SENTINEL PROTOCOL Rating Review

Stable+

Investment Rating

Expire date: 2018-08-27


Based on the analysis performed and issues identified we have assigned the Sentinel project a “Stable +” rating. However, we would like to point out that without an existing MVP, it is difficult to fully assess the project’s true potential.  

The project has the following strengths: 

  • A favorable competitive landscape (no direct competitors)
  • A significant and fast-growing market (the blockchain industry)
  • The expertise of the core team (network security, IT security, hardware and system security, etc.)
  • A potentially strong competitive position and market exposure.
  • The Mainnet is expected to be released in July 2018.

However, there are still some risks linked with this ICO:

Absence of an MVP. At the time of analysis (May 2018), the team has not yet released an MVP/beta, due in February 2018 according to the project’s roadmap. The absence of an MVP seriously compromises the ability to assess the team’s competencies, the capabilities of the suggested product, the level/degree of product development or other crucial factors that investors in an ICO must consider before making any decision to invest. However, reference to the MVP was found on the company’s YouTube channel, where team members demonstrated the MVP at the ICON annual summit 2018.

ICO details unverifiable at time of writing. The smart contract code on GitHub is unavailable for public review; other ICO information (vesting periods, Sentinel Points supply, token burning) cannot be verified either. Nevertheless, according to information found on the company’s website, the team intends to open the smart contract code for public review. If that happens, the risk may go down.

Team composition and competence. We note that some team members also have other duties apart from working on the Sentinel project. Besides, the Sentinel project is not mentioned in some team LinkedIn profiles. Also, only a single advisor states affiliation to the Sentinel project.

The whitepaper is not comprehensive. We believe that the whitepaper has the following issues:

  • Absence of competitor analysis
  • Unclear vesting periods; the whitepaper does not clearly state the periodicity of vesting rounds, however it states that each round is planned to be executed at the point when total Sentinel Points hit a target value, or a certain week or timeframe, whichever comes sooner. According to the team, the vesting period for both themselves and advisors is two years.
  • Forecast marketing activities and plans for product promotion are not covered in the whitepaper, and it is impossible to analyze or draw any relevant conclusions regarding potential market exposure.

Given that there is no actual MVP yet, all of the above could increase risks for investors.

Based on our analysis and taking into consideration all the risks associated with the Sentinel project as of May 2018, we assign Sentinel a “Stable +” rating. We would like to note that once these major issues are resolved by the team (i.e. the beta is released, marketing activities clarified etc.), the project rating will need to be reassessed as risks may change in level.

Sentinel Protocol is a Security Intelligence Platform for Blockchain (SIPB) created to protect crypto assets against hacking, scams and frauds. It aims to utilize contributions from users, security experts and artificial intelligence to establish a consensus and incentive scheme to share collective security intelligence.

Sentinel Protocol, delegated by the Uppsala Foundation, a group of proven institutions, experts, cyber security firms and white hackers, is a first-of-a-kind security platform intended to assemble all threat information in one pool - a Threat Reputation DataBase (TRDB) and provide incentives for vendors to contribute to it. 

Website

Whitepaper

Telegram Announcement

Telegram chart

Twitter

LinkedIn

Reddit

Medium

Facebook

Youtube

Information regarding Sentinel Protocol token distribution can be found in the table below.

 

Presale 

ICO (public sale)

Start date

May 23, 2018

May 27, 2018

End date

May 26, 2018

June 10, 2018

Stage cap

87,500,000 UPP 

39,000,000 UPP 

Token

ERC-20

Token         supply         (for

sale/total)

300,000,000 / 500,000,000

Soft cap

-

Hard cap

USD 34.6 million

Estimated market value

USD 57.7 million

Token price

1 ETH = 5,000 UPP

Bonus

15% bonus

No bonuses

Lock-ups

All bonuses have a lock-up

No lockups

 

period of 180 days

 

Minimum investment

30 ETH

0.5 ETH

Maximum investment

300 ETH

10 ETH

Currencies accepted

ETH

ETH

Restricted list

United States, China

 

KYC procedures

Yes

 

Country of legislation

Singapore

 

UPP will be supplied to the amount of 500,000,000 (five hundred of million) tokens; the team intends to sell 60% of this amount i.e. 300,000,000 (three hundred million) UPP tokens. 

Initial UPP distribution scheme:

Initial UPP allocation: 

The team has also launched a bounty campaign in which they are offering participants

0.003% of total tokens (up to 1,500,000 UPP). All applicants had to submit their application in February and March. According to the Sentinel Protocol website, a maximum of 300 individuals or organizations will be bounty winners. Although bounty campaigns may have a negative impact on the short-term / mid-term token price, we believe that a 0.003% pool is not sufficient to significantly influence the token price.

Information which covers the above aspects of the ICO is available on Sentinel Protocol’s website for public review.

According to the description given in the whitepaper, it is planned to execute a 20-times vesting period, when additional UPP will be generated and distributed among contributors to the Sentinel Protocol. In order to provide incentives to early contributors to the TRDB, the initial inflation ratio will be set between 3-7%, then each logarithmic decrement percentage will be reduced as the round occurs until reaching a (near) 0% inflation ratio. 

It is also mentioned that 30% of UPP revenue, generated by the advanced feature usage fee, case processing fee, and/or future development by the Foundation, is planned to be vested together with inflation UPP as a reward to participants.

We draw attention to the fact that the whitepaper does not clearly state the periodicity of vesting rounds; it states that each round is planned to be executed at the point when total Sentinel Points hit a target value or a certain week or timeframe, whichever comes sooner. However, according to the team, the vesting period for both team and advisors is two years.

The team is planning to use funds raised from the ICO as follows: 

We note that intended distribution of funds between R&D, sales & marketing, accounting, legal & compliance and general operations & administrative is healthy, taking into account the project’s nature and current development stage. The only possible drawback is that if the hardcap is not reached, it is highly likely that the intended use of proceeds will change accordingly.

We think that the whitepaper has the following issues:

  • An absence of competitor analysis. However, on the company website we found this information in FAQs, stating that team members are unaware of any companies providing or planning to provide the same services. The team also consider that any associated company should not be competitors and are welcome to join their ecosystem.
  • Forecast marketing activities and plans for product promotion are not covered in the whitepaper, and it is impossible to analyze or draw relevant conclusions regarding potential market exposure.

The above issues, especially the absence of marketing activities, make it impossible to analyze the potential marker distribution for the services. However, given that the project is actively promoted on social media, and the solution has been well thought-out and looks promising, this should not significantly increase the level of risk for potential investors. 

Sentinel Protocol is a blockchain-based threat intelligence platform that has the following unique security features:

  • Threat reputation database (TRDB)
  • Machine learning (ML) engine integrated security wallet (S-Wallet)
  • Distributed malware analysis sandbox (D-Sandbox)

The threat reputation database (TRDB) aims to solve two main issues existing for the cybersecurity industry: 

  • Any centralized database containing threat information is vulnerable to manipulation and abuse. A decentralized blockchain database can decrease vulnerability and provide a more sustainable location to store data.
  • A thread database should be openly spread among vendors; this is not exactly the case at the moment. Dissemination of information on threats, hacker attacks and malware could lead to  prevention of further attacks. 

TRDB is to be contributed to by security experts in two ways: auto reporting and manual reporting. If users allow auto reporting, unknown threats automatically detected from the machine learning-based security wallet go into the database. Through manual reporting a user can report risk information, which will be validated by the community afterwards. TRDB will be provided as an API, so any individual or organization (e.g. cryptocurrency wallet projects, cryptocurrency exchanges, or security vendors) can make use of the information.

The machine learning engine integrated security wallet (S-Wallet) has features of antivirus software, including the ability to analyze threat tendencies and history to proactively respond to unknown threats. The S-wallet uses information collected from the connected TRDB and provides basic blocking services for the following information:

  • Cryptocurrency wallet address filtering 
  • URL/URI filtering
  • Data filtering
  • Fraud Detection System

Fraud Detection System (FDS) is enabled on all distributed ledgers and identifies transactions that are reported for misuse or stolen, thereby preventing secondary damage.

Distributed malware analysis sandbox (D-Sandbox) can be used in order to check for suspicious and unidentified files or link, to run untested or unverified programs and code on a separate virtual machine on decentralized nodes. Such programs and files are submitted to the D-Sandbox using a ticket system and analyzed through collective intelligence.

Two main advantages of the D-Sandbox are the following:

  • Firstly, it is cost effective and can be infinitely scaled through distributed systems.
  • Secondly, while D-Sandbox can eliminate wastes of computing power, it can also build a better security ecosystem. Nodes participating in the Sentinel Protocol’s network can use their computing power to analyze malware additionally. After all,

the advantage of a decentralized system is that idle resources can be utilized where they are needed. Individual users will be of help by provisioning the sandbox through a virtual machine, boosting the overall security ecosystem. There are some use cases which describe security features.

Case 1. Individual crypto users.

Sentinel Portal:

  • Ultimate user interface to report hacking incidents.
  • Post-hack guidance.
  • Sees point status and case handling history of each sentinel.
  • Check latest threat data before making any transactions.

The S-wallet:

  • A client software for PC to store/send/receive UPP tokens.
  • Can activate advanced security features by remitting UPP tokens on a subscription basis.
  • Can activate machine learning and/or distributed sandboxing.
  • Advanced security features need subscription.
  • Can participate as distributed sandboxing nodes. 

Case 2. Crypto payments and exchanges.

Computer emergency response team outsourcing:

  • Case handling experts.
  • Anti-theft system.
  • Malformed transaction prevention.
  • Fraud detection system.

Global alliance as Sentinels:

  • Exchange of threat information.
  • Real-time alert service.
  • Sentinel point rewards for data contribution.

Safeguard cryptocurrency:

  • Hacker/scam address filtering.
  • Extra layer of end-user protection.
  • Brand protection and reputation management. 

Case 3. IT companies and security companies. Computer emergency response team outsourcing:

  • Detection log management.
  • Preliminary data analysis.

Less reliance on signature updates:

  • Automatic data send to/receive from the TRDB.
  • Real-time data update.

Sentinels as a global alliance:

  • Exchange of threat intelligence.
  • Sentinel point rewards for data contribution. 

The team provides the following project roadmap divided into four phases:

Phase 1. Sentinel Protocol of the Cryptocurrency World 

Phase 2. Proof of protection 

Phase 3. Self-purification 

Phase 4. Self-evolution 

The project’s roadmap states that a prototype beta test version of the SIPB was to be released in February, 2018 and a machine learning engine beta test in November, 2018. It is also mentioned in the whitepaper that beta releases will be announced on the company’s official website. However there was no announcement found. Reference to the MVP was nevertheless found on the company’s YouTube channel, where team members demonstrated the MVP on the ICON annual summit 2018.

We also note that the team expects to launch the mainnet in July 2018, slightly over a month after the ICO, which is good news for potential investors and could indicate that the team is making good progress.

The other issue with the roadmap which could be considered a disadvantage is that it covers only the technical aspects of the project and does not specify the business development process – e.g. when and how marketing activities will be performed, how many platform users the company intends to reach by the end of 2018 and in 2019, etc.

Competitive landscape

We will use Porter’s Five Forces framework to perform an initial competition assessment for the Sentinel Protocol project.

Threat of new entrants - Medium

The threat of new entrants is medium, as all blockchain developers, particularly those developing solutions for the financial services industry, must conduct their design and development activities at a high level of sophistication relative to security threats. The market is developing and there are not many major players at the moment; barriers for new entrants are relatively low.

Threat of substitutes - Medium

Threat of substitutes is medium, as developers of industry startups elaborate on modified solutions for users, so ecosystem participants are likely to prefer to work with a company that provides services and support for a reasonable price. 

Bargaining power of customers – Medium/Low

The key factor for an ecosystem like Sentinel Protocol is its popularity among both regular users and specialists. If it succeeds in attracting enough contributors, users and companies will have no other option but to use the ecosystem (and vice versa). We assess the bargaining power of customers as medium-to-low.

Bargaining power of suppliers - Medium

Since the whole ecosystem depends on industry participants who will provide threat information and make contributions to the TRDB, the bargaining power of suppliers can be assessed as medium.

Industry rivalry

As of May 2018, Sentinel has some competitors in the blockchain market. Please refer to the summary table below:

 

Sentinel

PolySwarm

Hacken.io

Quantstamp

Project type

Blockchain ecosystem

Blockchain ecosystem

Blockchain ecosystem

Blockchain ecosystem

Key functions / features

Blockchain-based threat intelligence platform

Threat detection ecosystem

Constellation of businesses providing services

Smart-contract security auditing protocol

Key users

Developers, enterprises,

consumers, vendors and security experts

Developers, enterprises,

consumers, vendors and security experts

Developers, enterprises,

consumers, vendors and security experts

Developers, investors and users

Key products

Sentinel portal, S-

Wallet, D-Sandbox

Antivirus program

HackenProof bug bounty marketplace,

Startups Incubator,

Analytics center, etc. 

Check on smart contract vulnerability

Development stage

SIPB testnet launch with token issuance

Vo2. Beta

Launch of Analytic Center

Hold first Quantstamp hackathon

ICO status

Presale round

Ended

Ended

Ended

Capitalization

(as     of      ICO

date/hardcap)

USD 5.05 million / USD 34.6 million

USD 25.9 million / USD 50 million

USD 7 million/USD 20 million

USD 31.3 million/ USD 31.3 million

Market capitalization 

USD 57.7 million

USD 9.7 million

USD 12.2 million

USD 119.0 million

 Product launch

Q3 2018

Q4 2018

Q3 2018

Q4 2018

At the time of writing, the market for Sentinel is not very competitive. Competitors are either focused on smart contracts or cryptocurrency payment security. We believe that these market players can coexist, as in addition to security intelligence Sentinel plans to utilize top-notch machine learning and sandboxing technologies, helping the project to stand out from the crowd.

The team’s capability  to deliver such a complex project will be easier to assess once the MVP/beta is released. Without the actual product it is hard to assess the concept. 

Michael Zhou (Head of threat intelligence) is currently employed by Palo Alto Networks as a Support Delivery Manager; this could cause a conflict of interest. Moreover, he does not state that he works for Uppsala Foundation on his LinkedIn profile.

Likewise, Dayeol Lee (Core development) does not state that he joined the Sentinel Protocol project or is working at Uppsala Foundation on his LinkedIn profile. He is currently a first-year graduate student in the Ph.D. program in Computer Science at University of California, Berkeley. 

We draw attention to the fact that some advisors do not have publicly available profiles on LinkedIn or their profiles are not complete, so information about their experience and affiliation with Sentinel Protocol cannot be verified. Besides, only one advisor states his affiliation to the Sentinel project.

Name

Positi on

Total experie nce

Relevant experience

Relevant education

Professio nal

achievem ents

LinkedI n

Conn

ectio ns

Endorsement

Recommenda

tions

Team

Patrick

Kim

Found er                & CEO

10+ years

 

10+ years (IT and system engineer)

Yes

-

Yes

358

No

HM

Park

Cofound

er                & Head

of

operat ions

10+ years

10+     years      (IT

security)

Yes

2 patents, 1 honor & award

 

Yes

500+

No

John Kirch

Chief Evang

elist

25+ years

25+ years (Hightech industry)

Yes 

-

 

Yes

500+

Yes

Dayeo

l Lee

Core develo pment

2+ years

2+ years 

(Hardware        and

system security)

Yes

-

 

Yes

59

Yes

Micha

el

Zhou

Head

of threat intellig

ence

8+ years

8+ years  (Technical support)

Yes

-

 

Yes

500+

Yes

Naron

g

Chong

Head

of securit y operat ions

12+ years

12+ years 

(Network support)

Yes

-

 

Yes

500+

Yes

Karly Choi

Head

of

marke

ting

4+ years

4+ years 

(Marketing)

Yes

-

 

Yes

235

Yes

Minwo o Ku

Head

of

produ

ct

19+ years

19+ years  (Sales management/tech

nical design)

Yes

-

 

Yes

351

Yes

Jangy eon

Jin

Full stack develo per

7+ years

7+ years  (Software engineering)

Yes

-

 

Yes

38

Yes

Chulw an Park

UI/UX design er

3+ years

3+ years

(UI/UX design)

Yes

-

 

Yes

71

No

Seok Kim

Head

of financ e

4+ years

4+ years

(Finance)

Yes

-

 

Yes

6

No

Advisors

 

Simon Kim

Advis or

12+ years

Yes

Yes 

CEO        at

HASHED

Yes

500+

Yes

John Ng

Advis or

5+ years

Yes

No

Partner at

Signum Capital

Yes

500+

Yes

JH Kim

Advis or

20+ years

Yes

No

Foundation

Council at ICON

No

-

-

 

Hongz huang Lim

Advis or

Unkno wn

Yes

No

CEO          at

XSQ

Yes

410

Yes

Wong

Lee

Hong

Advis or

Unkno wn

Yes

Unknown

Executive

Advisor at

Kyber

Network

Yes

97

No

Kenne

th Oh

Advis or

7+ years

Yes

No

Senior

Partner at Dentons

Rodyk        &

Davidson

Yes

0

No

The purpose of the Sentinel Protocol is to establish a self-sustaining cyber security ecosystem in a moderate timeframe without interference from any centralized guidance or organization. Obviously, such an ecosystem requires an exchangeable cryptocurrency that will work in two ways: as a mean of payment for its goods and services, and as a reward for contributions to improve the cybersecurity ecosystem. Therefore, Sentinel Protocol has elaborated a cryptocurrency named UPP (Uppsala) for the use of goods and services provided by SIPB and SP (Sentinel Points) for rewards for contributions to the ecosystem.

UPP (Uppsala). As stated in the whitepaper, 500,000,000 UPP will be generated initially  and distributed to early-stage cybersecurity community builders. Later on, additional UPP is planned to be generated throughout 20 time-vesting periods and distributed among participants, contributors and users of Sentinel Protocol services. The initial UPP exchange ratio will be available on the official website.

As stated in the Sentinel Protocol whitepaper, UPP will have the following uses:

  • For goods and services provided by SIPB, such as advanced security features of the security wallet.
  • For detailed cyber forensic service, consultancy, vulnerability assessment, and/or other activities requiring The Sentinel Protocols’ help.

SP (Sentinel Points). SP can only be acquired as a reward for contributions to the Proof of Protection system (reporting a true scammer’s address, IP, website, validating reports, resolving incident cases, etc.) and by acting as a Sentinel (cybersecurity experts). Sentinel Points can be further converted to UPP tokens.  

We identified the following key factors that could affect the token price:

Factor

Description

Price effect

Development and release of new products according to the roadmap

We note that Sentinel Protocol plan to provide several goods and services, which together constitute the ecosystem. However, the services provided are mainly interrelated and depend heavily on participants’ contribution and Sentinels.

Just as a successful release for each of the services may lead the price up, failure to deliver will push the token price down.

 


 

Demand for the platform

The expansion and decentralized nature of blockchain technology should give rise to security awareness on the part of users. Thus, a system that will identify and prevent attacks, malware, etc. is more likely to find its market and experience demand.

 

 

Sales of tokens by the team, advisors and partners

15% of tokens are reserved for the founders, advisory incentives (2%), business development and other organizational activities (15%). The whitepaper does not clearly state the periodicity of vesting rounds, it states that each round is planned to be executed at the point when the total number of Sentinel Points hits a target value or a certain week or timeframe, whichever comes sooner. However, according to the team, the vesting period for bot team and advisors is two years.

Limited token supply

Assuming that the company develops the ecosystem as intended, market penetration is sufficient and the demand for the solution exists and is growing, this will lead the price up. But, referring to the information given on the company’s website stating that UPP tokens should be readily available for crypto users who plan to use its security services, and in the event that the UPP token price increases too much, the Uppsala Foundation may adjust the number of tokens in order to level up the token price.

 

Volatility and immaturity of cryptomarket

Although the token lacks speculative purposes, high volatility in crypto markets may cause traders and speculative investors to trade UPP, which may lead to UPP price fluctuations or even speculative activities (pump and dump, etc.).

 

Based on our analysis we identified the following risks for the Sentinel project:

Risk

Description

Level

Absence of MVP

At the time of analysis (May 2018), the team has not yet released an MVP/beta, which is due in February, 2018 according to the project’s roadmap. The absence of an MVP seriously compromises the ability to assess the team’s competencies, the capabilities of the suggested product, the level/degree of product development and other crucial factors that investors in an ICO must consider before making any decision to invest. However, reference regarding the MVP was found on the company’s YouTube channel, where team members demonstrated the MVP on the ICON annual summit 2018.However, reference regarding the MVP was found on the company’s YouTube channel, where the team members demonstrated the MVP on the ICON annual summit 2018.

Medium

ICO details, terms and conditions cannot be verified. Smart contract code on GitHub not available.

The smart contract code on GitHub is unavailable for public review as well as other ICO information (Sentinel Points supply, token burning) cannot be verified. Nevertheless, according to the information found on company’s website, the team intends to open the smart contract code for public review. If that happens, the risk may go down.

Medium

Team composition / competence

 

We note that some team members also have another duties apart from working on the Sentinel project. Besides, they do not state that they work at Uppsala Foundation or engaged in Sentinel project on LinkedIn profile. Also, only one advisor states his affiliation to the Sentinel project.

Medium

Whitepaper is not comprehensive

We believe that the whitepaper has the following issues:

  • Absence of competitor analysis
  • Unclear vesting period, whitepaper does not clearly state the periodicity of the vesting rounds, it says that each round planned to be executed at the point, when total Sentinel Points hits a target value or a certain weeks or timeframe, whichever comes sooner. However, according to representation from the team, vesting period for team and advisors are two years.
  • Forecast marketing activities and plans for product promotion are not covered in the whitepaper and it is impossible to analyze or draw relevant conclusions regarding potential market exposure.

Given that there is no actual MVP yet, all of the above can increase risks for investors.

Medium

Token price fluctuations

UPP is a cryptocurrency token which means that it has higher exposure to volatility and fluctuations of the cryptocurrency market as well as speculative actions from market players.

Medium

Commercial risks

 

Despite the presence of competitors in the market, we believe that Sentinel’s approach to the blockchain cybersecurity has its competitive advantages, which is top-notch machine learning and sandboxing technologies.

Low

Roadmap is not comprehensive

The roadmap covers only technical aspects of the project, and does not specify the business development and marketing processes.

Low

 

 

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.