Alchemint (SDT) ICO Analysis: An NEO-based Stable CoinsteemCreated with Sketch.

in blockchain •  6 months ago

Executive Summary

Project Description

In the current environment, cryptocurrencies are highly volatile and unsuitable for use as a medium of payment. As a result, a coin that keeps itself stable, making it ideal for use as a day-to-day payment medium is very important for the future of digital currencies. With this coin, it would no longer be necessary to calculate dollar equivalent before conducting a transaction, rather, the cryptocurrency itself shall be considered a standard and stable unit of valuation.

The Alchemint project wants to develop a stable coin that has the properties described above. Named SDUSD, Alchemint’s coin will be collateralized by several crypto assets, and it will use smart contracts to facilitate the distributed creation of SDUSD in order to keep the coin stable. For a start, the coin is expected to be collateralized only with NEO but in the future, more assets, including gold, real estate, as well as other digital currencies or tokenized real world assets will be included as collaterals. SDUSD is expected to have a 1:1 ratio to USD.

Here is an example of how the SDUSD is supposed to work:

  • A user sends 20 NEO to a smart contract with the value of NEO pegged at $100 per token.
  • Then, the smart contract evaluates the mortgage rate, say 200% and sends the proper amount of SDUSD back to the user (in this case, $1000).
  • If the user wants to withdraw the 20 NEO he deposited initially, he has to pay back the 1000 SDUSD and a small commission.
  • If the price of NEO increases, the market value of a user’s collateral will also increase, along with the user’s mortgage rate.
  • However, if the price of NEO falls below a certain point, users have to invest more NEO tokens to make up for the loss. If they choose not to, Alchemint has the option of liquidating the collateral, and the user will have to pay additional fees.

In addition to SDUSD, the Alchemint project will also have a utility token, SDT. SDT will be used to pay commission fees, as well as pay for other activities that Alchemint has not yet decided/communicated to the public.

Existing Product

No prototype or working product yet.

Hard Cap and Valuation

There will be a total of 1 billion SDT tokens and Alchemint aims to sell 20% of the token total during the crowdsale, 15% tokens will be sold to the private investors and 10% for the cornerstone investors. The remaining 55% will be shared thus: 30% will go to the project’s community development fund, the founding team gets 10%, 10% will be used for commercial promotion and the final 5% will be used as consultant fees.

Participants in SDT presale received bonuses of up to 30% on a release schedule of 33% thrice in 6 months.

Hard cap and further details are to be released in due time.

Important Dates

Presale is going at the moment and crowdsale is scheduled for late April.

Roadmap

June 2018 Launch on testnet.

September 2018 Launch on mainnet.

November 2018 Alchemint V1.0 officially launched.

April 2019 Alchemint V2.0 officially launched.

Marketing Power

As of the time this post was published, Alchemint had over 2,600 members in their English Telegram channel, 2,000+ members in their Chinese Telegram channel, over 1,900 followers on Twitter, 200+ followers on Weibo, 194 Reddit readers, 81 subscribers on YouTube, and 42 followers on Linkedin.

Prominent Advisors

NEO Council

  • Management of the NEO blockchain

Liu Ming

  • Former COO of Tron.

Chen Yu

  • Investor and Partner at Juxiu Capital.

Team Members’ Areas of Expertise

Only few of the team members have well-detailed online profiles, as a result, the information provided below was extracted from the project’s whitepaper.

Business experts

Zhang Ting, CEO.

  • Extensive experience in the securities, media and Internet finance industries.
  • Worked as a CEO at a community finance platform for over a year.
  • Worked as COO in P2P Wealth for almost 3 years.

Zhang Wei, Product Director.

  • Master’s degree in Finance & Economics.
  • Product Manager & Investment advisor at a large-scale bank in China for about 8 years.
  • Worked in the management and operation of ultra-high net customer products.

Target market experts

Since a stablecoin is an economic product, experience in economics and the finance can be regarded as the required target market experience and several members of the Alchemint team are experienced in these areas.

Marketing experts

No team members with marketing expertise.

Legal experts

The project is working with Sun Ming, a legal advisor with a specialty in digital currencies and blockchain technology.

Software engineering experts

Qi Feng, CTO.

  • Over 10 years of experience in IT construction and management in the financial industry.
  • General Manager at Sinosoft E-Commerce.
  • CTO of Harmonia Capital.
  • Senior Consultant to the Financial Division at Neusoft Group.

Steel Chen, Core Development Engineer.

  • Senior Engineer and Financial Technology Specialist at IBM for 8 years.

Lei Geng, Core Development Engineer.

  • Full Stack Engineer.
  • Senior Engineer for smart contract development.

Joe Wu, Core Development Engineer.

  • Over 8 years’ experience in mobile applications and network instant messaging systems.

Blockchain development experts

No team member with blockchain development expertise.

Token economics experts

As mentioned above, several team members are knowledgeable in finance and economics. While this doesn’t translate to expertise in token economics, it will surely help to an extent.

Token sale structure experts

Same as above.

Conclusion

Strengths

  • There is a need for a stable currency that can be used as a secure medium of payment.
  • Outstanding advisors and investors.
  • Team is well-established in the finance and economics sector.

Potential risks for investors

  • There are a number of stablecoin projects presently (DAI, Basecoin, Tether, TUSD, Kowala and so on.)
  • Their price stability model appears to be similar to what MakerDAO employed while developing DAI. Development of DAI took 2+ years, MakerDAO being very well funded company.
  • Pretty early development stage, no prototype or working product yet.
  • The success of the project depends on the performance of NEO (at least, in its formative year(s)).
  • No marketing team.

Disclaimers:

  • Nothing written in this article is a legal or an investment advice.
  • Information is provided on a best-effort basis and is subject to change without prior notice. Be sure to verify everything you read with a project team.

The analysis was produced by Research Center team members: Alexander Bugaj, Mark Jedd, Eugene Tartakovsky.

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Ha, a stable coin project! Even though there is definitely a demand for a decentralized 'unit of account' currency, I'm not sure what to think of the following:

However, if the price of NEO falls below a certain point, users have to invest more NEO tokens to make up for the loss. If they choose not to, Alchemint has the option of liquidating the collateral, and the user will have to pay additional fees.

How does that work? It sounds a bit strange to me since the whole idea behind a stable coin is that when the market drops significantly, this thing remains stable right? Could you elaborate a bit on this?

Thanks for another great analysis though!

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How does that work? It sounds a bit strange to me since the whole idea behind a stable coin is that when the market drops significantly, this thing remains stable right? Could you elaborate a bit on this?

Sure. It looks like these guys basically copied DAI model and transferring it to NEO. There are two tokens, a stable coin and a utility/security token. Stable token is indeed designed to be as close to USD as possible via CDP mechanism. Utility/security token is however volatile.

In DAI model there are two main parties in the game. The ones who post collateral to the system and take a loan against it, the creators of CDPs. These people benefit by using collateralized loan services and potential upside volatility of their collateral. However, they also bear the risk of downside volatility and a liquidation fee. E.g. I'm the borrower, I send 1 ETH at $400 to the system and create a CDP. I can borrow let's say 200 DAI from that CDP. To get back my 1 ETH I need to return back the borrowed DAI. However, if price of ETH goes down, in this case to $200 + liquidation and other fees, the system will need to liquidate my collateral to maintain price balance. It does so by sending my collateral (1 ETH) to a smart contract and selling it directly to arbitrage guys cheaper than it is on the market. The difference is covered by commission the CDP issuer pays for liquidating the CDP.

The second party is DAI buyer. He buys DAI on an exchange from CDP issuers and benefits from it being a stable coin. He doesn't bear any underlying volatility risks expect in cases where stability system breaks down and can't compensate for market action (So far maximum DAI/USD drawdown was around 13%, happened twice for less than a minute).

So the sentence you're quoting is talking about CDP issuers and not DAI buyers.

I haven't really dug deep into Alchemist model though, there might be some discrepancies with DAI, but it looks very similar so far.

Here are a couple of links to learn more:
https://medium.com/cryptolinks/maker-for-dummies-a-plain-english-explanation-of-the-dai-stablecoin-e4481d79b90

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Wow, thanks for this in-depth explanation! I think I get it now. I will definitely watch that video :-)

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This video I found particularly useful as well, maybe you've seen it already:

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