcoins via Shapeshift, a third-party cryptocurrency conversion platform. Decentraland was hit by a scam on Friday with several community members falling prey to a false URL being distributed in its Slack channel. As a result, Decentraland announced on Sunday that it had cancelled its community whitelist and will offer registrants a 40 percent discount on tokens.
Decentraland’s developers also created Streamium, a live video broadcasting platform in which streamers are paid in bitcoin, and Bitcore, a bitcoin node. Its board of advisors include Jake Brukhman, founder of CoinFund; Manuel Araoz, CTO of Zeppelin Solutions; and Luis Cuende, project lead at the decentralized autonomous organization Aragon.
Open Date: August 17
Hard cap: —
DMarket is a concept for a cross-game virtual item trade and exchange platform on which players in any game universe can sell their virtual assets to players in other game universes. According to the developers, the disconnect between game universes means that trade in virtual goods can be unnecessarily unreliable and complicated.
The global games market is set to reach 108.9 billion USD this year, according to NewZoo’s quarterly Global Games Market Report, an increase of 7.8 percent from last year. Digital game revenues will account for 87 percent of the global market at 94.4 billion USD. DMarket aims to connect existing game universes and allow the trade and exchange of assets across platforms and databases without the need for a third party.
DMarket’s tokens are set to be used on a platform as a currency for buying and selling in-game items, to distribute profits among digital property copyright holders, and in the acquisition of premium accounts for retailers and wholesalers.
DMarket’s roadmap includes the release of an alpha version in October after the conclusion of the first phase of its token sale. It aims to host a second token sale in November, followed by the beginning of its main development phase in January 2018 and API integration in June 2018. Its token sale will run from Aug. 17 to Aug. 21 at a rate of 1,000 DMarket tokens per ETH. There is no cap to the amount of tokens an individual can purchase; there will be 50 million tokens available for distribution. In preparation for the token sale, DMarket has released its smart contract address, reviewable on GitHub, as well as a Howey Test evaluation to estimate how likely a token is to be deemed a security under U.S. law. DMarket scored themselves a 20 out of 100 on the scale, “unlikely” to be a security, despite the project’s pre-deployment status.
DMarket was founded by Volodymyr Panchenko, who founded skins.cash, a virtual items marketplace that has reportedly sold 12 million items over the last year. He is founder and CEO of Suntechsoft, a global games trading company that connects marketplaces, wholesalers, retailers and publishers. DMarket’s other founder is Alexander Kokhanovskyy, who has worked in the e-sports industry for 17 years and in 2009 founded Natus Vincere, an e-sports team that reached the finals of The International Dota 2 Championships three times.
Scam of the Week
Decentraland announced on Saturday in its Slack channel that it had been alerted to a scam website, identical to its legitimate domain except for a capitalized “i” in place of the “l,” circulated in Slack via direct messages from project lead Ari Meilich’s account. Meilich’s account had reportedly been compromised and hackers had used it to ask Decentraland’s whitelist contributors to send funds to a false address.
Token Report is an independent financial information service founded by Galen Moore and Peter Vessenes. Galen is a financial journalist with a background in startups, venture capital and launching news sites. Peter is a co-founder of the Bitcoin Foundation, and launched the first VC-backed Bitcoin company in 2011. He is managing director at New Alchemy, a boutique consulting and investment group based in Seattle, Wash., that is making a pre-seed investment in Token Report.
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