Liquidity Network (LQD) ICO Review

The Liquidity Network is a project trying to tackle the scalability problems of current blockchains. The team is based in Switzerland, a country recognized for its openness toward cryptocurrency and blockchain projects. They will be conducting their ICO starting from June 14 2018. Interested investors can currently whitelist their Ethereum address and complete the KYC process to be able to participate in the crowdsale.

According to the team, current solutions to use and transact cryptocurrencies are flawed. Solutions such as Lightning Network or Raiden are economically broken because of the required collateral to be locked up. Also, most current solutions require to perform an expensive on-chain transaction.

This is where the Liquidity ecosystem comes in. It is composed of the Liquidity Network and the Liquidity Exchange.  Both of these applications are made possible by two of the team’s innovations: the Liquidity Hub and REVIVE.

  • Liquidity Network

The Liquidity Network is a non-custodial, blockchain settlement system supporting off-chain payments.

  • Liquidity Exchange

The Liquidity Exchange is a non-custodial off-chain exchange. The exchange performs atomic swaps off-chain.

The novel feature of the network and the exchange revolves around the hub architecture. The funds are no longer locked between two users. A user joining a hub can trade with any other member of the hub, off-chain. This implies much lower costs and more flexibility than on-chain solutions.

For those who want to have more details about the architecture, feel free to review their whitepaper.

Use cases

Use cases of the Liquidity ecosystem include money transfers, purchases, IoT sensors, off-chain exchange of tokens and airdrops. Airdrops are a good way to engage with the community and ensure a fair distribution of a cryptocurrency . Unfortunately, right now it is expensive to do an airdrop because of the high transactions fees of blockchain networks. The Liquidity applications could be a secure way to conduct large airdrops at no transaction costs.

Incentives

How is LQD necessary to the network? Users participating in the network won’t have to use LQD tokens for regular usage. The tokens will allow participants to pay for auxiliary services such as channel monitoring and to access premium features of the network. For example, a user could pay a certain amount of LQD to guarantee a high number of transactions per second. Also, they envision an open marketplace for payment processing. This would allow any hub operator or commercial user to advertise its payment processing services. The hub operator would take care of the processing for the client. I think this is a good idea because it will create competition and thus most likely reduce prices for end users. The remuneration in this marketplace will be using LQD tokens.

Team

Liquidity Network’s team is quite impressive, most have a strong academic background and I think this project has been and will be a good way for them to get some hands-on experience.

Token Sale

There will be 100 million LQD issued: 15% was allocated to participants of the pre-sale, 50% will be allocated during the ICO and the rest is retained by LiquidChain. This entity is building and pushes the development of the Liquidity Network. Fortunately, these tokens are vested over a 2-year period. I think this distribution is quite fair and not too greedy compared to other ICOs.

The team did video interviews with every single contributior of the pre-sale to build a strong liaison with their early supporters, which is pretty interesting.
10 496.59 ETH have been collected during the pre-sale for 15 million tokens. The average Ether price during the pre-sale was of $873.28, which gave the pre-sale participants around 1429 LQD per ETH or $0.61 per LQD. This implies a total market cap of 69 977 ETH($40M at today’s price of $575 per ETH).

The model used for the ICO will be a uniform Dutch auction. The price will initially start very high and be reduced gradually with every Ethereum block.  Investors will be able to bid Ether at any time they want during the auction. The auction will be done when the price multiplied with the number of offered tokens(50M) will be equal to the total ETH amount sent to the contract auction. The exact auction parameters will be released on June 11.

Funds collected from the sales will mainly be used for these tasks/activities:

  • Hire engineers
  • Hire researchers
  • Marketing & communication
  • Legal services
  • Business development
  • Education

Progress of The Project

The information is pretty non-existent on their GitHub. The team has mentioned in their Telegram group that they will gradually release their code on GitHub later. This is quite unfortunate because investors usually like to have a more precise idea of what they’re investing in and scanning through the code on GitHub is a good way to do so. On the other hand, the fact that they have a working version online of the Liquidity Network proves that they are serious and made progress before collecting money, which is great.

According to the roadmap, the official and stable Liquidity.Network version should be ready in June 2018 and the off-chain exchange should be released during Q3 2018.

Overall, Liquidity Network seems like a project with great potential if everything goes as smoothly as expected. 

  Original article: Liquidity Network

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