Coin Report #80: Decentr

Welcome to the 80th Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of Decentr. This will be comprised of an analysis of a number of significant metrics, an evaluation of the project’s community and development and an overview of its price-history. The report will conclude with a grading out of 10. I hope you enjoy the read!

Introduction

For the first Coin Report of 2022, I thought I would circle back on a project that I thought showed promise back in 2020 when I first reviewed it but that had – in my opinion – some pressing concerns regarding emissions. I have traded DEC over the preceding period but never really considered a long-term position because of this. Coming off the back of a significant drawdown and a revised emission schedule, however, it may be approaching more interesting levels for the speculator and I am keen to determine how the project has progressed and whether it is now approachable as a long-term investment.

I hope this report will prove objective where it must be and fair on more subjective matters. For those who’d like to learn a little more about Decentr prior to reading this report, here are some primary links:

Fundamental Analysis

General:

Name: Decentr

Ticker: DEC

Token Type: ERC-20 + Mainnet on Cosmos (Delegated Proof-of-Stake)

Sector: Browse-to-Earn / Data Economy

Exchanges: Uniswap, AscendEX, Hoo.com, Poloniex, BKEX, Bilaxy, Hotbit, BVNEX and CoinW

Launch Overview

Decentr was incorporated in Q4 2018, with preliminary research on a data economy solution having been completed by Q1 2019. The team then began development later in 2019, before conducting several token sales in order to raise funding for sustained development.

In mid-2019, they raised $250k in a seed round, allocating seed investors 2.5% of the maximum supply of 1bn DEC – the native token for the Deconomy. Following this, in Q2 2020, Decentr raised ~$489k via a private sale and ~$485k via a public sale, for 30mn DEC and 19mn DEC, respectively. Cumulatively, the team have raised $1.225mn across the three rounds, in exchange for 7.4% of the maximum supply of DEC.

DEC was later issued post-public sale as an ERC-20 token, with its mainnet token (built on Cosmos) and the Decentr Browser having been launched in late 2021. We will discuss these at length a little later in the report.

Of the maximum supply of 1bn DEC, 10% is allocated to the team; 10% to partners and advisors; 32.6% to the foundation; 40% to the ecosystem; and the remaining 7.4% were sold to investors.

Price-History Overview

Given that DEC has now been trading for ~18 months, there is plenty of price-history available for us to analyse, with multiple market cycles having played out. Whilst I will dig into price-action in depth in the Technical Analysis section, for now it will suffice to say that DEC formed its all-time low at 101 satoshis in January 2021, whereas its all-time low against the Dollar formed in October 2020 at $0.024. Its all-time high formed at $0.61 in February 2021, and at 2250 satoshis in September 2020.

Project Overview

Decentr is seeking to address and resolve the many issues surrounding user data and data privacy, with the express purpose of providing a platform that attaches value to user data, facilitating data ownership by the individual. By doing so, Decentr will allow users to use their data – if they so wish – to reduce the cost of purchases of goods and services, with user data allowing for a ‘discount’ due to its intrinsic value. Moreover, this user data will also be able to secure better deals across Decentr’s range of DeFi products and services within the Decentr platform.

As stated in its whitepaper:

“Data is the new currency. Companies have been trading stolen user data for over a decade now – raw data that actually belongs to the user.

This means the majority of users cannot participate in the emerging data economy (worth USD $1.7TRN annually across G7 countries), because users do not own their own data and hence cannot extract value from it.

As a result, vast amounts of unstructured user data – personal, open and Public Sector Information (PSI) – remain out of reach of individual and business users, siloed away for profit by large companies, far from wider public benefit and social good.

Decentr LLC provides a web browsing experience that gives surfing the internet a payable value. We achieve this by facilitating with our token (DEC) the extraction of economic value from user data into fiat or digital currency.“

I look forward to evaluating its progress in this respect.

Let’s begin with some Metric Analysis:

Metric Analysis:

Below are listed a number of important metrics, all of which are accurate as of 17th February 2022. 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.

Metrics:

General:

Price: $0.0675 (156 satoshis)

Circulating Supply: 101,268,535 DEC

Total Supply: 1,000,000,000 DEC

Maximum Supply: 1,000,000,000 DEC

% of Max. Supply In Circulation: 10.13%

Network Value: $6,834,168 (157.98 BTC)

Network Value at Max. Supply: $67,485,600

Exchange Volume: $246,063

Exchange Volume-to-Network Value: 3.6%

Category: Microcap

Average Price (30-Day): $0.073

Average Exchange Volume (30-Day): $210,325

Average Network Value (30-Day): $7,285,557

Average Exchange Volume (30-Day)-to-Network Value: 2.89%

Volatility* (30-Day): -0.0866

Average Daily On-Chain Transactions (30-Day): 23.2

Average Daily Transactional Value** (30-Day): $97,280 (source)

NVT*** (30-Day): 70.25

% Price Change USD (30-Day): -15.1%

% Price Change USD (1-Year): -83.8%

USD All-Time High: $0.61

% From USD All-Time High: -88.9%

Premine % of Max. Supply: N/A

Premine Location: N/A

Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 2.43 BTC

Liquidity-to-Network Value %: 1.54%

Supply Available on Exchanges: 7,975,947 DEC

% of Circulating Supply Available on Exchanges: 7.88%

*Volatility is calculated by taking the average price over the given time-period, calculating the difference between it and the highest price and it and the lowest price over that same time-period, and multiplying those figures together. The closer to 0, the less volatility during that period, and vice-versa. Read this for more on volatility.

**Transactional Value in $ is calculated by taking the daily transactional value in DEC and multiplying it by price.

***NVT is calculated by dividing the Network Value by the Average Daily Transactional Value. See here for more on NVT.

Supply Emission & Inflation:

Block Reward Schedule: N/A (Token unlocks as per this source)

Average Block Time: N/A

Current Block Height: N/A

Annual Supply Emission: 55,731,465 DEC (86.94 BTC at current prices)

Annual Inflation Rate: 55.03%

Circulating Supply in 365 Days: ~157,000,000 DEC

Token Sale:

The following details were taken from this source.

Public Sale Period: 13th July 2020

Total Tokens: 1,000,000,000 DEC

Total Tokens Available for Public Sale: 19,000,000 DEC

Total Raised: $485,060

Average IEO Price Per Token: $0.026

Total Tokens Sold: 19,000,000 DEC

Further Details:

Decentr raised funding via three rounds: a seed round, that raised $250k in mid-2019 for 2.5% of tokens; a private round in July 2020 (held in conjunction with the public sale) that raised $489k for 3% of tokens; and a public sale that raised $485k for 1.9% of tokens. Total raise was $1,224,650 for 74,000,000 DEC, or 7.4% of maximum supply.

Distribution:

Address Count: 7633

Supply Held By Top 10 Addresses: 93.93%*

Supply Held By Top 25 Addresses: 95.35%*

Supply Held By Top 100 Addresses: 97.03%*

Inactive Address Count in Top 25 (30 Days of No Activity): 18**

*These figures include the #1 address, which is team-controlled and contains 898mn DEC, or 90% of the maximum supply.

**Excludes exchange addresses.

Analysis:

There is quite a lot to work through here, so I will refrain from any preamble.

Beginning with transaction-related data, we find that Decentr has averaged 23.2 daily transactions on-chain for the past 30 days, equating to an average daily transactional value of $97,280, which gives it a 30-day NVT of 70.25.

Now, looking at the remaining General metrics, let’s take a look at Volatility:

I calculated this to be -0.0866 for the past 30 days; this is particularly low and is highly indicative of DEC being at the early/latter stages of a cycle as opposed to mid-cycle, and thus potentially in an accumulation range. We will look at this more closely towards the end of this report.

Next up, we have the metrics relating to Liquidity:

Firstly, I found that there was 2.43 BTC of buy-side liquidity within 10% of current prices to be found across all exchanges, equating to 1.54% of its Network Value. This places Decentr in the top 10% of prior reports, indicating relatively high demand at current prices. This is promising.

As for sell-side liquidity, I found that 7,975,947 DEC was available for purchase in the orderbooks, equating to 7.89% of the circulating supply. This is the 3rd-highest figure recorded in these reports, and whilst this – at a glance – is suggestive of a relative lack of conviction amongst holders, it must be noted that ~5.5mn of this is liquidity on Uniswap, in part provided by the team.

Moving onto volume, Decentr is reported to have traded $246,063 of Exchange Volume over the past 24 hours, equating to 3.6% of its Network Value. Further, Average Exchange Volume was $210,325 for the past 30 days, equating to 2.89% of Decentr’s Average Network Value for the same period. This is somewhere in the middle of the pack relative to prior reports but for these market conditions it is nonetheless good to see some speculative interest.

Now, let’s take a look at Supply Emission:

Given that DEC is an ERC-20 token, its entire maximum supply of 1bn DEC is technically already in existence, though the bulk of it is currently locked in a smart contract. To be precise, 898mn DEC is currently locked in the #1 address. As you will have seen in the recently revised vesting schedule pictured in the relevant section above, we can work out the rate at which DEC will join circulation for the forthcoming year. Using this schedule, I calculated that ~55,731,465 DEC are expected to be unlocked between February 2022 and February 2023, equating to 86.94 BTC at current prices. This would give Decentr an annual inflation rate (for the forthcoming year) of 55.03%, assuming all unlocked tokens join circulation during that period. This would put Decentr’s circulating supply at 157mn DEC in 365 days.

Now, more important than the nominal figures for emission alone are their relationship with traded volume and liquidity.

If we take the above figure of 55.7mn DEC expected to join circulation in the forthcoming year, we can work out that average daily supply emission during that period will be 152,688 DEC. This equates to 0.237 BTC, or $10,238-worth. Given this, Decentr’s 24-hour traded volume of $246k is 24x greater and its average daily volume for the past 30 days is 20.5x greater than the expected daily emission. Further, its buy-side liquidity is 10x that of its expected average emissions, which is very comfortable and thus we should not expect the annual unlocks to provide a great deal of headwinds here if liquidity and volume remains consistent.

Finally, let us take a look at some Distribution:

Using the rich-list, I found that there are currently 7,633 holders of DEC, up from 2,841 in August 2020.

Of the maximum supply of 1bn DEC, the top 10 currently control 93.93%; the top 25 control 95.35%; and the top 100 control 97.03%. If we look specifically at circulating supply and exclude that #1 team-controlled address, as well as any exchange-controlled addresses, the top 10 control 34.7%; the top 25 control 43.6%%; and the top 100 control 57.2%.

Among the top 25 non-exchange, privately-owned addresses, 18 were inactive over the past 30 days, whilst 2 were distributing and 5 were accumulating, with net inflows into these addresses of 6,215,435 DEC over that period, equating to 6.1% of circulating supply. Promising stuff – clearly larger holders are buying or holding in this range.

And that concludes this section. Onto the Decentr 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.

Decentr is present on two of these platforms; Twitter and Telegram. To begin, let’s look at the various social metrics that I calculated from the Decentr Twitter and Facebook accounts:

Twitter Followers: 13,423 (+8,965 since August 2020)

Tweets: 644 (+117 since August 2020)

Average Twitter Engagement: 0.86% (down from 2.69% since August 2020)

Facebook Likes: N/A

Facebook Posts (30-Day): N/A

Average Facebook Engagement: N/A

As usual, I will be using RivalIQ‘s social benchmark report for evaluation purposes.

Twitter:

Decentr has a modest audience on Twitter of 13,423 followers, which is has increased ~three-fold on its audience from the first report. Its engagement rate has however dropped off, and though not poor at 0.86% on average, it is also not outstanding. What seems to have occurred is that despite the audience tripling during that period, the number of engagements each tweet is getting has stayed roughly the same and thus average engagement as a percentage of the audience has dropped off. Relative to global benchmarks, this is 19.1x greater than the average across all industries of 0.045% and 31.8x greater than the average in the Tech and Software industry of 0.027%. I think the team have done a good job in growing the audience and have clearly continued to post at a decent rate, but more work needs to be done here on engaging their audience, particularly as a user-focused platform: more engagement = more awareness of the product = more downloads of the browser.

Facebook:

There is no Facebook page for Decentr.

Discord:

There is no Discord group for Decentr.

Telegram:

The Decentr Telegram group has 4,571 members, up 1,664 since August 2020.

I have provided my key takeaway from recent activity in the group below:

There is a good level of daily discussion for the number of members, with ~10% of the group online in general and conversation occurring throughout the day.
The team are waiting on Osmosis listing in order to automate swaps between ERC-20 and native DEC, utilising the Gravity Bridge.
Inter-Blockchain Communication is live on Decentr as of this month.
Queries from the community are answered promptly.
The full release of the Android browser, in which users will be able to earn from their mobiles, is in development.
25,000+ users are now on Decentr, as of mid-February. The growth rate has been parabolic since the New Year.
Users are saying that the browser is a little faster than Brave and that the dVPN feature is a favourite. In my experience of using the browser, I would say that it is actually just a touch slower than Brave when loading multiple trading-related tabs.
Users actively share both feedback and suggestions for improving the product itself – this is promising.
There are currently 20 validators on Decentr.
Users can stake DEC natively within the browser to earn on their balances.

BitcoinTalk:

There is no BitcoinTalk thread for Decentr.

And that concludes my evaluation of the Decentr community.

Let’s take a look at its development:

Development:

For the following Development analysis, I will be evaluating project leadership, the whitepaper, the roadmap and available wallets (I have provided developmental progress summaries within these sections as opposed to all at the end):

Project Leadership:

There are 7 team members listed on the website and 9 employees listed on LinkedIn.

More specifically, the team is comprised of:

The advisory board comprises:

Whitepaper:

The 31-page non-technical whitepaper can be found here.

I have summarised my key takeaways from the whitepaper below:

User data is as valuable as money, with companies trading stolen user data for many years that should be retained by the user.
The data economy is worth $1.7trn globally; this value does not directly benefit the user at present.
Decentr is seeking to fix this significant imbalance by attributing value to user data, securing data and facilitating data ownership for the individual, with a view to enable users to utilise this data to offset purchases of goods and services.
The first key concept here is Data As Payable Value, which is to say that, on Decentr, data is retain by the individual within their DecID, which itself is secured by Decentr.
Personal Data Value (PDV) is the mechanism by which this user data is attributed economic value, acting as an exchange rate of sorts between currencies that is unique to the user and fluctuates depending on the user’s engagement on the Decentr platform, whereby positive engagement increases a user’s PDV, enabling more cost-effective purchases and vice-versa.
Decentr believe that a “true” data economy must ensure that all currencies are controlled at the level of the individual; data becomes a means of securing an exchange rate, which means that data itself becomes a currency.
All of this will be facilitated via the Decentr Web Browser and its browser add-on, which will allow users to access web 3.0 applications in which a user can choose to use PDV to help pay for goods and services, whilst also accessing DeFi features such as dLoan and dPay.
The platform itself will utilise the DecID, which records all user data but can only be accessed by the individual as opposed to any third-parties. This data is decentralised and secured by Decentr. The data contributes to the fluctuates in PDV, facilitating an individual exchange rate, and this PDV offsets the value of purchases.
Regarding innovation, the primary innovation is to “eliminate the role of money-currency (fiat or digital)”, as this becomes redundant in a circular data economy.
Importantly, this will be facilitated by their novel consensus mechanism – Proof-of-Engagement – which will be 98% more energy efficient than Proof-of-Work.
Current partners include Holochain, Black Edge Capital, BISITE and Rotechnology.
We also find some team information and a brief roadmap, both of which are covered above.
Following this executive summary, we come to the Introduction. Here, the primary concept introduced is the Internet of Value, which is where economic exchanges are effectively instant, like information exchange currently is, for which Decentr’s proposed solution is the aforementioned data-as-currency, as opposed to money-as-currency.
One of the primary problems with a data economy being constructed and an Internet of Value being sustained is that data valuation and transaction is extremely difficult at present, with Decentr’s solution being the first to reconcile these issues by re-purposing user data as currency.
As data on Decentr is both secure and immutable, user data has intrinsic value and worth.
Data sharing and storage is not a data economy, thus current solutions are merely B2C or B2B services – the exchange and attribution of economic value to data is the crux of this.
Decentr will function as open software on which developers can build data sharing and storage solutions (such as those that currently exist) but it will also act as a decentralised user-layer, allowing for a completely decentralised web 3.0/web 4.0 solution.
Regarding the web browser and platform, Decentr will comprise of a comprehensive suite of tools and features, such as the DecID, dPay for transactions, social media services such as dNews, dChat and dPost, and more.
While using the browser, all user activity is recorded immutably and then credited with PDV. Decentr’s Multi-Layer Authorisation coupled with its dCloud create an environment in which increased user activity facilitates increased user data security, thus increasing the value of that data, unlike the current data storage and sharing paradox.
Cooperative-game Theory: This is the means by which PDV is attributed economic value via community consensus, where Proof-of-Engagement is the consensus mechanism. Decentr’s deconomic theory proposes to achieve fairness within PDV via relative numerical value as opposed to absolute. There is no trusted third party assigning value.
Decentr Tokenomics: DEC is the native token to the Decentr platform, where DEC will support data exchange between all currencies. If a user’s PDV is 1.1 and DEC is equivalent to $1, then purchases made will cost the user $0.90 for a $1 product.
The Decentr platform will have an integrated dEx, where users will be able to exchanged fiat and digital currencies utilising their PDV.
The 400mn DEC allocated to the Decentr Reserve will never be sold on the open market, instead being utilised to regulate the internal deconomy, stabilising the dFintech suite of products and services.

Roadmap:

The 2022 Decentr roadmap can be found here.

The first thing to discuss here is what the Decentr team accomplished in 2021, most notably the release of their native blockchain built on Cosmos and the public release of their browser. Despite a lofty but well-intentioned roadmap in which some of the objectives appear to have been missed, the two central milestones that had to be done to give Decentr any sort of fundamental soundness – in my opinion – were achieved. The launch of both the native blockchain and the browser in 2021 puts Decentr on the path to user adoption and thus towards success of their ambition: to empower Internet users with the full economic value of their data. Beyond this, they did also form strategic partnerships with Ocean Protocol, Aleph.im and the Mount Sinai Hospital in New York, and launched staking of DEC within the browser, providing more means by which users can earn while they browse. I am pleased to see that the project delivered on key objectives that, in the publication of the first report, were merely words in a whitepaper – at least from the perspective of the public.

Now, moving onto 2022, the team have released a pared back roadmap in which fewer objectives have been expressed but with the intention to deliver on a greater proportion of these.

In Q1 2022, the team will be upgrading the native blockchain to allow for IBC, allowing communications between native blockchains and thus improving integration capabilities across the ecosystem. This has already been launched as of February. The team are also having Decentr listed on Osmosis – the leading Cosmos DEX – allowing for greater liquidity of the DEC token and lower trading fees, as well as smoother bridging between ERC-20 and native. Thirdly, the team are working on a custom homepage for the browser that will display personal statistics relating to usage and data and incorporating general UI improvements. The team is also planning on launching dSync, which will make multi-device usage more seamless, allowing for bookmarks, histories and passwords to be instantly synced within one Decentr account. Further, the browser will be integrating xDefi as a wallet option in order to allow for cross-chain token support. The auto-update feature is also planned to be released for Mac in Q1. Finally, the team will be releasing the full Android browser that allows for complete functionality for the user, including browse-to-earn, and, perhaps most importantly, the team have engaged certified EU GDPR practitioners to help make Decentr a GDPR-compliant browser, unlike Chrome, Brave and Opera.

In Q2 2022, the team will be integrating the Sentinel dVPN, which will ensure not only the browser but all traffic on the operating system is fully encrypted. Users will be able to use the DEC earned via browsing to pay for this, or can simply opt to use Decentr’s free VPN instead if they so wish. The iOS browser is also planned for release in Q2, with the team waiting for release of the fully functional Android browser before rolling out onto iOS due to approval process for the App Store. The team will also be working on Decentr’s version of Twitter for incentivised social media. There will also be a governance module release to improve engagement by users with governance proposals. Finally, the team will be integrating data staking with Ocean Protocol, allowing for rewards to be earned by staking user data, thus the funnel will be: user browses on Decentr -> earns DEC & improves their PDV for their data -> stakes this data to earn further rewards on it.

Overall, there is plenty to look forward to if the team can deliver in 2022.

Wallets:

As DEC is an ERC-20 token, it can be stored on any compatible wallet, including hardware wallets like Ledger and Trezor, web wallets, mobile wallets and desktop clients. Further, as the mainnet token is native to Cosmos, it can be stored on any Cosmos-compatible wallet, most notably directly within the Decentr browser in their native wallet.

And that concludes my fundamental evaluation of Decentr.

Technical Analysis

DEC/USD

DEC/BTC

If we begin by looking at DEC/USD, we can see that price had a mini bull cycle on initial trading, rallying off of support at $0.05 into resistance at $0.26 before retracing the entire rally and printing a new all-time low at $0.024 in October 2020 -a low that holds firm to this day. Following that, price entered a period of accumulation with that low as range support and $0.05 acting as resistance, which culminated in a new, more protracted bull cycle that led to the all-time high into $0.61 in February 2021. This marked the top to this day and since then price has been printing lower highs back into the historical accumulation range. In July 2021, we saw $0.05 act as a bottom once again before a smaller cycle into $0.34 as resistance in September, leading to the slow bleed we have seen over the past few months, all the way back into $0.05 as support. Ideally, you want to see that all-time low at $0.024 hold in order for this historical range to continue to act as re-accumulation. We looked at the larger holders and found that most have been holding or buying in this range, which is a good sign, and thus I will also be building a position below $0.08 into $0.024. I am expecting to see further consolidation inside this range and perhaps and wick below the all-time low to act as a spring for the next cycle. One could adopt a fixed risk approach here given that this is a microcap, where I would DCA into the position, adding as we move lower, even below the all-time low, until a 1-2% position has been filled, with no stop loss – ‘moon or die’. Alternatively, one could view a breakdown below $0.024 and lack of immediate reclaim to be their exit point. If I am able to fill at an average of $0.05, and I am expecting to hold the position for 12-18 months, I am effectively buying DEC at a ~$10mn market cap. In 18 months, the circulating supply is expected to be 193,000,000 DEC. I can disregard the fully diluted valuation here as I am not expecting to hold for the many years it will take for that supply to unlock and join circulation, and I have accounted for the next 18 months of unlocks in that ~$10mn figure. As such, I am willing to pay for DEC at a $10m market cap for August 2023 in the context of 25,000+ users, a 92% drawdown from all-time highs and larger holders buying or holding within the current range.

If we look at DEC/BTC, we see that price rallied off the initial support at 474 satoshis upon listing into the all-time high at 2249 in September 2020, and since price has been printing lower highs on successive smaller market cycles. Price bled from 2250 all the way back to 474, which gave way and led to the current all-time low at 100 satoshis in January 2021 – a 95% drawdown. Subsequently, we saw a high volume mini market cycle that drove price off the lows into 1286 and then a slow bear cycle followed, taking price back into major support around 170 satoshis, which acted as support for quite some time before giving way in December 2021, with price now having spent 60 days range-bound between the all-time low and 217 satoshis as range resistance. Again, what we want to see here is further consolidation in the range and for price to then perhaps wick below the all-time low and reclaim the range, acting as a spring, whilst larger holders continue to accumulate. Targets would be 474 as first major resistance in a new cycle, followed by 800, 1286 and potentially the all-time high at 2250 depending on how successful Decentr is in capturing the narrative in the next altcoin boom. Regardless, I do think there is enough fundamental value here to take a punt on a 12-18month position around current prices, in expectation of higher prices at some point in 2023.

And that concludes my evaluation of Decentr.

Conclusion

This report is now approaching 5,000 words, and it is time to draw it to a close.

My final grading for Decentr is 8 out of 10.

Here, you can find my grading framework, for reference.

Lastly, here is a link to a Google Sheets file with any significant data from previous reports compiled for cross-comparative purposes. I will keep this updated as I continue to write these reports.

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.

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