Coin Report #84: Verasity

Welcome to the 84th Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of Verasity. 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 fifth Coin Report of 2022, I will be covering Verasity, as the winner of the June community poll.

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

Fundamental Analysis

General:

Name: Verasity

Ticker: VRA

Consensus Mechanism: Delegated Proof-of-Stake

Algorithm: ERC-777

Sector: Advertising

Exchanges: Kucoin, Gate.io, Uniswap, Huobi Global, Bitfinex, MEXC, Indodax, Bithumb, Crypto.com, Bittrex & Hoo.com

Launch Overview

Verasity launched in February 2018, initially raising ~$19.1mn across private and public sales through May to September 2018 to fund development in exchange for up to half of the then-maximum supply of ~12.5bn VRA, at $0.0075 per token. The Verasity supply was distributed as follows:

Public and Private Sales: 32.2%
Staking Program: 13.8%
Advisors and Partners: 7.5%
Foundation Reserve: 25.4%
Rewards and Referrals: 1%
Founders and Team: 20%

However, since then, the Verasity supply has changed, with the team having minted 100bn more tokens, 90bn of which are considered valueless and used within a closed loop manner in the Verasity ecosystem (specifically the VeraViews ad tech stack), and 10bn of which have been allocated to the company reserves for strategic acquisitions. As such, the maximum supply is now ~110bn VRA, with ~10bn considered in circulation.

Verasity have since launched several products and protocols under the VeraViews stack, one of which is Proof-of-View, which is now patented technology, along with VeraPlayer, VeraChain, VeraWallet and more.

Price-History Overview

As Verasity has been trading for a few years at this point, there is plenty of price-history available to us. Whilst I will look at this more closely a little later in the report, for now it will suffice to note that VRA formed its all-time low at 1 satoshi in December 2020, but its all-time low against the dollar formed in May 2019 at $0.0002. Its all-time high formed at $0.087 in September 2021, also forming its all-time high against Bitcoin at 141 satoshis.

Project Overview

Verasity’s primary goals are very much straightforward: they are seeking to eradicate the inefficiencies in the online advertising sector, aligning incentives across all participants and increase revenues for publishers, as well as providing financial opportunities for viewers.

As stated in its whitepaper:

‘Verasity is a rapidly growing blockchain-enabled company across the ad tech, Esports, and video entertainment industry. With patents secured in both the U.S. (USA Patent #10956931) and China for its revolutionary Proof of View (PoV) technology, Verasity is developing proprietary technology that helps eliminate ad fraud across video advertising channels. Verasity is already a revenue-generating project through growing ad revenue, with several product verticals actively deployed and used by enterprise clients.

Verasity’s core mission is to significantly increase engagement and advertising revenues for video publishers on any video platform. In turn, Verasity—through its
VeraViews ad tech stack and PoV technology—significantly increase advertising revenues for video publishers on any video platform. The VeraViews ad stack utilizes Verasity’s patented protocol layer on the VeraChain blockchain, ensuring transparency and immutability for both advertisers and publishers within the Verasity ecosystem.‘

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 30th June 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: $0.0049 (26 satoshis)

Circulating Supply: 10,356,466,695 VRA

Total Supply: 110,356,466,695 VRA

Maximum Supply: 110,356,466,695 VRA

% of Max. Supply Minted: 100%

Network Value: $51,039,775 (2692 BTC)

Network Value at Max. Supply: $543,869,775

Exchange Volume: $7,473,507 excluding wash

Exchange Volume-to-Network Value: 14.64%

Category: Midcap

Average Price (30-Day): $0.006

Average Exchange Volume (30-Day): $12,008,618 excluding wash

Average Network Value (30-Day): $40,803,924

Average Exchange Volume (30-Day)-to-Network Value: 29.43%

Volatility* (30-Day): -0.0465

Average Daily On-Chain Transactions (30-Day): 755

Average Daily Transactional Value** (30-Day): $9,716,394 (source)

NVT*** (30-Day): 5.25

% Price Change USD (30-Day): -37.7%

% Price Change USD (1-Year): -63.5%

USD All-Time High: $0.086

% From USD All-Time High: -94.3%

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): 27.35 BTC

Liquidity-to-Network Value %: 1.02%

Supply Available on Exchanges: 289,017,273 VRA

% of Circulating Supply Available on Exchanges: 2.79%

*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 VRA 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 (no supply emissions – all tokens minted)

Average Block Time: N/A

Current Block Height: N/A

Annual Supply Emission: N/A

Annual Inflation Rate: N/A (see analysis below)

Circulating Supply in 365 Days: N/A

Token Sale:

The following details were taken from this source.

Public Sale Period: May – September 2018

Total Tokens: 12,491,500,000 VRA

Total Tokens Available for Public Sale: 6,245,750,000 VRA

Average Price Per Token: $0075

Total Raised: $19,151,838

Distribution:

Address Count: 69,168

Supply Held By Top 10 Addresses: 44.48%

Supply Held By Top 20 Addresses: 50.53%

Supply Held By Top 100 Addresses: 58.23%

Inactive Address Count in Top 20 (30 Days of No Activity): 7

Analysis:

If we begin by taking a look at on-chain data, we find that Verasity has averaged 755 daily transactions for the past 30 days, equating to an average daily transactional value of $9,716,394 which gives it a 30-day NVT of 5.25, which is among the lowest I have found. This is also accounting for the fact that there was anomalous day on 16th June where ~92bn VRA were transferred, thus this day has been excluded as I made the assumption that these are the ‘marker’ tokens that we will discuss later in this report. Despite that exclusion, there is still a significant amount of VRA moving around daily.

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

I calculated this to be -0.0465 for the past 30 days, which is rather low, and potentially indicative of an accumulation range. To more accurately determine whether VRA is in accumulation, we will need to look more deeply at both holder activity and the chart later in this report, however it is useful to know that is in trading at low volatility, as historically periods of low volatility are where we want to be buying before expansion.

Next up, we have the metrics relating to Liquidity:

Firstly, I found that there was 27.35 BTC of buy-side liquidity within 10% of current prices to be found across all exchanges, equating to 1.02% of its Network Value. This places Verasity in the top fifth of all projects previously featured in these reports, which is promising.

As for sell-side liquidity, I found that 289,017,273 VRA was available for purchase in the orderbooks, equating to 2.79% of the circulating supply. This is a moderate figure and does not indicate that sellers are keen to get rid, with much of the circulating VRA held off the orderbooks.

Moving onto volume, Verasity traded $7,473,507 of Exchange Volume excluding wash over the past 24 hours, equating to 14.64% of its Network Value. Further, Average Exchange Volume was $12,008,618 (accounting for wash) for the past 30 days, equating to 29.43% of Verasity’s Average Network Value for the same period. This indicates a high level of speculative interest of late.

Now, for Supply Emission, in short, there is reported to be none, as all ~110bn VRA are minted and ~90bn of these VRA tokens are considered valueless, utilised in a closed loop manner within the VRA ecosystem as opposed to on markets. That leaves the ~10bn VRA reported as circulating, but also ~10bn VRA that have been minted for the purpose of a ‘warchest’ for the company – these again are stated to be out of circulation for the foreseeable future. Whilst I will discuss all of this at length a little later, including my many reservations, for now let us just consider that the 90bn are indeed valueless and out of circulation in perpetuity; I still expect the warchest tokens to join circulation at some point, and thus we have ~100% inflation to contend with over some period of time. If that period is 5 years, it is not so concerning; if it is 12-18 months, that becomes a different story, but unfortunately we cannot accurately determine this. As such, I will use what I expect to be the worst possible scenario of the warchest tokens joining circulation within 12 months:

This would equate to 27.4mn VRA daily supply joining circulation, or $134,250-worth. Verasity’s daily volume of $7.4m should still be sufficient to soak this up, and more importantly so should its buy-side liquidity, which is ~4x greater than this expected supply joining circulation.

Finally, let us take a look at some Distribution:

Using the rich-list, I found that there are currently 69,168 holders of VRA on Ethereum.

Of the maximum supply of 110.3bn VRA, if we look specifically at circulating supply and exclude ‘marker’, exchange and smart-contract addresses, the top 10 control 44.48%; the top 20 control 50.53%; and the top 100 control 58.25%.

Among the top 20 non-exchange, circulating addresses, 7 were inactive over the past 30 days, whilst only 3 addresses were found to be distributing and 10 were accumulating, with net inflows into these addresses of 424,258,701 VRA over that period, equating to 4.1% of circulating supply. This is quite promising from a speculator’s perspective.

And that concludes this section. Onto the Verasity 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.

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

Twitter Followers: 263,337

Tweets: 363

Average Twitter Engagement: 0.95%

Facebook Likes: 255,408

Facebook Posts (30-Day): 0

Average Facebook Engagement: N/A

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

Twitter:

Verasity has a very large audience of 255,408 followers – among the highest recorded in these reports. Its engagement rate is also very impressive for an audience the size it is at 0.95%, which is higher than a number of projects with far fewer followers. Relative to global benchmarks, this is 21x the average across all industries of 0.045% and 35x greater than the average in the Tech and Software industry of 0.027%. Relative to other projects featured in these reports, it is in the top third.

Facebook:

Whilst there is a Facebook page for Verasity with 255k+ Likes, it has been inactive for a year now.

Telegram:

There are 35,083 members of the Verasity Telegram channel.

I have provided my key takeaways from recent activity below:

The channel is exceptionally active, with constant daily discussion, to the tune of hundreds of messages across the course of each day, which is promising.
Much of the recent discussion centres on the debate around recent changes to tokenomics and the existence of the 90bn marker tokens and the 10bn war-chest tokens, as one might expect.
The team are active in making their clarifications, particularly so in the form of a Q&A published recently on the topic – I will be covering this at length towards the end of this report.
The team reiterate that war-chest tokens will be only used for strategic acquisitions and holders will be informed in advance. The circulating supply (or rather maximum circulating supply) is thus 10.3bn VRA unless the war-chest is use (hence my prior calculations of a true maximum circulating supply of ~20.3bn VRA).
There is clearly a lot of confusion around the ability to mint tokens on a whim and the ability for minted tokens to join circulation, with no real clarification given on either of these topics.
There is some concern about how acquisitions would benefit VRA holders, given that an acquisition doesn’t necessitate market cap growth attributed to the VRA token itself.
Some of the community are happy to trust in the team based on past experiences, some are more concerned about the recent changes, particularly insofar as even ‘marker’ tokens are not technically segmented from circulating supply via smart contract. There is no assurance for the community that the tokenomics remain as they are, effectively, in the eyes of some. The team’s rebuttal to this is that they require marker tokens for the business to function, and therefore these would not be sold regardless.
Support queries are responded to swiftly.

Discord:

There are 12,006 members of the Discord group for Verasity.

Much of the discussion that occurs here is covered in the previous section, so I will refrain from repeating myself here, but the general level of activity equates to near-constant conversation daily on the primary channels within the group, which is good to see.

BitcoinTalk:

Whilst there is a BitcoinTalk thread for Verasity, it is inactive, with one post this year.

I am likely to discontinue the BitcoinTalk section of these reports moving forward, as most new projects do not utilise it as a forum.

And that concludes our evaluation of the Verasity community.

Let’s take a look at development:

Development:

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

Project Leadership:

There are 8 core team members listed on the website, and 46 employees listed on LinkedIn.

The core leadership is comprised of:

Whitepaper:

The whitepaper can be found here.

As I cover much of this in the final section of this report, where I will be looking at developmental progress and also the tokenomics of Verasity with their recent shift, I will refrain from repeating myself here, as we are running on for 5,000 words for this report.

Roadmap:

The roadmap can be found here.

Firstly, I’d like to mention that this is a fantastic commitment to the roadmap from the Verasity team, not only providing a roadmap for future goals but a fully comprehensive timeline of achievements to-date, beginning with launch in 2017, which is incredibly useful for a potential new investor. The roadmap is well laid out, with clear and concise copy and some degree of progress accountability via checkmarks for achieved goals.

The 2022 roadmap is segmented by quarter and then by Product + Project subheadings, and thus I will detail each quarter below:

Q1:

Ongoing marketing.
Project: VeraESports – a major official tournament with a partner was launched, with many tournaments announced for 2022 and a substantial increase in game titles.
Product: Proof of View saw the release of an admin panel and an analytics dashboard for Brightcove publishers, and a closed beta for Brightcove customers. VeraEsports saw improvements in tournament creation flow and live chat functionality integrated for live events, whilst the VeraWallet released export functionality for account transaction history.

Q2:

Product: Proof of View will go live for Brightcove customers, and PoV-enabled smart contracts will be released for NFTS, with the NFT marketplace continuing development with an expected closed beta launch for gaming publishers. The VeraCard partnership will be launched and the VeraWallet will integrate automated KYC.

Q3:

Product: The NFT marketplace will see its MVP get a public launch, with in-game redeemable item creation, minting and sell functionality for game publishers, as well as purchase functionality, re-sell functionality and the introduction of public user profiles and NFT collections.

Q4:

Product: VeraWallet will get a website revamp, whilst VeraEsports will see the implementation of a new tagging and categorisation system for the video library. Verasity will introduce Single Sign-On across all products, whilst improving account security with phone number multi-factor authentication and introducing an identity and access management service for user authentication.
Project: Verasity will integrate support across all services.

Wallets:

As VRA is an ERC-777 token, it can be stored in a plethora of wallets, including Verasity’s own VeraWallet, hardware wallets like Trezor and Ledger, as well as in numerous web and mobile wallets that are ERC-compatible.

Developmental Progress:

Right – there is a fair bit to cover here as we bring this report to its conclusion, and the primary points I’d like to cover relate to recent tokenomics changes, the VeraViews ad tech stack and how it works, and recent general developments for Verasity. I will be running through recent Medium blog posts and summarising them below along with my thoughts.

Tokenomics (source and source):

The Kucoin 6 address containing 8.1bn VRA is custodial storage for the team – it is free to use by Verasity.
100bn VRA were minted as Proof of View Foundation tokens, in addition to the now-reported 10.3bn circulating VRA (of which much is not necessarily liquid due to staking – instead it is a theoretical current maximum circulating supply, but that’s a mouthful). This puts the maximum supply at 110bn VRA, with 90bn of the 100bn being utilised as Proof of View Marker Tokens, which are stated to not impact circulating supply. The remaining 10bn have been minted as a war-chest for strategic company acquisitions by Verasity in order to fuel growth.
My first question off the bat is why are ‘marker’ tokens even included in the supply of VRA? Why have they been minted as part of VRA supply if they are intended to be valueless and not part of circulation?
The 90bn ‘marker tokens’ are stated to be made available to enterprise partners for Proof of View utility, marking out data circulating within the VeraViews ad tech stack, with the tokens remaining within a closed loop. That being said, there is no technical/smart contract authentication of this.
The original tokenomics article also states that these marker tokens will be used within the VeraVerse NFT marketplace, and for ‘related activities’, which is not super convincing.
Regarding the 10bn VRA war-chest, VRA holders do not have rights and therefore cannot influence how this will be used, and further any value accrued to Verasity, the company, does not necessarily equate to value accrual to the token, in my opinion.
The article also mentions that if tokens are used for acquisition, these will be ‘locked and vested… by the target company.’ Why would a company being acquired in tokens agree to lock out those tokens over multiple years?
It is reiterated that the 90bn PoV ‘marker tokens’ will never be made available for trading outside of the POV ecosystem, so why do they need to be VRA tokens as opposed to some separate, segmented offshoot?
They have said this is because VRA has a market value that can then be used to determine required spend for ad campaigns.
The article goes on to discuss the BrightCove partnership. where VeraViews ad tech is deployable by leading publishers and advertisers via VeraPlayer which ‘will soon be available natively through the widely adopted BrightCove player.’ This extends to their 5,000+ clients. Each client that wishes to use VeraViews Proof of View will need ‘marker tokens’.
Now, if they can’t actually ever be traded on the market as actual VRA tokens, why would the VRA market price apply to them in any way?
Overall, despite the lengthy Q&A, this is still fairly opaque in its nature. Are Verasity investors expected to rely on trust in the company that 1. more tokens will not be minted 2. the war-chest will vest over years if used as opposed to swiftly and 3. that the 90bn marker tokens will never join circulating supply?

VeraViews (source):

VeraViews Ad Tech stack – general flow: Ad campaign initiated by brand → VRA deposited to VeraWallet → Escrow pool created to pay revenues to publishers
and rewards to viewers → Creative uploaded to VeraViews and propagated to CDN → Ad parameters set on VeraDSP (demand side platform) → Ads served via VeraPlayer → Campaign ID generated and data begins circulating → Escrow pool assigned to this campaign ID → Foundation Tokens minted as marker tokens for these campaigns to track data → POV marker tokens travel in closed loops returning to Foundation wallets → Ad views are processed and scored with a proprietary mechanism → PoV passes data to VeraChain to mark and record views against campaign ID → There are two wallets in the marker token pool for the campaign, one for valid views one for invalid → VeraFiers use Proof of Stake to sign VeraChain blocks → Sidechain marker tokens then are burned and minted back on the Ethereum network and sent back to original pool for that campaign → At the conclusion of the campaign, the marker tokens pool ceases with all tokens sent back to POV Foundation wallets.
The article states that ‘every valid ad view triggers revenue distribution. With every token purge from VeraChain, revenues and rewards are distributed to the Verawallet accounts of publishers and viewers.’ 10-20% of campaign funding then remains for Verasity as profit, with VRA profits used to pay company expenses. They they say no material impact on circulating supply but surely these tokens find their way into circulation if they are being used to pay expenses?
Finally, VeraChain is a sidechain on Tron for scalability and cost-efficiency.
Again, whilst I can appreciate the logic of POV marker tokens working within this closed loop circuit, there is still no assurance really for a VRA holder that these could not eventually make their way into circulation, which is potentially a 10x increase in supply, which even over a protracted period of time is an important consideration.

General Developments:

VeraPlayer has integrated VeraRewards, VeraViews, Proof of View and Live Streaming, with a Brightcove integration completed.
VeraViews has seen Proof of View algorithms fine-tuned and throughput increased and has also integrated with Brightcove.
Verasity has signed on more partners to prevent ad fraud for Proof of View, and these partners will be revealed when agreements permit. Further, on-chain verification of Proof of View is now viewable.
The Verasity Ecosystem has experienced a rebrand with a new website and improved UX and UI.
A Verasity NFT Marketplace is in development, which will feature creator perpetual licences for resales, in-game cosmetics cross-over with VeraEsports
and reduced NFT fraud.
VeraESports is the dedicated content streaming platform for ESports and a Proof of Concept for Watch and Earn, with live streaming now enabled, in-game cosmetics and currencies to be purchasable with VRA and the launch of branded tournaments for influencers/streamers. Verasity sponsored the October 2021 PUBG Mobile Pro League SE Asia and are expanding sponsorship over 2022.
Over 30 publishers have left other platforms to join Brightcove since Verasity’s partnership in order to utilise the VeraViews ad tech stack. This stack is now available to over 5,000 enterprise clients.

And that brings our fundamental evaluation of Verasity to its conclusion.

Let’s now take a look at price-action throughout the token’s existence:

Technical Analysis

VRA/BTC

VRA/USD

If we begin by looking at VRA/BTC, we can see that price had been accumulating around all-time lows at 2 satoshis for over a year between May 2019 to November 2020, finding range resistance between 13-17 satoshis throughout that period, before deviating below the low into 1 satoshi and then beginning a mega bull cycle, with the first wave taking it to 90 satoshis in April 2021. Price then corrected through to July, where it formed a low at prior resistance around 26 satoshis, then beginning the next wave, which took price to the all-time high of 141 satoshis in November 2021. Since then, price has been in a bear cycle, retracing 86% from the high back into the 26-satoshi support level, below which it closed a few weeks ago and is now consolidating around. The next level of support below is prior range resistance at 17 satoshis, and if we see the pair begin to flatten out and re-accumulate between these two levels over the coming months, that would be where it would make sense to DCA into a position if you are keen to own VRA. Alternatively, if the 17-satoshi support fails, it may be the case that the pair re-accumulates within the original range between 2-17 satoshis prior to the next cycle, where you would obviously want to buy as close to that all-time low as possible.

Looking at VRA/USD, we can see that the range resistance at $0.0017 was broken in early 2021, leading to a rally into a new all-time high at $0.057 in April 2021, which led to a correction back into support at $0.0096 and then that second wave that took the pair to the current all-time high of $0.087. Since then, price has drawn down 95% from the high, breaking through the $0.0096 support base and retesting it as resistance last month, leading to price now sitting in the middle of nowhere really at $0.0049, with the next support level down at $0.0033 and the next resistance back up near $0.0078. If the $0.0033 level holds, and price begins to accumulate between there and current support likely turned resistance at $0.0049, one option would be to DCA within that range and then add on a trendline breakout and structure shift on the weekly. Alternatively, if that level does not hold, the next major support level is back at prior range resistance at $0.0017, which is another 64% drawdown from here and would put the total drawdown at 98%, which is not uncommon for small projects in a bear market. That would be where I would personally be more comfortable looking to build a longer-term position.

To be honest though, the lack of guarantees around tokenomics makes me largely uninterested in rebuying VRA after my previous cycle’s allocation and exit. I think there are likely to be better opportunities around and I personally do not like the option being available for more tokens to be minted in the future. I do think there are many aspects of the project that are fundamentally sound, but supply malleability is a deal-breaker for me moving forward.

Conclusion

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

My final grading for Verasity is 6 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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