Our evaluation for TaaS is “Stable”. It could be revised in case:
- Forms of quarterly analytical report would be published. Fund managers should provide on regular basis these reports in order to reveal validity of performed during the reporting period deals and to show market outlook;
- Risk management policy would be published. It should at least include limit of investment `s size into a single asset;
- Cryptographic audit feature would be launched.
Anyway, in 2017 this project is expected to perform «as good as the market». We recommend to buy TaaS tokens through the crowdsale (ICO) to speculative investors whom estimate profitability in USD. We do not recommend to buy TaaS tokens through the crowdsale (ICO) to long-term investors whom estimate profitability in BTC.
TaaS is supposed to be a kind of hedge fund that invests only in crypto-assets.
TaaS comparison to traditional hedge funds and Exchange Traded Funds (ETF):
15% of net asset value (NAV) once ICO is over
discounts and allowances
Asset under management
No refunds and withdrawals, assets will be tradable on the secondary market
Withdrawals are generally allowed (on a monthly or quarterly basis), holding or redemption fees are possible in case of early withdrawals
Assets are pretty liquid on second market. No fees
Based on dividend`s performance (the more fund`s yield over-perform the
crypto-benchmark, the more dividend`s amount)
The value of an investor's holding is directly related to the fund net asset value, and depends on share`s amount
The value of an investor's holding is directly related to the fund net asset value, and depends on share amount
The main differences of TaaS in contrast to hedge funds and ETF include different final cost and asset value for investors (not NAV based).
From the technical point of view the project has interesting and innovative solutions. Dividends will be paid out using a profit-sharing Ethereum smart contract in the form of ETH on a quarterly basis. It allows to automatize process and to exclude a human factor. Another feature is the “Cryptographic Audit” technology. It will enable token holders to monitor the performance of the fund in a real time mode. Also, evidence of ownership of fiat assets will be provided and blockchain “snapshots” will be performed in case of unforeseen circumstances. Thus, TaaS provides for investors high level of fund`s transparency and usability due to Cryptographic Audit feature and user friendly web-interface.
Another innovative feature, KEPLER intelligence system, is supposed to be launched in Q4 2017. It pretends to be like a “Bloomberg” in a crypto-world. KEPLER is a set of tools for the market research and portfolio management.
From our point of view project`s team (including strong partners and advisors) has enough technical expertise and experience for launching TaaS. Founders are active across crypto-community both offline and online. We confirm that we've managed to reach them by e-mail and Skype. So we have no doubts about the team and technical side of the project. In a mid- and long term perspective the project`s success depends on the team`s skills and working capacity.
- Terms of Service TaaS have not been finished and published yet
- 15% of the raised funds excluding from NAV in favor of founders for covering operational expenses
- Founders do not contribute any asset into the fund
- Investors` dividends decrease due to expenses on Cryptographic audit and KEPLER development, and
- The fund`s investment strategy is unknown.
Investment appeal of TaaS tokens:
- We suppose drop in tokens` market value due to the ICO bounty program participants` profit-taking
- Short-term speculative growth of TaaS tokens market value after ending of ICO is supposed
- In order to over-perform crypto-market estimated in BTC in a long-term perspective TaaS tokens ought to achieve 2.7 times higher profitability than the average market benchmark
- From our point of view due to the lack of information and high quality examination of the market such level of outcome is hardly achievable in a long term
- We suppose the fund`s performance will be lower than on the market estimated in BTC until the reserve fund is completed
- It does not affect the profitability in USD. Traditional investors should consider buying TaaS tokens as easy and affordable way to enter cryptoasset market by purchasing Bitcoin and variety of altcoins
TaaS is a blockchain-based closed-end investment fund. It will manage crypto-assets (Bitcoin and altcoins) so its performance will be based only on cryptocurrency market growth. The fund`s strategy is to perform long-term (more than a year), mid-term (less than a year) and speculative cryptoexchange`s trades. In case of good market conditions the fund will be able to gain significant revenue. A half of the fund's revenue will be distributed among token holders on a quarterly basis. In case of bad fund's performance, token holders will get nothing until the next distribution.
In this project not only underlying assets are blockchain-based, blockchain technology is used in TaaS in several ways:
- Proof-of-Membership concept: TaaS token holders will be granted rights to 50% of the fund`s revenue,
- Dividends will be paid out by using a profit-sharing Ethereum smart contract, and
- “Cryptographic Audit” technology.
Use of Blockchain technology allows:
- Taking profit from the cryptocurrency market growth,
- Implementing innovative approach of fund raising and profit sharing in the asset management industry,
- Providing a high level of fund`s transparency and accountability, and
- Providing a high liquidity of TaaS tokens by trading it on cryptoexchanges.
Investors can become TaaS token holders by transferring their cryptoassets to the fund during the Initial Coin Offering (ICO) procedure. It will be performed from March 27th, 2017 till April 27th, 2017. TaaS tokens will be available for sale directly on TaaS website or Livecoin.net and Kuna.io exchanges. TaaS accepts BTC, ETH, USDT, and other methods that are available on exchanges. Altcoins may be also converted directly via Shapeshift. A total of 101 million tokens priced $1 each are planned to be sold, all unrealized tokens will be burned at the end of the ICO.
MARKET AND INDUSTRY OVERVIEW
The hedge fund is a private investment partnership aimed to maximize revenue providing limited risks or to decrease risks providing stable income. The idea is simple: to raise capital from investors and to invest it in the way to get income regardless of the market conditions.
Today hedge funds invest money in various kinds of relatively liquid assets on different markets in order to achieve their goals. To succeed on the competitive market hedging concepts and extend investment vehicles, they are only limited by investment strategies and risk management. That is why we are going to compare TaaS fund with hedge funds.
In general hedge funds` availability is limited for ordinary investors. It can be offered to accredited investors with a certain capital. Over the recent years this threshold has tended to decrease.
The American sociologist Alfred W. Jones is credited with creating the first hedge fund structure in 1949. 16 years later the fund's investment strategy and performance results over the recent 5 years (1961-1965) were published in the American business press. The Fund showed enormous capital growth (325%), it was much more than competitors` records. Such outstanding performance was achieved due to the innovative investment strategy: paired long and short positions for hedging the market risk. Thus, the Fund had a positive return on investment regardless of whether markets were rising or falling. This strategy became extremely popular, growing in 1968 to 140 investment partnerships classified by SEC as hedge funds.
By the end of 2016 there were 14,553 hedge funds that had over $3.22 trillion in assets. Over the recent five decades the global hedge fund industry has grown more than 100 times.
Hedge Fund`s Structure
In most cases hedge funds have a unique organizational structure based on the partnership with a variety of features and nuances. Some of them are highly complicated, another are simple and rather transparent. It depends on the fund`s goals, strategy and risk management. However, the majority of hedge funds have:
- Bank (custodian) safekeeping of fund’s assets, clearing and settling all trades, and monitoring corporate actions such as dividend payments and matching of the investment goals achievement,
- The fund is managed by an investment manager in the form of an organization or a company that is responsible for the fund`s actions and achievements,
- The Board of Directors` primary role is to provide a layer of oversight over the investment manager and service providers while representing interests of the shareholders. They are personally responsible for the fund`s mission and duties,
- The hedge fund administrators are responsible for operations, accounting, and valuation services regardless of investment manager activities,
- Prime brokers clear trades, and provide leverage and short-term financing. They are usually divisions of large investment banks,
- The auditor provides independent control and verification over the fund`s reports thereby offering a greater degree of transparency, and
- Hedge Fund Attorneys/Lawyers provide legal issues, for instance, the fund`s licensing, conclusion of contracts, etc.
In 2016 there were more than 980 hedge-fund closures. The main reason of failure is the fund`s disability to show the expected record of the past performance (track record). Investors treat it as an indicator of likely future performance and leave the unfortunate fund to search for more profitable investment. Then fund`s founders close it and try again but under another brand.
In common investors are charged with a few types of fees: a management fee and a success fee. Management fees (typically 2%) cover the operating costs of the manager, whereas the success fee (typically 20%) provides the manager's profits. Thus, the management fee is charged anyway despite on the fund`s performance. This fee structure is called “2/20” and is the most common in the hedge fund industry. However, there are other fee`s options: “1/10” or no management fee at all but there is a higher success fee.
A lot of hedge-fund closures are caused by the lack of funds and liquidity during their first years. Until the fund proves good performance and has no reputation on the market, almost nobody invests money into it because insufficient fund`s management fee does not cover expenses. And funds are unable to make fee higher since the competition is strong on the market.
In order to promote long-term investing, some hedge funds charge a withdrawal fee (up to 5% of the fund`s withdrawal) for early withdrawals during a specified period of time or withdrawal is not available at all until the fund`s liquidation. Generally investors have to inform the fund about their intention to withdraw funds in advance (2-3 months).
The largest hedge fund failures:
- Long-Term Capital Management L.P. (LTCM), the largest hedge fund in the world at the time, was founded in 1994 by John W. Meriwether. Members of the LTCM's board of directors included Myron S. Scholes and Robert C. Merton, who shared the 1997 Nobel Memorial Prize in Economic Sciences. LTCM collapsed in the late 1990s. During the first years LTCM`s returns was from 21% to 43% (after fees) annually. In 1998 it lost $4.6 billion in less than four months following the 1997 Asian financial crisis and 1998 Russian financial crisis. At that moment LTCM had off-balance sheet derivative positions with a notional value of approximately $25 trillion. In order to avoid a wider collapse in the financial markets (Dow Jones Industrial Average index plunged by 10%) the Federal Reserve Bank of New York organized a bailout of $3.625 billion by the major creditors. Anyway, the fund was liquidated and dissolved in the early 2000.
- Julian Robertson, a stockbroker, started Tiger Management also known as "The Tiger Fund" in 1980 with $8 million in capital. By 1993, the fund’s assets had increased to $7 billion in value. So it used to be the second largest hedge fund in the world but had more experience than LTCM. However, The Tiger Fund had large equity holding in U.S. Airways, whose troubles significantly dragged down the value of fund's holdings and led him to the fund`s bankruptcy in March 2000.
- During its peak in 2005, Amaranth Advisors LLC, a multi-strategy hedge fund founded by Nicholas Maounis in 2000, had up to $9 billion in assets under management. However, it made a huge mistake investing into natural gas assets. It caused loss of $6.5 billion in value during a few weeks. The firm's failure led to fund`s bankruptcy.
- In 2008 one of the largest known hedge fund frauds in history was discovered. Bernard L. Madoff Investment Securities LLC turned up to be an elaborate Ponzi scheme. This firm was founded by Bernard Madoff in 1960. Until then ther firm`s performance grew up to compounded annual return of 20% and estimated the firm's assets at $50 billion. It was so popular among investors that they had to wait for years until the firm accepted their money. In 2008 everything changed: the global financial crisis drove investors to take their money out of the firm and the fraud was revealed. In 2009 Bernard L.Madoff was sentenced to 150 years in prison with the restitution of $170 billion.
These cases show us that regardless of how many assets and experience the hedge fund has and who is in charge of the asset management (even Nobel Memorial Prize laureates in Economics), investors have significant risks dealing with hedge funds.
Hedge fund market overview
There are some significant trends in the hedge fund industry over the recent two decades.
- On the left picture above you can see that another asset management vehicle - Exchange Traded Funds (ETFs), an investment fund traded on stock exchanges - becomes more and more popular. Recently ETFs have over-taken the hedge fund by asset under the management size: $3.42 trillion vs. $3.22 trillion. ETFs have lower fees than hedge funds: the management fee is 0.5% of the asset value and no success fee. ETFs have a wide range of liquidity but in common it is much easier to sell it than to share in the hedge fund. Thus, the first global trend in the hedge fund industry is the decrease in fees rate for investors.
- On the other hand (the right picture above), the hedge fund returns significantly have fallen over the recent two decades: from 20% down to about 5%. From 2003 till the beginning of 2017, the aggregate hedge fund yield over-performed S&P500 index only three times: in 2005, 2007 and 2008. The majority of hedge funds (90%) perform worse than market indexes in a long-term perspective (10-15 years). ETFs are based on these market indexes and perform accordingly. That is why in a long-term perspective the hedge fund has only 5-7% of probability to make higher returns than ETFs for its investor. In case this trend continues during next years, plenty of hedge funds closures are expected.
In spite of the risks and complexities of the hedge fund, they can perform very well on growing markets - for instance, the Berkshire Hathaway holding company founded by Warren Buffett (not a traditional hedge fund structure). It has displayed astonishing performance over the recent 52 years.
It averaged the annual growth in book value of 20.8% to its shareholders (compared to 9.7% from the S&P 500 with dividends included for the same period). This result is above all praise and shows that active asset management is able to over-perform passive asset management more than twice in a long-term perspective.
DESCRIPTION OF THE TAAS FEATURES
Next, we will try to describe all features of the Taas fund and draw parallels with both the market of classical hedge funds and the trends of this market. We will be guided by information from the whitepaper and comments received from the fund founders.
The mechanism of forming and functioning of the fund business activities includes
- Step 1: Formation of the fund's capital
- Step 2: Distribution of the fund's capital
- Step 3: Operating activities
- Step 4: Distribution of fund profits
Step 1: Formation of the fund's capital
The maximum volume of ICO is 101,000,000 tokens valued at $1 per each. Thus, the maximum amount of ICO is equivalent to $101 million, which theoretically can make Taas ICO the largest in history. Such a huge amount seemed inflated to us and looks like a marketing move. Here are the founders’ comments on this issue:
“Because in the past there were different price-setting ICO models, and we decided to go with a fixed price due to the nature of our ICO - and that is a token acts as a Proof-of-Membership in a fund. Due to the profit distribution system we have, it was more natural to go with a very well-understood, fixed price. Winklevoss ETF is raising $100M, so we see the number as adequately given by the market.”
The fund's capital will consist only of investors. Due to the lack of legislative regulation of the blockchain industry, the TAAS fund does not apply standard requirements for hedge funds and management companies to own capital. This means that the TAAS fund cannot at their own expense to ensure the fulfillment of obligations to the tokens holders due to the lack of own funds.
Whitepaper Taas emphasizes the ban on the issue of new tokens after the ICO and the obligation of burning unsold tokens. This means that the share of tokens holders will not be blurred, there will be no SCO (secondary coin offering), and free float of tokens immediately after ICO reaches 100%. Thus, there is no tool for manipulating the token price after the ICO by creating an artificial excess of supply over demand due to the sale of "tokens" (so-called "treasury tokens") that were not placed during the ICO in TAAS representatives. Free float tokens can be reduced, but only by market methods - by physical buying of tokens from the market, which will provoke the opposite situation: demand will exceed supply, which will contribute to the growth of the price of the token.
Step 2: Distribution of the fund's capital
Attracted within ICO's assets will form capital of the fund, which will be divided into three unequal shares:
Investment portfolio: 75% of the fund's capital will be used to form an investment portfolio. It is this part of the funds raised during the ICO that will begin to form future profits estimated in BTC for investors. And this is a huge minus in comparison with classical funds, where all capital involved in the fund is involved in the formation of future profits, all 100%. We believe that, for this reason, the value of the Taas fund tokens may experience a drawdown in the medium term below the nominal value after the ICO, especially if the fund cannot show good results during the first few quarters.
Reserve Fund: 10% of the assets attracted to ICO will be immediately spent to form the reserve fund.
The reserve fund is formed for the following purposes:
- A liquid cushion for paying dividends to the holders of the tokens,
- Compensation of losses of the investment portfolio,
- Fund portfolio diversification,
- In case of technological failures of Ether or other force majeure, it can be used to buy back tokens from panicked owners.
Of course, the presence of the reserve fund will smooth unfavorable market trends, but other rules and features of the reserve fund also need to be mentioned:
- The reserve fund cannot be less than 10% and more than 30% of the total portfolio size,
- 25% of the quarterly profit of the fund will be directed to the formation of the reserve fund until its upper possible bar is reached,
- The reserve fund is invested exclusively in BTC, and
- The reserve fund does not generate profits for the holders of the fund's tokens.
In fact, the task of the reserve fund is to compensate the lack of equity of the funds founders and to guarantee the fulfillment of the fund founders’ obligations before the tokens holders. The difference is that the reserve fund is formed at the expense of the tokens holders and their profits (rather than the founders’ funds); this reduces the profitability of their investments.
Operating expenses: 15% of NAV (Net asset value) is immediately directed to finance operating costs, including:
- Bounty program (2% NAV),
- Expenses for ICO,
- Marketing, PR costs,
- Consulting costs,
- Development costs,
- Audit costs, and
- Technical support.
According to our calculations, the total cost of expenses for ICO should not exceed 5-7% of NAV, the maximum amount of which is estimated at $3 million for ICO. Thus, 8-10% NAV can be used to reward the development team immediately after the ICO.
Step 3: Operating activities
The main operating activity of the fund is to manage the investment portfolio. Representatives of the TaaS fund do not disclose details of the investment portfolio management strategy. We could not get any of the investment declaration, or other rules of the Fund, either.
As we understand, in the future, the main functions of the Manager will be taken over by the Kepler service. And this moment causes the greatest concern for us, the fund will start functioning in a month (the ICO will take place). And Kepler will be launched only in the 4th quarter of 2017, if there is no carryover release. It turns out at least 3 quarters without Kepler. Also, we could not get information about the detailed structure of the Taas fund, how the business processes inside the fund will flow. Who and how will make investment decisions before the release of Kepler? How do developers plan to receive alpha?
We interviewed TaaS representatives and they said that disclosure of their investment strategy details would level TaaS competitive advantage. Having access to fund`s operation history on daily basis (due to Cryptographic audit feature) anyone would be able to copy-trade TaaS performance with a little time-lag. TaaS representatives assumed that access to investment strategy details give opportunity to do this without any time-lag at all. Nevertheless we need to understand how TaaS will be able to overperform the market.
The whitepaper says that to be carried out as long-term investments (up> 1 year) and medium-term (<1 year) and speculative transactions. There are no plans to introduce restrictions on exchanges (i.e. all altcoins traded on various exchanges will be considered). This is the advantage of buying Taas token for an investor, since it minimizes the costs associated with creating and maintaining various wallets.
Hedging of investments is not expected, this role will be partially performed by the Reserve Fund. We were not able to receive comments on the diversification of investments. The whitepaper mentions that there are more than 700 cryptocurrencies, but they have too many correlations and they do not make sense to diversify. The main volume of trading goes to the BTC and it will serve as a quiet harbor at bad times.
Step 4: Distribution of fund profits
The operating profit of the fund is calculated on a quarterly basis and is the basis for the profit distribution between the tokens holders and the TAAS fund team.
Operating profit is calculated as the difference between the assessment of the investment portfolio at the end of the reporting period and the start date of the reporting period. The currency for calculating the operating profit of the fund is declared by the BTC
The operating profit is distributed as follows:
The currency for determining the profit of the tokens holders is USD, and the physical payment of dividends to the tokens holders is carried out in the ETH. Thus, the calculation of dividends involves the following stages:
- Assessment of investment portfolio profit in BTC,
- Assessment of the fund's profit in USD (converting BTC to USD), and
- Conversion of BTC to ETH through cross-rates BTC/USD and ETH/USD.
It is not specified where to get liquidity for paying dividends to the tokens holders, but it will be provided at the expense of the reserve fund and/or reduction in some of the investment positions.
The developers state that the operating expenses will be spent for
- Cryptoaudit development,
- Development of Kepler, and
- Fund marketing.
This formulation raised questions:
- The fund does not require marketing, as the fund's rules do not provide additional placement of tokens and the fund is closed,
- Cryptoaudit is a tool for monitoring the actions of the fund manager, but it turns out to be expensive for the investor fund, and
- Kepler is an asset financed by the cash flow generated by the fund, but not an investment by the fund. There is a similar situation from the real life - financing at the expense of one legal entity investment project, implemented at another legal entity, while the legal entity is controlled by the same majority.
Actually it turns out that Taas management fee is 0% and success fee is 25%. This is a fairly fair remuneration system even by the standards of classical hedge funds and should motivate managers to ensure substantial profits for investors.
However, in its turn, there are risks. The amount of funds raised for the ICO may not be sufficient for the substantial motivation of the Taas team. There may be a situation when we admit that the ICO will take place on the level of attracting $3 million, but it will motivate the team so much if $30 million are attracted during the ICO. And the second point to justify investors, this rate of success fee will need to show the profitability above the benchmark at least by the size of the fund's reward. As we saw on the example of the industry of classical hedge funds, about 5% of the funds manage to do this, which in its turn led to the emergence of the ETF market. Why to pay such high commissions if the fund cannot make enough alpha (a measure of profitability)? Disappointment by the fund can lead to the sale of TaaS tokens.
Re-investment contributes to maximizing the fund’s profit in absolute terms thanks to the effect of the compound interest. In its turn, this contributes to the growth of the absolute value of the dividend and dividend profitability for investors that have purchased TaaS tokens at ICO.
According to the whitepaper, 25% of the profit will be invested after the completion of the formation of the reserve fund to a level of 30% of the fund. Up to this point, 25% of the quarterly profit will be wholly or partly directed towards the formation of the reserve fund. The time TaaS will spend the formation of the reserve fund depends on the quarterly return that the fund managers will be able to provide.
According to our calculations, the formation of the reserve fund will not be completed before 4 quarters after the start of the fund's operational activity, with a positive scenario of the markets' yield.
As for the indisputable pluses in the features of the Taas fund, it is worth noting the ban on the emission of new tokens after the completion of the ICO and the burning of unplaced tokens, which seriously reduces the risk of manipulating the price of the token in the future.
Another plus is a fair fund remuneration system, management fee = 0% and success fee = 25%. This should motivate fund managers to earn their investors. Although the issue of motivation remains open, as it is stated that the commission will be spent to finance other projects.
As for negative points, it is worth mentioning that the formation of the investment portfolio will be sent to only 75% of the funds raised from ICO.
After the ICO, 15% of the funds will be written off for operating expenses, we consider this figure to be overvalued by at least 30%, it would be better to send an extra 5% of NAV for the formation of the investment part.
The reserve fund will be created at the expense of the tokens holders and their future profits until the reserve fund reaches 30% of the portfolio. This certainly reduces the return on investment.
The detailed strategy for managing the investment part of the portfolio was not disclosed, Kepler's service aimed to help in portfolio management will be launched only towards the end of the year. It is still unclear for us how the alpha will be formed, which at least discards the fund's commissions.
TaaS tokens value assessment
One of the major differences between traditional hedge fund and TaaS is an asset evaluation. Since in case of TaaS it is based on such intangible and sometimes illiquid asset as cryptocurrency, token holders take significant risks. They have no right on fund`s assets distribution after its liquidation and are unable to redeem TaaS tokens. That is why the TaaS tokens market price is calculated as derivative from fund's revenue over the time.
The only way to support reward for investors is a profit sharing (dividends on quarterly basis). Thus, the tokens price will be set only by the market: the more the dividends size, the more tokens price increase and vice versa. In its turn, the dividends size depends on:
- Altcoins profitability in comparison to Bitcoin (div max if altcoin yield>btc yield),
- BTC/USD rate (div max if BTC/USD>1), and
- BTC/ETH rate (div max if BTC/ETH>1).
In order to be interesting for investors the TaaS tokens performance have to be better than the cryptocurrency market (benchmark) at whole. As a benchmark we consider NXTTY Altcoin Composite Index, a market index comprising the 20 largest cryptocurrencies by market capitalization.
By our calculations NXTTY Altcoin Composite Index shows 39% quarter growth in 2016:
We made our assumption of TaaS fund performance estimated in BTC for it to over-perform the benchmark estimated in BTC too on quarterly basis. As we could discover above, the fund`s asset under management will be 75% of the funds raised from token holders estimated in BTC. Then dividends will be distributed only from a half of fund`s revenue. Thus, TaaS tokens beta assumed to be 0.375. It means that until the reserve fund is completed, TaaS tokens have to perform 2.7 times better than the benchmark in order to over-perform it in absolute numbers. These issues do not concern investors that estimate profitability in USD.
We develop some scenarios on the potential TaaS performance.
1. Optimistic scenario.
TaaS tokens perform as well as benchmark in absolute numbers. In order to do that, TaaS token performance have to be 105% quarterly instead of the benchmark`s 39%. In this case the reserve fund will be completed in a year:
For this scenario our assessment of TaaS tokens performance will be:
- 1st quarter: «worth than the market» - because bounty program participants take profit,
- 2nd quarter: «better than the market» - tokens market value goes to equilibrium with funds profitability,
- 3rd quarter: «better than the market», and
- 4th quarter: «better than the market» - trader will drive tokens price up in anticipation of the partial fund's revenue reinvestment in the 5th quarter.
As we can see the token price will rise consistently over time, and the funds revenue will grow because their trading portfolio is re-invested every month. Hence, the token price will be rising over time because the demand will grow due to profit sharing every quarter, so owners will not want to sell, and the token price will be at a premium, since the supply is limited. This is a standard scenario that can be seen throughout the majority of CEF models.
2. Realistic scenario: the fund’s portfolio performs as well as the market.
In case the fund's portfolio performance is 39%, dividends yield will be 15%. According to this way the reserve fund will be completed in a year and a half.
For this scenario we will assess the TaaS tokens performance as «worth more than the market». Sometimes the TaaS token market value will decrease even on the growing market. The risk of large token sales due to too high fund's success fee is quite possible, but a small probability of selling token should be foreseen in the market.
In 2017 this project is expected to perform «as good as the market». We do not recommend to buy TaaS tokens through the crowdsale (ICO) to long-term investors whom estimate profitability in BTC.
- TaaS tokens have to perform 2.7 times better than the benchmark in order to over-perform it in absolute numbers,
- It corresponds to 105% TaaS token performance in a quarter,
- Even if it is achieved, the TaaS token market value will start growing since the 4th quarter.
TECHNICAL ASPECTS OF THE PLATFORM
TaaS will use Ethereum blockchain to release tokens and work. This choice is due to the fact that the Ethereum is currently the most secure, convenient and popular blockchain for the release of tokens. Over the recent month the Ethereum capitalization has grown several times, which makes it possible to assume that it will occupy a leading position for a long time, and such blockchain as Waves or Rootstock will not soon present real competition. Standard ERC 20 tokens released on that blockchain are easy to integrate with applications and exchanges when listing, as well as convenient for developers.
TaaS will use Cryptographic audit for full transparency of operations with crypto-currency and fiat assets. To do this, API will be provided from accounts used by TaaS on the crypto exchange markets (Kraken, Poloniex, Bittrex) so that anyone can track transactions with assets. Besides, the ownership of fiat assets will be evidenced and the blockchain “snapshots” will be performed in case of unforeseen circumstances. Thus, investors will have full information about the activity of the fund, and any fraud will be excluded (at least it will be easily detected).
The TaaS tokens will be the standard Ethereum tokens. A smart contract will distribute quarterly platform revenue to the holders of tokens in accordance with their share and completely remove the human factor in this matter. Token will provide Proof-of-Membership in the fund. Token holders will also get free access to the Kepler platform for a year. It is the platform for managing your portfolio, getting market research and making predictions.
Smart contract will distribute 50% of the quarterly revenue between investors, if there is not last quarter of the income, the contract will not be activated. Dividends will be distributed to the Ethereum wallet, where the smart contract will find tokens. To prevent bankruptcy, a minimum limit will be set for the size of the fund at which payments will be made. It will be 75% of ICO.
When asked about the security of storing funds on a smart contract, the developers gave an answer in the thread to Bitcointalks:
“Smart contract does not hold any funds - it only disperses them whenever they are deposited to it. Funds are stored on a cold-storage basis”.
In TaaS there will be a reserve fund. The reserve fund will keep funds in the BTC. Initially, it will be 10% of the funds raised by ICO. The reserve fund will contain 25% of the quarterly income. The amount of the reserve fund will not exceed 30% of all funds owned by TaaS, if this limit is exceeded, the funds will be used for trading on the exchanges.
"The logic behind keeping the reserve fund in bitcoin is bitcoin, the main source of volumes in the crypto environment, more than 95% of the volume of investment in altcoins passes through it. When the picture changes, and, say, Ethereum or Monero will become more expressive gateway coin for investment, a rebalance is possible. But, in our understanding, this is an unlikely scenario."
Cryptographic audit is one of the key features of TaaS, it will ensure the transparency of all operations of the fund.
The following technologies will be used in cryptographic audit:
- Proof of Reserves.
TaaS will use those crypto-exchange exchanges that will use Proof of Solvency, that is, the solvency of these exchanges can be verified using cryptographic means (a signature made by the secret key from the bitcoin address is used). This check will not affect the safety of these funds. The preference will be given to exchanges that store their funds on cold storage (secret keys are stored on computers that do not have access to the Internet).
- Auditable exchange accounts
APIs (read only) will be provided for all TaaS exchange accounts. Using them, any technically competent user can view the account balance and the history of all transactions on the exchange.
- Proof of reserves for non-exchange accounts
On all accounts where funds are stored it will be also possible to obtain proof that these wallets belong to TaaS.
- Proof of reserves for fiat accounts
It will use tlsnotary or something similar. This solution will provide evidence of the ownership of Fiat funds on a bank or stock account without using a third party or disclosing passwords.
- Regular blockchain snapshots
The data from all APIs, crypto-currency and fiat accounts will be collected and stored daily in the Ethereum blockchain. For easy access to these data, a user-friendly explorer will be created on the TaaS website.
The use of these measures should ensure the desired transparency. All these tools are individually based on proven technologies, so there should not be any problems with the implementation of the conceived.
Kepler is a system for assessing the crypto-currency market, obtaining forecasts and managing your portfolio. Projections will be based on the Bitcoin cycle phase. That's what the developers answered to our question about the details of Kepler's algorithms for predicting prices:
"At the moment we are replenishing the data array and constructing various mathematical regression models. Learned neural networks are a part of the idea, as one of the platform's functionaries, and this will come at a more mature stage of the project. Predicting prices is just one chapter of the entire platform, which will include various aspects of data analytics, risk analytics, portfolio management and more. "
At the moment it is not yet defined in what form Kepler will be presented to users, as an application or as a personal cabinet on the site, therefore all questions about the security of user data will be solved already after the appearance of the MVP version.
It would be especially interesting to look at the Kepler's work now if the developers submitted a test forecast, since the last two weeks the market of the crypto-currency market is experiencing strong growth (altcoins) and a dump (BTC). In case of its success, the project can attract more investors. But in accordance with the roadmap, the private beta release of Kepler is scheduled for Q4 2017.
- Market research,
- Assistance in the preparation of the investment portfolio, making forecasts and strategies based on it, tips on the current portfolio,
- Trading on the main crypto-exchange exchanges (integration with them, and
- Test trading on virtual tokens for testing new strategies or gaining experience.
From the documentation there is: Whitepaper. Smart contracts code or a Kepler prototype code has not yet been written. Since Ambisafe, which has a huge experience in writing smart contracts and launching tokens based on the Ethereum blockchain, takes part in the development for the quality of the future smart contract code, one cannot survive. But Kepler's working prototype would be desirable to be presented before the ICO, but it is not included in the plans of the developers.
Judging by the answers given in the thread on the bitcointalk, the role of the escrow during the ICO will be performed by HLB International:
“HLB International (hlbi.com), a world-wide network of independent accounting firm and business advisors, will be holding a thorough audit of ICO's use of proceeds. It is a much safer way to protect investors from fraud”.
Also HLB is mentioned in the list of TaaS partners.
After the end of the ICO, the fund's funds will be stored on multi-sig wallets, the key holders will be members of the team.
ICO will start on March 27, 2017 and last for a month. A total of 101 million tokens are planned to be sold, all unrealized tokens will be burned at the end of the ICO. The price of each token will be $1. After the end of the ICO, new tokens will not be issued, and investments will not be accepted. The only way to become a member of TaaS will be the purchase of tokens on the exchange. This is one of the main differences between TaaS and ICONOMI.
Tokens can be purchased for BTC and ETH, other via Shapeshift.
The minimum amount of funds raised when the ICO will be recognized as successful has not been announced. Also, the number of tokens assuming the maximum amount of collected funds of 101 million dollars looks strongly overstated, more like a marketing move. Here are the team's comments on this matter:
“Because in the past there have been different price-setting ICO models, and we decided to go with a fixed price due to the nature of our ICO -- and that is a token acts as a Proof-of-Membership in a fund. Due to the profit distribution system we have, it was more natural to go with a very well-understood, fixed price. Winklevoss ETF raises $100M, so we see the number as adequately given by the market.”
75% of the collected funds will go to the fund, 10% to the reserve fund, 15% to development, transaction costs, audit, PR and so on.
Early investors will receive bonuses: 25% for the first, 1,000 BTC for every following 1,000 BTC bonus size will decrease, after 9,000 BTC the bonus will be absent.
Main milestones are noted.
Two percent of the released tokens (at least 100,000) will be used to reward members of the bounty programs.
There are several types of bounty:
- Facebook Bounty: 10K Taas Tokens,
- Twitter Bounty: 10K Taas Tokens,
- Email/Website Subscriber Bounty: 5K Taas,
- Signature Campaign 30K Taas,
- Blog Article and Media: 20K Taas,
- Translation Bounty: 20K Taas, and
- Slack Joining Bounty: 5K Taas.
For more information on the terms of the bounty program, see TaaS post on Bitcointalks.
Proof of developer
The team is not anonymous and active on a few social networks.
All information provided is given according to the project’s official website, public sources, as well as the team members’ LinkedIn and GitHub profiles.
Ruslan Gavrilyuk (LinkedIn) - Co-Founder, President
- Ruslan has experience in project foundation and management,
- Since March 2011 until now, he has been a co-founder and chairman of Geo-Earth resources engaged in exploration of oil and gas fields, and
- He was one of the co-founders of the BitUp Analytical group founded in 2015.
He has got a business experience. Since 2015 he has been working with fin-tech and blockchain.
Konstantin Pysarenko (LinkedIn) - Co-Founder, Vice-President
- Just like Ruslan he is currently a co-founder and chairman of Geo-Earth resources,
- Just like Ruslan he was one of the co-founders of BitUp Analytical group,
- Over the years of his work, he successfully launched several start-ups, and
- Over the recent 4 years he has been involved in blockade technologies.
He has got a business and blockchain investment experience.
Dimitri Chupryna (LinkedIn) - Co-founder, Technology & Analytics
- He was a crypto trader in BitUp, he was also engaged in investments in ICO for private capital,
- From November 2014 till May 2016, he was a Business Development Manager in Spray Network Inc.,
- From August 2014 till May 2016, while studying at the University of San Francisco, he was working there as a Student Assistant at Information Technology Services, and
- From April till August 2015, he was working as a Business Analyst in SpeedVu.
He has got a business and blockchain investment experience.
Maksym Muratov (LinkedIn) - Co-founder, Technology & Trading
- From September 2016 till January 2017 he was working as a Lead Trader in BitUp,
- From May 2015 till September 2016 he was working as a trader in Private Asset Management.
He has got a crypto trading experience.
All founders were associated with BitUp that was engaged in investing in cryptocurrency for private investors. We asked TaaS to comment this:
"At different stages we were involved in this project, and this was an inspiration for building a more perfect model of the fund. The goal of creating and developing TaaS is to make the world's first fully transparent investment mechanism, which was not available even in the traditional economy".
Andrey Zamovskiy (LinkedIn) - Technical Partner / Chief Blockchain Architect
- He worked as a software engineer and project manager in various companies (RussianDesigners, TechnoPark, Krendls LTD, DIMALEX, Matvil Corp, Skykillers and oDesk). According to his linkedin he was involved in the Tether project,
- He was a founder and CTO at NoveltyLab, where he was involved in crypto-projects HolyTransaction, Bitmerch and BTC dealer (the latter two are now defunct), and
- Currently Andrey is a founder at Ambisafe - a blockchain technology company that specializes in blockchain-based shared ledgers for financial instruments. Ambisafe has been chosen as a platform for Inchain. He’s also a Chief Blockchain Evangelist at Propy Inc. – the company that allows users to look for the information on available apartments and houses for sale.
He has got a technical background and blockchain experience.
Oleksii Matiiasevych (LinkedIn) - Smart Contracts Engineer
- According to the CV posted on his LinkedIn profile, he has got an experience in blockchain technologies, Ethereum and smart contracts,
- He has a wide experience in Quality Assurance, having worked as a QA Automation Lead, QA Engineer and QA Specialist,
- At the moment he’s an Engineering Project Manager at Ambisafe. According to the official Inchain website, “during his engagement with Ambisafe, he has developed five DAOlike tokens with the most advanced features you can find on these kinds of contracts”, and
- He was involved in the development of the Bitfinex exchange which is confirmed by his CV.
He has got a technical background and blockchain experience.
Oleh Vasylenko (LinkedIn) - Technical Consultant / Cryptocurrencies
- According to the CV posted on his LinkedIn profile, he has an experience in project architect and blockchain development,
- He was working as a Web Developer and Lead Web Developer from 2005 till 2012 in TundraMobile, Fractelite,
- From March 2011 till August 2014 he was a Lead developer in Taxer. He was leading the development, UX design and project architecture since the early prototyping stage till the company was established on the market,
- From October 2013 till October 2014 he was working in NoveltyLab where he developed HolyTransaction - the universal cryptocurrency wallet,
- He was working in the Tether.to team from October 2014 till January 2016 as a Lead Software Engineer. He developed a backend for the multi-currency wallet and exchange, managing servers. He was responsible for the team coordination, releases/deployments, technology investigation, and
- At the moment he’s VP of Products and Services at Ambisafe.
He has got a technical background and blockchain experience.
Matviy Zakharuk (Upwork) - Jr Data Analyst
- He was fascinated by the latest developments in big data and machine learning.
He has got a technical background but doesn’t have a blockchain experience.
Andriy Dubetsky (LinkedIn) - Managing Director
- From July 2008 till January 2016 he was an Executive Director of the Warsaw Stock Exchange. He managed to generate the majority of IPOs from Ukraine (nine IPOs in Warsaw and one in London in 2008-2012),
- He reached the level where WSE is called as the most leading destination for the majority of Ukrainian companies considering to go abroad for capital raising,
- He has been a Founding member in Bitcoin Foundation Ukraine since May 2014, and
- He was Head of Marketing, PR and IT in ISUZU and Manager of International Business Department in Bogdan.
He has got an extensive marketing and PR experience and some blockchain experience.
Olga Tertyshna - Marketing
- According to the official website, she is a marketing and advertising specialist. She used to live in different parts of the world, learned hundreds of brand success stories and did her best to understand people. She is fond of cryptocurrencies and blockchain. She is fascinated to be a part of this team because of a great challenge to manage complex marketing strategies.
Ambisafe is a blockchain technology company that specializes in blockchain-based shared ledgers for financial instruments. The company is one of the industry leaders. Three of the four technicians in the team work in Ambisafe.
A dynamic network of independent professional accounting firms and business advisers, HLB International is a leading global network comprising locally well-established member firms which mostly rank among the top 12 nationally. Inspired for more than 40 years, HLB International is present in close to 130 countries, their 2,100 partners and 19,000 staff in over 600 offices worldwide.
Axon Partners helps local companies to enter foreign markets by developing their corporate structure in Ukraine and abroad, drafting industry-specific contracts and supporting cross-border software development services.
They also represent foreign clients who subcontract Ukrainian developers or have R&D offices in Ukraine.
Wachsman PR is a Wall Street-based agency that lifts innovative finance and technology companies to new heights. They plan, develop, and execute tailor-made public relations campaigns to grow brands, protect and enhance reputations, generate positive press and connect clients with media.
Costache (LinkedIn) - Co-Founder and CEO of KrowdMentor
Wong (LinkedIn) - VP Business Development, Propy Inc
A. Spencer (LinkedIn) - Managing Director of Spencer & Associates
Wachsman (LinkedIn) - CEO, Wachsman PR
Salm (LinkedIn) - Financial Risk & Fund Specialist
Swatt (LinkedIn) - Founder, Investor and Advisor at ATS Inc.
Rabenko (LinkedIn) - Legal Consultant, IFC World Bank Group
M. Bommeli (LinkedIn) - Marketing & Communication Specialist
Polyvka (LinkedIn) - Partner at Axon.Partners
The founders of the company have business and investing experience. The fund has a strong technical team with a blockchain background as Ambisafe takes a leading position in the development of blockchain solutions and the release of tokens. The project is also secured by the support of strong advisors and partners who can provide valuable advice.
The team is active on Slack, Facebook, Bitcointalk, Telegram and via e-mail, answering the majority of users’ questions. We were able to talk to TaaS’s founders over e-mail and Skype and they answered our questions. The team gave more than 10 interviews to various publications (more details are found in the Social Media section).
The team participates in many big crypto-events and conferences such as Blockchain Event in Florida, d10e.biz's conference in Bucharest, Keynote 2017 in Dubai, Block Chain Finance & Fin-tech China 2017, at Shanghai, BlockchainUa, Kyiv 2017.
They also have an active blog.
TaaS has recently launched ANN thread on Bitcointalk: on Feb 2, 2017. The project has received considerable attention, getting more than 450 replies throughout 50 per day. The comments are almost exclusively positive, many of them specify on the differences from ICONOMI, and functioning of the fund and investments.
The team spends a considerable amount of money on advertising in various crypto-media outlets. They have also attended many blockchain conferences just over 2 months.
They also have a bounty program for blogging, registrations, translations and local community management.
The company is extensively presented in social media:
It is difficult to say at the moment but comments are mostly positive.
TaaS has been widely covered by press from various crypto and financial media outlets such as Forbes, Econotimes ET, Seeking Alpha, The CoinTelegraph, Bankless Time, Finance Magnates, Payment Week, Finance Feeds, The Blockchain Event.
- Account - Sr. Member,
- Non Self-Moderated Announcement Thread
- Has a detailed and professionally designed website available in English, Chinese, Russian, Spanish, and German,
- The information on the website is clearly structured and convenient for searching.
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.