Ubcoin Rating Review
|Start ICO||02 Apr 2018|
|End ICO||27 Aug 2018|
We assign Ubcoin a “Stable+” rating.
The Ubcoin project is expanding its business as a marketplace and intends to offer its own token to be used in transactions on a proprietary platform developed on the basis of the successful Ubank product.
Despite the use of cryptocurrency’s rapid increase in popularity, it still remains somewhat incomprehensible for the majority. Many prefer to stay away from any non-fiat transactions due to conservatism; there is only a superficial penetration of cryptocurrency into everyday life. Ubcoin may have to deal with this problem. However, the project counts on attracting crypto users, rather than those who prefer to settle in fiat currencies.
Factors that could have a negative impact on the future development of the project and the forthcoming ICO include the following:
- There are some direct blockchain competitors in the market. This could hamper the development of the project.
- The hard cap is not justified as currently set.
However, we note that the project has advantages over its competitors; a business model and a global marketing strategy are presented, and the token is tied to platform services. Unlike its competitors, the project has a ready audience as a result of 16+ million installations of the Ubank app; the Ubcoin Marketplace will be part of this, which is an advantageous position compared to competitors that have to build up their user bases from scratch.
Ubcoin is a blockchain-based marketplace for the purchase and sale of real goods for cryptocurrency; it is an extension of the Ubank mobile finance application that has been available since 2013 in the Russian Federation.
Smart contract platform: Ethereum blockchain
Contract type: ERC-20
Total emission: 650,000,000 UBC
Hard cap: 29,000 ETH
Start date: March 10, 2018
End date: March 31, 2018
Token rate: 1 UBC = 0.0000535705 ETH (1 ETH = 18,667 UBC)
Hard cap: 7000 ETH
Accepted currency: ETH
Minimum purchase amount: 5 ETH
1st phase of the token sale:
Start date: April 2, 2018
End date: April 21, 2018
Token rate: 1 UBC = 0.0000892857 ETH (1 ETH = 11,200 UBC)
Minimum purchase amount: 0.01 ETH
Maximum purchase amount: Unlimited
Discount to token sale price = 29%
2nd phase of the token sale:
Start date: April 22, 2018
End date: May 11, 2018
Token rate: 1 UBC = 0.0001000000 ETH (1 ETH = 10,000 UBC)
Discount to token sale price = 20%
3rd phase of the token sale:
Start date: May 12, 2018
End date: May 31, 2018
Token rate: 1 UBC = 0,0001041667 ETH (1 ETH=9600 UBC)
Discount to token sale price = 17%
4th phase of the token sale:
Start date: June 1, 2018
End date: June 20, 2018
Token rate: 1 UBC = 0,0001086957 ETH (1 ETH = 9200 UBC)
Discount to token sale price = 13%
5th phase of the token sale:
Start date: June 21, 2018
End date: June 10, 2018
Token rate: 1 UBC = 0.0001157407 ETH (1 ETH = 8640 UBC)
Discount to token sale price = 7%
6th phase of the token sale:
Start date: July 11, 2018
End date: July 14, 2018
Token rate: 1 UBC = 0.0001250000 ETH (1 ETH = 8000 UBC)
The distribution of tokens is as follows:
The diagram shows the future distribution of funds raised during the token sale:
According to information provided on the project website, at the time of writing more than 4100 ETH had been raised.
Tokens are created as funds are received. No additional emission is provided.
The goal of the platform is to enable anyone who wants to buy or sell goods and services without using fiat. The means for mutual settlements will be the domestic currency - UBC tokens.
When registering on the platform, each user receives an Ethereum wallet tied to his account. Two-factor authorization (2FA) is provided to ensure security when launching the application and conducting payment transactions.
Users will be able to buy / sell various goods - clothing, household appliances, jewelry, cars - everything that could be transferred from one person to another via mobile application while maintaining their anonymity. KYC / AML procedures are not mandatory for the main aspect of transactions, apart from certain types of transactions with third-party suppliers - delivery companies, couriers, notaries, etc. Reliability and transparency of transactions will be provided by smart contracts.
For convenience, the Ubcoin Marketplace application interface is divided into three main sections that have the following capabilities:
Seller Account Management Section
Buyer Account Management Section
Product category screens
Tools for creating and managing sales
Saved favorites and previous searches
Product description screens
Ad promotion and targeting toolkit
Customer crypto wallet
Intelligent search engine
Ad statistics - number of views / clicks / comments, etc.
Product recommendations based on previous searches and purchases
AI-based preview of user messages, product descriptions, visual and video content
Sales conditions and payment management screens
Product recommendations based on previous searches and purchases
Seller’s crypto wallet
Feedback management toolkit
Review management screens
When placing an ad, a user can connect additional paid services such as a premium ad, placement at the top of the product list for several days, etc. Moderation of ads will be done using machine learning and AI.
There is a rating system for sellers based on the number of successful transactions and the quality of goods sold. In the event that a seller changes his mind about selling a product or in case of arbitration to resolve a dispute between a seller and buyer regarding the quality of the goods and its declared characteristics (if the arbitration takes the buyer's side), the seller's rating is reduced. The seller will be charged a fee for each successful sale, the amount of which depends on the seller's rating - the higher the rating, the lower the fee. There will be no fees from buyers.
At the time of writing the MVP is under beta testing, after which the Ubcoin marketplace will be integrated into the Ubank application available for Android and iOS. According to the White Paper, Ubank currently has more than 2.5 million active users every month.
The project is planning to implement a built-in cryptocurrency exchange service on the platform in the second quarter of 2019.
The application is preinstalled in a number of models of smartphone (Samsung and Fly); due to this the number of its installations has exceeded 16 million. However, the current application has geographical limitations.
We think that the expansion of the existing Ubank application with its own customer base could be popular with users wishing to buy goods for cryptocurrency while maintaining anonymity.
4.1. Market analysis
We will cite information from the «Global cryptocurrency benchmarking study» by the Cambridge Centre for Alternative Finance for this section. The credibility of the authors is undoubted; this research was also conducted with the support of the world's largest payment operator, VISA and involved the largest crypto portals, exchanges and other members of the global community.
Current Ubcoin business operations fully cover the three main areas of the crypto market considered in the Global cryptocurrency benchmarking study: Exchanges, wallets and payments. Thus, the market potential for the project in terms of existing services is determined by the dynamics of demand for cryptocurrencies and their capitalization.
Current aggregate capitalization of all cryptocurrencies represented on the popular analytical service Coinmarketcap is $345.7 bln. In early 2017, the market capitalization of cryptocurrency hardly exceeded the $18 bln mark. At the end of the same year, capitalization reached $769.1 bln. Currently, the market capitalization has decreased almost 2.22 times compared to the end of last year. This is due to the fact that digital assets are characterized by increased volatility and unpredictability. Cryptocurrency reputation and uncertainty with its regulation in most countries remain one of the main issues that regulators and participants in this market have yet to solve.
In the crypto exchange area, the major market share is occupied by a few large crypto exchanges. Other sites account for only 25% of the market. The study we cited notes that there is a significant difference between large and small platforms in the breadth of services offered, licensing and security, which is the main reason for the market segmentation. Thus, 52% of small platforms have official licenses; for large exchanges this figure is 35%. At the same time, 86% of large exchanges and 76% of small ones support multi-signature. 73% of small platforms support one or two cryptocurrencies, while 72% of large exchanges support two or more cryptocurrencies.
The crypto wallet segment is also actively developing after the start of the adoption of virtual currencies by the larger population. According to Cambridge research, the total number of user wallets increased more than 4 times from 2013 to 2016, up to 35 million, and the number of active wallets is gradually increasing. Wallet providers actively implement new functions and increase their convenience, security and accessibility. The list of supported currencies and means for their deposit and withdrawal also grows. Thus this market is quite competitive.
The payment services market is developing following the rest of these segments. In the study, the authors collected data from 48 companies providing services from 27 countries. Most of them are European; the largest number of companies are based in Great Britain and the US (15%). It is stated that more than 79% of payment operators maintain relations with the banking sector and payment networks but the difficulties in maintaining these relations are a defining problem for the market.
Thus, the potential market for Ubcoin is very extensive, but its development is closely connected with the penetration of cryptocurrencies into the global financial system. This is important to understand since many associate the acceleration of the market trend in cryptocurrencies with increased risk.
4.2. Competitive analysis
The market for global marketplace appeared a long time ago; as a result there are many successful market giants, but settlements on such platforms are of course carried out in fiat: AliExpress, Amazon, Ebay and many smaller ones.
Among the main blockchain competitors for Ubcoin, we distinguish the following projects:
Cryptaur — a decentralized Ethereum-based ecosystem which is a platform for a potentially unlimited number of specialized P2P services (dApps), through which suppliers and consumers of a wide variety of products and services can interact directly thereby increasing economic efficiency for all transactions within the ecosystem. Features of the Cryptaur ecosystem include:
- The universal means for mutual payments and rewards is the Cryptaur (CPT) token.
- Cryptaur Pay (CPP), a multifunctional payment platform.
- A Global Users’ Rights Protection System (URPS).
Operations within the Cryptaur ecosystem are to be implemented in proprietary crypto tokens - CPT. Another function of this Cryptaur token will be to reward participants for active use of the ecosystem and for contributing to its development (several types of crypto payback, sharing grace, etc.).
According to information from the website, Cryptaur tokens have been traded on crypto exchanges since April 2018.
Storiqa – a marketplace platform with a completely self-sufficient ecosystem designed to create stores with all the innovations of e-commerce, including an ability to pay for goods in cryptocurrency and platform tokens (STQ). The concept of the project involves two ideas; the first and the main one is to unite producers within a single global platform providing them with tools to bring their unique products to the global market, while avoiding financial boundaries, intermediaries, complex bureaucratic delays and minimal transaction costs. The second idea is the integration of cryptocurrency for all operations and blockchain to ensure all processes are transparent and fair.
The project’s ICO is completed – the hard cap of $25 mln has been achieved.
Vestarin – a platform that provides marketplace services based on a mobile multifunctional application, that aims to create a single community for all crypto market participants:
- Crypto specialists
- Startup founders
- Cryptocurrency holders
Vestarin will unite several segments of the ICO market on its platform. The project’s ICO is over; information on the ICO results has not yet been published in official sources.
We think that the Ubcoin platform could be in demand among a growing number of participants in the crypto industry. The founders consider users who wish to become investors in UBC tokens or use these tokens as a means of payment, as their target audiences. A unique distribution model, a pre-installation for Samsung and Fly smartphones, will help increase Ubcoin’s share in this market segment. We also note that according to the founders, anonymity will be guaranteed to all crypto holders on the platform; this is also a competitive advantage for the project.
Team and stakeholders
The Ubcoin team includes 6 core members and 4 advisors. Key positions are occupied as follows:
Felix Khachatryan (linkedin) – Founder and CEO of Ubcoin.
Entrepreneur with a master's degree in political science and government from RAU University. The creator of Ubank, a universal free payment solution for smartphones. Has worked for Ubank since 2011, founded inTAXI in 2010, has experience in finance and financial services, as well as creating uTalk.
RAU University 2006
VP Product Development and VAS at FLY Mobile.
Alex Putilin (linkedin) – CTO and chief blockchain developer of Ubcoin.
A software developer with 15 years of experience.
Moscow State Technological University (Stankin)
Stan Danysh (linkedin) – Financial industry professional.
Has worked for Ubank since September 2016. Stan was deputy chairman of MDM Bank. He has 10 years of experience as a financial director, and has experience of creating a business and its subsequent sale.
The advisory board has the following key members:
Yama Bassam (linkedin) – an American businessman with more than 10 years of experience in the banking sector. A member of the regulatory body for the US financial industry.
Maxim Filin (linkedin) – a network specialist with many years of experience.
Thus the Ubcoin team has gathered specialists with extensive experience in relevant fields. The team has strong experience of teamwork. An advantage of the team is that the founders already have experience with launching startups and selling ready-made businesses.
A smart contract repository is available on GitHub:
Token name – UBCoin
Symbol – UBC
Decimals – 18
UBC – an ERC20 Ethereum blockchain utility token intended for mutual settlements within the Ubcoin marketplace.
Platform participants buy UBC using cryptocurrency. Tokens are credited to the wallet linked to a user’s account. The user selects goods via the application; the necessary number of UBC tokens for payment of the goods is blocked on his balance; this reserved amount is transferred to the seller's wallet after confirming purchase by the buyer. The platform’s smart contracts function only with UBC; other currencies are not accepted.
The White Paper mentions the possibility of connecting additional services (premium ads, placement s at the top of ad lists). Prices for these services will also be quoted in tokens.
Given that the project has a tool to reduce the risk of exchange rate fluctuations in the form of a reserve pool for reducing the volatility of the price of goods at the time of transaction, in our opinion this approach offers an advantage for using tokens on the platform as opposed to other cryptocurrencies.
Analysis of factors affecting the future value of the token
The contract for issue of UBC tokens is structured in such a way that the number of UBC tokens in the reserve fund, as in all other allocations, depends on the number of tokens sold in the pre-sale and the ICO. This is illustrated by the following scenario analysis provided by the founders:
The size of the reserve fund is proportional to the size of the ICO, and in this case it functions like a market maker in the classical market. If the market price of UBC tokens falls below its intrinsic value, the company will buy them, thereby maintaining the level of token demand. If the market price of UBC tokens rises above the intrinsic value, the company can either sell the available UBC tokens from the reserve or continue to hold them.
As a result, to stabilize the market price of UBC token, the founders propose a strategy determined by factors such as the availability of funds for buying up UBC tokens, the need for funds for the company's requirements for the sale of UBC tokens, and pre-set price volatility triggers for UBC tokens. This mechanism for controlling short-term volatility is also necessary for the successful functioning of the marketplace in order that transactions can be correctly carried out, that rate changes do not lead to the disruption of concluded deals. According to the founders, such a mechanism should create a balance between the interests of users in the sale of goods and the interests of investors in investment income. We note that in using this strategy, the speed of the team’s decision-making will be important for stabilizing the token exchange rate in already concluded deals.
According to information provided on the website, the team is planning to implement their buyback program to the amount of 10% of the operating profit when the project enters positive operating cash flow, expected no earlier than by 2021 according to the business model. We also note that 5% of UBC tokens received from commission income are planned to be burned as from 2021, and we think that these factors will also contribute to the future growth of the market price of UBC tokens in the long term.
Investment risk analysis
We have identified a number of risks inherent in the project:
The rate for UBC during the ICO period is pegged to ETH. Given the high volatility of cryptocurrency, this creates an additional risk, since in the case of an increase in ETH’s rate, the price of one token becomes more expensive. At the same time, in the event of the fall of ETH, UBC clearly becomes cheaper.
A beta version of the platform will be launched in September 2018. According to the roadmap, a full launch for the platform is expected in early 2019. This factor incurs risk of an outflow of ICO participants in order to fix profits to the amount of the bonuses received for the ICO, if the listing of UBC tokens on exchanges takes place before the launch of the platform.
Since platform prices will be set in UBC, the price of goods may change during the period for blocking tokens in the buyer's wallet until goods are received from a seller (end of the transaction) due to the high volatility of cryptocurrency. This fact could reduce the number of planned transactions.
The reserve fund consisting of 31% of funds received during the pre-sale and the ICO is managed by the founders. Tokens belonging to the team and commissions for covering current expenses could be sold on the market, which will affect the exchange value of the UBC token. The project takes this into account when making decisions but this risk is still present.
It will be individuals that will firstly be integrated in the Ubcoin tokenomics mechanism. The involvement of legal entities in the project will begin one year after the ICO. The use of tokens by legal entities is problematic in many countrie,s and it is not known how the regulation of utility tokens will develop, including in those countries whose legislation is currently supportive of the use of cryptocurrency.
At the time of writing, the Ubcoin hard cap is $46 mln. Such an amount has not been collected by any ICO for a marketplace project. According to the founders, the project will be launched regardless of the results of the ICO; the hard cap value is not substantiated in the documentation.