Coin Report #5: Stakenet

N.B: This Coin Report has been selected by the readers of the blog, with Stakenet winning the poll with 33% of  the ~5,000 votes. Congratulations!

Welcome to the fifth Coin Report. In today’s report, I’ll be covering Stakenet, looking primarily at its fundamental strengths and weaknesses, followed by analysis of its price-history and concluding with a final grading out of 5. I hope you enjoy the read!


Introduction

Stakenet has been a coin of great interest to me for a long time. I first came across the project back when it was POSW, prior to its rebranding and chain swap. Back then, I saw a coin with a great chart, solid fundamentals and some exciting goals. I think I originally bought in around 1200 satoshis, and held through the swap to XSN (its current ticker), all the way to its peak around 11k satoshis this past summer. I then noticed a Complacency shoulder forming on the chart, and exited my entire position a little below 10k satoshis, content with my profits but disappointed with a couple of things: firstly, that XSN did not quite reach the heights that I expected of that cycle; and secondly, that I had to exit my position, as I did like the project and had spent a lot of time learning about it. Regardless, I am first and foremost concerned with turning a profit on my trades, and thus any admiration I had for Stakenet had to be set aside. In hindsight, it was absolutely the correct decision, as that particular bull cycle did end and prices have retraced heavily.

But enough background on my interest in the project; what is important is where the project stands now, and, prior to researching this report, I had little clue on the progress that had been made since the summer. There is indeed a lot to get through in the following report, and a number of interesting cross-comparisons to be made with prior reports, particularly those of Bulwark and ALQO. These two coins seem to have some overlap with Stakenet in their ambitions and their current developments, and I look forward to dissecting where Stakenet shines and where it does not…

I hope this fifth Coin Report will prove objective and insightful.

If you’d like to know more about the project, prior to reading the report, here are some of Stakenet’s primary links:


Fundamental

General:

Name: Stakenet

Ticker: XSN

Algorithm: X11

Sector: Decentralised Financial & Cloud Services

Exchanges: Cryptopia, Livecoin & Sistemkoin

Stakenet was launched in March 2018, completing a transition from the POSW chain. Since March 1st, the POSW chain has been abandoned, with Stakenet operating on its own blockchain. At that time, 73m POSW was swapped to XSN. There is no premine and there was no ICO. The coin also exclusively operates with a Proof-of-Stake consensus mechanism, and is currently in its final block reward stage; a stage that will continue indefinitely. This is important to note for the purposes of profitable speculation, as we’ll discover when we dig into supply emission and inflation.

XSN has very little price-history, having only been listed on exchanges from early April 2018. As such, it has only experienced a (brief) bull cycle that topped out in June, with price now trading within its first bear cycle, having made a local low early last month around 1800 satoshis. But more on that a little later…

There is a great deal of ambition apparent in the Stakenet roadmap and whitepaper, and the project states that its ultimate aim is to build “an integrated decentralized ecosystem to create a suite of effective investment tools for investors and the world’s first truly decentralized cryptocurrency bank.” They also persistently refer to Stakenet as “a trustless, profit-driven economy.” There is much to be evaluated here, but with goals as ambitious as these – with such a broad, global scope of use – the development has to be constant, consistent and distinguished. It’s a lot to ask for, but let’s see how Stakenet fares.


Metric Analysis:

Below are listed a number of significant metrics, all of which are accurate as of 20th November 2018. For anyone reading this who has yet to read a Coin Report, it might be worth reading this section of the first report, where any potentially unfamiliar terms are explained. For any terms or metrics specific to this post, I will provide explanations besides the figures. Also, Transactional Volume and NVT have been omitted due to lack of functionality of the block explorer for such calculations. However, as Stakenet (as we’ll see) is aiming at XSN becoming a store-of-value rather than a currency, this is not such a big deal. The rich-list analysis has been conducted using https://xsnexplorer.io/. Lastly, I also used https://masternodes.online/currencies/XSN/ for some masternode-related data, though much was calculated by myself.

Metrics:

General:

Price: 2273 satoshis ($0.10)

Exchange Volume (24H): $172,764

Circulating Supply: 73,434,401 XSN

Total Supply: 82,563,978 XSN

Maximum Supply: 135,123,978 XSN (there is theoretically no maximum supply, but I have calculated it as the circulating supply in 5 years)

% of Max. Supply Minted: 61.10%

Network Value: 1669.16 BTC ($7.412mn)

Network Value at Max. Supply: $13.638mn

Category: Midcap

Exchange Volume-to-Network Value: 2.33%

Average Price (30-Day): $0.18

Average Exchange Volume (30-Day): $195,936

Average Network Value (30-Day): $13.208mn

Average Exchange Volume-to-Average Network Value: 1.48%

% Price Change USD (30-Day): -48%

% Price Change USD (1-Year): N/A

USD All-Time High: $0.89

% From USD All-Time High: -87.5%

Premine % of Max. Supply: 0%

Premine Location: N/A

Liquidity (calculated as the sum of BTC in the buy-side within 10% of current price across all exchanges): 8.471 BTC

Liquidity-to-Network Value %: 0.51%

Supply Available on Exchanges: 1,615,485 XSN

% of Circ. Supply Available on Exchanges: 2.2%

Staking & Masternodes:

Network Staking Weight: 7,579,469 XSN on XSN Cloud (unable to determine entire Network Staking Weight)

Staking ROI (Annual): Minimum 9.23%* (if all circulating supply is staked minus that locked in masternodes)

Masternode Price: $1,514.01

Masternode Collateral Size: 15,000 XSN

Masternode Count: 1479

Masternode Count Growth (30-Day): -0.14%

Masternode ROI (Annual): 21.32%**

Masternode Reward / Block Reward: 45%

Supply Locked In Masternodes: 22,185,000 XSN

Masternode Network Value$2.239mn

MNV / Network Value: 30.21%

*To calculate minimum staking ROI annually: ((Annual Supply Emission * 45%) / (Circulating Supply – Masternode Locked Supply)) * 100 = (4,730,400 / 51,249,401) * 100 = 9.23%

**To calculate masternode ROI annually: ((Annual Supply Emission * 45%) / Masternode Count)) / Masternode Collateral = (4,730,400 / 1479) / 15000 = 21.32%

Supply Emission & Inflation:

Current Block Height: 364690

Block Reward Schedule: Currently in final reward stage of 20 XSN per block with 60-second block times. This will continue indefinitely.

Annual Supply Emission: 10,512,000 XSN (238.94 BTC at current prices)

Annual Inflation Rate: 14.31%

Circulating Supply in 365 Days: 83,946,401 XSN

Distribution:

Address Count: 6947

Supply Held By Top 10 Addresses: 34.31%

Supply Held By Top 20 Addresses: 40.95%

Supply Held By Top 100 Addresses: 56.80%

Inactive Address Count in Top 20 (30 Days of No Activity): 9

Analysis:

Now, I’m sure you were all enthralled by that mountain of metrics, but which of them are the most insightful for our purposes? Well, this is where Stakenet differs a little from Bulwark and ALQO (two projects that I have previously reported on and that I believe share a number of similarities with XSN). Where those two projects are focusing a lot of their effort on making their respective coins more effective as means-of-payment, Stakenet is seeking to position XSN as a store-of-value, with the coin fueling the Stakenet ecosystem. As such, metrics such as Transactional Volume and NVT, which would usually be insightful, are not so relevant, and so it is not such a problem that the Stakenet block explorer does not allow for such calculations to be easily made. Where, then, should we look for insight? In my opinion, there is much to be gleaned from the metrics concerning supply emission, distribution and masternodes, in particular. But, before we get to those, let’s run through some of the General metrics:

Firstly, Stakenet has unusually high Liquidity, calculated using buy-side depth within 10% of current prices as a percentage of Network Value. Where it’s potential competitors in ALQO and Bulwark had 0.12% and 0.29% Liquidity, respectively, Stakenet currently has 0.51%. This is almost twice that of ALQO and 4x that of Bulwark. This is indicative of high demand at current prices, relative to Stakenet’s competitors.

However, this evens out when we take a look at the Supply Available on Exchanges. Stakenet has ~1.6mn XSN available in the orderbooks on its two primary exchanges, Cryptopia and Livecoin. This constitutes 2.2% of the circulating supply. Bulwark, however, only had 1.18% of its circulating supply available on exchanges, suggesting that the desire to hold onto Bulwark is greater than the desire to hold onto XSN. Perhaps this is a symptom of the ~60% annual masternode ROI offered by Bulwark relative to the ~21% ROI offered by Stakenet, and the minimum annual staking ROI of 38.57% relative to Stakenet’s minimum of a little over 9%. (I didn’t run these calculations for ALQO, so a comparison cannot be made here.) However, these greater rewards come with a catch, as we will discuss when we delve into supply emission and inflation; where Stakenet shines over Bulwark.

Moving on, I’d like to highlight the metrics concerning volume and price. Stakenet’s Exchange Volume for the past 24 hours works out as 2.33% of its Network Value. This is the largest EVNV figure I’ve found whilst researching these reports, indicating significant interest in the coin despite the macro bear market. To cement this notion of interest, the Average Exchange Volume works out as 1.48% of the Average Network Value for the past month; the interest in Stakenet has been sustained at greater-than-usual levels given the current market conditions. For context, of my previous four reports, no coin has had an EVNV or Average EVNV of greater than 0.64%, which is less than half of Stakenet’s average.

Further, Stakenet is currently price around $0.10, with an average price of $0.18 for the past 30 days… it is trading at a ~40% discount to its average for the month. It is also trading 48% below its opening price for the month (in USD). This, of course, is partly a symptom of Bitcoin’s recent decrease in prices, but perhaps it is an opportunity for a relatively cheap entry. We’ll come back to this in the Technical section.

Lastly from the General metrics, it is important to highlight the lack of premine. Unlike Bulwark or ALQO, Stakenet was launched without a premine, and, though both of those projects had small premines, this could imply relative strength if Stakenet is able to deliver on its promises as effectively as those two, given that all three projects are looking at similar areas of development (which we’ll come to later).

So, let’s get stuck into the metrics concerning Supply Emission & Inflation:

The most significant aspect of Stakenet’s supply emission is that it is currently in its final and lowest stage of block rewards, thus inflation is the lowest it has ever been. With 20 XSN rewarded per block and 60-second block times, this equates to an annual supply emission of ~10.5mn XSN, or 238.94 BTC at current prices. Stakenet’s annual inflation rate is a little over 14%.

Now, let’s break this down a little further. Whilst even a surface-level calculation like this one illuminates just how low the inflation is for Stakenet – and thus, how little headwinds there are for price growth – it is important to get an understanding of whether current demand would cover this inflation: 238.94 BTC of supply coming into existence annually at current prices equates to 0.654 BTC of daily supply emission, or ~$2,900-worth. Stakenet’s Average Exchange Volume for the past month is ~$196,000; 67.5x greater than the supply emission.

This is a very promising sign of sustained demand and there is a strong possibility that current prices will be maintained going forward, as there is vastly more daily volume being traded than there is supply being minted. This is not even taking into account the fact that 10% of the block reward is automatically locked in a Treasury fund that can only be accessed via an accepted proposal through the Governance system. Decreasing prices against Bitcoin at current levels of volume would indicate either smart-money distribution or panic, as it could not possibly be caused by the sale of the daily supply emission. We’ll look more at price when we dissect the chart.

Further, when we take into consideration the current Liquidity figure of 8.471 BTC, daily supply emission is covered almost 13x by buy support within 10% of current prices. This is a good indication of a cheap entry.

Now, let’s take a look at Staking & Masternodes:

Whilst total Network Staking Weight was unable to be determined (as was the case with Bulwark and ALQO), the functionality of XSN Cloud allows us to see that over 10% of the circulating supply is being staked using that service alone; or ~15% of the circulating supply minus the supply locked in masternodes. Further, I calculated that minimum annual staking ROI would be around 9%, if all circulating supply minus that locked in masternodes was being staked. This is a modest but decent minimum return.

Moving onto masternodes, the first point-of-interest is in the 0.14% decrease in active masternodes over the past month. This is neither good nor bad, and simply indicates a stable network.

Secondly, I calculated the annual ROI for a masternode to be a little over 21%, which is significantly lower than that of Bulwark and ALQO, which return ~60% and ~53%, respectively. However, Bulwark’s annual inflation rate comes in at a little under 55%, and ALQO’s is around 5%. Going by these metrics alone, if one was simply seeking a profitable masternode, going with ALQO would seem the best choice, as its return covers its inflation by almost 10x, whereas Stakenet’s masternode ROI is 50% greater than its inflation rate, and Bulwark’s barely covers its inflation.

Lastly, we must look at Masternode Network Value. This is where Stakenet comes up a little short relative to the other two projects. Stakenet has an MNV of ~$2.2mn, which equates to just under a third of its Network Value. In comparison, ALQO had an MNV equal to 49.79% of its Network Value, and Bulwark had the strongest MNV, with 55.2% of its Network Value comprising of masternodes. This is a signficant metric as it gives us another perspective on demand and a much clearer picture on real value than the traditional Network Value (market cap) figure.

At long last, we come to Distribution. This is where the decentralisation of a project can be assessed, particularly if that is one of its goals, and, more importantly for the speculator, smart-money interest can be determined. Now, the Stakenet block explorer is pretty awful for functionality, so I did the best I could to accurately assess distribution. It seems decentralisation is where Stakenet is currently failing, relative to its competitors in Bulwark and ALQO. ALQO, in particular, is also looking at becoming the foremost decentralised financial and cloud services ecosystem, but is doing significantly better on the decentralisation front. Stakenet’s top 10 richest addresses control ~34% of the supply; the top 20 control almost 41% of the supply; and the top 100 control 56.8% of the supply. ALQO’s top 100 richest addresses control less than half the supply that Stakenet’s top 10 richest addresses control: 15.77%. Bulwark’s top 100 richest addresses control even less, at 15.3%. This is certainly no bad thing, on Stakenet’s part, for our purposes of profitable speculation, but it must be said that it is a current failure for the project given its core aims.

(update: apparently, those larger addresses are mostly exchange-owned and the richest address is the XSN Cloud – usually these are labelled as such, so I thought that they were individually-owned)

Breaking the distribution down a little further, 9 of the top 20 richest addresses have been inactive for the past 30 days, and thus almost half of the largest holders seem to be content with position sizes at current prices. This is despite (as we will see on the chart later) a recent sell-off, confirming that the decrease in price is a result of panic rather than smart-money distribution. Further, of the remaining addresses, the majority seem to be staking or running masternodes. The 20th-richest addresses recently bought their entire position of 384k XSN. There was, however, some position shaving that seemed to take place in early-to-mid October, which actually lines up with the low that formed on the chart around 1800 satoshis.

That concludes this section on Metric Analysis. Onto the Stakenet community:


Community:

There are two primary aspects of community analysis: social media presence and Bitcointalk threads. I’ll begin with the former before moving on to the latter.

Social Media:

Concerning social media presence, there are four main platforms to examine: Twitter, Facebook, Telegram and Discord. In the previous reports, I had included Slack in this list, but as none of the coins reported on thus far seem to use the platform, I will no longer be including it.

Stakenet is present on all four platforms. To begin, let’s look at the various social metrics that I calculated from the Stakenet Twitter and Facebook accounts:

Twitter Followers: 10811

Tweets: 1225

Average Twitter Engagement: 2.09%

Facebook Likes: 1575

Facebook Posts (90-Day): 40

Average Facebook Engagement: 2.48%

Using RivalIQ‘s benchmark report as a point-of-reference, as usual, Stakenet excels in its social presence. Stakenet’s Average Twitter Engagement rate is 45x greater than the average across all industries, and ~160x greater than the average for the Media industry (the closest industry in the report). It is also a little over 5x greater than the Average Twitter Engagement rate of Bulwark, and ~60% greater than that of ALQO. Further, where those two coins had fairly weak audiences on Facebook, Stakenet comes in strong with over 3x more Likes than Bulwark and almost 8x more than ALQO. This shows a cross-platform commitment to generating a social media presence. Regarding Facebook engagement, Stakenet has an average engagement rate that is 15.5x greater than the average across industries, and 31x greater than the engagement found in the Media industry. It also beats Bulwark’s rate of 2.16%, despite Bulwark having a far smaller audience. ALQO’s rate was 3.43% but the sample size was only 1 post in the past 90 days. Overall, very promising.

Now, let’s take a look at the Discord group. The Stakenet Discord has 5862 members, which is a few hundred more than the Bulwark Discord and a few hundred less than ALQO. There are clearly segmented channels spanning relevant topics. The FAQ channel is extensive, providing informative answers to a plethora of common questions that a new user might be thinking about. This is great for accessibility. The Announcements channel seems to have been regularly updated (every other day, or so) up until about two weeks ago, with no update since. The Github channel shows near-daily activity, which is promising. Regarding resources, these are all compiled in their own channel, ensuring ease-of-access. Further, there are multiple channels for support depending upon the support required, allowing for efficiency of management for the team and more useful responses for the community. As would be expected, much of the discussion occurs in General, and the channel was actually utilised to great effect recently by imploring the community to vote on the poll for this Coin Report. As such, Stakenet won the vote with 33% of the total votes. Positive. There seems to be plenty of back-and-forth between the community, with suggestions being put forward and the team seeming to take these on board. This has dried up a little over the past 48 hours, but this is perhaps in part a symptom of the recent Bitcoin volatility. Overall, there is a strong sense of community involvement and a genuine interest in Stakenet’s future. One thing that could perhaps do with improvement is the % engagement of the group as a whole: there seems to be a lot of discussion between 100 or so members. Regardless, the Discord definitely scores a 5.

Moving onto the Stakenet Telegram, there are 2514 members in the group. A comprehensive list of relevant resources is pinned, ensuring new user accessibility and thus allowing for greater community growth. Looking through the past couple of weeks of messages, I can see that the vast majority of discussion is support-related, with queries being swiftly answered. There is also a clear trend in growth of the group size. However, there is rather little conversation concerning the development of the project and no palpable sentiment of genuine interest towards the future of the project, unlike that found in the Discord group. There also seems to be only ~25 individuals in discussion recently. 4 out of 5.

BitcoinTalk:

The Stakenet BitcoinTalk thread was created on March 28th, 2018, and has since generated 33 pages of discussion, totalling 658 messages. In the past 90 days, there have been 206 posts from around 50 individual posters: the most posts in 90 days of any coin I’ve reported on so far. The community seems eager to answer questions from new users and the thread is used to push out long-form, detailed development updates via the Medium blog. As tends to be the way with BitcoinTalk, there is quite a lot of focus on price, but there is plenty of discussion on support and some conversation concerning the future of the project. In particular, there is talk about the upcoming Decentralised Exchange, which will be the run fully on masternodes. Overall, I get a strong impression, and it is certainly the strongest thread of the five coins I’ve written reports for. 5 out of 5.

And that concludes my evaluation of the Stakenet community. Onto Development:


Development:

For the following Development analysis, I will be evaluating project leadership, the website, the roadmap, the whitepaper, the wallets and finally providing a general overview:

Project Leadership:

Once again, relative to competitors, Stakenet seems to be in a strong position with regards to its leadership. There are 18 listed core team members on the website; Bulwark and ALQO both have fewer than 10. There are 40+ individuals reported as part of the Stakenet team. More impressively, there are 535 Github contributors, which shows true decentralisation of development (making up, at least in part, for the lack of strong decentralisation of the coin itself). They are currently hiring an International Communications Manager and an Article Writer.

Overall, I like the balance amongst the listed team, with 10 members that have relevant experience in development, 7 that have relevant experience in marketing and support and a  listed advisor in Frank Amato, who is assisting with development of the DEx and has vast experience in traditional finance. This is a good balance between generating brand awareness and creating a strong end-product: there’s no point in having a stand-out product if no one knows about it, and even less point in having a strong brand identity with no working product. Overall, very impressive. I also like that they’re continuing to expand. 5 out of 5.

Website:

www.stakenet.io

The website itself is sleek and easy-to-use. It is well-design with a very strong brand identity. I would like to see the Medium blog linked in the main menu, perhaps alongside the Wiki (extensive FAQ) as it is such an insightful resource for those interested in the product. On the topic of the blog, it is thorough and fairly regularly updated with a variety of topics covered. All the relevant social and resource links are included, and there are informative pages on the team and the coin itself. However, the block explorer is dreadful and in dire need of an update. It needs to be far more functional and feature-rich. XSN Cloud (which we will get into in the following sections) works smoothly, though it is in Beta at present. Overall, 4. Sort that explorer out.

Roadmap:

https://stakenet.io/roadmap/

Currently, only the 2018 roadmap is available, though I can see an inaccessible page for the 2019 roadmap.

The 2018 roadmap begins with a brief description of the composition of the roadmap itself, which is useful as it allows new users to better understand the core components of the project’s development. The layout of the roadmap is visually appealling, comprising of brief descriptions of individual goals, with dates of completion and a visual progress bar. There are also Show More tabs for further info. The roadmap clearly states that the various projects in development will see reveneues returned into XSN. As the first 3 quarters of the year (beginning with the launch in March) are pretty much complete, there has been much progress:

In Q1 (March-May), XSN successfully underwent a coin swap from POSW, and Trustless Proof-of-Stake (an original innovation by Stakenet) was integrated. Masternodes were also implemented and the end of the quarter saw the release of the new website.

Q2 (June-August) saw team expansion and the appointment of Frank Amato as advisor. The website was updated and XSN Cloud was launched with Staking-as-a-Service. Segwit and Lightning Network updates were completed.

Q3 (September-November) is the deadline for the Excalibur multi-currency hardware wallet. Further info can be found at https://medium.com/stakenet/xsn-core-update-september-xsn-light-excalibur-epos-9046a93cf222. The progress bar indicates this is near-completion. Q3 has also seen the completion of Lightning Swap compatibility, allowing Lightning Network Cross-Chain Atomic Swaps (more on this). In essence, this allows for instant swaps between XSN and other Lightning Network coins. Apparently, Stakenet is the first coin in the space to achieve this outside of BTC and LTC. Very impressive stuff. Masternodes-as-a-Service are also scheduled for Q3 completion, and are 95% complete. Further, testing for the hardware wallet prototype is complete, Stratis and PIVX have been added to the XSN Cloud for staking functionality, and the Revolving Stake Bonus (RSB) business model has been implemented, with a trackable page depicting buy-backs-and-burns of the XSN supply and funds donated to the Treasury.

Next quarter (December-February) will see zk-SNARK and TOR integration, Cross-Chain-Proof-of-Stake functionality, cold staking via Ledger Nano S, conceptual work completed for the DEx, autonomous swaps via masternodes, testnet sharding, new whitepaper and roadmap releases and prototype launch of the hardware wallet. Wow. That’s a lot to get done in 3 months. I’ll be beyond impressed if it’s all completed to a high standard. The ambition is certainly great.

The roadmap gets a 5 out of 5 but I’d have liked to have seen more of 2019’s roadmap given we’re only a month away from the New Year.

Whitepaper:

https://stakenet.io/Whitepaper_Stakenet_V3.0_EN.pdf

My first impression of the whitepaper is that is is far too long. 56 pages is incredibly excessive, regardless of the content, and this is the weakest part of the project thus far, as I will explain. The Bitcoin whitepaper is 9 pages long… too long a whitepaper makes the most important document less accessible or attractive for new users.

However, there is a clear and ambitious overall goal for Stakenet stated in the opening paragraphs:

Stakenet (XSN) is building an integrated decentralized ecosystem to create a suite of effective investment tools for investors and the world’s first truly decentralized cryptocurrency bank.

The whitepaper also opens by listing many of their innovations or their improvements on existing technologies (TPoS, CCPoS, DEx, masternodes with multiple income sources, RSB, cold staking etc). This is all clearly described in jargon-free prose, painting a solid overall picture as to the project’s core components. The block reward schedule is informative and transparent, with the 10% Treasury reward not obscured. There is also a focus on XSN becoming a “store-of-value” and Stakenet being a “trustless profit-driven economy”. There are visual aids to increase ease-of-understanding and much of the description remains in plain English. That being said, the prose should be far more concise, with much overlap in the pages concerning goals/aims/objectives/missions/vision etc.

Next, there is a condensed version of the roadmap printed in a visually appealing graphic, which is useful. This usefulness dwindles when the following pages are filled with a detailed breakdown of each component of the roadmap, in exactly the same language as that of the roadmap on the website. It feels redundant. There is also a lot of repetition throughout the document, especially with regards to the components of the Stakenet ecosystem. This is what is making the whitepaper unnecessarily long.

That being said, there are informative yet brief sections on the history of XSN and its beginnings as POSW. The subsequent graphic featuring Bitcoin first-of-class forks is particularly smart, as it distinguishes Stakenet as one of few Bitcoin forks truly innovating. This is followed by clear breakdowns of more general technical terminology concerning cryptocurrencies (algorithms, consensus, masternodes etc).

The Treasury section elaborates on the 10% block reward, stating that these funds will be exclusively used for development, bounties and marketing, Further, the funds will only be accessible once a proposal has been accepted via the governance system, ensuring decentralisation of power.

Next, the block reward schedule is repeated – again, redundant. Later sections delve into more technical aspects of Segwit and Lightning Network. The following section on Trustless Proof-of-Stake is useful as it serves to distinguish XSN, showing its unique use-case; the utility of cold storage staking and Staking-as-a-Service is massive. There is then pages and page of material covering the history of Proof-of-Stake, which, whilst seemingly overkill and certainly dull, does help illuminate where Stakenet has improved on these older solutions.

We then find out that masternodes will be getting rewards via three income streams: block rewards; 100% of DEx fees; and 100% of TOR fees. This is followed by some very informative sections explaining various privacy technologies. But, alas, we find pages and pages of material on consensus mechanisms, making the whitepaper begin to feel almost like a cryptocurrency encyclopaedia rather than a document explaining the purpose and development of Stakenet. Once again, there is repeated material on TPoS, and, most mindnumbingly, there are sentences that have been copied and pasted within the same section in the XSN Businesses section. Proofreading is required. I also think a condensed “light paper” would be far more useful, as, by the final few pages of the whitepaper, I could not wait to stop reading. It is just a little bit confused; there are some informative, concise and exciting sections mingled with dull and excessively long sections of little utility. Overall, 3 out of 5.

Wallets:

Concerning wallets, there are local wallets for Windows, Mac and Linux and the web wallet on XSN Cloud. There is a multi-currency hardware wallet in development, as well as a multi-currency light wallet for desktop and mobile.

The Windows wallet is well-branded, like everything else, and works well with smooth UI/UX. It is a little bit bare-bones in functionality, a bit like the explorer. It is also a little high in CPU usage. Overall, solid 4 with room for improvement.

General:

Generally, Stakenet has a lot going for it. Significant achievements of the past year include the initial transition to XSN from POSW; the integration of masternodes; Trustless Proof-of-Stake; Segwit; and Lightning Swaps. In particular, those latter 3 are stand-out achievements. There is also so much to look forward to, it seems: a Decentralised Exchange; DApps on the Stakenet blockchain; a multi-currency hardware wallet; zk-SNARK integration; cold staking functionality for Ledger Nano S; a multi-currency Light wallet; and, a new innovation in Exertive-Proof-of-Stake. You can find out more on that here.

The primary innovation, and what I think gives Stakenet an edge over its competitors, is Trustless Proof-of-Stake, Cross-Chain-Proof-of-Stake and Lightning Swaps. These are truly revolutionary technologies in the space.

Regarding funding, I like that they have a 10% Treasury that is governed using the masternode network. I am more excited for the RSB mechanism to start buy-backs-and-burns and to begin assisting with Treasury funding as the Stakenet ecosystem evolves to include more services.

That concludes my fundamental analysis of Stakenet. Let’s have a look at that chart:


Technical

Whilst there is rather little price-history for XSN, the chart is somewhat of a beauty in its clean market structure. We can quite clearly see the phases of the bull cycle play out, with a peak forming in June and price subsequently bleeding out over the past few months. That bleed occured on unusually low volume. Since then, price seems to have found a bottom at ~1800 satoshis, and the volume profile is in an uptrend over the past few weeks, indicating that accumulation is once again underway. Price is currently sitting at a level of prior resistance potentially turned support, and is only ~20% above all-time lows. Given the rest of this report – in particular, the Metric Analysis – it would seem as though price is in a strong position for a low-risk, high-reward entry, and the signs of reversal are there. It will be interesting to see whether Stakenet can buck the macro market downtrend in the short term, but, over the coming 12-24 months, I can see a lot of upside for the coin. Exciting.


Conclusion

This report is now approaching 6,000 words, and it is time to draw it to a close.

My final grading for Stakenet is a strong 4 out of 5. It would be so easy for me to award it a 5, but there are lots of areas where improvement is necessary for a perfect score, despite the overwhelming strength in social media presence and innovation, in particular.

I hope this report has proved insightful and that you’ve enjoyed the read! Please do feel free to leave any questions in the Comments, and I’ll answer them as best I can.

 


If you’ve enjoyed this post and want to receive new posts straight to your inbox, I’ve set up a RSS-to-Email feed that will be sent out weekly; every Monday, 12pm. Just submit your email and I’ll make sure you’re included in the list. Cheers.

Coin Report #4: Bulwark

N.B: In the spirit of full transparency, the following Coin Report is the first Sponsored Post on my blog. The Bulwark team recently contacted me with a request to write up a Coin Report on the project. At first, my concern was that the team would expect me to cover up any weaknesses I spotted, which I was not willing to do; in fact, their expectation was the opposite. After they had agreed to my sole stipulation that this report would conform to the rigour of the previous reports, with all strengths and weaknesses being explored and evaluated, I agreed to write the report.

Further, my thinking was that the periodic publishing of Sponsored Posts would benefit the blog in numerous ways: firstly, it would incentivise the ~20 hours a week I spend on compiling material for this blog unpaid; secondly, it would create a greater breadth of coverage on the blog, as material up to this point has been exclusively centred on my own interests in the space; and thirdly, any revenue from Sponsored Posts can be reinvested into the blog so that it grows more quickly and reaches more readers. I have always been fully transparent with everything I do, sometimes to a fault, and I will continue to do so.

 

Welcome to the fourth Coin Report. Apologies for the long preface, but I felt that it was necessary. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of Bulwark, examining specifically a handful of significant metrics; Bulwark’s community; its development history and future; and its profit potential at current prices. This will culminate in a grading out of 5. I hope you enjoy the read!


Introduction

I first wrote about Bulwark in Market Outlook #4, but my analysis of it in that post was primarily technical. Back then, it had been range-bound for 210 days (the period during which the rest of the market was dying a slow death) and that is what brought it onto my radar. At that point, it was priced at ~12k satoshis, and price has since fallen by 25% to around 9k satoshis. Evidently, an entry then would have been an early one. Since then, I have paid little attention to the project; that was until the team approached me to write this report.

Having now compiled my research, there is a great deal to discuss regarding the various strengths and weaknesses of Bulwark as a project and as an altcoin. I hope the following report will prove to be thorough and objective where it must be, though, as is the case with these reports, I will provide commentary where it is required for the benefit of the reader.

If you’d like to know more about the project, prior to reading the report, here are some of Bulwark’s primary links:


Fundamental

General:

Name: Bulwark

Ticker: BWK

Algorithm: NIST5

Sector: Privacy Hardware / Masternodes

Exchanges: Cryptopia, CryptoBridge & Blocknet

Bulwark was launched in December 2017 –  in the earliest stages of the Winter bull cycle – with a small premine (1.81% of the maximum supply), no ICO and a Proof-of-Work consensus mechanism on the NIST5 algorithm. The launch was fair, with block rewards for the first day (minus the premine block) being set at 50% of the block reward from the following day (25 and 50 BWK, respectively). The Proof-of-Work stage lasted ~182700 blocks, with the project now operating with a Proof-of-Stake consensus mechanism, supplemented by a network of masternodes. This transition has brought with it an advantage for the speculator, as we will get into later.

Further, as Bulwark has yet to have its 1st birthday, there is rather little price-history to analyse, which I will dissect in the Technical section, but an all-time high was set in January 2018, as was the case with so many altcoins.

Bulwark, as a project, seems to be less concerned with grand ambitions and more concerned with consistency. As is stated in the whitepaper, they “offer a simple value proposition with no grandiose promise: we will deliver a privacy coin that works today and into the future.” The project is, as stated, primarily focused on privacy, with development goals centred on hardware development. Privacy is about as inextricable an ideal as you can get in this space, and, with the plethora of projects devoting their attention to it, it will take a lot to stand out. We’ll see how Bulwark deliver on that front later.

For now, let’s begin with some analysis of the metrics:


Metric Analysis:

Below are listed a number of important metrics, all of which are accurate as of 10th November 2018. For anyone reading this who has yet to read a Coin Report, it might be worth reading this section of the first report, where any potentially unfamiliar terms are explained. For any terms or metrics specific to this post, I will provide explanations besides the figures. Also, Transactional Volume, NVT and Network Staking Weight have been omitted due to lack of functionality of the block explorer (and integrated privacy, obviously) for such calculations. Lastly, rich-list analysis was undertaken using https://explorer.bulwarkcrypto.com/#/top and some masternode statistics are sourced from https://masternodes.online/currencies/BWK/.

Metrics:

General:

Price: 9199 satoshis ($0.59)

Exchange Volume: $28,550

Circulating Supply: 13,566,663 BWK

Total Supply: 13,885,717 BWK

Maximum Supply: 27,000,000 BWK (the reported Max. Supply is just the Circ. Supply 5 years post-launch – there is some supply emission after this point)

% of Max. Supply Minted: 51.43%

Network Value: 1277.35 BTC ($8.21mn)

Network Value at Max. Supply: $15.965mn

Category: Midcap

Exchange Volume-to-Network Value: 0.35%

Average Price (30-Day): $0.67

Average Exchange Volume (30-Day): $28,592

Average Network Value (30-Day): $8.585mn

Average Exchange Volume-to-Average Network Value: 0.33%

% Price Change USD (30-Day): -15.6%

% Price Change USD (1-Year): N/A

USD All-Time High: $16.03

% From USD All-Time High: -96.3%

Premine % of Max. Supply: 1.81%

Premine Original Location: https://explorer.bulwarkcrypto.com/#/address/bWMiJk57wsPJuGFFJCp8MzSsvzepf7CFAi

Liquidity (calculated as the sum of BTC in the buy-side within 10% of current price across all exchanges): 3.677 BTC

Liquidity-to-Network Value %: 0.29%

Supply Available on Exchanges: 159,940 BWK

% of Circ. Supply Available on Exchanges: 1.18%

Staking & Masternodes:

Network Staking Weight: Unable to determine

Staking ROI (Annual): Minimum 38.57% (if all circ. supply minus supply locked in masternodes is being staked)*

Masternode Price: $2,956.54

Masternode Collateral Size: 5000

Masternode Count: 1533

Supply Locked in Masternodes: 7,665,000

Masternode Count Growth (30-Day): -0.58%

Masternode ROI (Annual): 59.39%**

Masternode Reward / Block Reward: 60%

Masternode Network Value: $4.532mn

MNV / Network Value: 55.2%

*To calculate minimum staking ROI for the next 365 days: ((Annual Supply Emission * 30%) / (Circulating Supply – Masternode Locked Supply)) * 100 = 2,275,986 / 5,901,663 = 38.57%

**To calculate masternode ROI for the next 365 days: ((Annual Supply Emission * 60%) / Masternode Count)) / Masternode Collateral = (4,551,973 / 1533) / 5000 = 59.39%

Supply Emission & Inflation:

Current Block Height: 314027

Block Reward Schedule: 31.25 Block Reward for next 31574 blocks (~33 days) > 25 Block Reward for 86399 blocks (~90 days) > 21.875 Block Reward for 86399 blocks (~90 days). ~4 years until final block reward stage of 1.625 BWK per block. More info on p8 of whitepaper.

Days To Final Block Reward Stage (Block 1728000): 1472

Supply Emission Until Block 1728000: 14,149,056 BWK (1301.57 BTC)

Supply Emission (Next 365 Days): 7,586,622 BWK (697.89 BTC)

Annual Inflation Rate (Next 365 Days): 54.64%

Circulating Supply in 365 Days: 21,472,339 BWK

Annual Supply Emission After Block 1728000: 569,400 BWK (52.38 BTC)

Annual Inflation Rate After Block 1728000: 2.03%

Distribution:

Address Count: Unable to determine

Supply Held By Top 10 Addresses: 5.2%

Supply Held By Top 20 Addresses: 7.39%

Supply Held By Top 100 Addresses: 15.3%

Inactive Address Count in Top 20 (30 Days of No Activity): 6

Analysis:

Well, that’s a lot to get through…

Given that Bulwark is a privacy-focused masternode coin, and thus payments are a critical component to the success of the project, it’s a shame that Transactional Volume (and thus NVT) couldn’t be measured. This is, in part, a byproduct of being a privacy coin, which does make calculating that metric far more difficult. But it’s also because the Bulwark block explorer has little functionality regarding transactions. The team are, however, developing a new block explorer (which we’ll talk more about later) and they have taken my suggestions onboard. That being said, whilst Transactional Volume has been omitted from this report, there are plenty of other meaty metrics to dig into, particularly those concerning masternodes, inflation and distribution. But, we’ll begin with the General:

The first metric I’d like to highlight is the Supply Available on Exchanges, as this is inconceivably low. Supply metrics are all well and good when evaluating prices and valuations, but what often goes without consideration is how much of this supply is actually available to buy on exchanges. Exchange trading is the primary means of acquiring a position in an altcoin for the vast majority of us, and, as such, it makes sense to monitor how much supply is on the market.

In Bulwark’s case, this is extremely little. 159,940 BWK is currently on the orderbooks across Cryptopia and CryptoBridge (the two primary exchanges that Bulwark trades on). This equates to a measly 1.18% of the circulating supply. What this implies is that the conviction to hold Bulwark is strong, and it also significantly reduces headwinds for price growth. As so little supply is available on the market, in order to purchase a significant amount, one would inevitably be forced into increasing price.

Of course, this figure is dynamic, with the supply available on exchanges shifting from day-to-day; however, the most important takeaway from this figure is that very few holders are willing to sell their Bulwark at present. Now, when we cross-compare Bulwark with some of its competitors, this figure makes more sense. Phore has 1.27% of its circulating supply available on orderbooks across its listed exchanges, and Solaris has 1.11%. Privacy-focused masternodes are in high demand across-the-board, it would seem.

Supply Emission and Inflation is of particular interest, as always, given that the primary objective for readers of this report is likely to turn a profit on a position. Analysis of supply emission is paramount in this regard. As we can see from the metrics listed above, Bulwark is currently providing 31.25 BWK block rewards, though this will be reduced to 25 BWK per block in a little over a month.

As my approach to speculation is long-term,  I like to calculate at least one year’s-worth of emission statistics before I can accurately evaluate current prices. To that end, we can see that there is ~7.6mn BWK to come into existence over the next 365 days, giving an annual inflation rate of 54.64%. Now, this is a little high, but Bulwark seems to be unusually good at maintaining prices despite such inflation, as we’ll get into when we take a look at the chart. Regardless, it must be said that inflation for the next year is indeed high.

But how does the inflation fare against Exchange Volume? ~7.6mn BWK coming into existence over the next year equates to 697.89 BTC of supply emission at current prices, which equates to ~1.91 BTC  of daily supply emission ($12.2k). Exchange Volume over the past 24 hours was $28,550, and Average Exchange Volume across the past month was a fraction higher than this. Thus, Average Exchange Volume covers daily supply emission by ~232%, and, as such, if similar levels of traded volume persist, current prices should easily be maintained. Promising.

Now, where this gets even more interesting is when you take an even longer-term view. There are 1472 days remaining before Bulwark enters its final stage of block rewards at block 1728000, at which point the reward will be 1.625 BWK per block. Between now and then, ~14.149mn BWK will come into existence, or 1301.57 BTC at current prices. On average, this equals 0.88 BTC ($5687) of daily supply emission leading up to block 1728000. If Average Exchange Volume is maintained, it would be 5x greater than daily supply emission, and thus more than enough to sustain present prices, if not indicating that price growth is inevitable.

Further, once block 1728000 is reached, annual supply emission will be 569,400 BWK; an inflation rate of 2.03%. This is not taking into account the fact that 10% of block rewards will be going into the Bulwark Governance fund once we enter the next block reward stage in 33 days.

We’ve established Bulwark’s primary purpose of facilitating private transactions, but an equally important component of the project is its masternode network. So, let’s dig into the masternode metrics:

N.B: it’s quite unfortunate that Network Staking Weight was unable to be determined using the block explorer or the local wallet, and I hope that functionality will be implemented in future releases.

Now, the first point-of-interest concerning masternodes is that Masternode Count totals 1533, with -0.58% growth (9 less) over the past month. (Note: this is due to a wallet upgrade that took place a week ago, which temporarily disabled the masternode network.) This shows that the network is at least stable in its size. Secondly, ROI on masternodes for the following year works out around 60%, given the current number of live masternodes. Whilst figures on masternode statistics websites (like masternodes.online) show an ROI closer to 90%, this is not accounting for the changes in supply emission over the course of the year. Regardless, 60% is a solid reward; not too high, not too low. It’s about the sweet spot when looking for a good ROI on a masternode, especially when the above sections on average volume covering supply emission are taken into account.

This means that entries at current prices for those that can afford the ~$3,000 masternode are doubly-attractive, as the rewards from running the MN would serve to lower the average entry price with low probability for capital loss. This is further reinforced when taken into consideration with the fact that Bulwark is 96.3% below it’s all-time high.

Lastly, and most importantly, we must look at Masternode Network Value. A deeper explanation of this concept can be found in my dedicated article. Bulwark’s MNV can be calculated by multiplying the number of masternodes online  by the collateral size of one masternode by the price of Bulwark. With 7,665,000 BWK locked in masternodes, this gives us a MNV of $4.532mn. This is equal to ~55% of Bulwark’s Network Value, which indicates a strong masternode network. For context, I calculated ALQO’s MNV to be a little under 50% in a previous report.

Before we conclude this section with some analysis of the distribution of Bulwark, there’s some house-keeping to do with remaining metrics from the General sub-section. Let’s take a look at volume against network value: for both, Exchange Volume-to-Network Value, and its 30-day average, the figures come out at around a third of a percent. As I have mentioned in previous reports, this is likely due to the current bear market, as I tend to prefer positions in altcoins that exhibit a 1% or greater EVNV. For purposes of cross-comparison, ALQO had an Average Exchange Volume-to-Network Value of 0.18%, Covesting was 0.36% and GeoCoin was 0.13%. Relative to the others examined, Bulwark is showing stronger signs of interest.

Moving onto Distribution, Bulwark seems to outshine the vast majority of altcoins in this regard. As quoted earlier, Bulwark prides itself on its fair launch and its strong emphasis on decentralisation (a trait we also saw when studying ALQO). To that end, Bulwark’s top 10 addresses control a measly 5.2% of the circulating supply, the top 20 control 7.39% and the top 100 control 15.3%. For comparison, ALQO’s top 100 richest addresses control 15.77% of its circulating supply. Fair play, Bulwark. Fair play.

Let’s explore this distribution a little more thoroughly: 6 of the top 20 richest addresses have been inactive for the past 30 days; the 2nd-richest address has recently increased position size by over 25%; the vast majority of these top 20 addresses are either staking or collecting masternode rewards; the only address distributing recently was the 14th-richest. Overall, the rich-list points at current prices being a potentially good area for an entry.

And that concludes this section on Metric Analysis. Onto the Bulwark community:


Community:

There are two primary aspects of community analysis: social media presence and Bitcointalk threads. I’ll begin with the former before moving on to the latter.

Social Media:

Concerning social media presence, there are five main platforms to examine: Twitter, Facebook, Telegram, Discord and Slack.

Bulwark doesn’t have Slack, but is present on the other four. To begin, let’s look at the various social metrics that I calculated from the Bulwark Twitter and Facebook accounts:

Twitter Followers: 8319

Tweets: 733

Average Twitter Engagement (30-Day): 0.41%

Facebook Likes: 416

Facebook Posts (90-Day): 54

Average Facebook Engagement (30-Day): 2.16%

Using RivalIQ‘s benchmark report as a point-of-reference, as usual, Bulwark’s Average Twitter Engagement rate of 0.41% is 8.9x greater than that across all industries and 31.5x greater than the Media industry (the closest industry in the report). However, it is half the engagement being shown on Covesting’s Twitter, less than a third of the engagement on ALQO’s Twitter, but twice the Twitter engagement of GeoCoin. Overall, positive against the rest of Twitter, but mediocre within the altcoin space.

Bulwark also don’t seem to have put a whole lot of effort into growing their Facebook page (416 Likes) to a similar following found on their Twitter (8319 followers), despite posting 54 times on Facebook in the past 90 days. Clearly, the intention is there and there is commitment to providing updates but perhaps the marketing hasn’t been so effective on Facebook.

Also, concerning Facebook, Bulwark’s engagement rate is 2.16%. Of course, this higher figure is natural given the smaller audience, but let’s delve a little deeper: the average engagement rate across all industries is 0.16% – Bulwark is experiencing 13.5x greater engagement; the Media industry’s average engagement rate is 0.08% – Bulwark is 27x greater. Now, let’s compare it with the altcoins from previous reports. GeoCoin had a 0.08% engagement rate on Facebook, ALQO had a 3.43% engagement rate (though, similarly to Bulwark, the page had only a fraction of the audience of that of their Twitter account) and Covesting had a 0.16% engagement rate except with 50x more page Likes. Twitter and Facebook don’t seem to be Bulwark’s strong point, at least relative to other altcoins.

Moving onto Telegram, Bulwark’s group has 2178 members. Over the past week, I noticed around 60 or so individuals forming the bulk of the conversation (2.75% of the group). I also saw consistency in team-driven updates, which was great. The Marketing Director, Jack, clearly wants to make sure the community is aware of development progress. From the community’s side, the conversation was predominantly centred on support, with questions and issues being promptly and informatively answered by the team. There was some off-topic conversation between group members, which is not necessarily a bad thing as it shows that those individuals view the Bulwark Telegram group as a place for general conversation – they enjoy spending time there.

However, I would have liked to have seen more community-driven conversation concerning the future of the project, perhaps with suggestions and proposals and some community-led marketing. What was very promising, however, was the fact that the group was used to drive votes for a masternode competition, which led to Bulwark winning the competition and beating out Phore, Deviant and GINcoin. This win gives Bulwark a fee-free listing on a new exchange. Overall, 4 out of 5. If more of the group was engaging, this would be a 5.

To conclude this section on social media presence, let’s look at the Bulwark Discord group. The group has 5224 members and plenty of internal channels that are clearly segmented and defined. This makes the Discord user-friendly and easy to navigate. The Announcements channel is updating at least every other day recently, which is good to see. The Official Links channel is incredibly useful for new users, with a comprehensive list of resources and relevant links. Weirdly, Development Updates is barely updated but the Github channel sees at least two or three new commits a week. Most conversation, as would be expected, occurs in the General channel, occuring between ~50 members for the most part. As with the Telegram group, I would like to see more of the community involved in discussion. That being said, the channel is in near-constant conversation, with very few extended breaks over the past week.

With regards to improvements, I would like to see more action in the Content Creators channel – this is a great idea for a channel, as the greater the level of commitment from the community in creating marketing and promotional resources for the project, the broaders its potential user-base and the more likely Bulwark takes on a position of permanence in the space. Overall, a solid 4.

BitcoinTalk:

Bulwark launched its BitcoinTalk announcement on 2nd December 2017, and has generated 3016 posts across 151 pages of conversation during those 342 days. That works out at 8.8 posts per day on average. However, over the past 90 days, there have been 112 posts from 32 individual posters. This shows a decrease in activity of late. That being said, the team continues to display an excellent level of commitment to providing regular updates, with numerous posts concerning developments. Further, the thread is used to push more detailed updates via Medium blog posts. With regards to general conversation, it is a familiar story: promptly answered support questions but little community input on the future of the project. Again, a 4 out of 5.

And that concludes my analysis of the Bulwark community. Time to take a look at the project’s Development:


Development:

For the following Development analysis, I will be evaluating project leadership, the website, the roadmap, the whitepaper, the wallets and finally providing a general overview:

Project Leadership:

According to the website, there are 8 core team members, including multiple developers, branding and marketing specialists and a community manager. This is slightly larger than ALQO’s core team despite Bulwark’s lower Network Value, which is positive. There is a good breadth of areas of expertise and experience. One possible improvement would be to perhaps get someone from the community to join the core team as a marketer, providing community-led updates via some form of engaging content. I would imagine this would help to drive greater overall community engagement whilst also increasing brand awareness.

Website:

www.bulwarkcrypto.com

The website is great: it’s easy to navigate with sleek UI/UX; it is informative but concise, with a backlog of resources linked in their own relevant sub-sections; there is a dedicated blog that is regularly updated with long-form progress updates. However, the block explorer needs to be more fully-functional, with greater detail on the rich-list, as well as more information on transaction history. Despite that, it’s a 5 out of 5. It’s what you want from any altcoin website, really.

Roadmap:

www.bulwarkcrypto.com/roadmap/

The roadmap is the best part of the website, as there is a separate page for the present and future roadmap and a dedicated page with a full history of past developments. Let’s begin with the present and future roadmap. It is specific, detailed and ambitious, with clearly delineated quarterly goals. With four quarters of future goals planned out, there is plenty to look into.

This quarter (Q4 2018) sees a cohesive and comprehensive design framework being created to be used with all future applications, for the purposes of creating strong brand identity. What I like about this is that not only is there an explanation of the goal itself but also a justification for the work being undertaken. The rest of this quarter will see progress being made on a new block explorer, new local wallets and mobile apps, all for release in Q1 2019. Further, the Governance system will be integrated this quarter, and research & development is set to begin for the Aegis hardware wallet and the Citadel home router. Hardware development is no joke, and this is clearly a route that could distinguish Bulwark from their many competitors if it is met with success.

Moving onto Q1 2019, the New Year will see Bulwark incorporated as a business to allow for team expansion in line with the ambitious roadmap. It will also see the release of the aforementioned explorers and wallets and applications, alongside Bastion (a centralised exchange with Bulwark pairings). Most significantly, in my opinion, Q1 2019 will see the public release of their Aegis hardware wallet. This is a lot to do over the next 5 or 6 months, and perhaps they are putting a little too much pressure on themselves to deliver so much, but they do seem to be consistent with their delivery on promises so far.

Q2 2019 will see the Secure Home Node 2 released, which is a limited edition version of their already-released Secure Home Node (the first bit of hardware they manufactured earlier this year).

Q3 2019 culminates in the release of Citadel. Looking at this roadmap, there’s certainly a lot to look forward to, but I almost feel as though the workload of the first quarter could be more evenly distributed amongst the latter two in 2019; but, if they can deliver on those promises, that will be mightily impressive.

Concerning the dedicated page for past developments, this seems to be regularly updated with clear information and relevant links for further research. It shows the most recent and significant achieved goal of Zerocoin integration, along with the release of a Staking Script, a dedicated forum, the original block explorer, the first Secure Home Node release, the establishing of the Knowledge Base, the transition to Proof-of-Stake, the implementation of masternodes and the fair launch – all in the past 11 months. The roadmap scores a 5 out of 5.

Whitepaper:

https://bulwarkcrypto.com/docs/EN_-_Bulwark_Cryptocurrency_Whitepaper.pdf

What impressed me straight off the bat was the lack of wild dreaming in the whitepaper. One of the first statements made is that they “offer a simple value proposition with no grandiose promise: we will deliver a privacy coin that works today and into the future.” If more whitepapers could begin with a fair assessment of their strengths and potential, rather than with claims of never-before-seen innovation, that’d be great. As I talk about in my book, I want to buy altcoins that do the simple things well, more than anything else, and that continue to deliver on their promises. Of course, innovation must play a factor, but not everything is original nor should it be. The focus on “results rather than hype” is promising.

The prose is jargon-free and concise, thus readily accessible to those unfamiliar with cryptocurrencies, in general. Blockchain parameters are also clearly illustrated, including the initial premine of 489,720 BWK. A nod is given to PIVX and Dash, on which Bulwark was built, and the whitepaper states that the project will differentiate itself from other privacy masternode coins by focusing on fairness and decentralisation, unlike the majority of PIVX/Dash clones that were launched at a similar time.

Potentially unfamiliar terminology is clearly explained. However, there is a palpable feeling of genericness in the whitepaper. There’s no plagiarism, but there’s also nothing that stirs excitement or genuine interest whilst reading. What I do like is that there is a clear commitment to keeping the whitepaper up-to-date, as brief notes have been added in relevant sub-sections in line with the progress of the project. It makes a change from the static nature of most whitepapers.

A solid 4.

Wallets:

With regards to wallets available, there are three local wallets (Windows, Linux and Mac), functionality for the Raspberry Pi 3, and a paper wallet generator.

The Windows wallet is functional and easy-to-use, if a little bare and bland (a bit like the whitepaper). It kind of looks like a Windows 98 application at present. I’m just poking fun, but I would imagine this will be rectified with the release of the new wallets and the design framework. Overall, it does work well and it uses very little CPU, but it doesn’t say much about Bulwark. 3 out of 5.

General:

In general, the development of Bulwark is promising. The project began with little ambition besides being a fairly-launched privacy coin that remained consistent, and it has since evolved into grand ambitions of manufacturing its own hardware wallets and other security-based kit. It is in this hardware development that I think Bulwark can really get an edge over its competition.

Where, at present, the project is funded partly via the premine but primarily via the team and community, over the coming months the project will secure funding via the Governance system (10% of block rewards) for proposals backed by the community and also from hardware sales. Funding is vital to survival in this space, and the revenue stream that could come into play when the hardware starts rolling out could be huge. Hardware wallets, in particular, are in huge demand, and there are only really three or four key players currently in the game. Watch this space…

That concludes this final fundamental section. Onto the chart:


Technical

Bulwark, as mentioned previously, has only 11 months of price-history. In fact, it has 339 days of price-history. 252 of those days have been spent inside one of the longest ranges I’ve ever seen… price has been bouncing between 9-18k satoshis for the best part of Bulwark’s existence, holding that range through mass supply emission and a macro bear market.

Bulwark is currently looking as though it wants to break below that range support, if only briefly, and is trading within a couple % of its all-time low. The fact of the matter is that there has quite literally never been a cheaper entry for this coin; but, at the same time, breaking below a support level that’s been strong for 36 straight weeks wouldn’t be the best. There is a chance that the level gives way in order to form a spring and return back into the range shortly afterwards, and, for those with lower risk-tolerance, it would perhaps be the wise thing to do to wait for that before entering.

Similarly, one could enter a position at these prices and set a soft stop loss around 8000 satoshis, in case of a Daily close at or below that level (10% below the current all-time low). Those are two possible low-risk approaches. My preferred method for midcaps is to allocate a fixed % of capital at an average entry that one is comfortable with (all-time lows are perfect for this). Then just allow time to prove you right. The downside to this is obvious: if 9k gives way without swift reclamation, we could see price bleeding down into uncharted territory. Either way, there is a lot of scope for growth from present prices; especially since the previous all-time high came one month into Bulwark’s existence, when there was little to no progress.


Conclusion

As per usual, this report has crossed the 5,000 word mark, and it’s time to draw it to a close.

My final grading for Bulwark is 4 out of 5. There was a lot that impressed me; but it also evident that there’s room for improvement in some critical areas, particularly around community engagement.

I hope this report has proved insightful and that you’ve enjoyed the read! Please do feel free to leave any questions in the Comments, and I’ll answer them as best I can.


If you’ve enjoyed this post and want to receive new posts straight to your inbox, I’ve set up a RSS-to-Email feed that will be sent out weekly; every Monday, 12pm. Just submit your email and I’ll make sure you’re included in the list. Cheers.

Coin Report #3: Covesting

Welcome to the third Coin Report. In today’s report, I’ll be examining in exhaustive detail the fundamental and technical strengths and weaknesses of Covesting, concluding with a grading of the project and its upside potential. And when I say ‘exhaustive’, I mean it. The previous two reports on GeoCoin and ALQO ran for ~4,000 words and ~5,000 words, respectively; this report may run for 6,000. I hope you’ll find some degree of insight in it.

Let’s crack on.


Introduction

Covesting is one of only three ICOs I have ever invested in. The entire concept of an ICO has always felt a little worrying to me as a speculator, and this was particularly the case during the ICO boom of summer 2017. Projects were raising hundreds of millions of dollars with no working products, dubious credentials and little-to-no innovation or viable use-case. And when you’ve raised $100m or more, where is the incentive to work? That was the primary reason for me steering well clear of ICOs and sticking to the near-zero or zero premine Proof-of-Work and Proof-of-Stake projects for the majority of 2017. Further, a lot of the ideas conceptualised and developed by ICO projects were also being explored by non-ICO projects, so there seemed to me to be no real advantage for the purposes of speculation; the reward-to-risk was greater for the more traditional coin launches.

However, in late November or early December 2017, I came across www.covesting.io. On the website, I found details of an imminent ICO for a copy-trading platform by the name of Covesting. Up until this point, I was unaware of any copy-trading platform for cryptocurrencies, but I knew that many in the space (myself included) used 1Broker for copy-trading BTC/USD, forex and commodities. There was a clear gap in the market, and I had been waiting for something similar to 1Broker to come along for altcoins, specifically. What I gleaned in my first impressions of Covesting was the potential for a far superior and more comprehensive, feature-rich platform than that of 1Broker. The thing that worried me was the ICO; but I knew that non-ICO projects weren’t working on copy-trading, possibly because of the capital-intensive nature of building a trading platform. Anyway, I was interested, and so I read the whitepaper to get some more details on the ICO (details I will go into later in the report). Long story short, Covesting was only looking to raise a maximum of ~$12.5mn at the time, with a 25,000 ETH hard cap. This was significantly lower than the vast majority of the ICOs I had seen, and the fact that only 13% of the tokens created were going to the team cemented my confidence in the project. There were Proof-of-Work coins launching with larger premines than 13%, and most ICOs were dishing out 25% or more of tokens to their founders. So, I bought the ICO at what worked out at roughly 5000 satoshis per COV, and I’ve been buying more over the past two months.

That’s enough back-story. Covesting as a project has innumerable points-of-interest for those of us looking for low risk, high reward opportunities in this space, and I hope that this report proves thorough and objective in establishing the project’s strengths and weaknesses.

For those that would like to learn a little about Covesting prior to reading the report, here are some important links;


Fundamental

General:

Name: Covesting

Ticker: COV

Algorithm: ERC-20

Sector: Exchange Platform + Social Trading

Exchanges: KuCoin, IDEX and HitBTC

Covesting was launched in November 2017, with its ICO selling out in its entirety on December 31st 2017. It launched, as with the vast majority of ICOs, as an ERC-20 token, and happened to get its first exchange listing when the entire market peaked in January, and, as such, has suffered a downtrend in price for the best part of its existence. We’ll dive into the limited price-history in more depth in the Technical section, but for now it is important to note that Covesting is yet to experience a full market cycle.

The project seeks to be the leading social trading platform in the cryptosphere, and a one-stop point-of-reference for all traders and investors in the space. At launch, there were no other similar, established projects. However, there have since been a number of potential competitors introduced: Blockport, Genesis Vision and Qobit come to mind. I am of the opinion that competition isn’t necessarily a disadvantage for those of us looking to capitalise on innovation in this space, as there is undoubtedly enough volume to be shared amongst a handful of social trading platforms; but it does put the onus on Covesting to deliver and surpass its promises in a consistent manner. I’ll evaluate their strengths in this regard a little later…

Regardless, the ambition is great, and the use-case is novel. Let’s see if Covesting is hitting the mark:

 


Metric Analysis:

Below are listed a number of significant metrics that will be analysed at the end of this section. Firstly, it is important to note that metrics are dynamic, and this information is accurate as of 4th November 2018. Secondly, if any of the recurring terms in these reports are unfamiliar, you can find brief explanations in the opening paragraph of this section on the first Coin Report I wrote. Lastly, the rich-list was examined using https://etherscan.io/token/0xe2fb6529ef566a080e6d23de0bd351311087d567#balances.

Metrics:

General:

Price: 13130 satoshis ($0.84)

Exchange Volume: $93, 476

Circulating Supply: 17,500,000

Total Supply: 20,000,000

Maximum Supply: 20,000,000

% of Max. Supply Minted: 100%

Network Value: 2297.75 BTC ($14.616mn)

Network Value at Max. Supply: $16.704mn

Category: Midcap

Exchange Volume-to-Network Value: 0.64%

Average Price (30-Day): $0.70

Average Exchange Volume (30-Day): $52,522

Average Exchange Volume (30-Day)-to-Network Value: 0.36%

Transactional Volume (24H): $40,486

Transaction Count (24H): 30

NVT: 361.03

Average Transactional Volume (7-Day): $7,498

Average NVT (7-Day): 1949.43

Transactional Volume-to-Exchange Volume %: 43.31%

% Price Change USD (30-Day): +47.9%

% Price Change USD (1-Year): N/A

USD All-Time High: $2.38

% From USD All-Time High: -63.10%

Founders’ Tokens % of Max. Supply: 12.5%

Founders’ Token Location: https://etherscan.io/address/0x25ed4f0d260d5e5218d95390036bc8815ff38262

Liquidity (calculated as the sum of BTC in the buy-side within 10% of current price across all exchanges): 4.61 BTC

Liquidity-to-Network Value %: 0.2%

Supply Emission & Inflation:

Block Reward Schedule: No further supply emission

Annual Inflation Rate: 0%

Distribution:

Address Count: 10189

Supply Held By Top 10 Addresses: 33.08%

Supply Held By Top 20 Addresses: 38.79%

Supply Held By Top 100 Addresses: 54.21%

Inactive Address Count in Top 20 (30 Days of No Activity): 12

Analysis:

Though the lack of staking or masternode functionality, and the fact that the maximum supply has already been minted, means that this section is a little less stacked than that of ALQO, there is still a lot of important information to look at. The Covesting whitepaper states that COV will serve as the fuel for the Covesting platform, making it, in essence, a utility token. In doing so, its value will be tied to demand for use of the platform. As such, which of the above metrics are most significant? Well, the greatest metric to determine the strength of COV would be the volume being traded on the Covesting platform, but, until the fully-functional public release comes out later this year, we’ve little to go on. There are, however, many points-of-interest for those of us looking to turn a profit on COV, particularly at its present price.

Let’s begin with the General metrics, before moving on to discuss the lack of supply emission and the distribution of the token. One of the primary means of determining interest is studying the volume traded, both Exchange Volume and Transactional Volume. Covesting traded ~$93k in the last 24 hours, or 0.64% of its Network Value. As expressed in my article on Picking Out Microcaps, I tend to prefer when Exchange Volume-to-Network Value is above 1%, as a sign of smart-money interest, but given that we are currently in a bear market, such figures are unlikely to be the norm. (Also, Covesting is not a microcap; it’s a midcap.) In my previous two reports, these figures were 0.24% and 0.28% for ALQO and GeoCoin, respectively. Covesting is trading at well over double these levels. Promising. Now, if we take a look at the Average Exchange Volume, which is measured over the course of a month, we get a lower figure of ~$52k, or 0.36% AVNV. Comparing this with ALQO’s 0.18% and Geocoin’s 0.13%, we once again find relative strength in COV. However, given that Covesting is listed on KuCoin and HitBTC (two of the larger exchanges in the space), I am a little disappointed that it isn’t hitting ~0.5% or greater AVNV. But, all things considered, there certainly seems to be some interest, and this is something we will later confirm in analysis of the rich-list. Now, if we turn to Average Price, we find that COV has traded at an average of $0.70 for the past 30 days, and is currently trading ~20% above that. This tells us that Covesting was possibly being accumulated around $0.70, and that the uptick in volume recently has brought with it the beginnings of a reversal.

Perhaps the strongest figure amongst that list of metrics is that of % Max. Supply Minted. Covesting being an ERC-20 token that launched with an ICO, this figure is 100%. That means zero supply emission post-launch, and thus zero inflation. One of the most common pitfalls I see in the space is the complete disregard of inflation when considering the price at which one should enter a position. Too often do you find faux-opportunities where everything is lined up technically for an entry, but the price you think you’re paying isn’t really the price you pay. This is due to excessive short-term supply emission – a high inflation rate – that generates strong headwinds to push back price growth. Just look at ZCash, for example. The one advantage that the majority of ERC-20 ICOs have for us, as speculators, is that they have zero inflation post-launch. No need to worry about mass supply being dumped on the market on a daily basis with potentially too little demand to maintain current prices. Returning to COV, what this also allows us to determine is the level of demand. As there is no more COV coming onto the market, if the current level of volume traded was unable to sustain prices, we would know that this is due to falling speculative interest; not because miners or stakers are dumping their rewards. In Covesting’s case, not only has price been maintained over the previous month, but it is beginning to pick up. Further, if we look at the Liquidity figure of 4.61 BTC, or 0.2% of Network Value, we find that demand at current prices seems to be greater than that of ALQO and GeoCoin, which exhibited 0.12% and 0.18% Liqudity, respectively.

Concerning NVT, Covesting scores 361.03, with ~$40k of Transactional Volume in the past day. Over the past week, Covesting has an Average NVT of 1949.43, with Average Transactional Volume of $7,498. Now, until copy-trading launches on the Covesting platform and COV begins to be transacted for its primary purpose and to its full extent, these figures are to be taken with a pinch of salt. However, it is interesting that in the past 24 hours, COV has experienced over 5x greater Transactional Volume than it has averaged over the past week. With that greater Transactional Volume, we have seen increased prices. Perhaps a sign of things to come when the platform is publically launched and COV takes on the function of its design?

Moving onto the last couple of points-of-interest in the General metrics, I found it intriguing that Covesting is currently trading around -63% from its all-time high of $2.38 (according to CoinGecko). This has both positive and negative connotations regarding profit potential. Firstly, the vast majority of altcoins are trading well below -90% of their all-time highs at present, even with the recent signs of reversal. At its lowest, Covesting traded at -76% of its all-time high. This shows strength via the genuine demand for the token, even at the deepest, bloodiest period of the current bear market; even when Ethereum itself had lost 78% of its value against BTC. Very promising. However, the risk that this brings with it is that we pay a higher price for entry, and calculable upside potential (a move back to the all-time high) is diminished. What is great about buying coins at 96% below their all-time highs is that the reward-to-risk is so high, providing the fundamentals are sound. With Covesting, we find genuine demand for the token at the worst of times, but for that we must risk paying more.

How I think this plays out, however, drawing back to something I said earlier about the limited price-history, is that there is a great deal of price discovery to be experienced above and beyond the all-time high, particularly upon successful launch of the platform and the arrival of a new bull cycle for the market. That being said, calculable upside potential puts us at around 130% given an entry at current prices. Price is currently 47% above the all-time low. This gives a calculable reward-to-risk ratio (if the position was to be sold at break of the all-time low) of 2.76. It could be better, it could be worse. Personally, I believe the upside potential to be much greater than that which we can view from Covesting’s price-history, for reasons that I’ll delve into in later sections.

Before we get onto more abstract fundamentals, let’s do some distribution analysis. Covesting currently has 10189 holders. If all of those end up users of the platform, we could be in for a treat. For comparitive purposes, Genesis Vision and Blockport (two potential competitors) have 7237 and 11849 holders, respectively. Covesting is well ahead of Genesis Vision – despite COV having a Network Value of around a third of GVT – and around 17% below Blockport, despite having a Network Value around 2.5x that of BPT. Based on this comparison alone, this would place Genesis Vision as highly overvalued, Covesting as reasonably valued, and Blockport as undervalued.

Returning to analysis of Covesting, specifically, the supply seems fairly well distributed, if you account for the founders’ 12.5% (essentially a premine). Not accounting for that 12.5%, the distribution is as follows: 33.08% of COV held by the top 10; 38.79% held by the top 20; and 54.21% held by the top 100. You can just subtract 12.5% from those figures if you want distribution figures accounting for the founders’ reward. Either way, it’s not poorly distributed. There are certainly signs of accumulation amongst the top 10 and top 20, as they control around a third of the supply, but a little under half the supply is distributed outside of the top 100 addresses.

Let’s dig a little deeper:

Of the top 20 addresses, 12 have been inactive for the past 30 days; they are neither accumulating or distributing COV at present. Of the other 8 addresses, only the 12th-richest is distributing, and the distribution over the past 30 days accounts for less than 1% of the total balance. The rest are primarily micro-buying. Further, the 12.5% founders’ reward remains untouched. This, to me, indicates that the majority of the top 20 are content with their positions, though there is some active accumulation at current prices from a few. I look forward to monitoring any changes as price rises.

That concludes my analysis of the metrics. Onto the Covesting community.


Community:

There are two primary aspects of community analysis: social media presence and Bitcointalk threads. I’ll begin with the former before moving on to the latter.

Social Media:

Concerning social media presence, there are five main platforms to examine: Twitter, Facebook, Telegram, Discord and Slack.

Covesting doesn’t have Slack or Discord, but is present on the other three. To begin, let’s look at the various social metrics that I calculated from the Covesting Twitter and Facebook accounts:

Twitter Followers: 9159

Tweets: 363

Average Twitter Engagement (30-Day): 0.79%

Facebook Likes: 20885

Facebook Posts (30-Day): 27

Average Facebook Engagement (30-Day): 0.16%

In the previous two reports, I referred to RivalIQ’s social engagement benchmarks. Let’s look at how Covesting fares in this regard: firstly, Covesting’s Average Twitter Engagement is 0.79%. This is 17x greater than the average engagement rate across industries, and almost 61x greater than that of the Media industry. Going back to previous reports, Covesting has an average engagement rate on Twitter around two-thirds of that of ALQO but over 4x greater than that of GeoCoin. Where both those coins failed, however, was on Facebook. Covesting has no such failure, publishing at a rate of almost a post a day for the past month, with 20,885 Likes and an Average Facebook Engagement rate of 0.16%. This is the exact average engagement rate across industries for 2018, and double the average engagement rate of the Media industry.

Moving onto Covesting’s Telegram group, the project boasts 7661 members (around 5x ALQO’s group size). Having spent some time evaluating the level and depth of discussion occuring, there seems to be hundreds of daily messages between members, with the group conversing almost 24/7. Much of he conversation centres around excitement for the public release of the platform, which is good to see, and the remainder comprises of support questions being swiftly answered. 5 out of 5.

BitcoinTalk:

The BitcoinTalk thread was created December 28th, 2017; a few days before the conclusion of the ICO. It has since generated 42 pages of discussion, and 822 individual posts. Over the past 90 days, there have been 64 posts by 23 individual posters; a post-to-poster ratio of 2.78. There is less recent discussion on the thread than in the ALQO or GeoCoin threads, which generated 140 and 94 posts for the preceding 90-day period from which those reports were published. However, the discussion is inquisitive, and queries are responded to quickly and informatively. There are a lot of consistent development updates being pushed out, also, with relevant links to lengthier, more thorough updates via the Covesting Medium blog. One thing I did spot that was a little fishy was the appearance of multiple posts with similar messages, all from new accounts. This is likely someone invested who is attempting to articificially generate enthusiasm about the project.

All-in-all, my impression of the Covesting community is that it is a large one with genuine interest towards the future of the project, in particular the release of the platform. Many seem to be itching to copy-trade altcoins.


Development:

For the following Development analysis, I will be evaluating project leadership, the website, the roadmap, the whitepaper and finally providing a general overview. No wallet evaluation is required as Covesting is an ERC-20 token, and can be stored in the plethora of Ethereum wallets.

Project Leadership:

The Covesting team is potentially the greatest asset to the project, and certainly one of its fundamental strengths. The executive team comprises of 3 heavily-experienced professionals: Dmitrij Pruglo – an ex-Saxo Bank trader and Covesting’s CEO; Tim Voronin – an early adopter of Bitcoin, a prop trader with over a decade of experience and Covesting’s COO; and Kurt Carlsson – an ex-Executive Director of Saxo Bank with over 25 years of experience and Covesting’s CCO. The executive team certainly has the experience and credibility required for the successful development and launch of a copy-trading platform. Further, there are 18 employees listed on Covesting’s LinkedIn, though 25+ employees are reported to be on the team on the website. 40+ employees are reported to be on the team in the October Review published by Covesting recently. Lastly, there are 8 vacancies listed on the website in an array of roles. I really like that the Covesting team continues to expand; and the depth and breadth of knowledge and experience seems sufficient for the ambitions of the project. Very promising.

Website:

Covesting.io is informative and easy to navigate. I particularly like that there is a dedicated blog with regular, long-form updates. The Crypto Intelligence portal is very useful, acting as, as stated in the whitepaper, a “Bloomberg terminal” for cryptocurrencies. There are social features, an altcoin screener, integrated TradingView charts and a regularly updated newsfeed. Further, there are free courses on trading for beginners and blockchain basics in their Academy. This all serves, in my opinion, to increase accessibility and ultimately the utility of the project for end-users. The platform itself (ref link, if you’d care to use it), though not fully launched yet, is smooth and well-designed. It is feature-rich, providing reports of all sorts, messaging and chat functionality, a dashboard with easy portfolio tracking and performance measurement and integrated TradingView charts for the exchange. I very much look forward to trying it out when it is fully-functional.

Roadmap:

There is no dedicated and permanent roadmap to be found on the Covesting website, but there are abstract forms of one that appear in blog updates and in the whitepaper itself. In this recent post, you can find a run-through of present and future goals. It seems the project was running a little late on deadlines, but this can be forgiven as much of the roadmap hinged on the issuance of a DLT License. This license was recently issued, around Covesting’s 1st birthday. Looking at the roadmap provided, the Beta launch of the platform was achieved on time, and the trading competition they hosted recently ended. Further, KYC integration is complete. A referral program has recently been launched with the imminent arrival of the public release of this platform. (You can sign up either using my ref link or via https://covesting.io/exchange.) According to the roadmap, this launch will be followed by initialisation of copy-trading functionality a month later, so that there is some trading history. Lastly, the buy-back program (which we’ll discuss at length later) will be launching this quarter alongside fiat gateways. Overall, the actual goals and targets of the roadmap are excellent, and they create a great deal of excitement about the potential of the project. However, I would have liked to have seen a dedicated roadmap on the website with specific and clearly delineated goals in a visually appealling manner. The website is the first point-of-reference for many new users, and this would ensure ease-of-access.

Whitepaper:

Here is a link to the Covesting whitepaper, for those that would like to read it prior to this section: https://covesting.io/static/Covesting_White_Paper.pdf

The Covesting whitepaper seems to be written a little like an Annual Report by a publicly-traded company, minus the balance sheets. It’s no surprise given the background of the team. The material is mostly professional but there are grammatical errors here and there; proofreading should have been done to a greater degree. However, this doesn’t detract from the jargon-and-buzzword-free prose that pervades most ICO whitepapers.

The first point-of-interest for me comes in the clear explanation of the benefits of aggregrated liquidity, which will be a feature of the Covesting platform. Aggregated liquidity will ensure the best possible prices for traders and will remove the necessity for multiple exchange accounts. That’s a plus in my book. Next, the whitepaper states that the Covesting platform will provide 24/7 live support. This, for me, is a big tick, as exchange support in this space is notoriously poor. If Covesting can deliver on this promise, that alone would distinguish the platform from the competition. Moving on, I like that the goal of the project is clearly depicted: Covesting, in essence, would like to be a one-stop comprehensive ecosystem for crypto-traders.

The value proposition for the platform is that it will allow traders
to increase earnings via “success fees”. It will also users to safely and securely follow the trades of those traders based on historical performance and their own goals, without ever having to give their funds
to others directly. Fully peer-to-peer. The financials for copy-trading break down as follows: 18% of followers’ profits are given to traders (this is the success fee); the platform takes 10% as commission; end-users take the remaining 72% as their profits. All profits are given in COV.

Concerning the ICO, the details are made transparent: 12.5% of 20mn COV tokens (2.5mn) go to the team; 75% is distributed via public ICO; and the remainder is distributed via pre-ICO, marketing, bounties and advisors. One point to highlight is that, for an ICO, this is a very small portion of tokens being given to the team. Further, proceeds of the ICO are stated to be distributed as follows: 40% to R&D; 25% to marketing and acquisition; 30% to capital expenses; and 5% to legal fees. You can find further info in the document.

Lastly, the use-cases clearly of the token itself are outlined: COV is used to copy-trade and any profits are returned in COV. 50% of revenue generated by the Covesting platform will then perpetually be used in a buy-back-and-burn mechanism, reducing the circulating supply over time. We will go into more detail on how I think this plays out in a later section.

Overall, the whitepaper is highly detailed and thorough, with visuals that ensure accessibility, but perhaps it needs an update given the past twelve months of progress and change. 5 out of 5 (just about – I’m forgiving the grammatical errors).

General:

Generally speaking, there is a lot going on at the present time for Covesting. They’ve recently achieved some of their significant goals, such as the Beta release of the platform, hosting their trading competition, the launch of their iOS app, and, most critically, the issuance of their DLT License. Moving forward, if Covesting can maintain this professional approach, it can only get better. They have their public platform release this quarter, which will bring with it copy-trading functionality and the buy-back-and-burn scheme. Also, they’re planning on an Android app release soon. Looking much further ahead, the goals don’t get any smaller: there is talk of derivatives being launched; algorithmic trading; and a global marketing campaign focused on institutional investment.

I mean, the distingushing feature of the project is, of course, the DLT License. This is what sets Covesting apart from its competitors. Perhaps there is good reason why the 1st result on Google for a search of “crypto copy-trading” is the Covesting website. I look forward to seeing the next few months unfold.

Regarding the funding structure of the whole project, it seems to me their revenue is presently set to comprise of trading fees, deposit fees and copy-trading commission. There is also talk of introducing binary options as another future revenue stream, as well as generating commissions on the trading terminal.

Other:

Now for some final thoughts on Covesting’s fundamentals, and, more importantly for us, the value of the COV token.

So, the main point-of-interest regarding the value of COV is that of the buy-back mechanism. Let’s look at how this may play out in the future with some examples:

If the Covesting platform becomes a top 100 exchange by volume on Coinmarketcap, it will trade, on average, $1.5mn daily. This would equate to $45mn of monthly volume, which would equal $90,000 in trading fees at a 0.2% average fee. 50% of these fees will be used to perpetually buy and burn COV, which would equate to $45,000-worth. At the current price of $0.84, this equals ~53,500 COV bought and burnt monthly, or 0.3% of the circulating supply.

If Covesting ends up in the top 50, it will trade, on average, $20mn daily, or $600mn monthly. This would equate to $1.2mn in trading fees at a 0.2% average fee, which would equal $600k in monthly buy-backs. At the current price, this is ~715k COV bought and burnt monthly, or 4.08% of circulating supply.

If Covesting ends up a top 20 exchange by trading volume, it will trade $95mn daily. This is $2.85bn of monthly volume, which equals $5.7mn in trading fees at a 0.2% average fee. That equates to $2.85mn monthly buy-backs, which is around 3.39mn COV at current prices, or 19.38% of circulating supply.

Now, there are several caveats. Firstly, this is only accounting for trading fees generated; not copy-trading commissions or deposit fees. Secondly, this thought experiment assumes a constant price irrespective of the volume of buy-backs. In practice, this wouldn’t happen, and the liquidity would not be there for such a volume of buy-backs without significantly raising the price of COV.

Regardless, it is easy to see how a successful launch of the platform and a future marketing campaign for user acquisition could lead to a dramatically higher value for COV based on buy-backs alone.

That concludes my fundamental analysis of Covesting. Onto the technicals.


Technical

As I mentioned earlier, there is limited price-history for Covesting, as it has only been in existence for a year, and has only been traded for ~10 months. That being said, there are numerous points-of-interest on the chart. Firstly the all-time high was one of the first prices ever traded for COV, which implies a huge amount of potential price discovery were a new bull cycle to begin. Secondly, the 3-month downtrend was recently broken in explosive fashion on announcement of the DLT License being issued. Price had previously traded back into an area of former accumulation, right at the all-time low. Price has since sustained the breakout, and has consolidated above a significant pivot level (a level that has shifted from support to resistance numerous times) at ~10k satoshis. There is significant long-term resistance around ~15k satoshis, and a close on the Daily above that level would indicate that new highs are incoming. As stated earlier, calculable reward-to-risk of an entry at current prices is 2.76, but I certainly won’t be selling my position at the break of the all-time high.


Conclusion

I believe I’ve covered quite a lot of ground in this report, and, having now garnered a better idea of the experience of the team behind Covesting, I’m eagerly anticipating future developments.

My final grading for Covesting is a solid 4 out of 5. There is so much fundamental strength that it would be easy for me to grade Covesting a 5, but I am reminded that this is not merely a fundamental report; we are speculators, and thus the technicals, and specifically the reward-to-risk, become a key factor.

Please let me know if you’ve enjoyed this third Coin Report; which sections you found most valuable; where you’d like me to develop further/refine/improve etc. And feel free to leave any questions in the Comments section and I’ll get back to you. Oh, and sign up for the mailing list if you want these delivered direct to your inbox!

Lastly, I know I mentioned it earlier, but I’d really appreciate it if, if you’re interested in the Covesting platform, you could sign up using my ref link: https://www.covesting.io/?ref=42416. Of course, there’s no obligation to do so, and I hope you’ve enjoyed the report!


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