B2Broker Rating Review
|Start ICO||11 Sep 2017|
|End ICO||15 Nov 2017|
We rate the B2Broker project at “Stable+”.
One of the strong points of the project is its team. A company working in the market sector for three years launches the project. The staff is developed. The company already has its loyal partners and clients. B2BХ product is ready. Its first version is available for use. The white paper describes many matters in details. The roadmap provides with explanations of chosen ways of development. Financial model is implementable.
The B2Broker project’s idea is not innovative but it is urgent for the cryptocurrency market. The market is prospective for speculators and investors who are not acquainted with the cryptocurrency yet. Many traditional brokers will seek ways to meet their clients’ demand. They will try to find simple, adequate, and reliable solutions.
The project focuses on institutional customers. The founders realize their demands. Moreover, if they establish the B2BХ service especially for them the B2Broker project can become a stock exchange.
The B2BX tokens are profitable in the long run in about 2-3 years after the project becomes self-sufficient. The tokens are infrastructural partially. Of course, the way is not disclosed because of evident legal reasons.
About the Project and ICO
The B2Broker project is going to establish the first cryptocurrency B2B-exchange. It is a liquidity aggregator. They intend to enroll no less than 5% of the Forex/DMA market and stock brokers. The platform gives them opportunity to sell cryptocurrency. B2BX is the liquidity aggregator for marginal and stock exchange trading, and liquidity delivery for the brokerage companies.
The distinctive feature of the project is that the B2BX project focuses on institutional customers but not retail clients. Namely, they focus on cryptocurrency exchanges, Forex and DMA brokers and exchangers, hedge funds, and other professional participators of the market.
Pre-ICO start: 13.09.17-29.09.17
The tokens will not be available for everybody. Pre-ICO limit - €1 million (35% discount).
ICO Start: 02.10.17- 17.11.17
Target cap on crowdsale: € 5 million
Hard cap on crowdsale: € 25,2 million
If the raised amount is less than €5 million the all investments will be returned within 48 hours after ICO close time.
ICO Price: € 0,63;minimal purchase amount — 10 B2BX tokens
- the first week (02.10–09.10) — 15%
- the second week (10.10–17.10) — 10%
- the third week (18.10–25.10) — 5%
- the forth and further weeks — no discounts.
Currency: BTC, ETH, LTC, ВСС, XMR, DASH
Total issue amount: 50 000 000 B2BX
- participants of crowdsale — 40 000 000 (80%)
- Company — 5 000 000 (10%)
- Team — 4 000 000 (8%)
- Bounty Program, PR — 1 000 000 (2%)
Token Issue Date: 05.09.2017
The B2BX tokens will be distributed among the crowdsale participants immediately at the moment of the cryptocurrency receipt transferred on to the Web Wallet. The unsold tokens will be annulled within 48 hours after ICO close.
Project Services and their Usage
The B2Broker project will join the brokers and all institutional clients together on the single platform and provide them with cryptocurrency liquidity. The distinctive feature of the project is that the B2BX project focuses on institutional customers but not retail clients. Namely, they focus on cryptocurrency exchanges, Forex and DMA brokers and exchangers, hedge funds, and other professional participators of the market.
B2BX is the cryptocurrency liquidity aggregator for the marginal and stock exchange trading and supporting of liquidity for the brokerage companies. The product is ready to use. The first version has been already launched. The main services are active. There are connectors to 5 cryptocurrency currency exchanges providing with liquidity. Due to the project’s information given 12 institutional clients are working on the platform now. You can try the test-version after request via— email@example.com.
Three main activities of the B2BX aggregator:
- stock exchange trading/exchange with physical delivery of cryptocurrency; trading is carried out on the basis of the company licensed by JFSA.
- marginal trading; trading via CFD, namely, trading without real cryptocurrency exchange at maximal ratio 1:3;
- cryptocurrencies exchange; this service is available only for institutional clients under Singapore jurisdiction.
The B2Broker project will solve the following current problems of the cryptocurrency market:
In the most countries the market is not regulated; As a result, the institutional investors cannot deal with cryptocurrency legally. So, they cannot provide their clients with the legal support. They cannot guarantee them free transfer/withdrawal of FIAT money. Of course, there are officially registered stock exchanges in Japan. Nowadays, it is an exemption to the rule. Cryptocurrency exchanges and exchangers, and cryptocurrency brokers’ activity are illegal.
That is why many institutional participants and their clients including traders and investors do not want to work in the cryptocurrency market. The B2Broker project intends to be an officially registered stock exchange and get JFSA, CySec, ASIC, and FCA licenses to open their services within the legal area for their institutional clients.
Poor liquidity; Speaking about the current cryptocurrency trading volume in the cryptocurrency exchanges it is high. Sometimes it is more than $10 billion per a day for the all instruments. But if we speak about the certain stock exchange, even if it is the largest one, there is the lack of liquidity for certain instruments. It is not comfortable for an institutional client to open accounts in different stock exchanges, to manage them, and distribute monetary means among the all accounts. It is expensive and requires much time to spend.
The B2BX aggregator is established for the above-mentioned problems solving, namely, to make the institutional investor’s work more comfortable and reduce liquidity risks.
Compound integration; There are many exchanges and exchangers in the cryptocurrency market. Their software, services, and functioning are different. That is why it is difficult to integrate into the platforms for the exchanges. It is not comfortable for them. The B2Broker will operate as a platform connecting with different market providers and aggregating their software, and transforming it into the single FIX API standard protocol. As a result, it provides the institutional clients with simple and comfortable solutions.
In 2017 the cryptocurrency market has become more popular. The number of queries in the search systems has increased. Cryptocurrency capitalization has been grown, too. The cryptocurrency market capitalization total amount increased to 800% after the beginning of 2017. It is at $160 billion at the moment.
The number of cryptocurrency traders is increasing. As a result, a number of cryptocurrency trading services providers is increasing. Average 116 stock exchanges and exchangers’ sales volume is about 1-2 BTC million per a day. It is about $5-10 billion per a day in accordance with the current rates.
The 10 top cryptocurrency exchanges’ sales volume is 70% of the total volume. The 20 top cryptocurrency exchanges’ sales volume is 90% of the total volume. Other participants command a small part of the market. It should be noted, in many large exchanges there are no more than 10 instruments available for sale. Their liquidity is worse than in any other institutional participator.
The Forex brokers’ sales volume is more. Sales volume of any one large Forex broker is more than the cryptocurrency market volume in total. The large-scale Forex brokers ranking as to $ billions per a day is given below as for the period of the 1st of February - 15th of March of the current year.
The cryptocurrency market is fast developing. The B2Broker project focuses on the Forex brokers. They can help their clients to sell cryptocurrency via B2BX aggregator. The global total number of Forex brokers is 8000. It gives many opportunities to the B2Broker project and cryptocurrency market liquidity as a whole.
Competitors and the Competitive Advantages of the Project
One of the main activities of the B2BX aggregator is marginal trading. The asset as itself is not useful for many clients of the brokerage companies. Speculators are interested only in positive balance sheet but not in cryptocurrency holding.
So, such factor as reliability of their broker and his responsibilities fulfillment under any market conditions is very important for them. If the broker’s activity is regulated with the current legislation, and if the broker has the certain licenses he is more reliable. Many cryptocurrency exchanges and exchangers are not legal and they do not have certain licenses. As an example, we can remind you about the BTC-E and Mt. Gox exchanges’ failure. Nobody can guarantee the other cryptocurrency exchange will not close after the market conditions changes or other problems appearance.
The first advantage of the B2Broker project is licenses they plan to get. Besides that, they will enroll only licensed institutional clients. First of all they will enroll the Forex brokers who will give their clients an opportunity to enter the cryptocurrency market.
The client has to trust his broker or exchange. He is not to worry where the broker or exchanger keep the funds and how they cover their losses. The possible risks as to inside positions of the Forex clients can be covered via the B2BX platform. Reliability and comfort are very important factors for the Forex brokers. Other procedures are regulated with the current law.
The second project’s advantage is comfort, namely easy to use services for the brokers’ clients. The Forex brokers’ clients do not need to open wallets. In most cases, they do not need to hold cryptocurrency. They do not need to solve the problems connected with FIAT money and taxation. It is easier to employ services of the large traditional broker and speculate via CFD contracts.
So, the B2Broker project wants to become not only the liquidity aggregator for the institutional clients but create comfortable conditions and services for their customers’ clients – institutional clients.
Before reviewing the B2Broker team it is necessary to point out that this is a 3-year established business with an already-formed team of 35 employees (https://b2broker.net/). The B2Broker business is based in two main areas – that of liquidity provider and of provider of technical solutions (for more details, see the white paper section entitled Who are B2Broker).
According to information from B2Broker, the company has 4 offices (Moscow, HongKong, Kiev and St. Petersburg) which currently serve 40 institutional clients from 11 countries including:
- liquidity provider;
- Forex brokers;
- DMA Stock Market brokers;
- cryptocurrency brokers;
- cryptocurrency exchanges;
- hedge funds, investment funds and companies;
- banks; traditional fund brokers;
- professional trading companies, Family Office;
- payment processors (PSP, IPSP);
- fintech enterprises.
Arthur Azizov, Founder and CEO – since 2006. A lawyer, Arthur has an MBA degree from the Academy of Education affiliated to the government in the field of finance and markets, and has worked 11 years in the field of fintech. Became interested in Bitcoin in 2014.
Evgenia Mikulyak, СOO – 5 years in Finnish industry, Master in International Economics, MBA in Project management, and author of 11 research articles on economics.
Olga Tkachenko, CFO – has worked for 10 years in the management of financial companies. Engaged in budget planning, cash flow control, internal and external audit.
Vladislav Posivenko, CTO – has 20 years’ experience in the IT field, from system administration to software development - for broker companies and banks.
Ruslan Khabibulin, Head of Dealing Desk – 10 years’ experience in large broker companies. Professionally deals with technologies of aggregation and distribution of liquidity, and has a deep knowledge of financial technology and stock exchange platforms.
Alexander Karelin, Marketing Director – responsible for implementing marketing strategies and PR. 13 years’ experience in marketing.
Mikhail Stepanenko, Blockchain / PHP developer – is responsible for accepting and processing payments based on cryptocurrency, developing automated systems, and the distribution and transfer of tokens using Ethereum. 9 years of working experience.
Pavel Manzhosov, Head of Legal Department – esponsible for the preparation of the company's external and internal documentation. Provides business processes from idea to implementation.
The project has many partnership agreements concluded while B2Broker business activity development:
Development Strategy and Roadmap
The main development strategy of the project is to attract as many clients to the B2BX aggregate as it is possible. The initial services are available. Besides that, there are connectors to five exchanges. The project intends to develop the aggregate and to establish the marketplace for the institutional clients certified by the regulatory bodies. The aim is to increase the responsibility of the participants to each other.
The project intends to receive licenses in Japan and Singapore. It gives the project a legal status and clients number increase. By the end of 2018 they expect to enroll no less than 200 brokers. It is about 2-2,5% of the market. In 2019 – till 500 brokers. In 2020, they expect to increase the number of brokers at more than 700. It is 7,5% of the market.
The roadmap is elaborated in details. It is planned for three years ahead. The roadmap includes five parts depending on the raised capital amount at ICO. Every part differs from another one. They do not depend on each other. The main aspects are shown in the chart below. For more information read the white paper of the project.
Due to the white paper the marketing budget is 8-9% of the raised capital at ICO. In accordance with the Business Plan the market budget is distributed until 2020. It is increasing quarter by quarter.
Aleksandr Karelin is a Marketing Director. He has been working in the marketing business for 13 years. His experience in the start-up projects is five years. He worked for Showmart (tickets sales volume in the Russian market is 7% as for the date of the project leaving) and Baseride.
The most important marketing strategy aspects from our point of view are:
- the B2BX platform ICO is the product and company advertisement. It is the way to demonstrate the market representatives the new product;
- B2Broker uses the agent model for sales alongside the direct sales. Many competitors do not have resources to provide with the all range of services. Such companies can sell the B2Broker services to their clients using White Label scheme;
- it is planned to open office branches in the countries of different jurisdiction, for example, London, Shanghai, Sydney, Dubai, and others;
- The plan to visit the all important profile conferences: iFXEXPO Hong Kong, iFXEXPO Cyprus, London Finance, Shenzhen Forex Expo, Shanghai Forex Expo , and others. The website provides with the plan of future events that the project intends to visit. We contacted the project representatives. They say they attract many clients on such events.
The staff of the project is a team of professionals. The business activity has been operating for three years in the market. In spite of that, Pre-ICO and ICO are advertised poorly. Instagram account has 9000 followers. It is the most popular project’s social account. The team assures they will advertise ICO intensively while Pre-ICO. Besides that, the team intends to translate the documents into 9 more languages. They have already agreed to publish announcement about the future ICO.
Economy of the project
ICO aim is to raise capital for the B2BX platform development. The raised capital will help the project to expand the territory of work and develop the project within a shorter period.
First of all, the team plans to buy expensive licenses and connect the B2BX aggregator with the new stock exchanges. They expect to deposit about €0,5 million onto marginal accounts of every exchange. If the project raises Hard Cap at ICO they intend to spend about €7,5 million for the connecting with exchanges.
The capital distribution is shown in the chart below. It confirms the main expenses for licenses and the B2BX aggregator connection with the exchanges.
The Business Plan is executed in details. The founders explain income and expenses items. It is a positive point for the project. We are glad to see such detailed plan. Other projects should follow the B2Broker’s Business Plan as an example. The project intends to receive revenue from Сrypto Liquidity, Forex Liquidity, Trader’s Room, Social trading, and Other service.
Due to the Business Plan the project will become self-sufficient in the 2nd quarter of 2019. We believe the plan as to clients number increase speed is implementable. But we question the office and staff expenses. We think they are underestimated. That is why due to our calculations the project will be self-sufficient in the end of 2019. Of course, it does not change the project economics totally.
Risks of the Project
We should mark the poor marketing as to the future ICO. It can influence the number of raised capital and the project development, which depends on the amount of raised capital at ICO.
Business plan is developed taking into account the maximal amount of the raised capital at ICO. The less amount of the raised capital - the less amount of the enrolled exchanges and the less number of licenses and less budget for the project development. So, the project will need more time to become self-sufficient. It causes the low project development.
Of course, we can take into account the parts of the roadmap that describe different ways of development depending on the raised capital at ICO. In our opinion, the project should raise no less than €15 million for the appropriate development because they intend to spend the most part of the raised capital for licenses and new liquidity sources connection to the B2BX aggregator. It is the most important factor for the project. The project will have clients only if it provides them with the licensed platform with the proper liquidity for the institutional investor with the wide range of instruments.
Token Investment Highlights
We would like to mark some important aspects for the potential buyers of the B2BX tokens:
- if the project raises less than €5 million at ICO the all raised funds are returned within 48 hours after ICO.
- if the project raises less than €25 million at ICO the unsold tokens are annulled;
- the maximal number of tokens is 50 000 000 B2BX = €25 million;
- 80% of tokens are distributed among the ICO participants. The tokens reserved for the team are locked for sale within 6 months;
- after ICO the B2BX token is sold by the brokers in the way of marginal liquidity. They get B2BX liquidity via FIX API protocol;
- after ICO the B2BX tokens are used for the payment of products and services listed in the B2Broker catalogue;
- besides that, the B2BX aggregator clients can pay fees with the B2BX tokens alongside the FIAT money.
We see the crowdsale participants are secured in case of ICO failure. The unsold tokens are burnt. The amount of Hard cap at €25 million is implementable. If demand is more than offer the secondary trading will be popular. The team’s tokens are locked for 6 months. It decreases possible pressure and reduce offer risks. Discounts at Pre-ICO and ICO are little with the comparison with other projects’ discount in the market. Sometimes the discounts are up to 50-80% at pre-sale. It reduces pressure to the B2BX tokens price after ICO.
The B2BX tokens are infrastructural partially. It increases its attractiveness. In future the project intends to negotiate with their institutional clients concerning the opportunity to pay for their services with the B2BX tokens. The tokens will become more infrastructural then.
The information contained in the document is for informational purposes only. ICORating received monetary compensation from the entity rated in this report for completing the ratings report. However, the entity rated in this report did not have the opportunity to approve this rating report before the report was published, nor did the rated entity have the opportunity to edit or remove this report once it was published.
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.
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