This is a two part series about the Ardor Platform’s Ignis ICO. In this first part I mostly give some basic information and background about where the Ardor/Ignis ICO fits into the broader crypto-currency market and give some facts about the ICO. In the second part, I will do a deeper dive analysis of the ICO and offer some insights into how you should be thinking about investing/profiting from this event.
The State of the Cryptosphere
As of today (July 2017), Bitcoin is still the undisputed king of crypto-currencies with a market cap of about 45 billion dollars, and Ethereum is the undisputed king of Blockchain-As-A-Service (BOAS) platforms with a market cap of about 20 billion dollars and more importantly a very active community of developers and companies pushing for its success. This year so far we have had more than 1.5 billion dollars of money raised through ICOs for various projects and most of that money was raised through ERC20 compliant tokens on Ethereum platform. Some notable exceptions to this model were the TEZOS ICO where no Ethereum-based tokens were used (in fact the majority of the funding was in BTC) and the upcoming Ignis ICO, where the funding currency would be NXT. In this article, I give a brief background introduction to Nxt, Ardor and Ignis, and lay out the rules for the upcoming Ignis ICO which will last for over 3 months starting on August 5, 2017.
What is Nxt Platform and Why Should You Care?
If you are following the crypto market, you have probably heard of Nxt which is both a crypto-currency and a blockchain platform with a market cap of around 130 billion dollars. Nxt’s claim to fame is that unlike Ethereum - which comes with a turing complete language - Nxt has much more restrictive components and APIs for creating custom blockchain applications and assets in favor of more built-in functionalities (including a decentralized asset exchange!). Now, if you are one of those people who always thinks “more is better”, you might be thinking that this makes Nxt an inferior platform. However, if you consider the hundreds of millions of dollars stolen by hackers due to no other reason than buggy ethereum contract code, then you you begin to wonder if all that power is a good thing. This line of argument is significantly strengthened when you consider the fact that the code involved in both the high-profile ethereum contract hacks was either written by or reviewed by none other than original Ethereum founders themselves. I won’t go into much more detail in this article, other than to note that the DAO hack was so disastrous that it literally caused the splitting of Ethereum into ETH and ETC.
How Are ARDR and IGNIS Related to NXT?
Now that we have established what Nxt is and why you should care, you must be thinking “what does this all have to do with Ardor?” Well, Ardor is essentially Nxt 2.0. It is an excellent example of “Blockchain Engineering”. The main improvement of Ardor platform over Nxt is that it does a great of job what in nerd-lingo can be referred to as “decoupling” or “separation of concerns”. Not only does the Ardor platform allow for transactions to be pruned and archived so that the network can scale infinitely, but also it separates the token required for the security of the blockchain from the tokens which are used for regular transactions. In this model, a single parent chain called the Ardor chain is responsible for the security of the network via proof of stake which is established by holding ARDR tokens. All child chains will have their own native coins which can be used to perform cheap secure transactions. The first official child chain of the Ardor platform which can be used for regular financial transactions is called Ignis (IGNIS) and this is the subject of the upcoming August 5th ICO. A very nice side-effect of this design is that as more child chains are added, cross-chain transactions become possible and the network can scale infinitely by pruning the transactions as needed. For a more detailed comparison see this table on the official Ardor Reddit page.
So How Do I get ARDR and IGNIS?
ARDR is currently being traded on the open market and exists as a custom asset on the Nxt platform. You can acquire ARDR by buying it from one of the many available crypto-currency exchanges or better still if you already have NXT, you can download the Nxt client and use the built-in asset exchange to purchase ARDR asset with your NXT coins. There is actually a nice back-story as to why ARDR is a currently an asset on Nxt platform. Back in 2016, when the Nxt development team decided to do the fundamental changes to the platform to make it more scalable, they decided to take the average holding of all Nxt accounts for 3 months and issue one ARDR asset for every NXT coin in the account. In this way, all Nxt owners would get a stake in ARDR platform equal to their stake in the NXT platform and things are kept fair.
Ignis does not currently exist in any form. The idea is that the ARDR platform will have a first official child chain called Ignis with one billion IGNIS coins. Half of the IGNIS coins will be distributed “for free” to Nxt investors depending on their NXT balance at the time of the snapshot some time in Q4 2017. Given the total supply of NXT is also one billion, that means you would get 0.5 IGNIS for every NXT you hold without giving up your NXT. Of the remaining half of IGNIS coins, 12% will be held back by Jelurida for development and promotion of the platform, and 88% will be sold in the ICO. The table below summarized this information:
|Earmark||Amount||Percent||Notes On Price and Participation|
|NXT Existing Investors||500 million||50%||Hold NXT at snapshot time and get 0.5 IGNIS for every NXT (You get to keep your NXT but keep in mind it will likely significantly drop in value after the ICO.)|
|ICO Sale||440 million||44%||Participate in ICO by buying a “controllable currency” called JLRDA with your NXT (So obviously you don’t get to keep your NXT but if you manage to buy in the first round you could get the IGNIS at 20% of the “free distribution” price, i.e. 2.5 IGNIS per NXT). JLRDA, is essentially a placeholder, non-tradeable token which will be swapped 1-1 for IGNIS after the snapshot.|
|Jelurida (Developement)||60 million||6%||Jelurida will keep between 20M and 40M in NXT and remaining will be changed to fiat or BTC (so there will definitely be downward pressure on NXT price after the ICO)|
When the Ardor platform goes live (which will happen at least two weeks after the end of the Ignis ICO on October 14, 2017), there will be a snapshot of every Nxt account to determine the amount NXT coins, JLRDA tokens and ARDR assets. For every Nxt account, a mirroring Ardor account will be created with the same private key holding the same amount of ARDR coins as the ARDR asset, and having the same amount of IGNIS coins as half the NXT balance plus the full JLRDA balance.
The Details of the Ignis ICO
The details of the Ignis ICO are listed on the Jelurida website and are worth studying in detail. Essentially the sale will happen in 5 one-week rounds with a fixed supply at a fixed price. It is important to note that the the price gets progressively worse at each round and the first round has by far the smallest supply so it may be sold out quickly. Any remaining tokens at the end of each round will be added to the next round and Jelurida has not committed to a clear action plan if there are unsold coins by the end of the ICO. The table below summarizes the ICO stages:
|Dates||Supply||Price in NXT|
|Aug 05 - Aug 12||60,000,000||0.40|
|Aug 26 - Sep 02||80,000,000||0.55|
|Sep 09 - Sep 16||100,000,000||0.76|
|Sep 23 - Sep 30||100,000,000||1.05|
|Oct 07 - Oct 14||up to 100,000,000||1.45|
Join me in part 2 for a detailed analysis of the ICO and what you should consider before participating...