We assign the TravelChain project a "Stable" rating. TravelTokens sold in the course of the forthcoming tokensale may be of interest as a long-term investment within diversified portfolios of crypto assets, provided that all the risks we have identified, especially the technical ones, are acceptable.
TravelChain is a decentralized platform for data exchange in the travel industry. TravelChain gives the impression of a very ambitious project; the team will have to work hard to launch the entire infrastructure. There is also the issue of the TravelChain community which should be formed on the basis of this infrastructure. If everything is implemented according to the parameters set during the ICO, TravelChain will radically change the world travel industry.
It is important that by mid-December the team is able to demonstrate the project's MVP. Before making a final decision about participation in the ICO, we consider it sensible to wait for its launch; potential investors should analyse it themselves.
The Blockchain community generally has a positive attitude towards projects that will "change life for the better". This could happen this time as well if the community becomes aware of the project; so far, the marketing of the ICO is not particularly successful. We also see a risk in the fact the mechanisms for marketing and promotion in the future are not very clear. In this regard, it should also be noted that TravelChain's marketing budget is smaller than typical budgets for other projects' ICOs.
Another possible issue lies with establishing relations with legal entities (players in the travel industry). TravelChain’s founders plan to sell them 30% of the tokens issued at the initial stage, but at present this is not legally possible: no jurisdiction has any legislation that allows legal entities to book cryptocurrency on the balance.
In addition, the sale of tokens to market players is estimated at about 10 times the price of TravelToken during the ICO. We doubt that in the coming months many will find such a transaction economically viable.
However, assuming the project is implemented in accordance with stated plans, the scale of the future ecosystem will increase the value of the project's tokens; therefore we can recommend participating in the TravelChain project's ICO to long-term crypto project investors who accept the risks we have identified.
General information about the Project and ICO
TravelChain is a decentralized platform for data exchange in the travel industry. A so-called "Smart Traveling ecosystem", according to its creators, will be useful to small and medium enterprises (SME), as well as to end users - tourists. The service will concentrate on identifying the habits and needs of individuals. The TravelChain team not only sets an objective of creating an international database with different levels of access to information provided by users, but also builds ambitious plans to restructure the whole travel business by introducing innovation into b2b and b2c relations in the industry. The founders say that the system will be managed by all its participants depending on the number of TravelTokens in a user account, under the supervision of technical observers, based on the principle of delegated democracy.
Make-up of the TravelChain ecosystem is as follows:
The blockchain - based on the Graphene core.
APIs and libraries for interacting with the blockchain.
Ontology, describing the rules and standards for developing applications in the ecosystem.
The TravelChain web application, which primarily performs interface functions.
TravelChain mobile application: Web application with truncated functionality.
Advertising platforms that provide businesses with the ability to launch advertising campaigns on TravelChain.
Reputation agencies analyzing deals and peer reviews of community members.
The team is launching its ICO to finance the development of the platform from scratch.
ICO Start: December 10, 2017
ICO End: February 10, 2018
Hard cap: US$10 million .
Soft Cap: US$3 million .
Token: TT, TravelToken
ICO Price: 1 TT = 0.0151 USD
Accepted currencies: ETH, BTC
Total issuance: 2 100 000 000 TT
50.69% - pre-ICO + ICO
1% — Bounty program
13.8% — Team
30% — Development fund
2% — Advisors
1.51% — Early Founders & Investors
1% — Safety funds start account
Allocation of funds:
The white paper indicates that up to US$10,000,000 of raised funds will be spent on designing, developing and launching the TravelChain network.
Escrow: no data
On the project site it is indicated that the team has already launched a working blockchain platform for blogging about traveling — "Mapala".
TravelChain creates the impression of a very ambitious project. To launch the entire infrastructure will involve a great deal of work. There is also the issue of building the TravelChain community which should be formed on the basis of this infrastructure. If everything will be implemented according to the parameters set during the stage of the ICO, TravelChain will radically change the world travel industry.
Description of the services and scope of the project
TravelChain’s services can be roughly divided into two groups: The aggregation of user data for tourism market participants, and functioning network features for mobile- and web application developers.
TravelChain for participants in the tourism market
Users will provide information about themselves, their interests and travels, for which they will receive rewards in TravelTokens. This information will be available to registered travel agencies, who will be able to analyze it and offer deals based on the preferences of an individual and the best market offers available at that moment. The emphasis is placed on the fact that, with a well-balanced offer, the interested user will have a simplified scheme of ordering and paying for a tour on the basis of a "Traveler's Passport", i.e. personal data previously entered in the database. Payment is possible in tokens earned for the sale of personal user information, among other things.
A potential tourist will be able to use TravelChain as an information resource: reading existing reviews about a location, tour operator, hotel, etc.
A tourist will be able to receive rewards in TravelChain tokens for writing reviews. The issue of false reviews or fake accounts will be addressed by the introduction of a reputation system for TravelChain members. The credibility of the information provided, communication skills, responsibility, goodwill and intelligence will be assessed in the calculation of reputation.
The project team have also announced a simplified method for using services, for example transport rental without contracts, using only the mobile application.
The ability to maintain and review history of transactions, travels and destination visits, and thus being able to analyze personal experiences and the financial aspects of recreation, even one’s history of search queries in this area.
An opportunity to participate in voting, the results of which will affect the life of the TravelChain community. There is very little public information on the rules of voting, its frequency and planned performance. However, the team stated the following about this issue: “voting is continuous, votes are counted at the time of the automated blockchain maintenance interval. This interval is managed by the economic observers of the network. By default, counting of votes for delegates and the committee will occur once every 60 minutes."
The following features are available for business accounts:
Obtaining private user information, i.e. an analysis of the needs of potential customers, not only those planning a trip in the near future but also customers who are not going to travel right now but are clients of the travel industry in general. This is essentially about collecting statistics and analyzing Big Data. Gathering information clearly takes time, while large players in the travel business already have statistics based on their extensive client bases allowing them to analyze the needs of tourists. This explains the interest of the TravelChain team in engaging SME in the project, since they do not have access to such information.
Targeted delivery of direct advertising messages. The documentation states that the project will create aggregators of information and advertising cores, which can allow businesses to form and deliver personified advertising messages. The uniqueness of this service will be increase of efficiency of spending of advertising budgets. The AdsCore TravelChain advertising core will operate as follows:
Step 1: A business creates an advertising message and targets the GPS coordinates of users who fall within a specific radius.
Step 2: The GPS aggregator provides AdsCore access to the user's coordinates data stream and receives TT token for this.
Step 3: When the user enters the targeted zone specified, AdsCore sends a message to the user, who receives TT token for reading it.
Creation of a decentralized market for owners of corporate assets.
Advertising companies will be provided with paid access to the GPS coordinates of users, which is a good tool for promoting an object to the users in the area.
Thus, if we view TravelChain as a platform for building mobile and web applications, then this a great idea for developers from around the world, abstracting from the practical applicability of different applications for the travel industry. Building applications in conjunction with the TravelChain API will help increase the circulation of TravelTokens within the system.
The owners of applications and web services integrated into TravelÐ¡hain will be essentially key service partners. This can facilitate the development and promotion of TravelChain, although it is not always clear from the documentation how the entire ecosystem will actually work.
The project team has prepared testnet, and promised to present an MVP by mid-December.
A separate document, the technical white paper, is devoted to the technical parameters of the project. The key feature of TravelChain is its own blockchain, based on the Graphene core. The algorithm of consensus is DPOS. The network infrastructure will be maintained by technical observers (delegates), receiving rewards in TravelTokens. The number and composition of the observers is established by the community based on the principles of delegated democracy; the number of delegates can range from 0 to 1000. For the chain of blocks to be considered trustworthy, 51% of delegates must agree on its correctness.
The project team gives the following assessment of the market condition in the white paper:
In theory, the potential audience for the TravelChain project is enormous — this is beyond question. Potentially TravelChain can become an international level player in travel business. However, it is virtually impossible to predict the market share occupied by the company since it is in the initial stages of development, especially given the poor marketing of the project. Main trends in recent years include tourists opting out of package tours since planning and organizing travel independently significantly reduces costs. This will potentially increase the number of users of the system, and could help the project's services attractiveness to customers. Further changes in the remaining traditional relationships in the travel industry will be facilitated by TravelChain if it manages to take up a prominent position in the market.
The situation in the world tourist market is developing rather favorably. According to studies conducted by the U.S. Travel Association, in 2016 the total number of tourists was about 1.2 billion, and the volume of spending amounted to a record 1.5 trillion dollars. The US market was in first place in terms of the number of foreign tourists entering the country (75.6 million) and in second place in estimated money value (207 billion dollars). Based on data from the World Tourism Organization, the global volume of tours will increase by 7% in 2017. In terms of the number of departures, China is among the leaders with more than 130 million tourists, and the interesting fact is that according to research conducted by the Center of Network Internet and Information in China, 53% of Chinese tourists travelled abroad, used mobile applications to order and formalize their trips; the Asian "online travel" market is also in general the fastest-growing one. The European region has also shown steady growth in number of tourists (+ 5.5% in 2015 and + 8% in 2016), and the figures, according to Phocuswright research, amounted to €273 billion in 2016, €264 billion in 2015 and €251 billion in 2014.
Given that the TravelChain project is from Russia, it would be prudent to examine the situation in the Russian tourist market. According to the World Tourism Organization, Russia occupies one of the world's leading places in the field of international travel. According to data provided by the Federal Public Statistics Service, the tourist market GVA share in the Russian Federation's GDP in 2015 was 3.4%. The tourist flow of Russian citizens to foreign countries between January and June 2017 reached 17.1 million people. The general situation in the market is characterized by a study conducted by the Russian Tour Operators' Association, according to which the sphere is currently marked by weak consumer demand caused by a fall in real incomes for the population.
That being said, the tourist flow entering Russia has increased by 6%, and the growth in demand for domestic tourism increased by 15%. And according to ATOP’s data, business profitability in the tour operator segment has declined significantly in recent years (up to 2%), which has led to a decrease in the number of players in the market. Nevertheless, tourism in Russia has the status of an important but still developing economy sector.
The project team is predominantly Russian, with 24 specialists. The amount of information on each participant is limited to a reference to rich managerial and entrepreneurial experience, and there are few data on actual places of work and successes of team members. The project team participate in many events in the field of blockchain technology; they publicize the project and establish new contacts.
Ilya Orlov (CEO/Co-Founder, LinkedIn), education: German gymnasium in Switzerland "Institute auf dem Rosenberg, Zurich University, Publizistik-und Kommunikationswissenschaft department, Ural State University, bachelor degree in International Relations. According to information from the white paper, he is responsible for governance and strategic management. Has a lot of experience in managing SMEs, with up to 450 staff. Has high social skills, a deep knowledge of technology and a clear vision regards the future industry development.
Alexei Muravev (Architect/Co-Founder), education: Master's degree in Nanomaterial Physics and Optoelectronics. According to information from the white paper he is a blockchain expert and research programmer. Master's degree in Nanomaterial Physics and Optoelectronics. Interested in fusion of informational systems. He seeks efficient applied principles for creating high-quality relations between people, based on the latest technologies.
Alexei Soloviev (COO/Co-Founder), education: Unfinished higher education (Ural Federal University, department of Radioelectronics and Information Technologies.) Integrated information security for automated systems). According to information from the white paper: Serial entrepreneur with 15 years of experience in various sectors – trading, services, construction. Top delegate of the Golos blockchain. Additional training in management, formation of corporate structure, marketing, creation and promotion of products. Engaged in corporate management and external development.
The project also boasts 8 advisors listed on its site and consulting the team, among these are: Yuri Matveyev (founder of the Banzay publishing house issuing National Business magazine, 62000 copies), Ruslan Sokolovsky (founder of the Bitjournal online-media and a YouTube blogger), Alex Tursky (founder of the izi.TRAVEL service), etc.
We have not identified any negative or defamatory information (including but not limited to participation in other ICO projects).
Development strategy and roadmap
The roadmap is presented in the project's white paper and is detailed up to Q2 2019.
At this point, testnet is ready, and the ICO is being staged to finance development. In mid-January, the team promises to present an MVP. As early as January 2018 it is planned to launch the basic functionality on TravelChain.io. Next, the system will be customized with additional functionality, key elements of which are as follows:
February 2018: Launch of functioning network (the team promises to launch ahead of schedule.)
Q1-Q2 2018: Mobile application, plug-in for Chrome, JS widget for implementation on the partners' sites.
Q2 2018: Integration of strategic partners, widget implementation, establishment of the developer community.
Q2-Q3 2018: Launch of labour fund, issuing commences, recruiting 100,000 users.
Q1-Q2 2019: Working out infrastructure solutions for the further scaling of the ecosystem.
In the first place, our attention was drawn to the plan to attract 100,000 users to the platform only nine months after the ICO. Given the size of the market, in theory this could be possible. However, the probability of achieving the declared KPI depends more on the size of the final marketing budget and above all on how effectively the team will spend it.
Moreover, the TravelChain Business plan indicates that by the end of 2018 the number of users on the platform will reach 1 million, and by the end of 2020, 330 million. These are figures worthy of an international-class player.
There is little information on the marketing strategy for product promotion in the provided TravelChain documentation. It is known that the team is already engaging travel companies and is looking to engage more of them in order to move their existing client bases into the ecosystem ("integration of strategic partners from the tourist sector") and to advertise on the partner sites ("introduction of widgets into partner sites"). The following existing project partners are listed in the documentation:
In addition, major representatives of the travel industry will be involved in the distribution of tokens according to the TravelChain team’s plans: A development fund (30% of total token issuance) will be established, which will be realized in favor of large-scale players in the travel industry.
The marketing budget up to 2020 is estimated by the team at approximately US$1.2 million. This is 17.8% of the total expense budget for this period. The team will spend about US$110 thousand quarterly on marketing activities. This is not that big an amount compared to other ICO projects. However, this matter also has some positive aspects. Firstly, marketing is often used as an "elegant" way to withdraw the funds raised during an ICO and budgets amounts are often artificially inflated. Secondly, given the huge potential audience, it can be assumed that with quality applications and services, when the working version is developed, information about the project will be transferred from one consumer to another, which will enable an increase in the number of members without active marketing. The project can sell itself, but this process is slow, so a smart marketing strategy will be necessary to accelerate it. A small plus is a pre-existing audience from the first project created by TravelChain’s developers known as Mapala.
As for marketing of the TravelChain ICO, this is very active on the YouTube channel where the team has 1895 subscribers. There is a video blog that describes TravelChain's work progress and their preparation for the ICO, their participation in conferences and other blockchain events and the process of attracting investors.
Otherwise, the marketing of ICO cannot be called sufficiently active. The project is announced on the bitcointalk.org portal, but the thread here is characterized by weak interest from the community and low activity. The lack of coverage of the project in the press and on social media should also be noted. The team manages pages on several social media sites: Facebook (206 subscribers), VK.com (955 subscribers), and Twitter (1137 readers). The site provides links to articles in the media.
Competitors and competitive advantages of the project
Viewing TravelChain as a decentralized platform for data exchange in the travel industry, it is difficult to cite direct competitors for the project. This possibly explains the lack of an appropriate section in the white paper. Moreover, the company plans to change the competitive component in the industry by providing equal access to the data exchange for all market players. In our view, abstracting from the practical applicability and market demand, should the project reach its set objectives and turn into the ecosystem intended, TravelChain will become a unique product for at least some time. Let's examine the individual components of the project's concept and its competitors in these areas.
Repository of the data on travelers and travel destinations. Large-scale travel business players’ own websites that are aggregators of data for travellers (both with the information on locations or services provided by the company and with customer feedback). For example, Tripadvisor and Lonelyplanet. Speaking of storing travelers' own data, we will quote the white paper, which states that most of the data is circulating "within corporate systems: Google, Apple, Amazon, and other major players in the area of interest." By announcing equal access to information on its system, TravelChain provides access to SME without significant client bases, which is certainly an innovation and a strong feature of the project.
In this context, we should also mention that TravelChain is distinguished by the commercial basis of reviews submitted to its system.
Direct advertising messages. TravelChain provides an opportunity to send and receive direct advertising messages to target audiences based on the analysis of user requests and preferences specified within profiles. In all fairness, contextually targeted advertising as such exists for a long period of time and works among other things on the basis of queries on search engines like Google, with which advertisers mostly work at present. A positive aspect of the TravelChain project is therefore a more detailed analysis of consumer needs and thus, a higher efficiency for advertising.
"Smart" selection of news feed and search inquiries. Again, there is a comparison with search engines; not on the basis of popularity of information, but on an analysis of individuals’ preferences.
Unified profile and source of social ties (e.g. friends, subscriptions.) In this aspect, TravelChain acts as a social medium uniting users through travel. Social media such as Facebook or VKontakte also unite people based on their interests by using the service of groups, but only as part of a multifunctional interface. The project focuses only on the subject of traveling, with more sophisticated social communication tools in this area.
Economy of the project
Management of the economy parameters of the TravelChain ecosystem is expected to be carried out by its users and economy observers. Economy observers will manage the blockchain’s economic parameters, trying to balance them and acting in the long-term interest of the community. An Economy Observer Committee will be formed from active participants of the ecosystem: team members, competent activists, representatives of companies and corporations participating in the life of TravelChain.
The operating activities of TravelChain will be financed through two mechanisms:
The first one is fees for operations in the system. For each action in TravelChain, a user will have to pay a fee, the size of which is set by the economy observers. Fees will be fixed with regard to the type of an operation and dynamic with regard to the amount of information published. At the moment, size of the fees is unknown, but it is known that only 20% of fees are allocated directly to TravelChain (Development Fund). 80% is paid to referrers, who invite new users to the platform.
The second one is the funds raised during the ICO. There will be two stages:
Immediately after the project ICO, a Development Fund (30% of total token issuance - 630 million) will be established. It will be sold to travel industry participants, which is intended to both provide additional funding and serve as a marketing tool. On the Development Fund Sale, the tokens will be sold for US$0.1428, which is 9.4 times more expensive than during the token sale. Thus, it is possible to attract up to US$90 million given full placement.
From April 2018 to the end of 2020, additional token issuance will begin. 10% of tokens will be additionally issued per year. Thus, from April to December 2018 an additional 157,500 thousand tokens will be realized in the 12 months of 2019 — 225,750 tokens, in the 12 months of 2020 — 248,325 tokens. The total amount of placed tokens will exceed 2.73 billion. Total issuance goes to the reserve fund and remains under its management. Technical observers of the network will receive rewards from this fund. These tokens will also be allocated to the Digital Development Fund. Community members will receive rewards for their ecosystem development work from the Digital Development Fund.
A total of about US$100 million can potentially be raised during the pre-ICO, ICO and the DFS stage. In contrast, it is very interesting to look at TravelChain's expense budget:
The total amount of expenses for three years will amount to $6.7 million — 15 times less than the amount of funds the project wants to raise. So, in terms of the tokenholder's economic security, the value of platform fees has no significance. However, even if they equalled zero, it is still unclear why TravelChain needs such money.
The team provided us with additional comments about using DFS funds. These funds will not be spent on financing the development of TravelChain and its team; instead they will be spent on the following:
Organizing conferences and hackathons for developers in order to popularize TravelChain in the developer environment and to provide training.
Marketing directed at travel business, publications in industry media, participation in specialized conferences.
Development of acceleration programs to stimulate and launch projects working on TravelChain. Resources will be used to organize the entire process and to attract experts who will assist the projects, but not for investing in the projects.
The launch of multiple co-workings, making use of startups collaborating with TravelChain on favorable terms.
Risks of the Project
TravelChain is a sophisticated and ambitious project; this involves a fairly large number of risks accompanying its activities.
The first risk is technical; the project is multidimensional, and currently it is not clear whether it will be possible to implement all planned functions.
The second risk is the community. Only time will tell whether TravelChain will be able to form a viable community. However this has to be done, so that all the ideas of the project’s authors can be implemented on their own blockchain.
The third risk stems from the second one: a significant role on the platform is given to legal entities, companies working in the travel industry. Moreover, they will have to buy out tokens from the Development Fund, according to the founders. The problem is that to date there is no jurisdiction that has a legislation that allows legal entities to book cryptocurrency on the balance. Moreover, the project team originates from Russia, and just at the time of writing this review the deputy of the Russian Federation Finance Minister, Alexei Moiseev, announced that "forthcoming cryptocurrency law may qualify the creation of cryptocurrency specifically for payments as a criminal offense ". This is directly related to utility tokens, and we can only hope that the Russian proposal will not be duplicated in other jurisdictions.
Also, the project's risks include insufficient coverage of product marketing and a relatively low marketing budget, as well as insufficient disclosure of the information on the project team.
Token investment attractiveness
During the ICO Travel Chain is selling TravelToken. This is a basic utility token of the system required for carrying out any operations on TravelChain. In addition to TravelToken, there will be other digital assets that can be created by the members of the system:
UIA — assets: tickets, points, experience, exchange items of any nature can be traded according to market pricing laws.
MPA — assets: an equivalent value for each type of information, the value of the assets is regulated by creator witnesses (technical observers) or a committee. They are a smart contract.
As far as we understand from the TravelChain documentation, the value of TravelTokens in circulation will not change. 80% of commissions paid in TravelTokens will be transferred to referers, which will then be either converted in the market or further involved in the circulation within the ecosystem. Moreover, token supply will continue to grow, mainly through payments to members of the technical committee.
On the other hand, given the scale of the planned services, it can be assumed that most of fiat assets that were once put in the ecosystem will remain there. If the inflow of fiat, convertible to TravelTokens, into the ecosystem exceeds the sum of the new issuance and the amount of outflow, the value of Traveltoken will grow. Thus, this asset may be of interest as long-term investments within diversified portfolios of crypto assets, provided that all the risks we have identified, especially the technical ones, are acceptable.
There is another notable risk which is intentionally described in this chapter: TravelChain plans to receive about US$90 million, selling tokens from the Development Fund to legal entities, the market participants, at a price nearly 10 times the price of the ICO. Will there be any deals? We do not know, but there is no economic feasibility in this DFS sale at the first glance. If the sale of the Development Fund fails, this may oblige the founders to seriously review the project's plans.
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.