DateCoin Rating Review

Rating

We assign Datecoin a «Positive» rating.

Datecoin is an innovative online dating service using blockchain technologies. An important factor for the future success of Datecoin is that the project has a working application with a large audience which provides stable cash flow.

In the near future, the project is planning to integrate a number of revolutionary technologies for the online dating market which are designed to make searching for partners maximally effective: AI, big data, neural networks and blockchain. Successful implementation of this technical development will solve many existing problems for dating services and increase the efficiency of matchmaking for various purposes, creating a product that has no competitive analogues.

Current trends in the global online dating market play into the hands of the project. The average age of marriage has gone up, the number of single young people worldwide is increasing and the proportion of internet users have increased significantly in recent years. The target audience for dating services is huge and not fully covered. Paid services in this sphere are more in demand. The decision to enter the European market seems to be the right step: Competitive analysis showed that ARPU and ARPPU indicators (which are the same for a product that works exclusively on paid subscriptions) for Europe are noticeably higher than the world average and Russian ones, including ARPU for the Denim application, i.e. Datecoin currently has significant growth potential on this indicator.

Datecoin has a strong marketing team, which explains their success with the media and a thoughtful marketing strategy, which is one of the strongest aspects of the project. We also note a detailed market review and attention to legal issues. At the same time, the company's business and financial models have a number of assumptions, which are undoubtedly a risk.

A risk for the project is the absence of an upper limit on the purchase of tokens in a single transaction, although the founders report that there are no investors with a significant share in the total emission.

We draw attention to the DTC token, which triggers an increase in its own price. The Datecoin utility token is designed in such way that its price will grow as the audience for the project grows and popularity of paid services increases. A better price for premium services when paying with tokens will certainly spur new users to purchase tokens. At the same time, the founders are building a mechanism for reducing token supply: once tokens are used to pay for a particular service, they will be immediately removed from circulation and "burned." Reducing supply with increasing demand will inevitably lead to an increase in price.

Project smart contracts have been audited by the independent auditor Bug Bounty.

General Information about the Project and ICO

Datecoin (DTC) is an innovative project for an international online dating service that operates on the basis of artificial intelligence, big data and neural networks, with the use of smart contracts - from the authors of the Denim pragmatic dating application and the Cinderella website, which serve as the basis for the launch of Datecoin.

Datecoin is a new dating service based on the successful Denim application. This was launched in 2015 and has become one of the leaders among dating services in Russia, with an audience of about 800,000 people. The mobile app is available on both iOS and Android.

As target audiences Denim identifies both financially successful men and beautiful girls with a goal of pragmatic dating that is clearly stated throughout the application. This positioning of the product enables male clients who use the application on a paid basis to avoid long searches and unsuccessful contacts, and enables girls to have access to financially successful men with a high degree of confidence.

A distinctive feature of the current Denim application is its specialization in pragmatic acquaintances which directly shows the target audience what the application is for and, therefore, significantly cuts the time for finding the right contacts. Men have the natural screening of a paying audience, due to the relatively high cost of using the application. As a result, according to the founders, a high ARPU of $11.9 is achieved due to the competent positioning; profitability of the Denim project in Russia is about 80-120% per annum, taking into account all expenditure. The founders say that they invest a significant part of the revenue in projects for scaling the service, without which the net income would be about 2 times greater. According to the founders’ estimates, revenue for the application was $2.5 million in 2017.

Datecoin, which is essentially an evolution of Denim, is designed to become a more versatile dating service: it will not be limited to the idea of ​​pragmatic dating, but, according to the founders, it will also serve purposes of building long-term relationships, creating a family, business networking, etc.

The ICO is being staged primarily with the aim of attracting funds to solve strategic tasks for the development of the product. A successful ICO will enable the founders to solve the following key tasks effectively:

  • Scaling the existing product to new markets, primarily Europe and the United States. This process includes a marketing campaign with the development of new brands, the localization of services to the needs of target regions, the creation of legal entities, if necessary, and other aspects.

  • Development and implementation of revolutionary technology for online dating, which is designed to make searching for partners optimally effective: AI, big data, neural networks and blockchain.

ICO company: Datecoin Ltd., New Horizon Building, Ground Floor, 3 1/2 Miles Philip S.W. Goldson Highway, Belize City, Belize (registration number 168633).

Website ICO

Website MVP: http://denim-app.ru/, https://zolushka-project.ru/

Whitepaper

Token: DTC

Token type: ERC-20

Token distribution:

  • 65% Tokens for sale

  • 20% Team and qualified consultants remuneration

  • 10% Reserve Fund

  • 4%   Marketing and development

  • 1%   Bounty campaign

An additional token emission is not provided. All unsold tokens will be removed from circulation on the basis of smart contract conditions.

Round 1: PreSale

Start: 29/11/2017

End: 29/12/2017

Price: 0,000175 ETH

Cap: 2213 ETH

Bonuses: 5-25%

Minimum Buying Transaction: 0.1 ETH (10 ETH during the Private Sale)

Maximum Buying Transaction: -

Users nevertheless have the opportunity to purchase DTC tokens before the crowdsale. Tokens are not issued at the pre-sale stage and a simple agreement for future tokens is made between buyers and DateCoin, by which Private Sale members will receive tokens by the stage of the Public Sale. To participate in the Private Sale, users must register by submitting an application.

Round 2: Public sale

Start: 30/03/2018

End: 30/05/2018

Soft Cap: $4m

Hard Cap: $20m

Price: 0.00025 ETH

Bonuses: 5-25%

Minimum Buying Transaction: 0.1 ETH (10 ETH during the Private Sale)

Maximum Buying Transaction: -

Accepted currencies: BTC, ETH

Funds allocation: fluctuates in the range depending on the range of attractiveness.

$20m: Development 27%, Operating 3%, Promotion 8%, Legal 2%, General advertisting 6%, iOS advertisting 18%, Android advertisting 18%, Mobile Web advertisting 12%, Web advertisting 6%

$4m: Development 36%, Operating 4%, Promotion 10%, Legal 2%, General advertisting 5%, iOS advertisting 14%, Android advertisting 14%, Mobile Web advertisting 10%, Web advertisting 5%

Token Issue Date: within 4 weeks of the end of the ICO

Vesting: 1 year for team’s and advisors’ tokens, 6 months for the reserve fund.

Currency rates within the ICO are not fixed. To participate in the Public Sale, users must register in the white list and KYC is required. DTC is a utility token. Citizens of the United States cannot participate in the ICO.

Description of the Services and Scope of the Project

The service enables users to chat in built-in chat rooms, make calls without disclosing the subscriber's number, give "gifts" inside the application and more. The functionality is paid but the service does not hide this at any stage and does not use hidden subscriptions or other tricks by which the user could lose money by mistake.

The list of premium services introduced within Datecoin is presented in the white paper. New services will be developed on the basis of market research: they will focus on user preferences and needs, depending on the location and its cultural characteristics. Fiat, cryptocurrencies and DTC tokens will be accepted as payment for the premium services. Demand for tokens will be stimulated by the fact that their use will be more profitable in a number of cases than for fiat or other cryptocurrencies; namely, it provides certain discounts. With the aid of DTC it will also be possible to purchase a number of services that will not be available using other payment methods. DTC tokens can be credited to Denim wallets after they are distributed to ICO participants, they will then be available for transactions.

The main task for the service is effectively the search for suitable partners for users. It is planned to use AI tools, including machine learning, big data and neural networks for this purpose. Technologies will be used to analyze appearance and perform syntactic and semantic analyses of user dialogues. There will be an individual personalized search based on the preferences revealed during use of the service (viewing profiles, correspondence, calls, duration and nature of communication).

Certain groups of token holders will be able to confirm the authenticity of users on the basis of blockchain technology. The implementation of the blockchain system will help to increase the effectiveness of user authentication. The distributed registry system will be used to verify users independently - this is detailed in the white paper. Thus, in addition to existing systems of identification and moderation, verification will be provided by users of the service themselves.

The successful implementation of technical development of the project will solve many existing problems for dating services and increase efficiency of the process of finding partners for various purposes.

Technical development of the system is carried out in Open Source mode. Source codes are published in the GITHUB repository; improvement is actively being pursued. The smart contract code was audited by an independent company, Bug Bounty: a copy of the verification report was provided by the Datecoin team.

Market Review

Online dating has trodden a thorny path from the course project of a group of Harvard students on a five-ton computer in the 1960s, to a full-fledged market in the 2010s where total revenue is about $5 billion by some estimates.

More and more people trust relevant websites and applications in their search for partners, throwing away old prejudices. This market continues to grow, having a huge target audience. Victor Anthony, an analyst at Aegis Capital Corp., with reference to the Bureau of Labor Statistics, estimates the number of single people over 16 at 125 million in the US. Analysts from JP Morgan in the relevant chapter of their review of Match Group, referring to World Bank data, note that the average age for marriage is steadily going up: from 1990 to 2010, (more recent information is available at World Bank's disposal), this figure for the United States has increased from 24 and 26 years to 26 and 28 years for men and women respectively, from 26 and 29 to 31 and 33 years for men and women respectively in Western Europe. In general, this trend can be traced in all regions of the world without exception, as can be seen in the following two figures:

It is worth noting the increase in the number of those with internet access worldwide: according to ITU, 48% of the world's population had individual access to the internet in 2017, while in 2015 this share was 43.4%, and only 29.2% in 2010. At the same time, the population of the planet has grown from 6.8 billion in 2010 to 7.55 billion in 2017. Thus, demographic trends favor the growth of the online dating market.

Therefore, we are not surprised by this rapid growth of the market and the number of players: at different times there have been several thousand different online dating services. The first ICO dating service for blockchain was created in 2017: the Lithuanian project JustDatingSite attracted a little more than $1 million in September. This project so far has created an ordinary dating site without any original developments or novel ideas, and can hardly be considered a competitor to Datecoin.

However, Datecoin faces many major international players beyond the scope of blockchain, who are pursuing an aggressive expansionist policy, buying up small companies in the industry and thereby determining the market trend towards consolidation.

Based on market capitalization and the size of its portfolio of brands, Match Group Inc. is the largest global player in the online dating market, 85% of its shares are owned by InterActiveCorp (IAC). The shares of both companies are traded on NASDAQ. Match Group is the largest asset of IAC, with a capitalization of $12.8 billion as of March 2018. The company's shares have more than tripled since the IPO in November 2015. Its portfolio includes 45 brands of various websites and applications for online dating, among which are such well-known services as OkCupid, Tinder, PlentyOfFish, Meetic, Pairs and Match.com. The company is represented worldwide and its applications work in 38 languages. Match controls 4 of the 5 most popular applications in North America and 3 of the 5 most popular apps in the world. Applications and Match Group websites are the most downloaded and viewed in the US, Canada, Japan, South-East Asia, Russia and other countries.

The company has an aggressive acquisitions policy: in 2015, PlentyOfFish was acquired for $575 million. In 2017, the company actively negotiated with Badoo about the acquisition of the Bumble service for $1 billion and in November this was close to completion, but in 2018 it was announced that the deal would not take place. In March of this year, Match Group filed a patent infringement lawsuit against Bumble. The founder of Bumble is Whitney Wolfe Herd - a former employee of the Match Group and co-author of the Tinder application. In the network, you can find Bumble's firm response to the lawsuit.

Match Group had a successful 2017, focusing on its main asset - Tinder, launching in August a paid extension, Tinder Gold, which increased the APPRU (revenue per user) for Tinder by 25% in 2017 compared to the previous year. Traditionally, Tinder was smaller than the rest of the Match portfolio in terms of ARPPU, as it was not confined to paid services: in 2017, before the new expansion, Tinder users paid an average of $7.4 per month, while paying users of other services provided about $18.2. In total, according to 2017 results, ARPPU for all Match services totaled $15.3, and the company's revenue was about $1.3 billion (+ 18% by 2016).

The trend towards consolidation of the sector can be traced to one more notable representative of the market - Spark Networks, whose headquarters moved from the US to Germany in 2017 after its merger with Affinitas GmbH in November. Depositary receipts of the company are traded on NYSE American, a platform for small-cap companies. In contrast to the Match Group, which focuses heavily on the US market, the updated Spark Networks mainly operates in Canada, Great Britain, France and Germany, but it also has plans to increase its share in the US market, where the company is currently inferior to Match Group, Badoo, Zoosk and eHarmony. The main asset of the group is the EliteSingles service, working on a premium subscription (hard paywall) and popular in Western Europe. According to the decoding of M&A Call on May 3, 2017, the management team plans to earn $115 million on this application with 500,000 users as early as 2018. Thus, the ARPU of this application is expected to be at $19.2. Further plans concern the promotion of the application in the United States. It is expected that the synergy effect through cross-selling with the help of other group services will play a significant role here: JDate (Jewish Dating Service) and ChristianMingle (dating for Christians). EliteSingles, successfully operating in the European market, could become a serious competitor for the future Datecoin application.

Another big player is Meet Group Inc. Their market capitalization on NASDAQ is estimated at $157 million. In addition, in the year since their IPO, the company's capitalization has more than halved. Meet has acquired Lovoo, the leader in downloading applications for dating in Germany, Austria and Switzerland in 2017. Lovoo also has many functions available only to premium subscribers, which is the basis of revenue from the service. In addition, the Meet Group has its own development for the application of artificial intelligence and machine learning, according to the decoding of a Q3 2017 Earnings Call. All this makes Meet Group a direct competitor for Datecoin.

There are several companies and services not traded in the organized market among other major market players: Badoo, estimated by the market to be worth $300 million after a deal with FINAM, Zoosk and eHarmony. According to eBiz MBA, these websites are among the world leaders in terms of number of unique users together with Match Group’s sites.

The results of interviews conducted by JP Morgan and Survey Monkey seem to be interesting in regard to paid services on dating websites existing in the market. Respondents were asked two questions: “Why Have You Paid for Online Dating?” And “What Features Convinced You to Pay?”

It follows from these surveys that most app users primarily pay to access special services, as well as to improve matches. This is exactly what Datecoin introduces in its service with AI and neural networks. Various paid services that are planned to be introduced are described in detail in the white paper.

Based on the market review, these are the following competitive advantages for Datecoin:

  1. Application of artificial intelligence technologies with description of the algorithm (previously this was not successfully implemented in other projects although attempts have been made, for example, in OKCupid).

  2. Application of big data technologies. There is no detailed description of how technologies for processing large amounts of data work in this area. Accordingly, there is no evidence of success, i.e. Datecoin could become a pioneer.

  3. Neural networks were previously unsuccessfully applied in the sphere of acquaintances, but in those cases developers did not have a large, ready-made platform where such technologies could be successfully tested.

  4. Introduction of blockchain technologies for effective authorization and control of bots. Acceptance of cryptocurrency for payment.

  5. A popular ready-working application is a notable advantage for the project over other similar blockchain based projects.

  6. The original idea of ​​an application for pragmatic dating will enable entering many markets quickly where the project will likely not face particularly tough competition in its first stages.

  7. A simple application with a clear interface with no subscription and hidden payments.

  8. A wide range of premium services in the application, some of which have already been implemented.

Team and stakeholders

The website and white paper indicate that 32 people work on Datecoin; 12 members of the team and 13 invited consultants are mentioned by name. Communication with the team took place via Telegram. We quickly received answers to all questions and comments. LinkedIn has a Datecoin page.

Nikita Anufriev – CEO of the project, creator of the Denim application, the Cinderella Project website and the developer of mobile Yasno.mobi websites. He has a Master's degree from Moscow Institute of Steel and Alloys in Automation of Control in Technical Systems (2014). The relevant experience with Yasno.mobi is confirmed. He is present in various interviews, articles and videos about Denim and Datecoin. He answers questions from the community on Telegram. No negative information was found. Nikita has presented his project at a number of exhibitions and hackatons: in particular, he made a presentation at the prestigious Blockchain Innovation and Investment Summit (BII SUMMIT) in Dubai this year.

Alexey Sinitsin – Co-founder and Investment director. He calls himself CFO of the project on LinkedIn. He graduated from MIPT in 1990 – information is verified. LinkedIn indicates only one place of work - Datecoin. Information about Alexey’s experience as a top manager for large banks could not be verified. There is no information about his past work experience in open sources. No negative information was found.

Maxim Kozlov – CTO of the project. He is responsible for technical developments. There is information on LinkedIn regarding his graduation from Moscow State Mining University and Moscow Institute of Steel and Alloys, and he has worked in a number of Russian online projects. In open sources he is mentioned only in connection with Datecoin.

Elena Platonova – Marketing manager. LinkedIn shows almost ten years of experience in various positions in marketing. Studying at Mordovian State University, a cultural studies degree and experience as director of marketing for Destiny Development are confirmed by an article devoted to the video-link on the topic of internet advertising on the university's website. In addition, there is a scientific article and a PhD of Elena’s in open access. The key is Elena's experience in the position of marketing director at Mamba.ru, a player in the Russian online dating market - this experience is confirmed. No negative information was found.

Dmitry Starostin – Product director. On open sources it is easy to confirm his working experience as a designer at Orbsoft and as a freelancer. The website of his personal project Trendishka was also identified. No negative information was found.

Oleg Gervalov – PR director. Oleg does not have information on LinkedIn, but there are many references to his work as a spokesman for the Just Russia party (his photo can be seen), deputy Oleg Nilov and his work at M. V. Lomonosov Moscow State University where he studied. Communication with the project is confirmed by video clips on the website. No negative information was found.

Developers of the project include Dmitry Gritsenko, Evgeny Alferov, Stepan Zolotukhin, Mikhail Dubovitckiy and Artem Balyasnikov, who are not experts in AI, big data or neural network technologies. There are no such specialists on the project page on LinkedIn. On the other hand, relevant experience from Dmitry Gritsenko, Stepan Zolotukhin and Artem Balyasnikov has been identified.

The project has 13 advisors - more than the number of publicly mentioned team members. Among them are such frequently cited names as Ken Tachibana, Greg Limon, Stan Milk and Jason Hung. Their appearance on the website and in the whitepaper does not say anything. We would like to draw attention to the participation of Alexander Shulgin, partner of iTech Capital fund. The founders of Datecoin informed us that this fund is not an investor in the project.

Token Analysis

The investment attractiveness of the token consists of two main features:

  1. DTC will be listed freely on exchanges, while users will have 65% of the whole emission if a positive scenario ensues. Thus, according to the founders’ idea it should be a highly liquid asset.

  2. The price of DTC will increase as the audience for the project grows and the popularity of its paid services increases. A better price for premium services when paying with DTC will certainly spur new users to purchase tokens. At the same time, the founders are building a mechanism for reducing token supply: Once DTC tokens are used to pay for a particular service, they will be immediately removed from circulation and “burned”.

The business model described contains a number of assumptions. For example, half of the services available in the application will be paid for with tokens. Also, in the scenario analysis, there is only the factor of volume of attraction during the ICO, although this is not the only parameter that future indicators of the project are sensitive to. Projected growth rates in planned markets describe a rather optimistic development scenario: In European countries, the founders are planning to occupy 40 to 50% of the total volume of the dating services market by 2021.

At the same time, the founders have a fully thought-out strategy for promoting the product which they display in the white paper. According to this strategy, promotional activities in each new country of presence will be undertaken according to the following plan:

  1. Research into the target audience and market payment instruments.

  2. Product launch based on market analysis.

  3. Market testing.

  4. Finalization of the product under the requirements of the local market.

  5. Advertising of the product on popular local resources, as well as via opinion leaders.

  6. Launch of an active advertising campaign, purchase of a large amount of traffic.

  7. AB tests and strategy adjustments.

The main advertising tools will be working with popular bloggers, local media publishing, buying banner ads in search engines and social media promotion.

The referral and bounty programs are responsible for the promotion of the ICO. The referral program is not mentioned in the white paper but a link to it is provided on the website. The founders are publicizing it on social media. Its essence is quite simple: inviting new users for free tokens.

The project is widely covered in the media, and actively works with the community via all sorts of social resources; the founders are constantly speaking at conferences and DTC tokens will be introduced in the application immediately after the ICO; infrastructure token demand will appear at this moment. Tokens are certainly attractive in the short term.

Tokens remain attractive in the medium and long term at the expense of the audience the application already possesses. However, further growth in demand is directly related to the effectiveness of the introduction of new technologies in the day-to-day service and the extent to which it will scale successfully to the first planned markets in Europe, where Datecoin will have to beat the competition. If everything goes according to the scenario described in the Road Map, tokens will most likely be completely withdrawn from circulation by 2020 - at this point their price will reach its peak.

Risks

The key risks of the project are described in the White Paper in the Risk Disclosure section. The team understands the risks of the market, the chosen technology in general, and the project in particular.

The operational activity of the company at its first stage will take place in the European Union. We have studied press releases from European regulators: European Securities and Markets Authority (ESMA), Financial Conduct Authority (FCA) and Autorité des marchés financiers (AMF). According to these reviews, DTC token is not a security: the founders intentionally abandoned their original plans for profit distribution. However, in the US (another future Datecoin market), the SEC recognizes all utility tokens by which the company that makes them promises to profit their holders one way or another as securities. All this could be observed in the example of Munchee. The founders are constantly consulting with lawyers and they are currently talking about plans to release the US version of the application without using DTC tokens.

There are also legal issues related to adultery: Some APAC countries (Taiwan and the Philippines, which is on the development map by 2021) and some US states provide for criminal punishment for adultery. In China, there are also certain restrictions: for example, punishment for members of the Communist Party. The service is focused mainly on an audience of married men (57% according to the WP) - legal problems may arise in these regions. The project is planning to resolve such issues via user agreements.

There are risks associated with the financial model, which contains many assumptions, for example on the permanence of the ARPU and the cost of attracting users in each market over the next four years, although in the example of the Match Group we see how strongly these indicators can change for an application with its evolution, and depending on market conditions. Changes in these indicators in the course of the company's real operating activities in one direction or another may adversely affect the further development of the project.

The project has a currency risk, both for fiat and cryptocurrency, as the project is planning to utilise ETH, BTC, DTC tokens and other cryptocurrencies, as well as in any state currencies of markets of presence. Exchange rates will affect the company's operating results.

We negative assess the absence of an upper limit on the purchase of tokens in one transaction. However, the founders claim that judging by the number of users who have subscribed to the White List and reserved user tokens, the situation in which one investor can gain control over a significant volume of tokens is excluded. Moreover, manipulating a utility token, the infrastructure demand for which depends solely on purchase of services in the application, seems inappropriate.

 

 

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

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

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