Datarius Cryptobank Rating Review
|Start ICO||05 Mar 2018|
|End ICO||05 Apr 2018|
We assign the Datarius project a “Stable” rating.
Datarius is a fintech project which is aimed at the promising, dynamically developing digital banking market. Present market dynamics could facilitate its success.
We note that the current project exists only on paper, there is no MVP; the implementation of its intended wide functionality as well as the overall creation of this business are considerable challenges.
Among the main factors that could attract potential investors is a mechanism for calculating profits from the platform fee for distribution to all token holders. The broad scope of the platform’s functionality in comparison with competitors is also notable.
Together with this, we have identified a number of factors that could have a negative impact on both the upcoming ITO and the future development of the project.
Firstly, the lack of a financial model in the documentation makes it impossible to assess profitability of the future product or its ability to survive in a highly competitive environment.
The project team boasts people with experience in the banking sector but mainly in areas not related to the creation and development of a banking business. Since this type of activity is subject to licensing and continuous monitoring, creation of such a business involves the consistent implementation of all regulations, requirements and instructions from the regulator, as well as a large number of conditions for obtaining a banking license. All of the above creates a regulatory risk for obtaining a license.
Our rating reflects the above risks, as well as others indicated in the “Risks” chapter.
General information about the Project and ICO
The Datarius cryptobank is a start-up comprising innovative financial technology: A social P2P crypto bank based on blockchain technology. Datarius intends to occupy its own niche in a changing financial world and provide its customers with:
- Security and confidentiality
- Profit for all interested parties
- Adaptation of services to customer needs
The main concept of the project is the creation of a social bank through the provision of trust limits, trust management and user ratings, as well as determination of the prices of services by users themselves. One of the main directions for this start-up is increasing the financial literacy of the population and provision of training for interaction with the market.
The total number of DTRC tokens will be issued based on funding raised and an approved distribution structure according to the results of the ITO.
Smart contract platform: Ethereum.
Contract type: ERC20.
Accepted payment: ETH, BTC, LTC, USD.
Price: $0,01 per 1 DTRC token.
Closed Round (completed):
Start date: December 09, 2017.
End date: December 12, 2017.
120,000 DTRC tokens were issued. The soft cap of $85,000 was achieved.
Start date: December 12, 2017.
End date: December 31, 2017.
$445,428 was raised during the Pre-Sale.
Start date: March 05, 2018.
End date: April 05, 2018.
Soft cap: $1,000,000.
Hard cap: $51,000,000.
A bonus program is provided for participants of the ITO:
- The first 6 hours - 30% bonus
- Second 6 hours - 25% bonus
- Second 12 hours – 20% bonus
- From 24 to 48 hours (from March 06, 2018) - 15% bonus
- From 48 hours to 15 days (from March 07, 2018) - 10% bonus
- From 15 days (from March 20, 2018) to the end of the ITO - 0% bonus. Only referral bonuses are accrued (5% of purchased tokens)
· During the ITO, 100 exclusive key cards will be distributed among the most active followers of the Datarius project, giving the right to receive a 45% bonus
There is no additional emission.
The distribution of tokens is as follows:
If the soft cap is not achieved, users will be able to get their ETH back at the end of the ITO by sending a corresponding transaction request to the smart contract from the wallet used for investment. Other currencies will be returned in manual mode.
Description of the services and scope of the project
The main idea for the project is the creation of a crypto bank with a full set of standard banking financial services within the framework of a decentralized system. The bank will operate on the basis of P2P where participants in transactions are private users, not banking institutions.
The team plans its objectives for project development based on the funding raised at the ITO. The documentation describes 5 development scenarios in detail. The website presents a detailed Roadmap up to Q2 2020. According to the founders, in the event that any milestone on the Roadmap is not completed on time, functions will eventually be implemented to create a comfortable ecosystem that meets the basic needs of customers.
The future capabilities of the platform are described below:
- Multicurrency accounts - the ability to create and use wallets with any currency. In the first phase smart coin will be used; as the users increase, the use of smart coin will become available in combination with the classical "balancing" approach. As a result, a client will be able to use one account to work with both any national and crypto currency; conversion will occur automatically. The documentation does not specify at what rate (exchange, fixed for the day, etc.) the size of commissions and arbitration issues will be charged in the first stages.
- P2P lending - issuing loans using smart contracts and recording data on the blockchain. Processing of applications occurs through the introduction of algorithmic selection (scoring) by the risk department and analysts of the Datarius platform. Users need to undergo a KYC verification procedure to gain access to the P2P crediting system. Loans are available both in fiat and cryptocurrency. All loans are insured with the help of partner companies. When all payments on a loan are made in full, the blockchain registers the transaction closing and the user's rating is updated. Datarius collects commissions from transactions which are calculated individually for each loan taking into account the interest rate, amount and term of the loan. The commission is charged when the loan is repaid. Datarius provides 3 types of loans:
- The main listing – this is the least risky medium-term and long-term application for raising funds. Applications are processed by artificial intelligence, staff and/or partner risk managers and analysts. Maximum requirements for KYC and additional information are provided.
- Second listing - medium and long-term low-risk applications. Applications are processed by artificial intelligence and use the standard requirements for KYC.
- Third listing - a list of ordered applications from all borrowers with a minimum KYC. Commission will be charged on operations on this listing.
Each user is able to upgrade their listing category for an additional fee by ordering additional analysis (through requesting additional documents, services, requests for artificial intelligence checks, engaging analysts and risk managers).
- Personal IBAN (co-branded) - each user in the system receives a wallet with a corresponding IBAN which is linked to the Datarius system account in the partner bank. This will enable the turnover of fiat funds without involving exchanges or exchangers (there are commissions for transactions).
- Co-branded payment cards - cards are serviced by a partner; Datarius receives data on transactions with the card via the provider's API.
- Internal exchange - a currency exchange (fiat and crypto) is implemented.
- Trust management - the ability to delegate a portion of funds for other platform participants to manage; an additional wallet is created for this purpose. A manager may use funds in the wallet in the framework of pre-agreed powers.
- Investment portfolios - investment portfolios are created by economics and financial markets specialists. By combining users' funds in a single portfolio, Datarius also meets the needs of job seekers who require a large amount of money for specific purposes and users by enableing them to invest in large projects with a small budget. At the first stage of implementation of this tool, Datarius will use an algorithm that analyzes the flow of applications and automatically closes counterproposals, preliminarily collecting funds in a common trusted wallet. The development of the system involves the introduction of artificial intelligence to promptly inform users about new investment opportunities. Based on the analysis of preferences and the actions of creditors, artificial intelligence will be able to offer users the most appropriate applications.
- Affiliate programs - a partner receives a reward for each user who has performed any financial transaction; this fee is paid in DTRC tokens.
- Professional analysts and managers - users can transfer their DTRC tokens to a manager, and all managers will be assigned ratings. Datarius is also planning its own training program for consultants and the launch of a training center franchise.
- Short-term savings accounts - an additional user account whose funds are frozen until certain conditions are met (the user himself controls all these rules, for example, automatic replenishment, rounding up of the balance, etc.); there is a facility for calculating interest on the balance for users who have established a long-term account.
- Cold savings accounts - hardware wallets for long-term storage of funds. This is a small USB keychain with a preinstalled UNIX system and a shell for custom wallet use.
- Trust limit - permission to access the funds of a particular user on specified terms, this will also offer the facility to obtain micro-credit on personal terms for any number of users.
- Credit cards - credit card operation is linked to the use of trust limits. Datarius collects all trust limits available to a particular user and filters out applications that do not meet the user's rules. Technically, credit card operation is implemented by means of an intermediate trust limit for the administrative account opened for card sub-accounts with reversed API.
- Personal IBAN accounts and access to SWIFT - connection to SWIFT will enable Datarius to refuse the assistance of partner banks and independently create personal IBAN accounts for users of the system.
- Opening Gateway to crypto-exchanges - Datarius will give its customers the opportunity to instantly send requests to the main crypto exchanges. Technically, this will be done by registering Datarius’ or partners’ accounts on exchanges, on behalf of which transactions will be conducted. Once a user creates an application on the domestic Datarius exchange, his application is automatically placed on a crypto exchange via its API. Users will have an opportunity for trade and currency arbitrage within the established limits. Algorithms will pick up variants with the most attractive exchange rate difference and offer users simultaneous conclusion of converse transactions.
- Fixed cryptochecks - users will be able to transfer funds among themselves using special codes. Each code corresponds to a certain amount (in any currency) frozen in the account of a particular user. The user can create three types of checks: Registered, unnamed and with limited access.
- The introduction of artificial intelligence in integration with Big Data will help solve the following problems:
- Tracking suspicious transactions
- Identifying the optimal product line for each user
- Predicting the outcome of transactions and the provision of preferences: The system automatically determines available trust limits, credit limits, restrictions on deposit and withdrawal of funds, maximum amount for a loan when transferring an application into a higher-level listing, and other parameters.
- Calculation of commission
- Creating a second listing for loan applications. The task of transferring applications from the third listing into the second will be entirely entrusted to artificial intelligence.
- Big Data enables obtaining a statistical advantage when compiling complex multifactor models. Any available information can be analyzed; artificial intelligence enables users to compile a detailed financial and social portrait of a client. At the next stage, artificial intelligence processes received data, makes conclusions useful for the system and corrects them in self-learning mode.
- Creation of ratings for enterprises.
- Integration of biometric authorization - biometric digipasses.
- Walking bankers - people who are able to meet customers and solve any problem quickly. Walking bankers receive commissions from each successfully resolved application.
- Mortgage lending - an opportunity to formalize a long-term instalment plan for real estate through a partnership with developers and other construction organizations. Analysts will help to estimate risks and determine profit potential.
- Services for small and medium-sized businesses - opening sub-accounts, setting own limits, making automatic payments on sub-accounts, issuing branded cards tied to sub-accounts, controlling expenses, sending mass payments.
- Establishment of a venture investment fund will enable users to make high-risk investments in projects. The format and technical implementation of the fund’s operation are under discussion.
- Direct access to government securities - Datarius is ready to provide a full range of services related to the acquisition and sale of government securities for DTRS tokens on the platform.
- Private pension fund - a pension fund can be established on the basis of Datarius; the choice of jurisdiction for the pension fund’s operation is in negotiation. One option is to participate in trust funds in the UAE. Consultations are being conducted on registration of the pension trust in Jersey.
- Integration of a crowdfunding platform - an All-Or-Nothing model is chosen. A user with a sufficiently high rating will be able to announce a fund-raising project with detailed indication of financing objectives, the required amount and a deadline for executing an application not exceeding 45 days. The use of smart contracts enables initiating the collection of funds with subsequent freezing until conditions confirm the transaction by a specific number of Datarius users with a certain rating.
- Commodities and Securities Exchange - Datarius is planning to trade traditional assets: Goods and securities. To complete transactions, partners register an account on the platform and receive DTRS tokens from customers who wish to open a deal. The user will have access to global exchanges via a partner terminal built into the system and make transactions using funds in his personal wallet on Datarius. Access to global exchanges will provide a wide choice for portfolio investors, including shares in world companies, futures and options contracts within investment packages.
Datarius is a project aimed at creating a banking platform where "everything is in one place"; it intends to provide services to its clients both in fiat and cryptocurrencies, relying on possibilities offered by advanced technologies. Taking into account such factors as progress in machine learning technologies, global market growth in the field of cryptocurrency, the growth in demand for internet banking and the fact that the bank is planning to obtain licenses, we think that the product offered by Datarius could receive the required recognition, but the project is currently under discussion and its development will begin only in March 2018. We think that there may be a number of difficulties and delays in implementation and licensing (interaction with banks, SWIFT, etc.). In our opinion, a number of factors are not taken into account; for example, the team does not indicate experience of interaction with banks via API, whether there is a list of standards on which such interaction will be based, how the complexities of certification will be addressed, etc. The issue of interaction with banks has been worked out to a low level, and in the process of detailed study a number of nuances may appear that will require time and money, which may affect the functionality of the platform in accordance with the Roadmap.
To implement all of the intended functions, the founders may need a larger amount than the claimed hard cap of $50 mln.
Interest in cryptocurrencies has grown over the past few years; there are more and more new services, people want to store and spend cryptocurrency safely. The total market capitalization of cryptocurrency is more than $400 bln at the end of February 2018.
Holders of cryptocurrency consider it an excellent payment mechanism that operates outside of government control, global in scope and more secure than traditional payment systems. However, the growth in followers and the increase in the number of uncontrolled payments have led to fears for governments in different countries regarding its use, legality and control. Governments and investors are worried about security problems (in 2018, $500 mln was stolen from the Japanese Coincheck exchange), drug trafficking, money laundering, facilitation of terrorism and arms trafficking. Governments and central banks are concerned about the loss of control and regulation of the money supply. This has not prevented cryptocurrency from invading our everyday lives and becoming part of the global economy.
In January 2016, the European Union adopted payment services directive 2 (PSD2), and after two years, in January 2018 the European banking industry will face changes related to the digitalization of the banking sector. The directive encourages banks to open their APIs to third parties, significantly increasing competition and the quantity and quality of payment services. These new players - Association for Internet Service Providers (AISP), and Payment Initiation Service Providers (PISP) pose a great threat to the traditional banking sector.
Currently, traditional banks are actively experimenting with blockchain technology, trying to increase savings and operational efficiency by partnerships with FinTech, membership in global consortia and creating their own solutions. They seek to improve competitiveness with FinTech, as well as the ability to use blockchain technology to create new business models.
While regulators are only beginning to study blockchain, the crypto market continues to develop rapidly. There are new exchangers, exchanges, companies, banks and services. Wallet providers actively implement new functions and increase their convenience, security, availability, lists of supported currencies and methods for their deposit/withdrawal. For example, there are over 2000 ATMs for purchase of cryptocurrencies worldwide.
Cambridge University has conducted a global study of the crypto market. Currently, there are more than 11m active wallets and 190 cryptocoin exchanges on the market. Thus, 52% of small exchanges studied have official licenses; for larger exchanges this figure is 35%.
In this study the authors collected data from 48 companies providing payment services from 27 countries. Most of them are European and the majority of companies are located in Great Britain and the US. It is stated that more than 79% of payment operators maintain relations with the banking sector and payment networks, but difficulties in maintaining these relations are a defining problem of the market.
It is logical that with increasing demand and supply of cryptocurrency, a service is needed that will unite currency exchange, payments, investment services, deposits and lending in one place and a crypto bank could be such a platform. The main question is whether the bank will be more reliable and more convenient than existing exchanges, exchangers and wallets.
Like a traditional bank, a crypto bank will be integrated with the real economy. It will have to obtain a license. In addition, it is necessary to create a statutory fund of several million euros (differently in different countries).
Thus, the potential market for Datarius is voluminous and its development is certainly connected with the popularity and penetration of cryptocurrency into the world financial system.
Despite the fact that many states are suspicious of cryptocurrency, market participants use both centralized and decentralized exchangers to buy cryptocurrency at the risk of being blocked by their banks. However, there are a number of banking projects that intend to enter the system and provide a simple and affordable way of functioning with cryptocurrencies for the global community.
Let us consider some of them:
Fidor – an online bank with a license, founded in 2009 in Germany, works with various trading platforms for exchanging cryptocurrency such as bitcoin.de and Kraken. In addition to standard banking services, it offers deposit services with insurance in €100,000s, loyalty programs and bonus programs, savings bonds, a smart community (the facility to ask financial and other questions and receive answers from specialists, receiving bonuses for both question and answer); members of the community can offer new functions or products and organize crowdfunding campaigns within the community. Each customer of Fidor Bank has a smart account which is an open system and supports about 25 functions, including acceptance, storage and transfer of money. Classic payments, transfers to mobile phones, e-mail, Twitter accounts, savings certificates, one-click microloans, currency exchange, purchase of precious metals, peer-to-peer transfer of money and social brokerage (copying the behavior of other brokers) - all this exists within the same account on Fidor. There is a function for brokertainment. For example, a customer can bet money on the fact that the rate of Bitcoin will decrease within the next hour. Another member of the community can respond to that bid, betting that at this time Bitcoin will actually grow. There is an opportunity to buy gaming currency. The bank has its own application store. Foreign currency trading is implemented via its Currency Cloud partner; Fidor only transfers information about transactions to this. Any other Forex start-up can connect to the application store and the client may choose which service to use.
Revolut - founded in 2015 - a bank that offers cards, loans, transfers, insurance, exchange of fiat and cryptocurrency (Bitcoin, Ether and Litecoin), internet banking and 24/7 support. Since February 2017, Revolut has launched current accounts in the UK, enabling its customers to obtain a personal IBAN. Since July 2017 users can obtain a personal EUR IBAN.
In summary, over the past year the number of crypto banks has increased. Several companies are currently staging an ICO (for example, Forty Seven Bank, European Crypto Bank and others). With such growing competition in the market, Datarius must exert a number of efforts to seize some market share. Regarding market advantages for Datarius, it is worth noting the following:
- The team is planning to work within the legislative framework. In the spring of 2017, ICrypto SA, which owns the project was registered in Costa Rica. According to information from the project in December 2017, documents for the DPL license were submitted, which the team hopes to receive back in May 2018. We can not confirm this information.
- Bank clients will be able to select services for themselves individually.
- Additional income for clients.
- Lack of commission for services; fees are only for transactions and additional services.
- Individual credit conditions for each user.
- It is planned to create demand deposits.
- Users will have the opportunity to invest in various projects.
- The facility to pay in cryptocurrency with a card (inside the platform and in partner systems), as well as the ability to withdraw and deposit cash at partner companies’ ATMs.
- Ability to work with global exchanges via the Datarius exchange.
- A "trust limit" function.
Team and stakeholders
The core team of Datarius features 10 specialists.
Key positions are occupied by:
Aleksey Vuyko (Linkedin) - COO.
Has worked with the team since October 2017. Skills: many years of experience in key positions in banks, outsourcing, collection and financial companies. Knowledge and skills in management, business planning, operational processes, marketing and sales. Experience in start-ups, projects on CRM implementation, ERP-systems. Proficiency in the field of debt collection.
- International Finance University
- National Ukrainian Technical University «Kiev Polytechnical Institute»
Ruslan Vasyutin (Linkedin) - CMO.
Has worked with the team since October 2017. Skills: 20 years in top management; mergers and acquisitions; brand management, rebranding, marketing management (including Baltic Beverages Holding, Metlife, ORKLA Media Group, AMICA Mutual); CRM; HR-management.
- Riga Military Academy
- Pace University-Pleasantville/Briarcliff Campus
- Zaporizhzhya State University
- Orkla Brand School (Norway)
- Russian Academy of Education
- Kyiv National Economics University
- Maximum International Coaching Academy
Larisa Sokolovskaya (Linkedin) - CFO.
Has worked with the team since October 2017. Skills: over 10 years of experience in key positions in the departments of economic planning, analysis and monitoring. Knowledge and skills in budgeting, analysis and forecasting of financial indicators.
Maxim Pashkovskiy (Linkedin) - Legal support for the ICO.
Lawyer with experience of more than 9 years and expert qualification in the field of information technology and electronic commerce; corporate finance / mergers and acquisitions; IP and media law protection. Skills: Blockchain, ICO, e-commerce, information technology and media law. Work experience: More than 4 years in management positions in administrative and legal management of companies; support of corporate transactions; tax planning and optimization.
- National University of Kyiv-Mohyla academy. LLM (2006).
7 people are involved as advisors who have sufficient experience in their field of activity, including those described below:
Sergey Skabelkin (Linkedin) - Advisor. Co-founder of FinTech Cluster in Ukraine. Expert in the field of FinTech and mobile banking. More than 10 years of experience in the banking sector.
Connor Kiyoung Tack (Linkedin) - Co-founder of Aston Company, advisor. Co-Founder and Director of Sales for the Aston Company, Singapore.
Nikolay Zvezdin (Linkedin) - Finance advisor. CFO / CIO at Envinary Group, CFO at Enlight Visionary.
Simon Cocking (Linkedin) - ITO advisor. Main editor of CryptoCoin.News; Senior editor of Irish Tech News. Advisor in more than 30 projects such as TV-TWO, Vestarin, Iconic Ecosystem, Bulleon, Omnitude, Open Collectors Network, MediChain, Sandblock and others.
In total, the project team has about 17 specialists. In the future, it is planned to expand the staff depending on the results of the ITO. The team members have had only a short period of working together. The project lacks specialists with experience in obtaining EMI and PI licenses, which could negatively affect the launch and development of the project.
DTRC is a utility token based on an ERC-20 Ethereum smart contract, available for storage in various wallets compatible with this standard.
Token name - Datarius Credit Token
Symbol - DTRC
Decimals - 18
GitHub has a repository of smart contracts.
The DTRC token (Datarius Credit) is the key to accessing the Datarius decentralized crypto bank system. The entire line of financial products and services is based on client use of DTRC tokens. A service fee of 0.02% to 0.15% of transaction amount is automatically calculated and charged when performing operations using DTRC tokens. The commission is calculated using algorithms that take into account factors such as the amount, type of operation and level of risk. The smallest commissions on the platform are levied on transactions involving the highest risk.
It is important to note that Datarius gives all active holders of DTRC tokens the right to receive 65% of all commissions and fees collected by the crypto bank, to be distributed annually starting in 2019 in proportion to the number of tokens held. This procedure is implemented by the platform via a special internal DaTaRius Reward token (DTRR token).
In our opinion, the use of DTRC tokens on the Datarius platform is justified and likely to be in demand, since all platform functions will be performed using these tokens. This makes it possible to use the platform from anywhere in the world with high speed and transparency. The platform's financial products are created by users of the system on the basis of pre-established rules. Clients independently establish conditions for interaction with the platform using DTRC tokens. The Datarius crypto bank decided to donate 0.005% of commissions collected from all operations using DTRC token to charitable organizations a list of which is chosen directly by token holders. In the future, transition of Datarius to its own blockchain is planned. At this point DTRC tokens will be converted at a 1:1 ratio.
Analysis of factors affecting the future value of the token
One factor affecting growth of the token price will be increase in the number of users on the platform. The marketing strategy is focused primarily on attracting long-term users, since the token is the key to accessing the system; the total balance of tokens on customers' accounts must increase as user numbers grow, which will lead to a gradual decrease in the number of DTRC tokens in free circulation.
Datarius grants DTRC holders a right to accumulate up to 65% of all commissions and fees on the platform. We think that this mechanism for the return of a portion of the revenue to project participants could significantly increase the intrinsic value of DTRC, thereby raising its market value in the future.
The project website contains a forecast for token price growth.
A bonus program for ITO participants is also available. (More information on bonuses is described in the “Introduction” chapter).
Only 73% of tokens are offered for placement; the rest will be distributed according to a pre-planned structure. The remaining 23% of tokens do not have a lock-up period and can be sold in the open market. This factor may put pressure on the price in the short term after the start of trading in the open market.
The founders aim to attract 1 million users to the platform by May 2019. According to our estimates, this forecast is optimistic and this rate will largely depend on the results of the ITO. We also point out that many projects at more mature stages of development have less ambitious goals.
Investment risk analysis
Firstly, we note the risk of high competition in this market. In addition to the emergence of new banks, more and more classical banks are introducing similarly modern technology into their businesses and the use of blockchain will no longer be a competitive advantage over time.
The financial model is not presented in the documentation. Thus investors will not be able to assess the realism of the costs of any of the plans. We also note a lack of information on the structure of allocation of funds raised during the ITO.
Since the Datarius project involves creation of the company from scratch, to be implemented on a platform developed after the ITO, risks typical for start-ups are all the higher here.
The project also has a regulatory risk. To enter the European market, Datarius is planning to obtain a banking license to operate in the UK. EMI registration takes 3 months (in case the FCA has no questions regarding the submitted application), and may last up to 12 months (in case the FCA requests additional documentation). There are also mandatory requirements for the purposes of managing and obtaining an EMI license. This implies the following:
- High level company management should have experience in launching these kinds of businesses. This compliance is important for the FCA, people who do not have any experience in this area usually do not get permission.
- The company must be managed from the UK.
Another risk that could affect the successful implementation of the project is the lack of a lock-up period for the team’s tokens.
We have not identified any other significant risks.