Investigating the Top 50 Cryptocurrencies, Part 37/50: Lisk

Lisk is a blockchain that enables people to build decentralized apps and customized tokens, a lot like Ethereum does.

_{source: lisk.io}

Blockchain applications can do anything that a normal application does, but in a decentralized way. For example, Steemit is a blockchain forum application, running on the steem blockchain. You could host it centrally, but the decentralized nature has its benefits - lack of censorship, for example.

Lisk is valuable blockchain that recently shot past $2 billion in market cap. There are some questions about how sustainable this price is - but regardless, as the #20 highest ranked blockchain token by market cap, Lisk deserves some attention.

This post will go into the deeper details about the Lisk blockchain as well as assessing its prospects for the future.

About This Series + Disclaimer

This post is part of a new series where I investigate each of the top 50 coins by market cap (based on coinmarketcap.com's rankings on October 11, 2017). My goal is to help steem’s userbase become the most knowledgable blockchain community in the world.

Disclaimer: I am not an investment expert and will not be providing investment advice. I will teach you about the top 50 coins, and you can do what you want with that info.

Why Lisk?

The obvious question with many blockchains is “Why?”

Sometimes it is literally unclear what the project is for. People have really weird ideas lol.

With Lisk it is at least clear what the project is for. The basic idea of this blockchain is to allow people to build decentralized applications and issue tokens. But, doesn’t Ethereum already do this? Why would anybody choose to use Lisk, a less popular option?

It turns out that Lisk has two main advantages over Ethereum:

(1) Lisk runs all applications as sidechains which increases scalability. This way no matter how many applications are running, the workload that the main Lisk blockchain deals with is proportionally low. The downside to this is that updating an app is difficult, requiring a hard fork on that sidechain.

(2) Delegated Proof of Stake means that the blockchain can be governed easily and without wasting resources. The top 101 delegates mine blocks based on proportional votes by all the token holders.

Keep in mind that Ethereum has been preparing for a move to PoS mining for a while - so that advantage may go away soon.

The sidechain app model is interesting, in theory it means that the Lisk blockchain can scale to handle much more traffic than Ethereum can. We all know that CryptoKitties revealed ETH’s inability to handle a single viral dapp.

Ethereum is supposedly going to be scalable after “sharding” technology is added. But I know that Dan Larimer is adamant that Ethereum cannot scale. If Lisk is able to handle higher traffic, that could be a long term advantage.

Will businesses actually adopt Lisk for building blockchain applications? There is no way to know yet… but at least $2 billion is currently invested in the idea.

Token Distribution

Here’s a very nice, simple chart from the Lisk FAQ:

That really says everything there is to say, lol. It’s a good distribution in my opinion as 85% is a hefty amount to sell to the general public, and only 7.5% is going to the core team. That’s much lower than some of the other initial distributions of cryptocurrency projects.

The Lisk Foundation Team

all photos are from the Lisk Foundation website

Max Kordek, President & Founder

Max’s only experience prior to founding Lisk in 2016, at least according to his LinkedIn page, is that he attended and eventually dropped out from “RWTH Aachen University”. He was at that school from 2011-2015. After founding Lisk, he also co-founded Lightcurve, a blockchain product development studio.

Oliver Beddows, Vice President & Founder

Oliver’s experience looks very similar to Max, with only Lisk and Lightcurve listed on his Linkedin profile. Oliver doesn’t list any college experience, I’m not sure what his educational history is.

Guido Schmitz-Krummacher

Guido is by far the most experienced member of the group. He brings 25 years of business leadership experience to the Lisk Foundation team, including an ongoing role as Managing Director at Sielva Management SA in Zug, Switzerland.

Market History

The cryptocurrency markets are simply in a crazy moment right now, with most tokens spiraling up towards the moon (but possibly to come crashing down in the near future).

You can’t predict much right now, other than the obvious statement that a correction could be imminent. Nonetheless, here is the current Lisk market chart:

See what I am saying??

A month ago, we could have discussed how Lisk’s valuation had been zig-zagging upwards to what was then a record high of $7 or whatever. But now this blockchain has a market capitalization of $2 billion ($17 per token!) which, IDK, doesn’t make a ton of sense to me.

I am not an expert. But I assume a correction for this token is around the corner. Either that or we are entering the new golden age of blockchain where these kinds of valuations are normal. I welcome that but it seems unlikely lol.

Final Thoughts

The concept behind Lisk is reasonable. Having an Ethereum-esque blockchain with a more accessible development structure sounds reasonable. The idea of running all blockchain apps as sidechains could be good too.

But right now, as with most blockchains, it is all theory. We know that Ethereum has some issues (see: Cryptokitties). But will Lisk fare any better if it ends up in a similar situation to the CryptoKitties debacle?

The fact that so much money is going into an unproven blockchain with founders who have basically no prior experience before Lisk… it’s not giving me a ton of confidence. My first impression on this token is that it is overvalued and really shouldn’t be in the top 20.

I could be wrong… but that is where I stand right now.

What do you think about Lisk?