Orderbook Reading 101

Orderbook reading is a key component of my trading toolbox. It is a technique I developed myself, back in 2014, and one that there is little-to-no quality information on online. (Seriously, Google “orderbook reading” and you’ll be shocked by the lack of resources.) In my book, I dedicated an entire 5,000-word section to orderbook reading, and, given the lack of material readily available elsewhere, I figured that it might be useful for anyone interested in the technique to have a primer written; if you find orderbook reading compelling, you can take a look at the more advanced material in the book.

Of course, I don’t doubt that there were others who had dissected the orderbook in a similar way to myself prior to 2014, and I don’t take any credit for the concept of orderbook reading; but it is the one technique that I learnt entirely via my own experience, with no help from resources such as those one would look to when learning other aspects of technical analysis. Now, I say it is an aspect of technical analysis, though strictly that isn’t true. TA is exclusively concerned with the chart, but orderbook reading resides in that grey area between fundamentals and technicals. The technique itself feels more like technical analysis, intuitively, but given that it is not derived from the chart, the analytical grey area is where it will remain.

So, what is orderbook reading? In short, it is the study and subsequent analysis of the ledger of orders for any given market. Orderbooks contain a list of all the buy and sell orders currently placed within a market on a specific exchange, and it is this transparency on which I learnt to capitalise. By studying the orderbook, one can often find clues as to the plans of those manipulating price. This can add confluence to our technical targets for entries and exits, as well as boost confidence in the validity of our positions.

But what’s the process? Below, I’ve outlined a breakdown of what I tend to look for when studying an orderbook:

  • There are three key components to orderbook reading: Order Depth, Order Patterns and Time. In this post, we will be looking at the first two.
Order Depth:

This is the simplest form of orderbook reading, and is predicated on studying the value of the orders in the bid and ask (buy and sell) sides of the orderbook.

  1. Pick any given market on any given exchange. Ideally, you’ll want to use exchanges that provide the most transparency with their orderbooks. Bittrex and Cryptopia are two exchanges that I like to use.
  2. Calculate the total value of orders in both the altcoin itself and Bitcoin for the bid-side and ask-side of the orderbook. For example, Vertcoin on Bittrex currently has ~20 BTC-worth of orders in the bid-side, totalling ~28,800,000 VTC. It has ~9.5 BTC-worth of orders in the ask-side, totalling ~100,000 VTC.
  3. At this point, you want to calculate the average order size in both sides of the orderbook. Using the above values, the average buy order is 69 satoshis. This doesn’t make a lot of sense, at surface-level, and we’ll come back to it in a second. The average sell order, however, is 9500 satoshis, or ~30% above current prices.
  4. A quick thing to note before we continue is that, from this point, one can also make another surface-level analysis based on the total Bitcoin values of the bid and ask sides: given 20 BTC-worth of buys and 9.5 BTC-worth of sells, it is evident that there is greater demand than supply. This, as mentioned, is surface-level, and does not account for orderbook manipulation, which I won’t go into here.
  5. Returning to our average order values, why is it that the average buy order for Vertcoin is so low relative to current prices? If we inspect the latter pages of the orderbook, we find a buy order worth 1.13 BTC at 4 satoshis, totalling ~28,200,000 VTC. This explains everything. At your discretion, you can then discount this order from the calculations. Doing so would give us ~600,000 VTC remaining in the buy side at a total of ~18.87 BTC, which equates to an average buy order of 3145 satoshis. Far more insightful a figure.
  6. Now, the ask-side calculation also comes with a caveat. Despite there being less than 10 BTC-worth of orders listed, we can see, if we look to the last page shown, that we are only being shown 20 pages of data – in this case, orders up to ~11,000 satoshis. Undoubtedly, there will be orders above that point, but this is a disadvantage of Bittrex; it only shows 20 pages of orderbook data for either side. Cryptopia, and many other exchanges, offer full transparency of the orderbook.
  7. Another point to note is that these values are dynamic, as orderbooks are dynamic. Consistent monitoring and study is required in order to garner a more accurate understanding of order depth.
Order Patterns:

Order patterns are perhaps the most complicated aspect of orderbook reading, as they illuminate much of the manipulation that occurs in altcoin markets. Whilst I won’t go into the more advanced stuff here, it is significant to highlight the four types of order pattern: clean orders, bot orders, walls and, for lack of a better term, non-clean orders or messy orders.

Clean Orders: a clean order is simply an order that is unusually perfect, mathematically. These are often orders comprising of multiples of 5s or 10s that occur at regular intervals in the orderbook. For example, buy orders of 50,000 Vertcoin at 5000 satoshis, totalling 2.5 BTC, with corresponding orders at 1000-satoshi intervals. These are indicative of significant price-levels for the market-maker; perhaps levels at which accumulation is taking place. On the ask-side, you may find similar patterns of clean orders that are set up as future targets for price-action. Again, this is simplistic, and not taking into account orderbook manipulation, but it is obvious to see how this can be useful when looking for entries and exits.

Bot Orders: a bot order is one that defies human ability in its execution. Often, algorithms are in place to bid up a buy order or push down a sell order. This is easily noticeable and you have likely experienced it yourself. Recall a time when you’d place a buy order at the top of the orderbook, only for it to be displaced within milliseconds by another buy order; this is a bot order. The purpose of these orders can be two-fold: either to drive you to make irrational decisions (as we’ll discuss in the next section) or to beat you out for the purposes of active and immediate accumulation or distribution.

Walls: Most are familiar with walls. A wall is an unusually large order in the orderbook. However, most tend to react in the most irrational manner when it comes to these orders. Large buy orders being pushed and pulled near current prices are often viewed by the masses as the perfect time to enter, lest one miss out on what must be an imminent bullish move. Large sell orders are viewed as the perfect time to exit, lest we lose all our money when the market crashes and burns. This is orderbook manipulation at its finest. Buy walls are an attempt at causing irrational market participants to buy up the orderbook, and vice-versa  for sell walls. This allows for better pricing to be had for the puppet-master for both accumulation and distribution purposes.

Non-Clean Orders: much like clean orders, non-clean orders are about determining symmetry and patterns in the orderbook. However, they are more difficult to notice, as, unlike their clean counterparts, they are comprised of seemingly random numerical values. For example, an order of 24879.284733 Vertcoin at 6435 satoshis might appear in the orderbook. This order would seem irrelevant to most, but perhaps you notice another order of that exact same amount at 5733 satoshis… and another at 5210 satoshis. Coincidence? I think not. Non-clean orders, such as these, are simply a more discrete way for market manipulators to mark out significant levels for future reference.

Note these various orders down as and when you come across them – and you will come across them – and you’ll begin to piece together a trail of footsteps that must be left by those manipulating price.

I hope this post has proved somewhat insightful and piqued your interest in orderbook reading. For anyone compelled to learn more, there is an advanced section in my book that goes into far more detail.


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

Coin Report #5: Stakenet

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

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


Introduction

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

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

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

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


Fundamental

General:

Name: Stakenet

Ticker: XSN

Algorithm: X11

Sector: Decentralised Financial & Cloud Services

Exchanges: Cryptopia, Livecoin & Sistemkoin

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

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

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


Metric Analysis:

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

Metrics:

General:

Price: 2273 satoshis ($0.10)

Exchange Volume (24H): $172,764

Circulating Supply: 73,434,401 XSN

Total Supply: 82,563,978 XSN

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

% of Max. Supply Minted: 61.10%

Network Value: 1669.16 BTC ($7.412mn)

Network Value at Max. Supply: $13.638mn

Category: Midcap

Exchange Volume-to-Network Value: 2.33%

Average Price (30-Day): $0.18

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

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

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

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

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

USD All-Time High: $0.89

% From USD All-Time High: -87.5%

Premine % of Max. Supply: 0%

Premine Location: N/A

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

Liquidity-to-Network Value %: 0.51%

Supply Available on Exchanges: 1,615,485 XSN

% of Circ. Supply Available on Exchanges: 2.2%

Staking & Masternodes:

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

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

Masternode Price: $1,514.01

Masternode Collateral Size: 15,000 XSN

Masternode Count: 1479

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

Masternode ROI (Annual): 21.32%**

Masternode Reward / Block Reward: 45%

Supply Locked In Masternodes: 22,185,000 XSN

Masternode Network Value$2.239mn

MNV / Network Value: 30.21%

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

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

Supply Emission & Inflation:

Current Block Height: 364690

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

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

Annual Inflation Rate: 14.31%

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

Distribution:

Address Count: 6947

Supply Held By Top 10 Addresses: 34.31%

Supply Held By Top 20 Addresses: 40.95%

Supply Held By Top 100 Addresses: 56.80%

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

Analysis:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


Community:

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

Social Media:

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

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

Twitter Followers: 10811

Tweets: 1225

Average Twitter Engagement: 2.09%

Facebook Likes: 1575

Facebook Posts (90-Day): 40

Average Facebook Engagement: 2.48%

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

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

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

BitcoinTalk:

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

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


Development:

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

Project Leadership:

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

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

Website:

www.stakenet.io

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

Roadmap:

https://stakenet.io/roadmap/

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

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

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

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

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

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

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

Whitepaper:

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

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

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

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

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

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

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

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

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

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

Wallets:

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

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

General:

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

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

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

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


Technical

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


Conclusion

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

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

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

 


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

Coin Report #4: Bulwark

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

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

 

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


Introduction

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

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

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


Fundamental

General:

Name: Bulwark

Ticker: BWK

Algorithm: NIST5

Sector: Privacy Hardware / Masternodes

Exchanges: Cryptopia, CryptoBridge & Blocknet

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

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

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

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


Metric Analysis:

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

Metrics:

General:

Price: 9199 satoshis ($0.59)

Exchange Volume: $28,550

Circulating Supply: 13,566,663 BWK

Total Supply: 13,885,717 BWK

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

% of Max. Supply Minted: 51.43%

Network Value: 1277.35 BTC ($8.21mn)

Network Value at Max. Supply: $15.965mn

Category: Midcap

Exchange Volume-to-Network Value: 0.35%

Average Price (30-Day): $0.67

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

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

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

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

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

USD All-Time High: $16.03

% From USD All-Time High: -96.3%

Premine % of Max. Supply: 1.81%

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

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

Liquidity-to-Network Value %: 0.29%

Supply Available on Exchanges: 159,940 BWK

% of Circ. Supply Available on Exchanges: 1.18%

Staking & Masternodes:

Network Staking Weight: Unable to determine

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

Masternode Price: $2,956.54

Masternode Collateral Size: 5000

Masternode Count: 1533

Supply Locked in Masternodes: 7,665,000

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

Masternode ROI (Annual): 59.39%**

Masternode Reward / Block Reward: 60%

Masternode Network Value: $4.532mn

MNV / Network Value: 55.2%

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

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

Supply Emission & Inflation:

Current Block Height: 314027

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

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

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

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

Annual Inflation Rate (Next 365 Days): 54.64%

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

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

Annual Inflation Rate After Block 1728000: 2.03%

Distribution:

Address Count: Unable to determine

Supply Held By Top 10 Addresses: 5.2%

Supply Held By Top 20 Addresses: 7.39%

Supply Held By Top 100 Addresses: 15.3%

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

Analysis:

Well, that’s a lot to get through…

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


Community:

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

Social Media:

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

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

Twitter Followers: 8319

Tweets: 733

Average Twitter Engagement (30-Day): 0.41%

Facebook Likes: 416

Facebook Posts (90-Day): 54

Average Facebook Engagement (30-Day): 2.16%

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

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

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

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

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

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

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

BitcoinTalk:

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

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


Development:

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

Project Leadership:

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

Website:

www.bulwarkcrypto.com

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

Roadmap:

www.bulwarkcrypto.com/roadmap/

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

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

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

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

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

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

Whitepaper:

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

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

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

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

A solid 4.

Wallets:

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

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

General:

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

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

That concludes this final fundamental section. Onto the chart:


Technical

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

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

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


Conclusion

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

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

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


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