22 Feb 2019

Xinfin Network ICO Review


Disclaimer: Please do your own research. We are not a financial advisers and the below statements are opinions only. As always, I tried to be as objective as possible when writing this. I am an investor in XDCE tokens. Only ever invest what you can afford to lose.

Description

The latest project is called XinFin Network — they are a non-profit (read: transparency) organization incorporated in Singapore who has created a hybrid public/private blockchain with many applications, the first being disruption of government infrastructure financing. Other applications include money transfer remittances (like Ripple — $XRP — $17B market cap), invoice purchasing (like Populous — $PPT — $211M market cap), and Supply Chain (take your pick, there are many ranging from the hundreds of millions to billions in MC). XinFin/ XDCE market cap is around $25M.


Smart Contracts

 While almost a platitude at this point, smart contracts are very relevant here. Smart contracts will make the platform interoperable with other public chains and also make the lending and payment vehicle   from financiers, to suppliers/contractors, to the end client (governments or even corporations) seamless and autonomous. Eg: Group “A” lends currency to “C” for a bridge they need to build, who pays contractor“B” to do the work. Smart contracts can enable this process in a trustless environment. That’s an extremely simplified example of course, but the premise enables“C” to obtain globally competitive,crowd-sourced financing rates with practically zero remittance fees. A HUGE competitive advantage for XinFin over banks and other lending institutions.

As an example, the USA is in dire need of infrastructure work. Donald Trump made this issue a cornerstone of his Presidential campaign. “The American Society of Civil Engineers (ASCE) has compiled regular “report cards” on the state of U.S. infrastructure since the 1980s. In its 2017 report, the ASCE finds that the nation’s infrastructure averages a “D,” meaning that conditions are “mostly below standard,” exhibiting “significant deterioration,” with a “strong risk of failure.” The group estimates that there is a total “infrastructure gap” of nearly $1.5 trillion needed by 2025. (https://www.cfr.org/backgrounder/state-us-infrastructure)

Of course, infrastructure is an enormous issue for all governments and economies, from third world to first.

Company





 I often say you can first judge the quality of a crypto project by the collective intelligence and knowledge of the frequenters of a Telegram group. I have not been disappointed with XinFin’s. (there is also a smaller group just for XinFin traders)

Basic intro to the project and tech: https://m.youtube.com/watch?v=K-tHZkV6zAs

Good, basic video on government infrastructure financing: https://www.youtube.com/watch?v=jLaqms1IHWE

Great video on the Financing of a Solar Plant using XinFin: https://www.youtube.com/watch?v=IkvCEE6VVNg&app=desktop


However they place an XDCE target possibility at $1 this year which is a bit absurd. 50c would be a big long shot, only if the entire market goes on a massive bull run by Q4, Which is possible this year, but not likely. $1–2 in 2019? Possible if BTC doubles ATH and gets to $40k+. These are just estimates and my opinion, of course.


Team





















Full team can be found here: https://www.xinfin.org/about.php

XinFin has over 60 employees on LinkedIn, many in the San Francisco area (marketing and sales and intern type developer folks). Roger Ver is listed as an adviser although as of July 2018 he stated he has very little involvement and is not aware of current developments. Clif High reviewed and endorses the project (I saw a recent, independent and unsolicited video interview of him confirming this). Strong adviser just added — a former KPMG Partner/ Head of Strategy and Ops (global Big 4 accounting firm).

Recently opened a research lab at UC Berkeley, giving them access to top talent in Silicon Valley area. https://www.newsbtc.com/2018/06/28/xinfin-opens-its-blockchain-engineering-and-business-development-lab-at-university-of-california/

From Clif High’s report last summer, when XinFin was in development and pre-ICO (also found on XinFin’s website):

“While nothing with government in it can ever be really good, the idea of taking a libertarian approach to supplying government, is a good idea, apparently as a formative entry into a new ‘space’ within cryptocurrencies. The data suggests that XinFin is going to get ‘pops’ within its pricing due to position in the space, which should provide the growing room, both for XinFin, and the many competitors who will come into the ‘global procurement arena’. Expect several new entries into this space over just the next few months. 

XinFin, as both an early riser, and a ‘non-profit’ organization, show as being stand-out through 2017. By the end of this year though, the space will be so crowded as to be forcing ‘niche paradigms’ on our understanding of the dynamics of this layer of global human activities. This will be a very good space, with longer term producers some of which will be powerhouses for decades. 

Will XinFin? Cannot be said with certainty now, but does seem a reasonable study for entry into what will become perhaps the largest, non-retail marketplace ever created, procurement for aggregated planetary government. Again, as has been mentioned in the past, we here at halfpasthuman have some specific language for sub categories within this area as temporal markers for very explosive growth in 2018.”

ICO & Tokens


ICO ended March 15, 2018 and they raised $15M.

100% pre-mined. 6B are in circulation. 15B is the total supply and 100B the max supply — most of this 100B is reserved to pay the masternodes, for ecosystem development, for the hedge pool, for charity donations, and for the team- but those vest at only 1% (yes, one percent) per year. (see allocations below). They are actually a non-profit company.

From admins: “Tokens will be released over decades with only a small percentage every year. (So the released amounts get smaller over time). The first release will be around 1.25 billion. all other releases will get lesser and lesser. We aim to release those to institutions at market prices or even higher.”

Here is info regarding the token allocation:

Total of 100 Billion XDC tokens. Total token supply is limited and locked which adds certainty on the XDC supply side. There is no concept of mining in case of XDC as all tokens are pre-mined. Hence, in case of XDC tokens, what matters at any point in time is what is the current ‘available’ supply of XDC on the market which is generally referred to as ‘circulation’ and how this supply will change over time. The allocation of XDC tokens is designed for inclusive growth of entire ecosystem.

The details of the allocation, lock-in periods for the XDC supply are illustrated below

  • Founders and Core Team Allocation (25%): This amount will be used as wage for the founding team responsible for making the XinFin XDC platform a reality. The XDC platform evolution has been a continuous product evolution with persistent effort from the founding team. This supply is locked and a maximum of 1% of the holder supply can be released every year.
  • Ecosystem Development Pool for Xinfin Organization (15%): This amount will be used to run the organization. The tokens from this pool will be used to fund incorporations that support the ecosystem development for XinFin. This supply is locked and a maximum of 2.5% of this supply can be released every year.

  • Pre-placement and Follow-on token offering (10%): XinFin completed Preplacement sale of 3% XDC tokens to private investors during first half of 2017. The proceeds from this were used to develop XDC protocol, TradeFinex platform and other operating expenses. The next follow-on token sale of additional 3% will be conducted in early 2018. Any remainder will be used to support the subsequent follow-on token sale and liquidity requirements across participating exchanges. Utilisation of follow-on token sale will be largely used towards protocol enhancement, eco-system development, strengthening the network, operating expenses including POC development, business development, travel, legal and compliance spends, etc.

  • Ecosystem participation incentives (32.5%): This part of the XDCs will serve as a reward for the Master node hosting institutions and incentives for the participants on the platform. Typically, reputed high stake holders, technology partners and authorized and regulated institutions are expected to host master nodes by staking in the predefined amount of XDCs and in turn they would be rewarded based for running and contributing towards the network consensus. Part of the supply will be used for reward scheme for the participants on the platform. The rewards amount will be determined depending on the project value, purpose and the participants involved. This supply is locked and a maximum of 10% of the XDC tokens held by the institution running the Master Node can be released every year.

  • Allocation for Hedge Pool (10%): This token supply will be used to hedge the commerce between financiers, buyers and suppliers against changes in the XDC token value. As all the trade and financing transactions on TradeFinex for the end user will be represented in equivalent fiat amount, any settlement losses arising due to fall in the value of underlying XDC token will be taken care by the Hedge Pool. This supply is locked and a maximum of 5% of this supply will be released every year.

  • Philanthropic and Social Cause (5%): XinFin strongly believes that giving back to the society is among the most important and valuable things. As part of its Corporate Social Responsibility, a portion of the XDC amount will be used for philanthropic activities and support various social causes to empower individuals, communities and building a sustainable future for all. The supply is locked and released on a need basis.

  • Contingency Fund (2.5%): Contingency Fund is created to meet some unforeseen expenditures. This supply is locked and released strictly on an as-needed basis.

Technicals

TechnicalWhitepaper: 

XinFin network is currently designed on PBFT+stake driven consensus which means participating entities such as masternodes and institutions need to stake their tokens. This simply means that in-spite of having 100 Billion tokens, most will be staked and locked for running masternodes, private subnetworks and various financial applications.

The blockchain is a hybrid PBFT/PoS consensus protocol (public and private — a “permissioned” blockchain for privacy necessary for banks/financial institutions/governments — with MN staking), built on Ethereum and Quorum forks.

Good article on hybrid blockchains written by one of their advisers: https://medium.com/@davidfreuden/hybrid-blockchain-the-best-of-both-chains-78518507449a

The ecosystem token (XDC- “XinFin Digital Contracts”) is stabilized by a hedge pool they have set aside — a HUGE selling point, as this will stabilize loan settlement relative to Fiat (a common complaint about crypto is the instability/ price fluctuation).

The ERC20 token (XDCE) is the trading token and is pegged 1:1 with the eco token. Currently only worth $.004 and a roughly a $25m MC — CMC has the circulating tokens for XDCE but not XDC, and they are essentially the same, as they are swappable 1:1; XDCE:XDC. From XinFin: Total circ tokens currently is 6B, not 3.6B as listed on CMC (CMC just has the XDCE portion reported). It’s 6B circ supply (2.4B XDC and 3.6B XDCE at the moment). 15B available supply and 100B total supply. The 15B includes the hedge pool.

The private side is enhanced fork of JPMorgan’s Quorum — a private, permissioned blockchain for enterprises. Quorum was developed a layer upon the Go implementation of Ethereum but replacing PoW with a new 2-step, more secure consensus mechanism. “We’ve developed a smart contract manager that allows for interoperability between the XDC blockchain and public blockchains. We’ve added punitive smart contracts that connect to the QuorumChain consensus smart contracts to ensure those who stake the XDCs to run network infrastructure remain honest.”

“The consensus architecture for the XDC protocol is divided into two parts. The first is the XDC consortium membership requirements. In order to participate in the XDC network, institutions must belong to one of the three tiers. The tiers, in part, correspond to the XDC token holdings. Any fraudulent activity results in seizure of the XDC tokens that are staked to gain membership and host network infrastructure.”

There are 4 types of Nodes, most importantly, in my view of marketing, is the Auditing node, which “allows for the access to the public and private state of the blockchain for the purposes of regulation, auditing, or reconciliation with legacy systems.” This is imperative for marketing to institutions and governments.

Masternodes will be used to secure the network and held mostly by institutions. Tentative requirements: must stake from 10m — 100m XDC/XDCE, depending on the type of node. Nodes requiring this much staking will likely be held by institutions, ultimately limiting the supply.

They claim to have clocked 500+ tps and are working toward 2000 by year end.


State of Affairs

Too many developments the past year to list, but of note: big Asian partnerships announced like Ramco, Assocham- Indian Chamber of Commerce, working with OMFIF.

“Ramco Systems, part of a $1 Billion conglomerate announced to build Blockchain solutions for its 500+ enterprise clients in Aviation, Logistics and Human resources using XinFin Hybrid Blockchain based out of Singapore.”


TradeFinex already launched and in beta — for global infrastructure financing, primarily for governments. “XinFin will extend its TradeFinex platform to Assocham’s network of 300+ trade associations and 450,000 members to minimize inefficiencies in trade and finance. Started with the World’s fastest growing economy, TradeFinex platform will be rolled out globally to all leading trade associations in coming weeks. XinFin has already expanded its client base across Singapore, India, USA, Europe and currently working on 10+ pilot projects across aviation, travel, banking, supply chain management among others.”

They have launched their own working exchange- AlphaEx- for trading of XDC, which is their native protocol currency and built on their hybrid blockchain. XDC will be tradeable on other exchanges in the future but it’s a more difficult implementation due to the new nature of their blockchain. Again, XDC is interchangeable 1:1 with the ERC20 token: XDCE.

They are launching an invoice factoring platform. “Come register your business on iFactor and start creating or buying invoices generated from real world transactions using our utility token.” This will compete with the likes of Populous ($211M MC).

Supply Chain solutions: “We’re building Supply Chain solutions on the XDC blockchain which will give unprecedented visibility to involved stakeholders. Even the onerous settlement process can be made efficient with direct and timely payouts to the parties involved.”

Travel industry solutions: “Integrating innovative smart contracts to facilitate instantaneous settlement between hotels, suppliers, aggregators, and clients/in the travel industry.”

Thoughts on Risks

There are few. Their development thus far has been very impressive, as well as positioning their marketing. But every project has risks. Here are some:

  • Bitcoin price continue it’s descent and takes everything down with it. I must say, XinFin has been rather immune to BTC’s moves, however. But that is likely because it is so unknown, is on smaller exchanges and thus, has lower liquidity.
  • Due to the above, I am currently almost exclusively investing in coins that have true use-cases as of today, to drive organic demand. Other than trading good TA set-ups, I view the market as too risky right now for spec investing….UNLESS something is absurdly undervalued (like XinFin). That said, the lack of true organic use of the coin currently is a risk.
  • Github is a bit light….but given where they are in development and the hybrid private nature of the network, I’ll give it a pass for now. Still, I’d like to see more.
  • Co-founders’ backgrounds are not very clear on LinkedIn. It seems they are making the rounds, attending some conferences and giving the occasional speech (which is great), but their LinkedIn profiles are minimal or not clear and there is just not enough info out there about them. Some seem to be working on multiple projects (per LinkedIn) and it’s unclear who steers the direction of this company, as they have 3 co-founders but no CEO. I’m told they prefer this flat structure — “decentralized leadership” as they put it — and I do think that’s an interesting idea. However, leadership clarity is the one area they really need clean up. Advertising Roger Ver as an adviser is a great start for building a following….but advisers should not come before a team on a company’s website, and they’re a bit too far along for that kind of silliness.
  • Their co-founders do not become more public-facing. This is a non-negotiable for instilling mass investor confidence if they want to become a mid-large cap. Short of that, it will not happen.
  • While incorporated out of Singapore and with a good US presence, from what I can tell XinFin seems mostly rooted in India. And India has been cracking down on crypto as of late. This would also be the first Indian project that I view as well-positioned to do big things in crypto (unless I’m forgetting some). That said, India is a true emerging economy with many bright, educated and talented people in tech, so it’s only a matter of time.
  • No big exchanges yet but they claim to have them in the works. However, I’ve heard this claim before with other projects that never come to fruition. That said, I do see the lack of big exchanges today as part of the upside opportunity and why they’ve been immune to the overall market crash this year. XinFin is quietly under the radar for now.

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