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ArcBlock Rating Review

Stable

Investment Rating

Expiry date : Expired 10 May 2018

Ratings

We assign a Stable rating to the Arcblock project. 

The project has some risks, but we would like to emphasize that they can easily be dealt with by the project team.

The project is attracting the attention of the blockchain community, thanks to its development of concepts for a third generation of blockchain networks (using internetworking). The company is planning to partner with big business via the Hyperledger Foundation created by IBM and the Linux Foundation. We believe that the team has all the factors necessary for a successful market entry

General information about the Project and ICO

Name: ARCBLOCK

Ticker symbol: ABT

Project type: Blockchain Service [https://www.arcblock.io/]

Description of the company: Arcblock is an open source protocol providing access to basic blockchain tools for any application. It is a comprehensive solution, combining blockchain technology with cloud computing. Miners provide not only computing resources and reusable components to the ArcBlock platform, but also new services and even ready-to-deploy applications. Users providing resources or services will be rewarded with tokens. The following is a comparative scheme of the ArcBlock project with Bitcoin and Ethereum.

Company: ArcBlock Foundation Ltd.

Website

Whitepaper

 

ICO Details

Public ICO Start: 03.02.2018 [1]

Public ICO End: 10.02.2018 [1]

Token Sale Duration (weeks): 1.0

The total number of tokens: 186,000,000 [Whitepaper]

Tokens available on sale (Pre-Sale + Public ICO): 83,700,000 [Whitepaper]

Investment goals: n/a

Price of 1 ABT: 0.56 USD (0.00053 ETH)

Accepted payments: ETH, CMT

Token Limit: 186,000,000 [Whitepaper]

Hard Cap: 37500 ETH + 6M CMT [Whitepaper]

Soft Cap: 12000 ETH [Whitepaper]

The open sale of ABT tokens will be held in 2 stages:

  • Private Sale: starting Jan 12, 2018, 7pm CST, which is closed;

  • Public Sale: starting Feb 3, 2018, 7 pm CST

  • Public Sale Registration: Jan 15, 2018, 7pm CST – Feb 21, 2018, 7pm CST

Token Distribution Date: ABT tokens will be simultaneously distributed to ETH wallets provided on registration within 4 weeks of the end of the token sale.

Token issuance:

45% — Maximum token amount for sale

8% (including bounty program allocation comprising 1%) — Marketing and partner support

15% — Team (Labs)

32% — Miners (community rewards)

Description of the services and scope of the project

3.1. Ecosystem operation

The core of the ArcBlock ecosystem is a blocklet application protocol. According to the project, this is also software architecture that creates the basic building blocks of ArcBlock itself. The ArcBlock platform is built on several blocklets. The general scheme of the ArcBlock ecosystem is given on Fig. 2.

Blocklets can be used on any platform and/or with any programming language enabling one to use any type of internetworking. Moreover, their use can enable cross-computing between blockchain and outside the network, providing networking connections to existing data sources, APIs and technology architecture.

Fig. 2. The general scheme of the ArcBlock ecosystem

 

The Open Chain Access Protocol allows a blocklet to interact with different blockchain systems at the same time. A distributed PUB/SUB gateway allows blocklets to interact with client code in real time in a user's browser or in mobile applications (Fig. 3).

Using the Open Chain Access Protocol, any user can access the functionality of different blockchain network integrations. This will enable developers to freely create possibilities for connecting to any blockchain on the ArcBlock platform and thus to freely switch between protocols and their applications.

Fig. 3. The scheme of Blocklet interaction with user applications.

 

On the basis of the white paper, we see that the project addresses several problems simultaneously:

  • low productivity

  • reluctance to use applications built on the blockchain

  • the high cost of using blockchain technologies

  • isolation and limited functionality

3.2. Key components of the ArcBlock ecosystem

ArcBlock offers app developers a service (blocklet) which includes the following components: user identification management, utilities, wallets, messages, notifications, etc. The Open Chain Access Protocol integrated into a blocklet allows applications to run multiple blockchain systems simultaneously.

Through ArcBlock services, systems and networks will dynamically connect, seamlessly linking existing industry and blockchain protocols in a single stream. The project is not creating a new blockchain protocol but will work with existing blockchains (for example, Hyperledger, Ethereum, Cardano etc.). Thus, ArcBlock will create a comprehensive solution for existing protocols for a more effective use of cloud computing.

ArcBlock is therefore creating an ecosystem, which they are developing by encouraging other developers to create new services within the platform.

The platform combines blockchain technology with cloud computing. The project team notes that this development principle makes ArcBlock fundamentally different from many other blockchain platforms.

An ArcBlock architectural node can be a "logical computer" consisting of one or more virtual machines, or a cloud services group, working together as a computing environment.

ArcBlock will initially be built on top of AWS and Windows Azure, and then expand to support Google Compute Engine, the major players in cloud computing in China and other platforms.

Ultimately, the ArcBlock system will allow one to create applications and components using protocols with the use of cloud technology as well as to sell and exchange them in the common marketplace.

3.3. Roles of ecosystem members

The ArcBlock ecosystem will consist of two main types of user:

Application developers can develop apps on blockchain using ready-made protocols, including those for creating proprietary tokens.

Users obtain easy access to applications with services on blockchain.

Miners provide computing power and new services in return for rewards in the form of ABT tokens.

Market review

ArcBlock is entering the market for architectural blockchain applications, so we consider the niche from the perspective of blockchain technology use.

According to Research and Markets, the blockchain sector will reach $6,076.6 billion by 2023 (from $0.297 billion in 2017). The blockchain CAGR is projected at 71.46% up to 2022.

This rate is confirmed by Yahoo Finance. The Technavio analytics company predicts overall market growth of the blockchain market with a CAGR of more than 55% [Yahoo! Finance], [GlobeNewswire], [BusinessWire].

The market for blockchain technologies is demonstrating high rates of growth; they are being used by companies and individuals in ways detailed in the following section.

The Tractica agency also provides information on the use of blockchain applications. In the last year alone, more than one hundred financial institutions, more than two dozen governments and countless corporations and venture capitalists have invested more than $1 billion in the blockchain [chiefmarket.com], [Tractica].

Blockchain technology has a promising future, but currently suffers from the following problems:

Low performance of blockchain networks. Existing systems exhibit a decrease in the speed of transactions with the increase of the size of their user networks and growth of commissions for transactions. For example Ethereum CryptoKitties, Ethercraft and other applications raise obvious issues regarding the scalability of their systems; Bitcoin has the same problems. It is clear that given the widespread introduction of blockchain and the increase in the number of applications working with it, in order to support the large number of decentralized applications under development, performance needs to be improved.

Usability: Blockchain technologies are currently focused on the technologically-educated niche. From investing to using existing applications, the learning curve is substantial and participation requires significant time and resources.

Cost: In order to use various applications/functions, developers should have access to various resources and software environments.

Binding to a specific platform (Lock-in): Developers usually have to choose a specific platform to launch / support an application, as each platform has its own costs and special code required to work with it. There is no possibility of easily switching from one blockchain network to another, which leads to restrictions in functionality.

The lack of opportunities for the development of blockchain: In most blockchain protocols there is no possibility for developers to influence the development of the system and be rewarded for this.

Regarding applications on blockchain, it can be argued that these are gaining popularity among users, large companies and governments, which we expect will help create demand for ArcBlock.

General conclusion on the capacity of the market and its dynamics:

The chosen niche for the project is enjoying significant demand and a paying audience; however, the project team should show how they will ensure occupying a significant share in this market. We believe that the project should focus on the marketing campaign and promotion strategy in the roadmap.

A new platform not relying on Bitcoin or Ethereum for transactions, with faster, cheaper and scalable options will definitely lead some new and even older platforms to consider the use of ArcBlock as a main "channel".

The obvious advantage is that ArcBlock has established partnerships with IBM and SAP, the fact of which can be used not only as a marketing point but also to access the sales channels of these companies in the corporate sector. Demand for the development of such applications is also extremely high. Consequently, efforts in this direction are justifiable.

Easing the interaction with blockchain systems for both end users and application designers is a promising idea, as the market is showing steady growth in this direction recently (section 4 of this report). However, as it will be shown in section 5, a number of companies are already working in this direction, and they are also providing services based on blockchain technologies. We believe that this niche has low competition and low activity from potential competitors; ArcBlock is attracting the the blockchain community’s attention to the niche in general. This has a positive effect on these projects and their development dynamics

Competitors and competitive advantages of the project

Dynamics of innovation development in the segment:

ArcBlock proposes to solve the above issues with its own innovative architecture. According to the project team, ArcBlock represents a new technological step in the development of blockchain applications that will lead to cross-blockchain networks of the third generation.

With regard to the overall development trends in the industry, analysts are predicting the fast appearance not only of the third but also the fourth generation of blockchain networks. We believe that this will positively affect the crypto industry as a whole and will enable more users to utilise blockchain apps.

IBM Hyperledger is one of the largest and one of the first blockchain software developers which signs blockchain architecture. IBM has already supported the following: [The Independent Republic], [YouTube]

  • Stellar (XLM), which managed to gain a foothold at the top of the list of blockchain projects by market capitalization in less than a year.

  • ArcBlock, promising stable and healthy growth based on strong international partnerships worldwide.

We compared ArcBlock with existing companies and identified direct and potential competitors in their market niche:

The ArcBlock team cited the following competitors:

Stellar — a platform for foreign exchange transactions operating in real time (hybrid blockchain).

EOS — Enterprise Operating System — a platform for scalable, decentralized applications on blockchain.

The following competitors can also be identified: Blocknet, IBM blockchain platform, Gem.

As we have noted above, there are platforms similar in functionality to ArcBlock, but currently this diversity is quite beneficial for the whole market segment. Each project is receiving a share of attention from the blockchain community.

Take EOS, for example. This startup has already raised $700 million, and its site traffic increased by 1 million in the last month. [https://be1.ru/stat/eos.io]

IBM's blockchain platform, which also enables one to launch proprietary applications on the blockchain as well as work on multiple blockchains, is very popular. We have already mentioned that ArcBlock has partnered with IBM, but there is no technical interaction between the project and IBM's blockchain platform as yet.

Regarding newer platforms in this area, Blocknet and Gem are still relatively unknown among users,  which is a loss for ArcBlock.

In general, the market is quite open, as blockchain is only just now gaining acceptance. We believe that the project has every chance to occupy a significant share in its target market.

ArcBlock does not have many competitors, but those present are already firmly established in the market.  Thus occupying a leading position will be difficult, but the opportunity is definitely there as the project has been welcomed by the blockchain industry.

Team and stakeholders

The team consists of 4 people and 10 advisors.

Project Core Team:

Robert Mao (Linkedin) — CEO and Chief Architect. Guest expert at W3C HTML, formerly co-founder and CEO of PixoMobile. He has extensive experience in software development (Microsoft) and management.

Flavien Charlon (Linkedin) — Chief Scientific Officer. Currently CTO at Trezeo and CEO of Coinprism. Formerly he worked extensively at Microsoft as a developer.

Jean Chen (Linkedin) — Head of Marketing. Has a variety of experience: PR, accounting and business development. He has worked extensively as a business reporter for the Modern Media Group.

The core team (except for the head of the legal department) indicated their affiliation to the ArcBlock project. According to the website, the team also has a head of legal department. Neither the WP nor the website disclose information about the key members; only links are given. The core project team has a solid background in the field of software development.

In analyzing public sources we did not find anyone in the team with negative or suspicious associations.

The parent company staging the ICO is ArcBlock Foundation Ltd.

Investors in previous rounds: n/a

Main project partners:

  • IBM, SAP, Guojin Capital, Krypital Group, Roaming Capital, Linux Foundation, W3C, IEEE.

Project advisors:

Justin Tomboulian (Linkedin) — Vice-President of LiquidHub, formerly senior associate at Annik Technology Services Pvt. Ltd. He has worked extensively at Microsoft.

Mike Cartwright (Linkedin) — Chief technical officer for DigitalTown, formerly: co-founder of Comencia Inc., CTO at Expedia, Inc;

Sal Dhanani (Linkedin) — Advisor to Everyhome, PixoMobile, president, automaker and founder of Telenav.

Lawrence I Lerner (Linkedin) — Managing Director at LERNER Consulting, chief development officer at RChain Holdings, venture partner at Denny Hill Capital.

Violin Wang (Linkedin) — Chief of operations at CyberMiles, formerly manager at DAC GreenSpace LLC, investment project manager at Beijing Xingge Investment and Management Co. Ltd.

Maggie Wu (Linkedin) — CEO and co-founder of Krypital Group, formerly CEO and co-founder of The Asian Media.

Huishen Cui (Linkedin) — Consultant-founder at 容積资源.

Jiaxi Lin (Linkedin) — CEO and founder of IFIC Group, founder and Chairman of the management community at Student Venture Association of Southeast University.

Ding Lei (n/d) — also known as William Ding, founder and CEO of 163.com (NetEase), one of China's first internet companies.

Andrew Le (n/d) — Co-founder and head of research department of the Krypital Group.

Summary: Each of the advisors is generally an expert in their field. The involvement of an advisor such as Ding Lei could contribute to the project's popularity among investors.

Token analysis

Main characteristics of the ABT token:

  • ABT is a utility token.

  • ABT tokens act as the currency of the platform.

The token is used within the platform for the following purposes:

  • As payment for using the ArcBlock system.

  • As a reward to users (“Miners”) that have provided the ArcBlock platform with computing power or with new components for the platform.

Token type: ERC-20

ABT is a utility token and is not subject to SEC regulations.

Earlier participation in the ICO ensures a discount on token price.

The token issue occurs at the end of the ICO within a 4 week period. There will be no additional issue, and tokens that have not been sold during the ICO will not be issued.

The sale is carried out through registration (White List) requiring KYC procedures.

Due to legal restrictions, residents of the following countries cannot participate in this project's ICO: People's Republic of China, United States, New Zealand, Canada, South Korea and OFAC (OFAC country list)

ARC was designed as a general purpose token that can be used for different scenarios. For ArcBlock, the underlying function and value of ABT is as payment for using the project’s systems.

The total supply will not exceed 186,000,000 ABT. The maximum number of tokens available for sale will be 45% of total supply, amounting to 83,700,000 tokens. 8% is reserved for marketing support and partners, including the bounty (1%). ArcBlock reserves 15% for the team, while rewards for the community will comprise 32% of the tokens, equal to 59,520,000 ABT.

Analysis of factors affecting the future price of the token

The following are factors that affect the price of the project token in the long, medium and short term.

  1. Scalability of embedded technologies in the long term:

    • we believe that the project needs better integration with its partners, given an obligatory entry to the large enterprise market which will provide sustainable development of the project.
  2. Assessment of the project’s development plans and interest from developers and companies in the project in the medium term:

    • we believe that attention from developers will grow throughout 2018. However, this year a large number of new platforms intended for working with blockchain are expected to enter the market as well.

  3. Assessment of the actual utility of the token in the coming months, and the popularity of the project:

    • The token will not be used in the coming months, as the project still has no publicly available platform.

In 2018 a very large number of platforms based on blockchain (that aim to solve a wide range of issues) will be launched. ArcBlock should be prepared for an extremely high level of pressure and competition, and to adapt and integrate into various systems based on blockchain that could function within its ecosystem.

Ivestment risk analysis

In this section we present weaknesses of the project that could potentially adversely affect the implementation of the project. We determined the following risks:

Commercial risks:

  • Arcblock says it has partnerships with major companies such as IBM and SAP, but there is no evidence of this anywhere; administrators of their community on Telegram are refusing to answer the question that is constantly asked: “Arcblock states it has partnerships with IBM and SAP, but links to information about these partnerships do not exist, please elaborate".

Technical risks:

  • technical difficulties with the launch of the platform.

  • as the project is announcing the integration of two or more blockchain networks, the system may experience technical hiccups.

  • the project claims to be able to simplify working with blockchain, but to date it is impossible to familiarize oneself with the architecture of the platform.

Other risks:

  • implementation of the project (this risk is connected with potential internal contradiction of the team and the project’s objectives; however these factors do not currently manifest themselves).

  • a loss of developer confidence in the project (this risk is currently not evident).

Risks for the investor:

  • The presented members of the ArcBlock team have no technical experience with blockchain. Many creative startups fail for such reasons, no matter how good their original idea.

  • Only 45% of the total number of tokens will be available to traders, which means that most of the tokens (15% + 32% = 47%) will be in the hands of the company and their 'employees' in the community. According to industry analysts, this has happened to Ripple (XRP), and although blockchain implies decentralization, the project will have a "centralized" approach.

  • Due to the fact that the project has not yet established itself in the blockchain platform market, there is a risk that returns on investment at the start of operation will not attain target figures.

The information contained in the document is for informational purposes only. The views expressed in this document are solely those of the ICORating Team, based on data obtained 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.