N.B: In the spirit of full transparency, the following Coin Report on LCX is a Sponsored Post.
Welcome to the 48th Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of LCX. 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!
I’d like to begin by mentioning that, prior to conducting my research for this report, I had very little idea about LCX beyond the minor details gleaned from its (albeit regular) appearance on my Twitter feed. I knew that it was an exchange, of sorts, and that it operated out of Liechtenstein, but, in truth, that was the extent of my knowledge up until the team reached out to have me conduct some research and have this report published.
Given all of the above, I do 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 LCX prior to reading this report, here are some primary links:
Name: LCX (Liechtenstein Cryptoassets Exchange)
Algorithm: N/A (ERC-20)
Sector: Financial Services
Exchanges: Liquid, IDEX, FatBTC, VinDAX, ExtStock
LCX, or Liechtenstein Cryptoassets Exchange, was initially conceptualised by entrepreneur Monty Metzger in November 2017, as a comprehensive financial services platform for professional investors in crypto. Utilising private equity for early stage development, they officially launched their LCX Terminal in June 2019, allowing for cross-exchange portfolio and trade management within a single user interface.
Following this, in September 2019, they conducted an IEO on Liquid, a cryptocurrency exchange, offering 100,000,000 LCX – the native token to the LCX ecosystem – at $0.06 apiece. The IEO did not fully sell out and all unsold tokens were burned in December 2019, though there are no publicly available details on the specifics of the IEO due to confidentiality agreements between Liquid and LCX; the December 2019 token burn is public, however, at ~42mn LCX, inclusive of LCX burned from fees generated by the platform. The LCX token itself was created on the ERC-20 standard and is limited to the 956,682,375 LCX currently in existence, with this supply only to decrease over time. Within the LCX ecosystem, these tokens have a guaranteed utility value of $0.10 – a 50-fold increase in value relative to market price.
The distribution of the total supply is as follows, as of April 2nd, 2020: 10.5% in the Company Reserve; 16.7% allocated to the team; 11% reserved for development; 4.6% for the ecosystem requirements; 8.4% for future release; and 48.8% circulating in public.
As LCX only began trading on exchanges in December 2019, there are only a few months-worth of price-history available for analysis, of which the majority has consisted of illiquid trading (as I shall come to a little later).
For now, it will suffice to say that LCX formed its all-time low against Bitcoin shortly after initial trading began in December at 1 satoshi. It later printed its all-time high in mid-April at 48 satoshis, but against the Dollar its all-time high formed at $0.004 back in January.
Regarding the project itself, its aims are quite straightforward, with the primary value proposition being a comprehensive financial services platform within the cryptosphere. More specifically, LCX will encompass a Terminal (a cross-exchange trading desk), a Smart Order service for automated smart orders, a price reference service, a security token platform and a native cryptoasset exchange.
As stated in the Vision Paper:
“LCX’s goal is to become one of the world’s first licensed and supervised security token exchanges as a regulated marketplace for digital assets.
LCX wants to provide the key infrastructure for the new market of digital assets and the token economy.”
I look forward to measuring its progress in this regard.
Let’s begin with some Metric Analysis:
Below are listed a number of important metrics, all of which are accurate as of 17th April 2020. 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.
Price: $0.002 (28 satoshis)
Circulating Supply: 435,311,884 LCX
Total Supply: 956,682,375 LCX
Exchange Volume: $14,600
Network Value: $866,253 (121.89 BTC)
Maximum Supply: 956,682,375 LCX
% of Max. Supply Minted: 100%
Network Value at Max. Supply: $1.903mn
Exchange Volume-to-Network Value: 1.69%
Average Price (30-Day): $0.0014
Average Exchange Volume (30-Day): $20,847
Average Network Value (30-Day): $583,303
Average Exchange Volume (30-Day)-to-Network Value: 3.57%
Volatility* (30-Day): -0.2785
Average Daily On-Chain Transactions (30-Day): 47.5
Average Daily Transactional Value** (30-Day): $33,803 (source – this is inclusive of IDEX and ExtStock trading volume; the figure is ~$21,300 excluding it)
NVT*** (30-Day): 40.66 (excluding IDEX and ExtStock trading volume)
% Price Change USD (30-Day): +142.1%
% Price Change USD (1-Year): N/A
USD All-Time High: $0.004
% From USD All-Time High: -49.7%
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): 0.649 BTC
Liquidity-to-Network Value %: 0.53%
Supply Available on Exchanges: 28,757,489 LCX
% of Circulating Supply Available on Exchanges: 6.61%
*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 LCX 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
Average Block Time: N/A
Current Block Height: N/A
Annual Supply Emission: 0
Annual Inflation Rate: 0%
Circulating Supply in 365 Days: N/A
Address Count: 1,186
Supply Held By Top 10 Addresses: 60.16%
Supply Held By Top 20 Addresses: 75.82%
Supply Held By Top 100 Addresses: 96.07%
Inactive Address Count in Top 20 (30 Days of No Activity): 6*
*Excluding IDEX and Liquid-owned addresses (#8 and #10)
Now, whilst there is plenty to work through here, the lack of staking, masternodes and supply emission rids us of a little weight.
I’d like to begin by taking a look at the metrics related to transactions, before working through the remaining General metrics, followed by (the lack of) Supply Emission and concluding with some Distribution analysis:
I found that there were 47.5 Average Daily On-Chain Transactions over the past 30 days, amounting to a fairly impressive $33,803 of Average Daily Transactional Value. However, remember, this is inclusive of ow and ExtStock trading volume, as Etherscan includes it in its Transfers section, though we know that this in itself amounts to less than $12,500. If we discount the $12,500, we get on-chain transactional value of ~$21,300, giving LCX a 30-day NVT of LCX is 40.66; this is around half that of Bitcoin, indicating a degree of undervaluation.
Moving on, I’d like to take a look at Volatility, which I calculated to be -0.2785 for the past 30 days; this places LCX 4th-highest amongst prior reports for 30-day volatility, indicating that a new cycle may be underway, as price has emerged from consolidation, at least against the Dollar.
Next up, we have the metrics relating to Liquidity:
Firstly, I found that there was 0.649 BTC of buy-side liquidity within 10% of current prices to be found across all exchanges, equating to 0.53% of its Network Value. This places LCX 9th-highest from prior reports, indicating relatively high demand at current prices.
As for sell-side liquidity, I found that ~28,757,489 LCX was available for purchase in the orderbooks, equating to 6.61% of the circulating supply. This is the 4th-highest figure ever recorded in these reports, suggesting that there is also a desire to sell LCX as opposed to hold it off of orderbooks. Perhaps, this is due to perceived lack of incentive to hold at the current time.
Moving onto volume, LCX is reported to have traded $14,600 of Exchange Volume over the past 24 hours, equating to 1.69% of its Network Value. Further, Average Exchange Volume was $20,847 for the past 30 days, equating to 3.57% of LCX Average Network Value for the same period. This is the 19th-highest figure recorded in these reports and certainly indicative of some degree of speculative interest.
Now, let’s take a look at (the lack of) Supply Emission:
Given that LCX was created in a token generation event in March 2019, its maximum supply was created in totality in that instance. Thus, annual inflation is 0%. Further, in practice, there is engineered deflationary pressure, as LCX have committed to burning 100% of their platform fees in LCX on a quarterly basis (having completed two token burns so far with a total of ~43.3mn LCX burned). As such, there should be no real headwinds to price growth, as there is no emission to be dumped at market. If anything, we would expect tailwinds based on the growth of the platform and thus the growth of the token burn rate.
Finally, let us take a look at some Distribution:
Using the rich-list, I found that there are currently 1,186 holders of LCX; the 4th-lowest address count among reports on tokens for which this was available.
Further, I found that the top 10 richest addresses control 60.16% of the total supply; the top 20 control 75.82%; and the top 100 control 96.07%. However, it must be noted that the 1st and 2nd-richest addresses are locked and hold 180mn LCX between them, with a vesting period of 3 years. Further, #8 and #10 are Liquid and IDEX, with 47.5mn and 29.8mn LCX held respectively. Of the 18 addresses excluding Liquid and IDEX, 6 have been inactive over the past 30 days (inclusive of locked addresses), 6 have been accumulating and 6 have been distributing, with a net cumulative inflow into these addresses of 21.7mn LCX over the period.
And that concludes this section. Onto the LCX 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.
Concerning social media presence, there are four main platforms to examine: Twitter, Facebook, Telegram and Discord.
LCX is present on three platforms; all except Discord. To begin, let’s look at the various social metrics that I calculated from the LCX Twitter and Facebook accounts:
Twitter Followers: 7,244
Average Twitter Engagement: 0.72%
Facebook Likes: 516
Facebook Posts (30-Day): 5
Average Facebook Engagement: 1.24%
As usual, I will be using RivalIQ‘s social benchmark report for evaluation purposes.
LCX has a moderately-sized audience on Twitter of 7,244 followers, which places it in the middle among prior reports. Its engagement is also average relative to other reports at 0.72%. Relative to global benchmarks, this is 15x greater than the average across all industries. I think there is work to be done here on fostering greater engagement within the Twitter community; this despite the community being quite vocal about the project and LCX themselves clearly committing to posting regular content.
Unlike the vast majority of cryptocurrency projects, LCX does appear to tend to its Facebook page, despite it having a small audience of 516. Its engagement rate is 1.24%, which is decent but expected given the size of the audience. Nonetheless, it is good to see an equal commitment to maintaining the Facebook audience as that of Twitter, with 5 detailed posts published over the past month.
There is no Discord group for LCX.
The LCX Telegram group contains 7,335 members.
Clearly, Telegram is LCX’s primary community, as there is constant discussion here on a daily basis.
Below, I have summarised my findings from the prior week:
- The team and admins are active in the group and queries by the community are answered promptly.
- LCX have been running a Trading Competition on the LCX Terminal in order to make improvements to the platform and increase the growth rate of the userbase.
- The team are expecting to make several announcements this quarter regarding the developmental progress of the platform.
- The community are very much engaged and are users of the platform as opposed to purely speculators.
- New exchanges are expected to list LCX soon, but there are no official dates yet.
Overall, there wasn’t that much new to be gleaned from reading the Telegram discussion but there is definitely an air of excitement about LCX, particularly given recent traction.
The LCX BitcoinTalk thread was created on September 9th, 2019, and has since generated 3 posts spanning 1 page since inception.
The thread itself is now unused, but the announcement provides a general overview of the project. More specifically, social links are provided at the header of the ANN, followed by the tagline “A blockchain bank for the new financial world.” There are brief updates on LCX joining the World Economic Forum and Global Digital Finance, but beyond this there is little information provided. We do get an introduction to the LCX Terminal, which is the first tool of the platform, allowing for cross-exchange trade and portfolio management.
Before I wrap up this section, I’d like to also briefly mention that LCX are very much active on LinkedIn, given the more professional target market, with regular, detailed updates posted there to their 2,879 followers. Moreover, unlike many cryptocurrency projects, I found that they also have a fairly active YouTube channel, which also has ~2,800 subscribers, with videos posted every fortnight or so.
And that concludes this section on the LCX community. Now, let’s take a look at some 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:
LCX was founded by Monty Metzger, an entrepreneur who began in tech in 1998, having successfully exited several companies during that time, becoming an angel investor via Metzger Capital AG following these. Moreover, Monty ran a regulated VC Fund as General Partner – Digital Leaders Ventures – which made investments in PayKey, Aircall and VOIQ between 2014-2018.
There are four core team members listed on the website, including Amanjot Malhotra (Director of Product Development), Anurag Verma (Lead Engineer) and Katarina Metzger (Member of the Board).
On LinkedIn, there are 12 listed employees, with the company size listed at 51-200 employees.
Having consulted with the team, I was informed that a Head of Compliance was employed recently in order to navigate new blockchain laws in Liechtenstein. They are also currently hiring a Front-End Developer.
Regarding advisors to the project, Don Tapscott, Jimmy Wales, Plamen Russev, Miko Matsumura, Yat Siu and David Mikkelsen Troensegaard are listed in the Vision Paper.
Rather than run over the project website, as I do for most reports, due to the nature of LCX I wanted to take this section to discuss the LCX Terminal itself, since it is the core component of the LCX ecosystem and the user interface from which most tools are accessed.
Firstly, there are both free and paid plans available, with the primary difference between the two being that free plans allow for 3 exchange connections and paid for 15 connections for $290 per month (paid in LCX – currently priced at 2900 LCX due to minimum guaranteed value). There are 15 different exchanges that can be connected to your account, including:
- Coinbase Pro
- Huobi Global
The UI is sleek and functions well, with a general dashboard available with personalised watchlists, as well as exchange-specific dashboards displaying portfolios. Users are able to seamlessly switch between exchanges in order to place orders and trade. Orderbooks are clean and customisable and markets have TradingView charting integrated. Beyond this, the side panel allows users to access the smart order functionality, news integrations collated from numerous sources, profit/loss reports and general market data.
Overall, I really like the Terminal and will be making use of it myself.
The roadmap can be found on page 28 of the Vision Paper, accurate as of October 2019. It is quite brief and there are no further reading links provided on any of the goals; however, it is quite clear that this is not intended to be specific and detailed but rather to provide an overview of the intended direction of LCX.
It is presented in chronological format, beginning with the conceptualisation of LCX in 2017, followed by the incorporation of LCX AG in 2018 and the launch of the LCX Terminal in June 2019.
Subsequent to this, we have a little more detail on future ambitions, beginning in 2020 with Growth via Tokenization, which is inclusive of the launch of LCX Assets (for security tokens), LCX Exchange and AI-based tools for compliance. In 2021, the focus will be on Digital Assets, with the launch of the LCX Vault (a custodian service). Following this, in 2022, LCX will be focusing on Artificial Intelligence and Big Data; and in 2023, there will be expansion of the Digital Assets platform; in 2024, they are expecting a period of Growth via Digital Excellence; and by 2025, LCX expect to have billions in assets under management, with 70% of this expected to be crypto and 30% fiat.
The LCX Vision Paper is a 33-page document that covers a great deal of information, including a history of the space they are operating in and where they believe they fit. For our purposes, I will not be covering the history, instead opting to dive right into LCX itself, beginning at page 15 of the document: LCX – A New Kind of Global Financial Technology Company.
Here, we are given an introduction to LCX itself, which is described as a “new blockchain ecosystem”, the first product of which is the LCX Terminal – effectively, an advanced trading desk allowing for an all-in-one user experience. Following this, we are given LCX’s philosophy, which is built on security, transparency and value.
The products and services that will be offered by LCX include the Terminal (trading desk), the Exchange (regulated marketplace for cryptoassets and security tokens), LCX Assets (tokenised platform), the LCX Vault (institutional custodian), LCX Protocol (decentralised compliance protocol) and the LCX Bank (application for a full bank license will be required here, with the long-term vision being blockchain bank for corporate clients).
As we come to LCX Partnerships, we find partnerships with the World Economic Forum, where LCX is a member of the Centre for the Fourth Industrial Revolution; Ledger; Blockchain Research Institute; Global Digital Finance; Security Token Alliance; and Liquid.
We also find information on the management and advisory board, which I have already covered, as well as the roadmap (detailed above).
Overall, the document is concise and informative, as well as fairly up-to-date.
As LCX is an ERC-20 token, it can be stored on all manner of wallets, including hardware devices, such as those of Ledger and Trezor, as well as web wallets and local clients.
There were a few things I wanted to cover from miscellaneous blog updates that earlier sections haven’t afforded the opportunity to discuss:
From The Blog:
- In November 2018, LCX announced their intention to apply for further licences from the FMA in order to trade security tokens, having just received their Business License. There was some FUD on this point, as the Liechtenstein FMA released an announcement in October 2019 to say that LCX had not yet applied for these further licenses, but, from what I have read, there were no explicit statements by LCX that the extra licenses had been applied for at that point in time, anyway. With the recent blockchain laws having been passed in Liechtenstein and the team having hired a Head of Compliance, these licenses are now pending.
- The most recent token burn culminated in 986k LCX being burned from fees generated in Q1 2020, giving us an estimated annual token burn of at least 4mn LCX (~1% of the circulating supply) assuming no growth.
- In January 2020, LCX announced an office expansion to accommodate a growing team, with the HQ moved to Vaduz and new offices opened in Zug and New Delhi.
- In December 2019, LCX announced 10,000 registered users with 10% of these having completed KYC; as per the April CEO update, this is now 12,5000+ users with 20% of these having completed KYC.
- LCX are currently partnered with Wesley Snipes to tokenise his $25mn Daywalker Movie Fund, pending regulatory approvals for Security Token Offerings, potentially allowing the public to invest in his films and be rewarded with profit share.
- In March 2020, LCX launched both their Cryptocurrency Reference Price service and their Smart Order service. Regarding the former, these are price services regulated by Liechtenstein blockchain laws, making them Trustworthy Technology Reference Price Services supervised by the LFMA. There are four reference prices available: LCX Bitcoin Reference Price (BRP in USD and Euros) and the same for Ethereum. These are an aggregation of major spot exchanges. Regarding the latter, this is an automated smart order routing service, whereby algorithms compare prices across 10 exchanges and execute orders at best market prices. It is accessed via the LCX Terminal and allows users to access liquidity across exchanges and capitalise on arbitrage. It is currently available in the free plan.
- As per the April CEO update, Q1 revenues of 986k LCX surpassed expectations and the partnership with F1 Delta Time enabled individuals to use LCX to purchase official Formula 1 crypto collectibles. Moreover, to date, LCX purport to have invested over $2.5mn into the company and are financing several million dollars of additional funding for development.
- Lastly, LCX are targeting the Tokenized Asset market, which, as per the above update, is expected to be worth $1.5trn in 2024. This is indicative of the potential upside given sufficient market share.
Overall, LCX appears to me to be novel insofar as it is an all-encompassing platform for investing in and managing cryptoassets and, in the future, security tokens.
And that concludes my fundamental analysis of LCX.
As we can see from the chart provided above, there is very little price-history available for LCX, with initial trading beginning in December 2019.
From the earliest days of trading, however, there is a clear uptrend in price, though no full cycle has been experienced; at present, it does appear as though LCX is in the midst of its first bull cycle.
Interestingly, we can see that the all-time low was printed shortly after initial trading in December at 1 satoshi, although price did not remain there for long, climbing almost 20x within a few days (highlighting the serious early illiquidity). From those highs, price fell back to form a base through the New Year at around 5 satoshis, after which we see another illiquid spike higher to 47 satoshis, though price quickly rejected those highs and came back below 10 satoshis. This is where we see the slow uptrend beginning, with higher-highs and higher-lows forming through February, up until the local peak at 28 satoshis. From here, we see a more protracted decline for a couple of weeks back into old resistance now turned support at 10 satoshis, with trendline support forming here also. Since then, price has been steadily climbing, with the most recent price-action including a spike up to a new all-time high at 48 satoshis; again, this was swiftly rejected, but price did close the Daily above 30 satoshis for the first time just this past week.
I have marked out the gradually steepening curve of the advance, characteristic of the early stages of a parabolic advance (often culminating in a blow-off top) and I am quite convinced that LCX is in its early stages of a bull cycle, perhaps somewhere around optimism.
That said, as was established earlier in the report and can be observed with the traded volume, the market is quite illiquid at the moment. As such, trading it short-term seems a hazard to me; however, for longer-term speculation, I believe LCX is undervalued relative to its current market cap and I am a buyer at ~30 satoshis (ideally, at 25 satoshis, if I can get it).
This report is now over 4,000 words, and it is time to draw it to a close.
My final grading for LCX 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.