Coin Report #36: PirateChain

Coin Report #36: PirateChain

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Welcome to the 36th Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of PirateChain. 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 those that are unaware, PirateChain is part of the Komodo ecosystem and is privacy-focused; beyond this, I had little idea about the project prior to conducting my research.

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 PirateChain prior to reading this report, here are some primary links:


Fundamental

General:

Name: PirateChain

Ticker: ARRR

Algorithm: Equihash (Delayed Proof-of-Work)

Sector: Privacy

Exchanges: Graviex, TradeOgre, AltsBit, Altilly, TradeCX & Zaddex

Launch Overview

PirateChain was conceptualised within the Komodo Discord and launched in August 2018 as an independent blockchain within the Komodo asset ecosystem. It was launched with no premine or ICO and utilises Delayed Proof-of-Work for consensus on the Equihash algorithm. Further, it is 100% private, with transparent transactions unable to be made on the network.

Regarding supply emission, it has a steep emission curve, with block reward halvings every 270 days, culminating in a maximum supply of 199.99mn ARRR. The current block reward is 128 ARRR with 1-minute block times.

Price-History Overview

Given that PirateChain has only been in existence for around a year, there is not a great deal of price-history available to analyse, with only one distinct market cycle having played out in that time, which we shall come onto in a later section.

For now, it will suffice to say that ARRR formed its all-time high at 2,875 satoshis in June 2019, with price having fallen significantly since, trading near all-time lows of 300 satoshis currently.

Project Overview

Well, I’m sure even the dimmest among us could decipher the purpose of PirateChain, if only given its name; simply put, to provide private transactions by default.

As stated in its whitepaper:

“A fully private cryptocurrency and shielded blockchain originating from the Komodo ecosystem. Pirate solves Zcash’s “fungibility problem” through the elimination of transaction functionality to transparent addresses in its blockchain, making private usage “fool-proof”. This feature results in a fully shielded user coin base in the Pirate chain.
By consistently utilizing zk-SNARK technology, Pirate coin leaves no usable metadata of user’s transactions on its blockchain. All outgoing transactions other than mining block rewards and notary transactions are sent into shielded Sapling addresses maximizing the efficiency and speed of its chain. Pirate utilizes the consensus algorithm Equihash proof-of-work originating from Zcash, with an added security layer of delayed proof-of-work from Komodo which provides a higher than BTC grade level of security to the Pirate blockchain. The future of private decentralized payments is here.”

I am keen to discover the progress that has been to this end since inception.

Let’s begin with some Metric Analysis:


Metric Analysis:

Below are listed a number of important metrics, all of which are accurate as of 29th September 2019. 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: $0.027 (335 satoshis)

Circulating Supply: 121,796,136 ARRR

Total Supply: 121,796,136 ARRR

Exchange Volume: $3,467

Network Value: $3.293mn (408.02 BTC)

Maximum Supply: 199,109,110 ARRR

% of Max. Supply Minted: 61.17%

Network Value at Max. Supply: $5.383mn

Exchange Volume-to-Network Value: 0.11%

Category: Lowcap

Average Price (30-Day): $0.035

Average Exchange Volume (30-Day): $3,119

Average Network Value (30-Day): $4.092mn

Average Exchange Volume (30-Day)-to-Network Value: 0.08%

Volatility* (30-Day): -0.1141

Average Daily On-Chain Transactions (30-Day): N/A

Average Daily Transactional Value** (30-Day): N/A

NVT*** (30-Day): N/A

% Price Change USD (30-Day): -23.9%

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

USD All-Time High: $0.294

% From USD All-Time High: -90%

Premine % of Max. Supply: 0%

Premine Location: N/A

Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 0.65 BTC

Liquidity-to-Network Value %: 0.16%

Supply Available on Exchanges: 1,705,594 ARRR

% of Circulating Supply Available on Exchanges: 1.4%

*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.

 

Supply Emission & Inflation:

Block Reward Schedule: 128 ARRR per block is the current reward, with halvings every 270 days and 1-minute block times.

Average Block Time: 1 minute

Current Block Height: 572,675

Annual Supply Emission: 47,404,480 ARRR (158.81 BTC)

Annual Inflation Rate: 38.92%

Circulating Supply in 365 Days: 169,200,616 ARRR

 

Analysis:

Well, given the private nature of the project, as well as its lack of staking or masternodes, we find ourselves with far fewer metrics to contend with than in the majority of reports, with no transaction-related metrics or distribution analysis available. Nonetheless, I will endeavour to evaluate the progress that is being made and whether the metrics we can consider are pointing towards potential undervaluation. We will be taking a look at the General metrics to begin with and will conclude with Supply Emission and Inflation:

One of the foremost ironies of evaluating privacy coins is that its most valuable feature is precisely what prevents one from determining its value: the inherent privacy, even more so for PirateChain, with its privacy set to default. As such, on-chain transactional value is impossible to determine.

Instead, let’s take a look at those metrics we can calculate, beginning with Volatility:

PirateChain’s 30-day Volatility was calculated to be -0.1141, placing it somewhere in the middle of the pack among prior reports.

Moving on, I found PirateChain to have buy-side Liquidity of 0.65 BTC, equating to 0.16% of its Network Valuethe 11th-lowest of all prior reports, indicating that there isn’t particularly strong demand for ARRR at current prices.

Regarding its sell-side Liquidity, I calculated that there was 1,705,594 ARRR available in the orderbooks on listed exchanges, equating to 1.4% of its circulating supply. This places it around 7th-lowest of coins featured in these reports, indicating that despite the lack of strong demand at current prices, there is also no overwhelming desire to sell, with a clear trend of holding ARRR off exchanges.

Now, let’s take a look at the volume-related metrics:

PirateChain traded $3,467 of Exchange Volume over the past 24 hours, equating to 0.11% of its Network Value. Those that are regular readers of these reports, or that have read my free Definitive Guide To Altcoin Selection will know that I like to see a figure above 1%. This is simply not good enough from a speculator’s perspective, as there appears to be little-to-no speculative interest in the coin. The picture is more bleak when we look at averages across the past month, with PirateChain trading an average of $3,119 daily, equating to 0.08% of its Average Network Value of $4.092mn for that same period. This is the joint-2nd-lowest of any coin previously reported on.

Moving onto Supply Emission, using PirateChain’s block reward schedule, I calculated that it has annual supply emission of 47.4mn ARRR (158.81 BTC-worth at current prices). This gives PirateChain a moderate annual inflation rate of 38.92%.

However, more significant than the supply emission itself is its relationship to traded volume. Given the above figures, we can work out that PirateChain’s average daily supply emission for the next 12 months is 129,875 ARRR, equating to 0.435 BTC, or $3,505-worth. PirateChain’s Exchange Volume does not cover this supply emission, and neither does its Average Exchange Volume, indicating that the headwinds for price growth are rather high and that PirateChain likely cannot sustain current prices at current levels of speculative volume. However, its Liquidity of 0.65 BTC is just about sufficient to soak up average daily supply emission.

And that concludes this section.

Let’s move on to the PirateChain 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.

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

Twitter Followers: 3,829

Tweets: 5,529

Average Twitter Engagement: 1.62%

Facebook Likes: 130

Facebook Posts (30-Day): 11

Average Facebook Engagement: 3.99%

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

Twitter:

The PirateChain Twitter account has a moderately-sized audience at 3,829, which is the 12th-lowest of prior reports. That said, in RivalIQ’s report, we find that the average Twitter engagement rate across all industries is 0.048%, which means that PirateChain’s engagement rate is currently 33.8x greater. Further, the average engagement rate for the Media industry (the most relevant in the report) is 0.009%, thus PirateChain’s is 180x greater. Relative to other coins from previous reports, its engagement is the 11th-highest. Positive, regarding engagement; but I’d like to see more eyes on its primary social platform.

Facebook:

Now, with regards to Facebook, PirateChain has a smaller audience of 130, as is often the case. Its average engagement rate for the past 30 days was 3.99% from 11 posts in the past 30 days, which is impressive although expected given the size of the audience. What is more impressive, however, is the commitment to keeping the page updated despite the tiny audience.

Discord:

There are 3,753 members of the PirateChain Discord.

The structure of the Discord is fantastic and highly accessible, with clear and relevant menus and channels, all branded humorously. There are over 30 channels here, so I shall refrain from attempting to cover them all, focusing only on the most active and the most informative.

The Announcements channel is regularly updated with all sorts of information, from development updates to minor news such as exchange maintenance and giveaway winners. Recent announcements included the possibility of listing on LBank, the release of the updated roadmap (which I shall cover in its own section) and fixes for wallet issues.

The Pirate Chat channel takes the place of General and is where we find the most activity with near-constant daily discussion. Though much of this is quite general, with regards to the cryptosphere as a whole, I did find a fair bit of engagement on PirateChain-specific topics. One interesting titbit of info was regarding PirateOS, which is in development and will function as a TOR-supported operating system that boots from a USB ship, with a basic version (GhostShip) and a feature-rich version (Galleon). More impressive is the genuine and palpable excitement the community has for PirateChain; if I’m honest, this community (at least within Discord) seems to be one of the most engaged I have come across. This is critical in the longevity of a project. That said, I did also notice a fair bit of bickering between group members that cast a different light on this. Finally, in this channel, I found some more information on the LBank listing, which will involve an airdrop of ARRR and more PR for the project if they can raise enough for the listing.

Beyond this, there is an entire section of channels for commerce and merchants, with a number of stores available for spending ARRR at. Finally, within the support-related channels, I found that issues were handled promptly, which I like to see.

Overall, very promising engagement but clearly some internal issues to resolve among the community. Nonetheless, there was a lot of passion for the project itself present.

Telegram:

There are 1,068 members of the PirateChain Telegram.

The Telegram is less active than the Discord, as would be expected given the difference in group size; however, there is some daily discussion occurring. Over the past week, there has been talk on the DigitalPrice rebrand to Altsbit, which is one ARRR’s primary exchange listings, as well as on Komodo’s quantum-resistance via Dilithium, which, in turn, makes ARRR quantum-resistant. Beyond this, there is not a great deal of interesting discussion. The pinned message, however, is highly informative for a new user, with a comprehensive list of resources provided.

There is also an announcements channel with 202 subscribers, but this mirrors that of Discord.

BitcoinTalk:

The PirateChain BitcoinTalk thread was created on August 30th, 2018, and has since generated 588 posts spanning 30 pages in 398 days. This equates to 1.47 posts per day, on average. However, in the past 90 days, the thread has had 62 posts via 19 individual posters, giving an average of 0.68 posts per day; a clear decline in engagement.

The thread itself is not official, as it was not created by the development team. As such, it is more informative than anything else with no real design input or branding. Nonetheless, a coin specification is provided, along with the fact that ARRR is a Komodo asset that is private-only for transactions. There is a 200mn maximum supply and TOR support. Beyond this, relevant links are provided for social platforms, wallets, the explorer and exchanges.

Regarding recent posts, I found wallet updates, development updates posted to Medium,  prompt support responses to wallet issues, the release of new mining pools and a new roadmap, which we shall cover a little later.

And that concludes this section on the 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:

There are 43 team members listed on website, which is one of the largest groups of core contributors featured in these reports. There is also a breadth of expertise within this team, with all relevant fields covered; impressive, given the grassroots nature of the project.

Website:

https://pirate.black/

The website is well-branded and relatively easy to navigate, although this could be improved by making the navigation menu more comprehensive; for example, I could not find the wallets clearly linked here (they can be found on the Get Started page), nor exchanges. Perhaps a drop-down menu would make the relevant pages more accessible.

The tagline reads “truly private, decentralised blockchain, secured by Komodo dPoW“. Beyond this, we find a link to the whitepaper and wallet, followed by a brief description of the project and a native introductory video. Further down the homepage, we find the key features highlighted, of which guaranteed privacy via ZK-SNARKs is the most critical component. We also find a link to a native blog, which is great to see, with semi-regular updates, although there hasn’t been a monthly update since July. Further still, we can find links to mining pools, wallets, the explorer and various guides, as well as prominent social links.

Overall, informative and well-branded, but in need of some UX updates.

Roadmap:

https://pirate.black/pirate-roadmap

The roadmap is segmented by quarter from Q4 2019, plus a list of prior goals achieved is included, ensuring that new users and potential investors are aware of the development progress made. The latter includes the receipt of a Howey letter for the US, deeming ARRR as not a security (huge news); the website rebrand; Sapling integration; the release of the Pirate full node; the Seven Seas full node; ARRRmada for commerce options; and ever-expanding merchant plugins.

Regarding the roadmap itself, Q4 2019 makes mention of an android app; a new exchange listing; Pirate Week Festival; PirateOS development; Z address exchange; another website rebrand; release of a pirate.onion website; and a marketing campaign.

For 2020, Q1 discusses Cryptocurrency Checkout marketing; Kovri integration for further anonymity; and PirateOS v1 release. Q2 includes a QT wallet update and the release of something dubbed privatebay. There is also a “Planned For Future” section that mentions a Merchant POS register; the ARRRtomic DEX; a Litewallet; and a Snarkz private chat and file sharing platform.

I would suggest updating this roadmap to include links to further reading on these goals, as many are somewhat abstract. Other than that, good work.

Whitepaper:

https://pirate.black/files/whitepaper/The_Pirate_Code_V1.0.pdf

The whitepaper is 22 pages in length and titled The Pirate Code. This is the V1 release, so likely a little out-dated. There doesn’t appear to have been an update since.

It begins with an abstract that discusses the core purpose of PirateChain: a permanently private blockchain with consistent zk-SNARK utility, where only mining block rewards are visible. The project was launched utilising Equihash and dPOW for consensus. Following this, we find a Mission Statement with 4 value propositions outlined: privacy by default; fully decentralised; dPOW; and ZK-SNARKs. Why privacy? The document states that, quite simply, financial privacy is needed by all, customers and merchants alike. Further, there were over 30 contributors in the team at the time of publication (and now over 40).

Following this, we are given an introduction into crypto and privacy; the primary point here being that the issue with most cryptocurrencies is the lack of privacy due to transparent blockchains and, within these, the problem with contemporary privacy coins is found in the technology used. For example, ring signatures are notoriously difficult to analyse when the ring size is increased but transaction data is still technically visible, so this is a vulnerability. Also, the existence of non-shielded transactions in Zcash makes privacy vulnerable as this impairs the fungibility of the coin base. And what is the Pirate solution? Well, default shielded transactions that make transparency physically impossible on the network beyond mining rewards.

A brief history of PirateChain is then provided, with the project having been launched in August 2018 within the Komodo Discord.
ARRR is a Komodo asset; Komodo is a fork of Zcash,which itself is a fork of Bitcoin. Further, Assetchains on Komodo are independent blockchains. The purpose of Pirate was to solve the fungibility issues of ZCash, which was achieved by forcing z-transactions.

Following this section, a more technical overview of dPOW is provided, but the primary point here is that it provides PirateChain with greater security than Bitcoin. This is because ARRR and KMD blockchains would have to be destroyed by an attacker, as well as  (and most improbably) Bitcoin’s due to Komodo inserting notarised data here.

We are then given details of ARRR emission and the coin specification, which mentions 60-second block times, Equihash dPOW, 50-80tps, 200mn maximum supply and that rewards halve every 388,885 blocks (270 days).

Later, we find a roadmap but this is out-dated and we covered the update in the prior section. Concluding the document, there is a “guide” provided with links to mining tutorials, exchange listings and social links.

Wallets:

There are GUI wallets available for Windows, Mac and Linux. No mobile or hardware wallets are available as of yet, though the former is in development.

General:

To conclude this section, I’d like to briefly cover the June and July monthly updates, which can both be found on Medium, as well as the cryptobridge incident.

Regarding the June 2019 update, I found that PirateChain were given their letter for the United States acknowledging that ARRR is not a security, which is great news for the longevity of the project and its growth prospects. Further, there was an Agama wallet hack (for Komodo) that left 37 ARRR addresses compromised, with the development team able to sweep these funds into secure addresses and safely return over 90% to the original holders. Other news included the release of arrrmada.com, which displays stores that accept ARRR; OTC trading via tortuga.black; the release of new e-commerce plugins; default status on Delta, showing ARRR on every user’s default list; the ability to donate ARRR to streamers on Twitch and YouTube; listings on Altilly and TradeCX; and the imminent launch of the Pirate Chest Full Node, which is a physical, branded full node, making it easy for users to run their own.

Regarding the July 2019 update, I found that pre-orders became available for the Pirate Chest Full Node, and that the Seven Seas wallet was updated to include a QR code for merchant requests and encrypted messaging. Beyond this, progress was being made on the lite mobile wallet, PirateChain launched a new Youtube channel, private mining pools were released and the coin was listed on Zaddex. No monthly updates have been published since July.

Finally, we come to CryptoBridge, which was a well-covered incident from earlier this year that led to 1.8% of the circulating supply being dumped by users that did not own those funds. This caused a major crash in the price of ARRR from which it has yet to recover.

Regarding this incident, the facts as I have them are as follows: CryptoBridge failed to respond to inquiries from the development team about a known issue in the implementation of PirateChain on the exchange > CryptoBridge had misunderstood the requirements for implementing this technology (regarding the lack of transparent transactions and thus additional accounting measures required) > this led to the creation of proxy-ARRR (not real coins) due to this flaw in the exchange’s accounting system and the fact that the exchange was operating, in essence, on fractional reserve > CryptoBridge refused the team’s assistance once the flaw became known, and it was unknown if this bug originated with the exchange or was due to a hack > this led to clients receiving more coins than they had and ARRR was dumped on the exchange at any available price, with the exchange’s wallet being depleted.

In short, clearly the fault here does not lie with PirateChain. The issues did not appear to be with the ARRR codebase but rather accounting negligence. As such, I personally would not hold this against the team nor question their competence in this regard.

And that concludes the Fundamental section of this report.


Technical

ARRR/BTC

ARRRBTCDaily

As we can see from the ARRR/BTC chart provided above, PirateChain has around 10 months of available price-history, with only one distinct market cycle having played out in that time. Price, it could be argued, experienced a mini market cycle in December 2018 that lasted a couple of weeks, but ultimately the most significant occurrence here was the forming of a bottom at 530 satoshis, which remained firm for 6 months whilst price continued to make higher-highs each time it bounced off this support. Following this, in May 2019, price began its first real bull cycle, rallying to the all-time high of 2,875 satoshis by June from the base above 530 satoshis; euphoria set in here and the bear market began, with price forming a complacency shoulder at 2,511 satoshis. Over the course of the following 4 months, price has fallen to new all-time lows, breaking below the 530-satoshi base in August and the 200-day moving average shortly prior to that. These all-time lows were printed at 300 satoshis and price has been range-bound between it and the 530-satoshi support turned resistance for 53 days.

As such, I am not yet interested in buying ARRR; however, once price breaks above that all-important 530 satoshis resistance again, I will most certainly be buying the retest. However, for those looking for a higher-risk but higher-reward opportunity, fixed-risk allocation could be provided here given that price has been range-bound and this may well be an accumulation range. For me, I like to have this confirmed via rich-list analysis before I allocate fixed-risk, but this obviously cannot be done for ARRR.


Conclusion

This report is now over 4,000 words, and it is time to draw it to a close.

My final grading for PirateChain is 7 out of 10.*

*As is often the case in these reports, liquidity often drops the grading down by one more than I feel the project deserves. If the volume and liquidity improves, this grading shall be updated to 8 to reflect this.

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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