Ties.Network Rating Review
|Start ICO||18 Sep 2017|
|End ICO||18 Oct 2017|
We rate the Ties.Network project at "Stable-".
The Ties.Network project is a blockchain-based business-oriented social networking service. In terms of functions the platform resembles LinkedIn, but it has the advantages of decentralization.
The project will have very serious competitors. This competition may prevent the initiators from achieving the targets they set in the financial model. The financial model presented in the Business Overview looks too optimistic, and a little detached from reality. In our opinion, actual results will be poorer. In addition, we found contradictions in the project documents relating among other things to project revenue sources, which does not earn points for the project either.
From our viewpoint, a TIE token at the initial stage will not outrun the market. As in many other projects, TIE exchange movements will depend on how many people are going to use the platform, and considering that there is no customer base so far, the prospects cannot be evaluated.
Nevertheless, there is an additional peculiarity of the TIE tokens which is the prospects of Ties.DB. If the storage beats other decentralized networks, the demand for node services will grow, which will have a good effect on TIE exchange movements.
About the Project and ICO
Ties.Network is a decentralized blockchain-based business-oriented social networking platform. It empowers organizations and individuals to strike deals through the use of smart contracts. Smart contracts are self-validating and self-executing agreements that function independently. They are constantly checked by the blockchain to ensure terms of the contract are met.
It is a private (not public) blockchain for corporate use. It is public in a limited way, but has a single point that controls the system (data storage cluster) and can cause system failure. It allows arbitrary users to work with it, but it does not allow anyone to become a node because all nodes work with the same data storage.
Ties.Network allows any organization or individual to engage in trade with any entity in any country. It provides a transparent platform for commerce. The connection is flexible, and allows companies or individuals to expand networks and search for specialists in different areas. Goods and services can be offered with the option of immediate purchase.
Company: Ties BV, Dutch
Smart contract platform: Blockchain Ethereum
Contract type: ERC-20, ERC-223
Pre-ICO: expected on 20th of September
ICO start: 09/21/2017 12:00:00 UTC
Maximum ICO period: 10/12/2017
Total issue amount: 200,000,000 TIE. 140,000,000 TIE are offered for sale.
All unallocated tokens will be destroyed. No additional issues will take place after the ICO.
Minimal target: $3,000,000 (soft-cap)
If the minimal target is not reached, the project will be closed, and the funds will be paid back to ICO participants.
Maximal target: $33,600,000 (hard-cap)
ICO price: 1 TIE = $0.24
Currency: BTC, ETH
No minimum or maximum scopes of transactions during the ICO are set, and hypothetically all the tokens may be purchased by one investor.
The bonus program is limited to the ICO period only, and is as follows:
A 20% discount will be offered for the first 10% of tokens sold. It will then decrease to 2-3% every time another 10% are sold.
- 70% of tokens will be allocated during the ICO as described above.
- 2.5% of issued tokens will be used for marketing, the bounTies program and to pay for advisors' services.
- 7.5% Network promotions
- 20% of tokens will be given to the TIES team.
Raised funds will be distributed as follows:
- 31% Marketing support
- 19% IT Functions
- 20% Business
- 16% Support Functions
- 14% Overheads
After the ICO, TIE tokens will be available for trading on cryptocurrency exchanges.
The project’s services and their scope
According to the definition given by the authors in the white paper, Ties.Network is a "decentralized social platform where business professionals can connect and strike business deals via smart-contracts in no time". The project will enable users to comfortably do business within the network and use all the benefits of a decentralized system.
For this purpose, the social network infrastructure will enable the users to:
- trade in goods, services and cryptocurrencies within Ties.Network;
- search for staff;
- organize new blockchain projects and interact with teams of operating startups;
- keep all project information in a decentralized network.
How is a business-oriented social networking service different from general ones? - it is pretty much the same, just a little bit more business. And in business, as everyone knows, trust is what is valued the most. That is why Ties.Network emphasizes the creation of a trustworthy channel for interaction of business partners. This is possible due to a system of internal ratings and escrows.
The "genuine rating" system is organized so that the business rating of a particular user is determined only by the people who have worked with the user. That is why not only rating holders, but also all those leaving a rating bear reputational risks. Apart from giving ratings, one will be able to leave feedback and give recommendations.
Another useful service from Ties.Network is an escrows system. This makes it possible to secure performance of a concluded contract. The contractor will be motivated by the funds deposited to pay for his/her services, and the customer will be happy knowing that payment will only be made after he/she and his/her partners confirm the completion of the order.
Thus in our opinion it is an infrastructure for business projects, particularly blockchain projects, that is most valuable in Ties.Network. As claimed by the authors, there are all the services required for this purpose.
Let us have a look at a few project management options available in Ties.Network which seem the most interesting to us:
- The existence of multiple signature owners for a project’s wallet.
- The possibility for publishing project materials (photos, videos, documents, text, comments).
- Instruments of collaborative financing of a project (fund raising in the project’s wallet).
- Possibility of creating derivatives for funding different aspects of the project.
Data on the project are also stored in a decentralized manner, and in fact, this technology is the core of Ties.Network. It is called Ties.DB and is a decentralized distributed noSQL data base. The technology makes it possible to store large volumes of unstructured data, such as documents, pictures, videos, etc. The network’s decentralization makes it possible to make Ties.Network a reliable, stable and upscaled business tool.
Another important aspect of this network is that specialists are able to find projects of interest and get a job working with them. Experience they gain here will be reliably confirmed and have a positive effect on future activity; this is what sets Ties.Network apart from LinkedIn.
Summarizing the above, we would like to say that the Ties.Network has a wide range of offered options, both as a social networking service and as a data storage service. Here are some of the most useful of them in our opinion:
- It makes it possible to recruit highly professional specialists required for your project.
- It offers a convenient and reliable method of payment for contracts.
- It confers openness and scalability with a technically unlimited basic protocol that can handle a growing amount of storage, and has the potential to be enlarged to accommodate a growth in membership.
The Business Overview of the project contains the following statment: "Ties.Network business model relies on two main market trends (besides blockchain technology) – social business networking and cloud storage services.” In this we agree with the founders; it would be wrong to consider Ties.Network a business-oriented social networking service alone. Decentralized data stores like Ties.DB are already in demand which will only grow in size.
It's no secret that currently, LinkedIn leads the market in business-oriented social networking services. LinkedIn is definitely a benchmark in this social media segment. According to statista.com, as of the start of August 2017 it ranked 19 by number of active users (with more than 106 million active users, and the number of registered users has exceeded 500 million.
The LinkedIn business has been rapidly growing since 2009. The revenue CAGR for this period is over 30% per year. For three quarters of 2016 the service's revenue amounted to some $3.6 billion. Today this indicator is likely to be higher, but there is no reliable information on this, as in December 2016 the company was acquired by the IT giant Microsoft for $26.2 billion.
Below is LinkedIn’s revenue segmentation, 1Q 2009 until 3Q 2016:
For several years it has been hard to imagine global IT business without cloud data storage. The ratio of cloud service price to the costs of maintaining your own infrastructure proves outsourcing to be more efficient. However data storage costs are growing every year, and by the year 2019 will exceed an estimated $50 billion.
Today the cloud services market is divided among the largest IT companies. According to Synergy Research Group, as of the end of the second half of 2016, the largest players included Amazon, Microsoft, IBM and Google. The big four hold over 55% of the entire market.
But progress never ceases, and currently there is a new wave of blockchain-based decentralized data storage facilities in the market. Due to the keen interest in blockchain startups, such solutions are finding more and more clients, and often become a part of decentralized social networking services. We expect that in the near future the demand for such types of data storage will only grow, and there are objective reasons for that.
Currently, the largest social networking services are often criticized from different perspectives. The complaints include censorship, heavy-handed moderation and a tendency to reduce anonymity. Decentralization makes it possible to overcome these limits by way of distributed data storage, where there is no single center capable of editing, removing or disclosing client data. The technology is welcomed in the community; that is why such solutions as IPFS (Inter Planetary File System) may often be seen as the technical basis of new blockchain projects.
The team is not anonymous; it is active on a number of social networks. All information provided is from the project’s official website, public sources, and the team members' LinkedIn profiles. Team representatives communicated well with us while preparing our review, answering questions promptly.
There are 9 members and 5 advisors. The white paper details all necessary information about key members of the project. All necessary reference links proving the specialists’ qualifications are available as well. Examining public sources, we have not found any negative information concerning the members.
The key project members are:
Alexander Neymark (LINKEDIN)
Co-founder and CEO
Alexander Neymark has some experience in launching and developing financial services, such as banks and telecommunications companies. However, he has not been working in this field long, and we fear that he may lack the experience to develop a project of this scale successfully.
Dmitry Kochin (LINKEDIN)
Co-founder and CEO
Dmitry Kochin has a PhD in Technical Sciences, with a strong IT background. He has been a serial entrepreneur in the IT sector since 2005 and has been involved in a variety of software projects dealing with payment processing, account aggregation, computer telephony, and financial services within online games.
A leading expert at the intersection of law, business, and technology with research focuses on innovative technologies, blockchain technology applications, smart contracts, initial coin offerings, hedge funds, and dynamic regulatory methods. He teaches at University of St. Thomas School of Law in Minneapolis and serves as director of the Private Investment Fund Institute (PIFI). At Ties.Network, he advises the PR and social outreach.
Aaron Schwartz (LINKEDIN)
An expert in global blockchain education. He is Director of Global Engagement at Blockchain Education Network and is currently advising several blockchain-based startups. At Ties.Network, he advises the education and science departments with his programming and training expertise.
Dr. Marcel Schlatter (LINKEDIN)
An expert in the IT industry since 1969 with an impressive background as a thought leader and a trusted technical advisor who can bridge between business and technology issues. Over more than three decades, he has worked as a Systems Engineer in the Information Technology and Information Processing Industry, an IT Architect, and IBM Distinguished Engineer and Technical Executive. At Ties.Network, he serves as technical advisor.
Development strategy and Roadmap
The Ties.Network Project was launched in 1Q 2017. As stated in the Business Overview, the development will be completed only 1.5 years after the launch. It means the founders expect to raise $33.6 million, and this amount should be sufficient to launch Ties.Network and Ties.DB in time.
Raised funds are going to be distributed as follows:
- 31% - Marketing support
- 20% - Business
- 19% - IT Functions
- 16% - Support Functions
- 14% - Overheads
We must say that the classification does not clarify the allocation of funds raised during the crowdsale very well. One has to guess, for instance, that about one third of the raised funds will be spent on development.
According to the plan given, the project must go through the following development stages:
2Q 2017 – Research and Prototyping
At this stage the team was working on documents and started developing a platform. According to the results of the stage, the documents were published on the website, and on the project's GitHub the code is regularly updated.
3Q 2017 – Ties.Network ICO
This is where the project is currently. Ties.Network is actively preparing for the forthcoming ICO. We believe that the main efforts are spent on promotion in the crypto community and the revision of documents (e.g. important ICO parameters on the project's website were changed while we were writing this review).
The Business Overview promised the publication of a mysterious Yellow Paper project, but that has not happened so far.
Q4 2017 – Development of Ties.Network and Ties.DB
It was announced that pre-alpha versions of Ties.DB and Ties.Network will be released in 4Q. Apart from that, the start of a Ties.Network marketing program was announced.
Q1-Q3 2018 – Pre-Alpha of Ties.Network and Ties.DB ready
During this period alpha versions of the services will be launched, and almost all the announced functions will be implemented: P2P token exchange, Escrow, Premium subscription. A beta-version of Ties.DB will be actively tested.
Q4 2018 – Launch of Ties.Network
Finally, complete decentralization will be launched, and an active marketing program promoting Ties.DB will be started.
It is hard to tell currently whether the founders will be able to meet these relatively tight deadlines. However, considering the rapid speed of development of the blockchain solutions industry, the developers should use every month and do their best to fulfill the intended plan within the fixed time limit.
The stages of the marketing program to promote the project and ICO are as follows:
- An ambitious bounty program was started; during the program tokens will be distributed as follows:
- Translations & Community management campaign: 100,000 TIE
- Twitter Campaign: 143,600 TIE
- STEEMIT articles + GOLOS articles campaigns: 56,400 TIE
The bounty program is well-thought out. Key requirements for program participants have pages on Facebook, Twitter and Reddit. Rules for commenting in social networking services have been devised.
2) A referral system for future customers will be launched. A registered user can receive additional bonuses, if he/she invites a new participant. For a bonus to be given, a new participant must use a special referral link. No details of the program are being disclosed so far; they are likely to be shared as soon as an MVP is released.
4) The project’s founders participate quite actively in events and conferences dedicated to cryptocurrency projects. Below are several of the latest events attended by the Project representatives:
- “State Of Digital Money” in Los Angeles on July 22
- BFC 2017 in Singapore on June 20-21
- "Fintech Week New York" conference in New York on 22 August
- Crypto Financing conference in London on 7th July 2017
- The project has a YouTube channel containing a video from one of the conferences.
- The project founders actively interact with the community. On Telegram (114 members as of the date of the review) there is an active discussion, and the team promptly responds to users' questions. At the time of writing there were 595 followers on Facebook, 2169 followers on Twitter, and 185 followers on LinkedIn.
The project's competitive strengths
By contrast with classical professional networks, Ties offers a number of additional functions:
- The trade of goods and services
- Trade of cryptocurrencies
- Hiring and recruitment of specialists
- Participating in token generation events and blockchain projects
- Receiving feedback for startups or token generation events
- Promoting token generation events and network with startups
In TIES every transaction is secured by smart-contracts that self-execute after work is completed. Smart contracts can be used to define how much each person in a team receives as remuneration for work completed.
Ties.Network charges fees as well. The team expects that psychologically speaking, users who pay tend to be more appreciative of the community, which is key to maintaining a trustworthy, safe, and secure environment.
It assumes that Ties.DB is not a competitor to other blockchain-based systems, such as IPFS or BigChainDB. TIES can be used in conjunction with them. It can be used to store data that does not need to be immutable, but does require speed of reading, writing, and searching through, as well as full decentralization.
Each of these projects has issues. For example, IPFS does not allow users to upload documents to the cloud, neither does it allow to find documents based on partial content. BigChainDB is not public, not completely decentralized, and its search function for user data is limited. Therefore, Ties.DB surpasses them in these aspects and can be used together with them to complement these solutions.
In order to make sense of the economics of the Ties.Network project, one must first understand how the project is going to generate revenue. Ironically, this is extremely hard to understand. The different sections of the project documents contain different input data which sometimes even contradict each other.
Section 5.1 Platform revenue sources of the project's white paper contains the following:
- Escrow tax
- Currency exchange
At the same time, the following is written two paragraphs below: "Unlike centralized competitors who get their revenues from advertising or from using freemium models, Ties.Network belongs to the community …". This message does not correspond with the stated first source of revenue, advertising.
Section 4.1 Monetization Model of the Business Overview contains the following two revenue sources:
- Premium accounts
- Escrow service
As one can see, this fundamentally differs from what was said in the white paper. This inconsistency casts doubt on the relevance of the economic and financial model provided in the Business Overview. If the founders have not made up their mind about how their business is going to make profit, the models may quickly become irrelevant. The issue may be all-too-common carelessness and inconsistent maintenance of documents.
In the Business Overview, the financial model of the project is revealed nonetheless, which is why the analysis was based mainly on this document. According to the Business Review, monetization is based on the sale of Premium accounts and the Escrow service. The premium service will provide users with additional advantages in the network, such as additional options of data access; a fee will be charged monthly. Escrows will provide users with performance guarantees.
The founders built their model around a number of assumptions as to the operation of Ties.Network during the next five years. Here are the main parameters of the model:
- 15% of premium users on average
- 15% growth of the user base per quarter
- The price of the TIE token will be growing based on the market statistics of other altcoins.
- Ties.Network staff will reach 200 employees in two years.
- Discount rate (WACC) applied to the business model was set at 15% per annum.
The document contains scenario modeling; two scenarios are considered, optimistic and pessimistic. The two scenarios differ only in how bold the predicted growth of final results is five years from the project’s launch.
Summary of results for the two scenarios:
5 years from launch
TIE price, approximately, $
TIE price increment, %
Market capitalization, $
As can be seen from the table, the Pessimistic scenario can be called as such only by a long stretch of the imagination. Both in the former and in the latter case the results are more than just impressive. By the way, LinkedIn before its sale was estimated by the market at 26.5 billion, with the Price to Sales ratio at 7.4; in the pessimistic scenario of Ties.Network this ratio is 18.1. The network's ARPU is $50 in a worst-case scenario, which currently seems extremely overstated considering that the ARPU of LinkedIn was $8 and was considered to be one of the highest among social networking services.
A brief analysis is enough to conclude that the financial model is in the rough stages and probably too optimistic. In our opinion, even in the best environment the actual indicators will be a lot more modest.
The main risk of the project is competition. There are truly serious players with history and reputation in the market. Ties.Network is similar to LinkedIn in general concept, the only difference is that users understand and accept cryptocurrency. LinkedIn has proven itself to be a reliable source of high-quality staff; it will be difficult to lure users to a new resource.
Generally, users may simply not be interested in the project's idea. Despite the fact that the team is offering certain new features, the main services of the system will duplicate solutions already existing in the market. However in contrast with LinkedIn, Ties provides paid services:
“When the user places content in the database on the node server, he or she pays the node's service fee for storing and processing content.”
The ICO of Ties.Network overlaps in time with the ICO of Nexus. Nexus is another blockchain-based social networking service, which is also offering payment for some of the services within its infrastructure with a cryptocurrency. Nexus is not strictly business-oriented; however the projects generally have much in common. As of the date of this review, Nexus has raised just under $5 million of the $28.5m. The actual result of the Ties' crowdsale is very likely to be much worse than the set hard-cap goals.
There are also systemic risks of the cryptocurrency market in general. In the event that the Ties.Network platform makes profits from sources including advertising, escrow tax, and currency exchange, it will be sensitive to cryptocurrency market volatility.
The most important (and at the same time uncontrolled) risk for the project, is the legal risk. Generally, nobody knows what regulations goods and money relationships in terms of cryptocurrency are going to be subject to in future. There may or may not be legal restrictions on payment for physical goods with cryptocurrency. Governmental bodies may launch their own controlled and only nominally decentralized platforms and instruments; or they may support independent cryptocurrency marketplaces. If governments begin controlling the blockchain infrastructure, this will change the market fundamentally. This kind of risk is taken by all investors dealing with cryptocurrency. This is especially true since the team does not provide enough information about legalization and company incorporation.
It should be noted the team is not entirely public. The Ties.Network's website was registered only 70 days ago, and the domain lease term is one year only. The addresses and contacts do not correspond with the information provided by the team. The registrar is anonymous.
The email address the website is registered to - Ties.email@example.com - also appears suspicious. The anonymize.com service used to register the email address is designed to hide the ultimate beneficiary and owner of a domain name. This move seems strange considering that the startup needs to gain as much trust from potential investors as possible. Deliberate concealment of certain information may warn off the community and affect the success of token placement.
Token investment highlights
The main purpose of the TIE token is to be used as a payment instrument within Ties.Network. The token enable the users to:
- pay for transactions made within the network;
- pay a participation fee during the registration in the network every user;
- purchase TIE tokens both within the network and on cryptocurrency exchanges.
There will be three ways for Ties.Network users to make money from the token. First, as a result of the natural growth of demand for the token directly connected with the growth of network users number. Second, to act as a Ti.node (i.e. a participant of the Ties.DB distributed data base.) As indicated in the project's white paper the profit for nodes will be generated by:
- placing content on the node server
- retrieving content from the node server
The third way is the least clear. It involves playing certain roles in the network and facilitating its development. As stated by the founders the project's revenue must be spent on network development and support. Thus, it is logical enough to assume that revenue will be distributed among the most active users supporting the project. Here is the list of the duties (the list and description are entirely taken from the project's white paper):
- Content moderator (who has the authority to delete content and ban users).
- “Super-moderator” (who investigates collusion between nodes and participants, manages the budget, and rejects, or fires, participants).
- Moderators (who arbitrate disputes).
- Technical positions, including developers (who develop software for Ties.Network).
- Ordinary users (covering fair user expenses).
In spite of the fact it appears that the third way has more prospects, it is poorly described in the documentation. The algorithm under which the fees for the duties will be paid is not clear.
In addition, all token holders may get a 20% discount for early participation in the ICO. The bonus program is so structured that the first 10% of the issue are sold at a 20% discount, the next 10% at a 17% discount and so on. The last 10% will be sold without a discount.
Honestly speaking the TIE token has quite an average growth potential. As with many other projects everything will depend on how many users are going to use the platform; considering that there is no customer base so far, rapid growth can hardly be guaranteed.
The key question for token holders is the prospects of Ties.DB: if the storage beats other decentralized networks, demand for node services will grow.