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ValPromise Basic Review

ValPromise is an Ethereum based distributed value promise protocol for creation of the contracts for managing weather related risks. Project is developed by founding team of WeatherPal, Chinese largest weather risk management platform with 200,000+ users and monthly risk protection amount exceeding CNY 20 million or around USD 3 million.

Project brief

Name

ValPromise

Ticker

VPP

Project type

Financial Services

ICO brief

Pre-sale start date

26.06.2018

Pre-sale end date

03.07.2018

Public sale start date

08.07.2018

Public sale end date

N/A

Private sale

N/A

Token type

ERC20

Token usability

Utility

Total token supply

5,000,000,000

Token supply for sale

750,000,000

Part of tokens for sale

15%

Soft cap

10,000 ETH

Hard cap

20,000 ETH

Token price

1ETH = 50000VPP

Bonuses

5%

Lock-ups

No lock-ups

Currency accepted

ETH/EOS/BTC/DTH

KYC

N/A

Additional emission

No

Restricted list

N/A

Team & Advisors

Team member

6

Key member (executives)

  • Xiang Tao
  • Eddie
  • Wang Hui

Advisors

8

Partners

151

Official information about the project is available on the webpage and in the whitepaper. Webpage has English, Turkish, Chinese and Japanese. Whitepaper is available in English and Chinese only.

We note that whitepaper is rather outdated, as roadmap and team composition does not agree with those on the website.  Also, it seems that English whitepaper was not translated by professionals, as there are logical and syntax mistakes.

All in all, ValPromise provides comprehensive information about the project. Both business and technical aspects are covered.

Conclusion: Project’s whitepaper is outdated, however all information needed for informed decision making is available.

In a nutshell, ValPromise is a transition of an existing platform, Weather Pal, to the blockchain with simultaneous emission of platform’s native token VPP.

Weather Pal is a Chinese platform where users can initiate contracts to hedge against undesirable weather conditions. On this platform users create a contract that determines the sum, contract’s logic, execution criteria and time span. Contract price is determined by the system. Since launch in 2016, team declares 200,000 contracts sold with more than 100,000 users served. Main users of the platform are tourism, travel and agriculture companies, whose businesses have high exposure to weather risks.

At the moment, team wants to transition Weather Pal infrastructure to Ethereum blockchain to benefit from better data management and increased scalability. Though it is not specified, project seems to target China as the only market for operations.

Project aims to resolve the following problems that are believed to exist on the market:

  • There are very few solutions for weather risk hedging in China;
  • Existing contracts are costly and inefficient;
  • OTC weather risks contracts lack liquidity;
  • Pricing is done by third-parties, which increase risks;
  • It is hard to verify outer data, needed to estimate execution conditions.

Project’s new ecosystem potentially will be as follows:

ValPromise is creating a platform where any individual or organization can create a smart-contract to hedge against weather risks. It is unclear if users will have to create smart contract templates by themselves or their will be any assistance service. Creators will get a portion of a transaction fee charges form smart contract user by ValPromise. This percent is not specified yet. Also, creators will pay a fee to issue a contract template. Such decentralized creation mechanism will create conditions where any particular need of customers can be met be specific contract increasing platform’s overall service level.

After the contract is created it needs to be marketed. For this purpose WalPromise will have a specific type of users, called Delegators. Their role is to promote smart contracts among potential users increase size of the network and platform liquidity. To participate on the platform delegators will pay a deposit and will get fees for each new trader brought to the platform.

Market makers role is to quote contracts on the price basis. For this they will get a reward.

Lastly, traders are individuals or entities who use ValPromise smart contracts to meet their hedging needs.

Users will have access to the platform form various Dapps. One was already by ValPromice team and is available for testing here. Project will allow other developers to create apps on top of ValPromise infrastructure to increase usability and user experience.

Hedging contract pricing will be done on the platform with the help of the specific model. Weather data will also be stores on the blockchain and will be acquired from IOT devices and weather offices to guarantee transparency in contract execution.

The platform only financial asset will be a VPP ERC20 token. All fees and prices will be denominated in VPP.

Proposed ecosystem has a potential to solve all aforementioned problems, however it is not as good as it may seem.

First of all, though now contracts will be priced be the platform and not by third-parties, it is still a single point of failure. There only difference is that pricing model is developed and in run on ValPromise.

Secondly, amount of fees that will be paid by users and the portion if these fees redistributed to delegators, market makers and smart contract creators are not defined. This is crucial to estimate project’s economics and incentive for contributors, therefore without this information no judgment about project’s potential can be made. 

Thirdly, it is unclear if smart contract templates will go through audit proses. Without security check, the whole model is undermined as creators may exploit purposely implemented bugs to still users’ money. If this will be the case, platform will lose all clients in a matter of weeks.

Conclusion: Despite project proposes improvements that has all chances to significantly contribute weather risk hedging market, it lack some important features that will define project’s success. Also, it is not defined how easy it will be to create a contract. If no assistance is provided, users will have to hire professional Solidity developers who are scares and cost a lot. It this will be the case, total costs of using a platform will be high and may decrease the demand in the beginning, when contracts are developed.  Another issue is project’s adoption rate. Financial institutions are reluctant to innovations, therefore project will have to spend a lot on marketing to bootstrap adoption. Until these issues are clarified, project’s success is questionable.

ValPromise infrastructure will be based around smart contract infrastructure that will have the following execution logic, as described in the whitepaper:

When the contract is initiated, user, who initiated is verified. As contracts will require VPP stake equal to the contract price plus execution costs, users accounts will be checked for the presence of the required sum.  After that, contract goes through two verification stages. First includes self-checking algorithm two finalize payment verification. This algorithm is not covered in the whitepaper and remains unclear.

Second stage is verification by nodes, operating in the system. This will be an iteration process, with N nodes selected at each iteration until 95% of them agree. After that nodes will be awarded with VPP. Also, node that were right get increased voting power, while nodes, that for two successive rounds where inconsistent with 70% of all nodes, get their voting power decreased.  Voting mechanism is not described in the whitepaper, however it seems that it will be a traditional Proof-of-Stake consensus mechanism.

The overall architecture of the project will be the following:

Project will use Ethereum blockchain. It was chosen because company considered it the easiest to transition its existing platform to.

On the core level contracts will be initiated and executed with accordance to the scheme described above. Also, on this level the weather data needed to decide on contracts’ results will be stored.

Contract service level is where users perform their functions and get rewards.

The application layer is the entry to the network.

Conclusion: Technical side of the project looks well thought-of and clear, however further clarification of consensus mechanism. Also, Ethereum blockchain at the moment quite low tps that is not suitable for high volume networks dealing with IOT. This problem is not covered in the whitepaper. Also, technical description of how contracts are created is superficial.

Project has the following roadmap on the website. We note that the roadmap provided in the whitepaper is outdated.

Project also has a three stage development plan.

On the first stage, Weather Pal (company developing ValPromise) will create a Weather Index Insurance contracts and release them on ValPromise platform.

On the second stage, users will be provided SDK and API to build their own contracts. Also, at this stage ValPromise services will be promoted among industries other than tourism and agriculture.

Third stage mainly focuses on promoting ValPromise among new potential users, like ForEx or crude oil industry.

Conclusion: By now, team managed to stick to the deadlines. Since project is actively working on development chances are high that they will deliver updates on time. However, we note that roadmap is short-term. Also, roadmap does not cover BD aspects.

Name

Position

Total experience

Relevant experience

Professional achievements

LinkedIn

Affiliation with project

Connections

Endorsements/ Recommendations

Team

Tao Xiang

Big Data Senior Expert

N/A

Yes

Founded Weather Pal and HeXun Technology company;

No

No

N/A

N/A

Ai Di

Full stack development engineer

N/A

Yes

Worked in Alibaba, Taobao,

Innovation Factory pea pods; research and development leader at Innovations Farm Pea Pod

No

No

N/A

N/A

Wang Hui

Full stack development engineer

N/A

Yes

Worked in Microsoft; MooterMedia.

No

No

N/A

N/A

Anna Zhang

COO

N/A

Yes

Member of a Singaporean blockchain investment team; awarded the secondprize in Jiangsu Province College Student Technology Entrepreneurship;

Yes

No

388`

N/A

Liu Shiming

Block chain development engineer

N/A

Yes

Certified by project professionals of PMP and PMI-ACP;Contributorof Ethereum community; active in Gitter, an IM community of developers;

Yes

No

387

N/A

Advisors & Investors

Zhen Jiao

Advisor

N/A

Yes

Doctor of Computer Science; Chaired and participated in the National Natural Science Foundation, a major national science and technology project, and a joint research and development project of Fortune 500 companies.

No

No

N/A

N/A

Wang Lijie

Advisor

15+ years

Yes

founding partner of PreAngel Fund, executive director of China Youth Angel Association, executive committee / executive director of Haitian Association and a well-known blockchain project investor; managed more than 6 funds valued over 300 million yuan and has invested nearly 300 technology start-ups.

Yes

No

500+

Yes

Wang Gang

Investor

N/A

Yes

Investor of Didi Chuxing Technology Co; Was in charge of development and organization of Alibaba B2B Beijing area and Alipay Merchant Division.

No

No

N/A

N/A

Wu Xiaoguang

Investor

N/A

Yes

Co-founder of Tencent, was the former Senior Executive Vice President of Tencent, CEO of Tencent e-commerce holding company and founder of Weiguang Venture and Investment.

Yes

No

18

N/A

Lao WeiXin

Advisor

25+ years

Yes

Partner of DL CAPITALS, professor of Department of Information Engineering in The Chinese University of Hong Kong;

Yes

No

231

N/A

Raymond Yang

Investor

10+ years

Yes

CEO of PruSmartHR consulting services company; Former head of Asia Pacific region of North American Search Group headhunter; Former executive at  Pacific Life Re in Greater China,  U.S. Reinsurance in Taiwan and Southeast Asia, PricewaterhouseCoopers China non-life actuarial consultant and of ZhongHong

No

No

N/A

N/A

Melody He

Investor

N/A

Yes

founder of Spartan Group and blockchain consultant

No

No

N/A

N/A

Ivan Zhang

Advisor

N/A

Yes

Former employee at Qihu 360 and APUS Group.

No

No

N/A

N/A

 

We note that information in whitepaper does not correspond with that on the website. Since website proved to be more up to date, only team member and advisors, mentioned on the website, were discussed in this section. Also, in advisors and investors section, team does not clarify who is who.

Team also has a wide range of partners, all of which are Chinese.

Conclusion: Team provides contradicting information about team composition. If website information is correct, we note that initial team lacks blockchain experience. Nevertheless, team has strong advisory board that can significantly contribute to the project.

Hedging industry was bootstrapped by appearance of derivatives. In 2017 option and futures derivative turnover was $2,764,145,000,000,000 or $2.7 quadrillion dollars. Investopedia is more conservative in its estimates of the derivatives market and provides a figure of $1.2 quadrillion. Nevertheless, this is an outstanding sum. Clearly, ther is a huge demand for hedging from various entities all over the world.

There are also specific instruments for hedging against weather. Among the most popular are HDD and CDD. HDD refers to Heating Degree Days and is a measure qualifying the demand for energy needed to heat the building. Weather derivatives, like weather swaps or weather futures, are priced with accordance to HDD.

Since weather can have a significant impact on some businesses, like agriculture, tourism, energy production or energy-intensive businesses, this hedging instruments are crucial to secure companies’ profits.

However there are no blockchain projects that provide infrastructure to create weather hedging instruments, there projects, that target hedging market as a whole. LedgerX and VariabL already provide derivative instruments. However, there is no other platform than ValPromise that provides instruments to create weather derivatives

Conclusion: Financial market cases prove that weather derivatives instruments are really applicable in the real life. In addition, there is no other company that provides a blockchain solution for weather derivatives. This creates a prosperous environment for ValPromise. However, since project targets only China, that may be an unnecessary limitation bounding potential profits.

The only source information about project’s ICO is the following table in the whitepaper:

Graphical representation is the following:

We note that only 15% of total token supply (5 billion) will go to the public. 750 million VPP will be distributed.  Supposedly, release to suitable group refers to development costs. Random incentive is also questionable as 10% will be sent to people who are not involved or affiliated with the project. Taking into account that there is no lock-up mechanism, the majority of them will immediately sell tokens dragging the price down.

No information on bounty program or airdrop is available.

Conclusion: Since only 15% of the tokens will go public, adaption may be limited since potential users will have to buy VPP on the secondary market from either delegators and other platform members or from those who received tokens randomly. We also note that since only 15% are distributed, there can be a lack of liquidity. In addition, there is no information on use of proceeds.

VPP token will be used for the following purposes on ValPromise platform:

  • Platform participation;
  • Medium-of-exchange;
  • Proof of proceeds;

VPP will be the only means of payment on the ValPlatfrom, therefore everybody will have to buy it to get access to weather hedging tools. Also, team mentions that all participants will receive dividends generated by operations. What fraction of revenue will be distributed and how it will be done is not explained.

Users will have to stack VPP to initiate the contract or to buy it. Potentially, this will decrease velocity and increase VPP price respectively. Since weather contract hedging is not itself subject to high transaction volume, users to not have an incentive to hold VPP between contracts, therefore they may sell it right afterwards, treating as resource instead of financial asset. This will have a pressure on price.

The team has provided legal opinion from Tzedek Law LLC stating that VPP is not a security.

Conclusion: Despite token economics is promising, incentives to hold token are not clear.

Project has an active Twitter, Facebook, Twitter and WeChat. Project has 225 followers on twitter, 5,000+ participants in Telegram chat and 312 followers in Facebook group.

According to Simmilarweb, 70% of traffic comes from direct and 30% from search.

Top 5 searched keywords that lead to project’s webpage were the following:

BE1 provides the following information about traffic geography:

  • Vietnam – 17.06%
  • India – 9.56%
  • Tunisia – 8.53%
  • Argentina – 8.11%
  • Turkey – 7.52%
  • Other – 49.22%

Conclusion: Since information about Chinese part of the internet is unavailable on BE1 platform, marketing efficiency can hardly be judged, since China is the primary market. However, we note that project has poor representation in social media.

Project’s team can be contacted through the following channels:

Webpage

Twitter

Facebook

Telegram

E-mail





The information contained in the document is for informational purposes only. The views expressed in this document are solely personal stance of the ICOrating Team, based on data from open access and information that developers provided to the team through Skype, email or other means of communication.

Our goal is to increase the transparency and reliability of the young ICO market and to minimize the risk of fraud.

We appreciate feedback with constructive comments, suggestions and ideas on how to make the analysis more comprehensive and informative.