Zonto Basic Review
|Start ICO||11 Sep 2017|
|End ICO||11 Oct 2017|
About the Project
Ticker symbol: ZONTO;
Project type: Blockchain-based social networking technology;
Company: Zonto OÜ, Peterburi tee 47, Tallinn, Estonia, 11415;
Start: September 12, 2017
Sale period: 30 days
Token type: ERC20
Total tokens: 2,000,000 ZONTO.
Available in Token Sale: 1,800,000 ZONTO
Fundraising goal: 10,000,000 EUR;
Price: 1 ZONTO = $5
Bonuses: 1st day: 25%; 2nd - 7th day: 20%; 8th - 15th day: 15%; 15th - 20th day: 5%; 20th - 30th day: 0%
Team size: 20 members
GitHub: no information available
Twitter: 35 tweets, 1,329 followers
Medium: 2 followers
Facebook: 527 likes, 542 followers
Telegram: 43 members
The authors of ZONTO describe their project as follows:
"ZONTO is a modern social networking service based on blockchain technologies. In addition to classical "likes", every user will receive "ZONTO coins" from his or her followers. Coins can be used to pay for the system's paid functions. In the future, it will be possible to convert them to cryptocurrencies.
At the same time, coins are needed to give likes or make posts. As a result, Internet bots cannot spam, add friends or otherwise bother ZONTO users.
Zonto is a new product in the world of high technology. It is an ecosystem with many functions, which are designed to improve the quality of its users' lives".
ZONTO offers a new take on the concept of a social networking service. It is an application which will combine all the typical services currently available to an average user. The main feature of the application is the possibility to make payments for various services inside the app. The social networking service will consist of the following basic elements, which will interact with each other:
- Social network
- "Nearby" - A map of what’s happening nearby
- Discounts and promotions offered by businesses
- Wallet for digital and fiat cash
- Cash transfer
- Loyalty card
- Cashback services
- Private services
- Apartment rental
- System of online appointments
- Online radio
- Simple CRM system
As can be seen, the team has very ambitious plans even at this stage of the project. This new and interesting view on what a modern social networking service should include definitely catches the eye. The team offers to bridge the gap between "digital" and "actual" social reality. The project's interactive nature will enable users to easily find necessary services, stores or contacts for people nearby. At the same time, the business will be able to flexibly integrate its processes into the system, so that interested customers have no trouble finding what they need.
The team is planning to monetize its business using two kinds of paid advertising:
- Native contextual advertising in the user's news feed;
- Geolocation advertising. Advertisers will be highlighted on the search map inside the application.
However, we should remember why most IT companies decided to focus on a particular technology instead of trying to cover everything at once. Most often, businesses prefer to use their best efforts to scrupulously study and create their own expertise in a clearly defined segment. Through more in-depth work on their product, they gain competitive advantage over other market participants.
Seeking to create a large number of services, the ZONTO team may face the fact that every individual function will be inferior to that produced by competitors. This is especially so as modern operating systems can easily interact between different applications, thereby ensuring general integration.
Generally, the ZONTO project seems interesting. It is clear what the main idea is, and what the authors try to communicate. However, going through all documents in detail, we stumbled upon many red flags. Here are some of them:
- The blockchain community does not show any particular interest in the project's ICO. We can tell this from the low activity on the usual channels.
- There is no proper market review in the project's documentation.
- There is no proper description or presentation of the team working on the project; part of the team is anonymous.
- Budget items and project financing plans were not explained, and the development plan was worked out poorly. The estimation of the potential profit and payback period is not clear.
- There is no technical description of the project.
- It is not clear how blockchain technology can help this product; it seems to be used as a marketing trick.
There are positive aspects of the project as well:
- The description of business processes contains interesting new ideas not seen in the market so far.
- The business model is clear, and has reasonable revenue sources.
- The project held a pre-ICO. In the course of it, tokens were obtained by large market players, current and likely strategic partners interested in the project's success, which also depends on them.
- The service offers new solutions for the social networking sector.
- The project is looking for major investors; the documentation contains legally significant information.
In the following paragraphs we will discuss these points in more detail.
REVIEW OF COMPETITORS
Since the project will combine a number of various services, it is likely to face tough competition in several market segments at the same time. Apart from the main competitors mentioned above, one should pay attention to similar projects holding ICOs in the near future: steem.io and coss.io.
We need also to mention the nimses.com project; this is an already launched social networking service with more than 1 million downloads, which implements the "tokens for actions" concept.
MARKET AND INDUSTRY REVIEW
The project positions itself in the segment of high-tech internet companies. According to statista.com, the total capitalization of this market exceeds $1 trillion.
However, the index is dominated by Google, Facebook and Amazon. These companies are in direct competition with the project, as they offer similar services and functions within their own applications.
ZONTO does have potential for growth however. According to research by Smart Insights, the total number of active users of the main social networking services has now exceeded 5 billion. Users actively register in new and developing networks; this is typified by the success of Snapchat’s IPO: With all the frenzy around the allocation of capital by the new, rapidly developing social networking service, the project raised more than $33 million. At the time of the IPO, this was comparable with the capitalization of such giants as Marriot or Target.
TECHNICAL ASPECTS OF THE PLATFORM
The project is not presented as open source. This means that the source code of the development will not be made public. Smart contracts responsible for the ICO process have not been published either. This is a big minus, as no one can guarantee that fraudsters will not be able to steal investors' money during the ICO by taking advantage of any vulnerabilities in the smart contract.
According to the developers, PSD2 payment technology will be built into the application. This technology is quite new; it enables banking systems to delegate their payments to services of partner applications. For example, one can use this technology to transfer money from his or her bank account directly from a messenger app with the service built in.
The following documents may be found on ZONTO's website: White paper, company registration certificate, ‘Venture Funds Teaser’, ‘Presentation of Services’ and a ‘How to Buy’ tutorial.
The documents are well prepared, easy to read and contain basic information on the project. It is helpful that the team have posted information about the legal status and legal details of the founding company in a separate document. It is clear that they will attract institutional investors, as there are separate documents designed for this purpose (Venture Funds Teaser and Presentation of Services).
There are minuses as well. The documentation contains no review of the market of social networking services and no peer group analysis. Potential investors need to know that the company has comprehensively analyzed the market segment it plans to take over. The technical side of the development was not described either; for a fintech company, this is considered bad manners. The project's white paper looks like an extended presentation rather than a complete offering memorandum. We trust that the description of the services will be supplemented in the future.
Finally, one can also find fault with the way the documents are published. Physically, the documents are stored on the drive.google.com service, not on the zonto.world domain. Certain unreliable companies publish their documents on third-party resources in order to make it easier to prove, if necessary, that the documents have nothing to do with them.
Tokens will be distributed as follows:
- 85% are reserved for participants
- 5% are reserved for the bounty campaign
- 10% are reserved for the developers
The project will issue 2,000,000 ZONTO tokens, 85% of which are offered to investors during the token sale. The project plans to raise €10 million. However, the team says that €500,000 will already be enough to complete the development of the most important system modules. It is not clear why this figure is 20 times smaller than the initial target. It is worth asking the developers the following question: "How did you draw up the budget, if such key indicators differ by an order of magnitude?"
It is not clear why fundraising targets in the white paper are specified in euros whilst the token price is indicated in US dollars. Such imprecision also casts doubt on how thoroughly the financial plan was developed.
No information is provided about whether the money will be paid back to investors should the project fail to raise the minimum limit.
The system of bonuses for token buyers will be as follows: 1st day – 25% discount
2nd - 7th day – 20% discount 8th - 15th day – 10% discount 15th - 20th day – 5% discount 20th - 30th day – 0% discount
It is worth mentioning that the team plans to be distributing 10% of the net profit among token holders for the first 10 years, starting with the seventh month after the end of the ICO. This is definitely a positive aspect, but we fear that the forecast of achieving profitability within seven months is too optimistic. Only 10% of the revenue is apportioned for marketing purposes.
PLANS OF THE PROJECT DEVELOPMENT
The roadmap is provided as a flowchart on the website and in the white paper of the project. It consists of nine stages, three of which have been reached and passed.
For each subsequent stage, the team plans to add another service to the project's functions; the planning horizon is 4Q 2018.
The roadmap seems to be in the rough stages to say the least. It is not specified what portion of funds will be spent on what stage and on what project. From point 5 the figures are in the dollar equivalent, but it is hard to tell what they refer to: expected profit, revenue or costs.
The project's roadmap leaves the impression that the team has not addressed their financial model in detail.
The project's team consists of 20 people; they are not presented in the white paper whatsoever. A list of the participants is published on the official website. It must be said that neither the website nor any other sources reveal the background or experience of the project’s participants. The team only provides links to their LinkedIn accounts and their pages on the project's own platform, ZONTO. The latter provide no information at all.
Moreover, the team did not announce any advisors invited from other projects. LinkedIn profiles of managers and staff are not completely filled. Most of the participants indicated ZONTO as their only place of employment.
Together with the small number of contacts, such pages look as if they have been specially created for this project.
In view of the above, one may say that the team is actually anonymous. We think this is a critical minus, significantly reducing the community's trust in the project, which will negatively affect the forthcoming ICO.
There is very little information about the project; the team have hardly ever been mentioned in news sources. The first lines of search results on the keywords are taken by the principal competitors.
The project's team is present on the main social media: Twitter, Medium, Facebook. The project's Telegram chat is accessible, and the authors quickly reply to users' questions. Their Slack account can be accessed only by invitation.
The lack of popularity with the community is striking; there are very few followers on the main pages, and discussions are inactive. On the Bitcointalk forum, the discussion takes three pages only.
The team has started a five-category bounty program:
- 20% - Facebook
- 20% - Twitter
- 20% - Subscription on Bitcointalk 25% - Blogs and mass media
- 15% - Translation and moderation on Bitcointalk
Participation terms are described in detail, and the team supports the campaign well. However they have provided no information about the portion of budget to be subsequently spent on marketing and promotion.
The following details may be used to contact the development team: