The ChainLink ICO begins this coming Tuesday September 19th at 8am PST. This one has been covered by a fair number of blogs I follow. ChainLink’s goal is to provide the infrastructure for existing institutions (banks, financial networks, etc) to connect with smart contracts (bitcoin, ethereum, etc.). Given the wide coverage and seemingly innovative project, it seemed worthy of a deeper look.

Summary

ChainLink is a three-year old company that is working to connect existing data networks, banks, APIs to smart contracts. As they explain on their site:

ChainLink is secure blockchain middleware that allows smart contracts on various networks to connect with the critical resources they need to become useful for 90% of use cases. We’ve been creating secure oracles for Bitcoin and Ethereum for over 3 years, connecting smart contracts on various networks to critical external data feeds as triggers, and the many off-chain systems needed to become operational.

And here’s a good graphical representation:

via ChainLink ICO website

ChainLink is looking to raise up to $32 million by offering 35% of tokens in their ICO. If reached, that would give them a valuation cap of $91.4 million.

ChainLink ICO Info

Symbol: LINK
ICO Dates: September 19 2017 at 8am – October19 2017 at 8am (PST)
Links: ChainLink ICO Site | ChainLink ICO Whitepaper (Note: whitepaper is mostly technical and does not discuss the ICO)
Soft Cap/Hard Cap: none/$32 million
Token Allocation: 35% in ICO, 35% going to early node operators, 30% retained by company
Distribution: Immediately at end of crowdsale
Implied min/max valuation cap: no min, $91.4 million
Who is running ICO? Self-run
Bonus: first week 20%, second week 12.5%, third week 7%, fourth week no bonus
Unsold Tokens: Unclear. There’s no mention of what happens to unsold tokens. Instead, all terminology assumes the max cap is reached.

What Others Say

As mentioned earlier, the ChainLink ICO has been covered by a number of ICO analysis and data sites.

• ICORating gave the ChainLink ICO a hype score of high, risk score of medium and no investment score nor in-depth analysis. No info given for reason to either score (though the hype score certainly seems accurate).
• Picolo Research rated the ICO as a Buy (4 out of 5 stars) in their report. Their analysis is definitely worth a read. Only concern is with the transparency of the usage and allocation of the tokens and funds being raised.
• CrushCrypto rated this as Good for both flipping and long-term investing. Transparency is also the only concern cited here, specifically related to questions by community going unanswered for multiple weeks.
• Hacked covered the ChainLink ICO (subscription required) and were lukewarm overall. Overall, they like the idea and feel there is a big opportunity but feel there are risks. Definitely worth a read if you’re considering investing.
• ICOAlert has listed the ICO, but has not published a report.
• TokenData has listed the ChainLink ICO, but no mention on blog.
• TokenMarket has not listed this ICO.
• ICO Tracker has not listed this ICO.

Pros

• Existing business that has an established partnership with SWIFT
• Solving a real problem that has only developed recently with the rise of cryptocurrencies
• If successful, many revenue opportunities
• Strong team of advisors

Cons

• No specific plan stated for use of funds
• Little info provided around ICO, including what happens to unsold tokens
• High valuation if hard cap reached ($91.4 million)
• Team currently has just two team members

Conclusion

Overall, I like the idea and believe there is a lot of potential. They have a strong-team of advisors and their partnership with SWIFT is encouraging. However, I am hesitant to participate in this ICO because of the small team, amount of funds being raised, and lack of info about the ICO.

Presumably, the small team will expand as needed with the help of the funds raised in the ICO. However, it’s far from proven that the current duo can put the right team in place, especially when given the opportunity to use up to $32 million to do so. Regardless, it will take time to build and in the meantime, the tokens will have little usage, which may be detrimental to their value in the short-term.

Lastly, it’d be extremely helpful to know what happens to unsold tokens. If the 35% of tokens available in the ICO are to be equally distributed to ICO participants, and the amount raised is well-below the max cap of $32 million, the risks become tolerable. However, if the tokens are returned to the team, the initial valuation would still be very high, with a greater future dilution rate.

At this time, the risks outweigh the rewards and I will not be participating in this ICO. I don’t like it for the short-term and believe there will be better opportunities in the future by nature of further validation and/or a lower token price.