True Flip Rating Review

Ratings

We rate the True Flip project as "Stable +". We rate the TFL tokens as “better than the market” and recommend the individuals who are loyal to the investment risk defined herein to BUY the TFL tokens within the ICO.

We like three things about the True Flip project:

- The idea itself: genius in simplicity,

- Realistic forecasts and expectations of the project founders, and

- Multiple potential of the project scalability.

The gambling market is growing. Online gambling as a whole and online lottery in particular show advanced tempos. Countries of the Asia-Pacific region, primarily China, make up the leading region for the market.

At the same time, the popularization of crypto-currency trading in China stipulates the synergy between the online lottery and the jackpot in the + blockchain crypto-currency. This is a synergetic effect that can be implemented by the True Flip project in the future.

Risks of the project are mainly related to the technological peculiarities of the movement and storage of coins. They do not differ from the risks of any blockchain project whose ecosystem functioning is tied to the movement of crypto-currencies. We have not identified specific risks for the lottery functioning.

Our positive view of the project is also substantiated by the fact that it has already been launched and is functioning. During several months before the ICO, the developers gave the opportunity to participate in the lottery with a small jackpot which can be used to test the functionality.

All this allows us to rate the project as “Stable +”.

The investment attractiveness of the TFL token is based on the following factors:

- Dividend yield that is directly proportional to the increase in the market share of the True Flip lottery,

- Prospects of the project scalability on the market, and

- Participation of token holders in the lottery management (by using the voting mechanism).

The main uncertainty for the investor who is the ICO member is whether the True Flip management will be able to scale the project and take the planned market share. Everything is interconnected in this project:

● The higher the dividend per token is, the more expensive the token is,

● The greater the tickets turnover is, the greater the dividend per token is,

● The larger the jackpot is, the greater the tickets turnover is, and

● The more tokens are sold during the ICO, the larger is the jackpot.

Thus, the participation in the ICO becomes profitable for the investor because it contributes to filling the jackpot and increasing the tickets turnover and dividend yield.

Rating the token as "better than the market", we rely on the effect of the above synergy which, to our mind, increases the probability of the True Flip lottery to achieve the levels of market shares as declared by the founders.

Information about the Project and ICO

True Flip is a lottery based on the blockchain. Before the Pre-ICO it functioned with a simplified system of winnings and without a full jackpot. In order to form the jackpot and complete the project, the team took the decision to place the TFL tokens on the Ethereum blockchain. Tokens will not take any part in the further functioning of the lottery. This is a tool exclusively to raise financing.

The maximum term of the ICO is 30 days as of the launch date.

The total issue volume is 21,000,000 tokens. After the ICO TFL tokens will not be issued anymore. 1,050,000 tokens have already been sold during the Pre-ICO.

The price of ICO is 1 TFL = 0.0005 BTC. ETH and Litecoin will also be accepted during the ICO. The price of the TFL token in other crypto-currencies will be determined depending on the data about the rate of crypto-currencies in relation to BTC.

Distribution of funds – 14,700,000 TFL (70%, including 5% sold during the Pre-ICO) - for sale, 4,200,000 TFL (20%) - for the team, 1,050,000 TFL (5%) – for the bounty campaign, 630,000 (3%) – for the advisers, 420,000 (2%) - escrow.

Investment targets – min is not established, max is 6,125 BTC. In case the maximum ICO funding cap is not reached, all unredeemed tokens will be burned.

Bonus tokens will be accrued to investors on the regressive basis depending on the number of the sold TFL tokens:

The True Flip documentation provides embargo on the sale of the team's shares: only 20% of the tokens will be available for sale after the ICO, 40% - before the KPI (launch of three additional lotteries provided by the Roadmap), the remaining 40% - in 12 months.

 

Description of the Project Services and Their Application

True Flip is a lottery based on the blockchain. It is assumed that the blockchain technology will ensure the platform decentralization. It means that any ticket sale, drawing, victory and the prizes accrual will be recorded in the blockchain. Theoretically it will ensure complete independence of the draw (impossibility of the lottery operator to influence its results). Practically the developers realize that achieving the full decentralization is currently technologically impossible. However, they state about the plans to make the platform as decentralized as possible.

Based on the platform, the lottery like a famous Powerball game - the most popular American lottery in the world - is now being implemented. Tickets are sold in 44 US states. During the game, its participants choose 6 numbers from two blocks: five numbers from the first block from 1 to 69, and one number from the other block from 1 to 26. The jackpot is played when all six numbers coincide. Drawings are held twice a week.

This is Powerball where the largest jackpot in the history has been won. It happened on January 13, 2016. The win cleared of all mandatory payments was $983.5 million:

Largest US Lottery Wins

Rank

Jackpot

Cash value

Game

Date

1

$1,586.4

$983.5

Powerball

January 13, 2016

2

$656

$474

Mega Millions

March 30, 2012

5

$587.5

$384.7

Powerball

November 28, 2012

6

$564.1

$381.1

Powerball

February 11, 2015

7

$536

$378.3

Mega Millions

July 8, 2016

4

$590.5

$370.9

Powerball

May 18, 2013

3

$648

$347.6

Mega Millions

December 17, 2013

8

$487

$341.7

Powerball

July 30, 2016

12

$429.6

$284.1

Powerball

May 7, 2016

10

$447.8

$279.1

Powerball

June 10, 2017

11

$435.3

$263.4

Powerball

February 22, 2017

9

$448.4

$258.2

Powerball

August 7, 2013

14

$420.9

$254.6

Powerball

November 26, 2016

13

$425.3

$242.2

Powerball

February 19, 2014

18

$380

$240

Mega Millions

January 4, 2011

17

$390

$233.1

Mega Millions

March 6, 2007

15

$414

$230.9

Mega Millions

March 18, 2014

23

$337

$224.7

Powerball

August 15, 2012

16

$399.4

$223.3

Powerball

September 18, 2013

25

$333

$214

Mega Millions

August 28, 2009

22

$338.3

$211.0

Powerball

March 23, 2013

24

$336.4

$210.0

Powerball

February 11, 2012

29

$319

$202.8

Mega Millions

March 25, 2011

28

$326

$197.5

Mega Millions

November 4, 2014

27

$330

$194.4

Mega Millions

August 31, 2007

30

$315

$185

Mega Millions

November 15, 2005

20

$363

$180

The Big GameMM

May 9, 2000

19

$365

$177.3

Powerball

February 18, 2006

26

$331

$174

The Big GameMM

April 16, 2002

31

$314.9

$170.5

Powerball

December 25, 2002

21

$340

$164.4

Powerball

October 19, 2005

32

$314.3

$146.0

Powerball

August 25, 2007

It is obvious that Powerball appears in ratings of the most profitable jackpots most often.

The True Flip lottery is held every day. The winning ticket is picked based on the hash of the first block on the bitcoin blockchain after 20:00 UTC. Every transaction will be available for all lottery participants to audit through the True Flip platform. The numbers that are lost during the lottery, as well as the numbers of the winning tickets will be automatically recorded in the smart contract on the Ethereum blockchain for any participant of the lottery to be able to check the fairness of the winnings distribution.

The probability of winning the True Flip lottery is higher than in Powerball. Numbers are chosen from 49 numbers but not from 69 numbers as in the classical lottery. According to the True Flip estimates, it increases the probability of winning the jackpot 1.3 times.

According to the True Flip calculations, the probability to win the jackpot is 1:49,504,950. The table of wins with probability calculations is found below. The lottery mathematics was developed by one of the True Flip team members - Felix Sidokhin.

The lottery algorithm is posted on GitHub to be audited by the community.

It is planned to sell the lottery ticket for 0.001 BTC. It is necessary to buy a lottery ticket until 19:30 UTC. After that transactions will be blocked during half an hour before determining the winning lottery combination. The payment will be accepted in BTC, Litecoin, ETH, and Waves.

The winnings are supposed to be automatically credited to the winners' personal wallets by using the smart contract infrastructure excluding the jackpot: it will be manually transferred from the cold storage to the winner’s wallet.

Market Review

In its Whitepaper True Flip refers to the analysis of the game industry made by H2 Gambling Capital. H2 Gambling Capital is a consulting agency that provides information and analytical support for the online and offline gaming industry in the USA and Europe. H2G is mentioned almost in all analytical reports related to the gaming industry. That is why it is possible to consider this data source as rather adequate.

We checked the H2G calculations shown in the Whitepaper True Flip and compared them with the data of other industry analysts. The H2G estimates are very close to the Statista data: Statista estimates the online-gambling market in 2016 on the level of $45.86 bln.1, i.е. this is even a bit more higher than according to the H2G estimates given in Whitepaper ($44 billion). Statista expects the market to grow up to $56.05 bln. by 2018.

Thus, we can confirm that the market review made in the Whitepaper estimates the situation rather adequately.

In 2016 the online lottery market True Flip will have to occupy is estimated on the level of $3.85 bln. (8.8% of the online market). True Flip expects the growth of the entire online market up to $60 bln. by 2020. Subject to maintaining the 8.8% share, the volume of the online lottery market will be $5.3 bln.

We will also note that the growth of the market is generated primarily by players from the Asia-Pacific Region. For example, in 2016 the ATR games market grew by 10.7%, with the ATR share being 47%:

In this sense the lottery placement on blockchain and carrying out the ICO seem to us a very successful venture: here the synergy effect - the traditional demand of investors from the APR countries for crypto-currency assets and their love for gambling - is possible.

TEAM

We have got a positive impression from communicating with representatives of True Flip. In addition to the IR head, we spoke to COO and CFO. CFO is responsible for financial calculations, and COO - for strategic management. The team is not anonymous, and is represented in social networks.

Nikita Parhomenko (Facebook, LinkedIn) - COO of True Flip

Nikita Parhomenko started as COO in the True Flip project in November 2016. Before that he had held the position of CEO in a number of companies: 7 Pikes Inc., Piluli.ru & eApteka.ru, Racios Group, LLC Internet projects. He implemented such Internet projects as online drug stores Piluli.ru and eApteka.ru, Kidstore.ru. There are good reviews from his colleagues working for the 7 Pikes Inc. software company.

Daniil Andrianov (LinkedIn) - CFO of True Flip

Daniil Andrianov held the position of the innovation center head at the Bauman University. There he developed the “Innopark Innovation Center” and “MSTC Innovation Center” projects. He also held managing positions in the Financial Department and Sales Department of such companies as Partmedia Agency and Part Group.

Konstantin Katsev (Facebook) - Marketing Director, IR

Konstantin Katsev is a co-founder and an expert on marketing and promotion of the True Flip project.

He participated in the creation and promotion of Minex.io as a customer service manager. He was also a co-founder there.

Felix Sidokhin (LinkedIn) - Lead Developer

Felix Sidokhin was a developer in the Minex.io startup together with other members of the current True Flip team. He is a founder and developer of algorithms in QuantAce Inc. The company specializes in creating algorithmic trading systems on world exchanges. He obtained the Master's Degree in Mathematics at the Concordia University. He developed the mathematics of the True Flip lottery. He did not publish his developments either for the Minex or QuantAce Inc. project in open resources.

Project Development Strategy and Roadmap

Unlike the majority of projects that enter the ICO, True Flip is an already functioning business. At https://trueflip.io/ you can participate in the lottery that has already been available since May 10, 2017. According to the statistics provided by True Flip, when testing the marketing strategy, the maximum number of the website visitors reached 45 thousand people per day; above 18 thousand lottery tickets participated in the draw (a considerable part of 70% of tickets were promotions provided by the referral program “bring your friend and get two free tickets per each, as well as a 2% lifetime from all wins of your friend”). In total during the lottery testing the players have won more than 21 BTC (the information on payments is available on the blockchain).

Now the jackpot is 40 BTC. A separate system of wins is provided for promo (free) tickets. It is limited to the maximum prize of 1 bitcoin when guessing all 6 numbers. Thus, the wording used for marketing purposes "Win bitcoin in a free lottery" is fair.

The further development of the project entirely depends in the ICO success. Despite the fact that in its Whitepaper True Flip mentioned several reasons to enter the crowd-sale, the main one is undoubtedly the following: the need to raise funding to form the jackpot.

At this stage True Flip completed the Pre-ICO where more than 200 BTC were collected and 5% of tokens were sold. During the ICO True Flip expects to collect 6,125 BTC more by selling 70% of the tokens in total.

This is the structure of distributing the crowd-sale income:

Thus, the maximum amount of the jackpot could be 3,075 BTC. However, the team realizes that the jackpot of more than $7 mln. (according to the today's rate) can cause the increased interest not only from honest players, but also from swindlers who will try to dishonestly get the jackpot. To minimize the risks, the True Flip team is going to spend the ICO funds to attract independent specialists to conduct analytics and give recommendations on performing large-scale works to provide extra protection and minimize vulnerabilities (everyone remembers the sad experience of DAO that entered the market too early, and failed to provide the reliable protection). That is why during the first 3 months the jackpot will be artificially limited down to 200-350 BTC (which is also quite much).

Upon the testing completion, the jackpot will be divided into two parts according to the 80:20 ratio. The largest part of the jackpot will be immediately played (let’s call it jackpot1). The smaller part (jackpot2) will be maintained until jackpot1 is won. Both jackpots will be kept in cold wallets.

Thus, jackpot1 will be 1,960 BTC, and jackpot2 will be 490 BTC. In our opinion, it is an absolutely justified solution in terms of marketing tokens. By this True Flip compensates for the tokens holders’ risk related to the theoretically possible win of the jackpot at one of the early stages of the lottery. The loss of the jackpot at an early stage of the lottery would mean loss of the players’ interest in the True Flip lottery which is a risk, above all, for tokens holders who are ICO participants.

In the future jackpot1 will be played every day and replenished by selling lottery tickets. The revenues from sales are distributed as follows:

● 60% - jackpot,

● 10-15% - dividends for TFL tokens holders,

● 5-10% - operating expenses,

● 15-20% - marketing, and

● 2% - referral program.

In case jackpot1 is won, it is replaced by jackpot2. Jackpot3 is formed for the reserve. Jackpot2 is played and replenished every day, but only 48% of the revenues earned by selling tickets is spent for replenishing it (60% of the revenues from selling tickets is distributed between two jackpots according to the 80:20 ratio). 12% of the revenues are credited to jackpot3, and so on.

Financial calculations of True Flip assume two stages. At the first stage the daily volume of the sold lottery tickets will be 15 thousand. It corresponds to the daily turnover of 15 BTC (5,475 BTC per year). Depending on the BTC/USD exchange rate, in this case the True Flip market share will be 0.3-0.4%.

At the second stage the volume of the sold tickets will reach 50 thousand (50 BTC per day, 18,250 BTC per year). In this case the market share of True Flip will reach 1.3%.

We find the forecasts to be realistic. Taking into account the above factors and advantages of the decentralization for online gambling, we think that the True Flip business is scaled even more. We will also note that these forecasts do not take into account the probable growth of the BTC/USD rate. Taking into account the community expectations on the further growth of the crypto-currencies market, the market share of True Flip will increase automatically.

The further project development plan includes the launch of three additional lotteries played every 15-30 minutes. We think this decision to be ambiguous: the lottery is popular when it has a big jackpot. Four lotteries under the same brand can cause the jackpot blurring: this is a potential risk for the total ticket turnover.

Marketing Strategy

Marketing is one of the most important components of the lottery success. The True Flip marketing plan includes four components:

  • Referral program,

  • Partner networks,

  • Advertising in blogs, and

  • Offline advertising.

Inviting a friend according to the referral program gives two types of bonus: a free ticket and 2% of all future possible wins of the friend. These are good conditions that motivate to establish a network of one’s own referrals. At the same time 2% are paid out of the separate marketing budget but not from the friend's win.

As for partner networks, it is more difficult. True Flip declares the development of its own widget for the rapid purchase of lottery tickets on partners’ websites. However, the process of concluding agreements is not easy due to the low margins of True Flip for CPA networks. We discussed possible ways of solving the problem with the team: new negotiations with a new offer that can raise the average check for the CPA several times will be held simultaneously with the ICO.

As for online and offline advertising, in general there is nothing to add. There is an issue related to conversion and quality of landings the advertisement will refer to. For this purpose, True Flip promises to translate the landing into foreign languages, including Chinese, Korean, and Japanese.

The total marketing budget is 1,225 BTC + 15-20% of the total ticket turnover.

The project disadvante is a rather weak public interaction with the community: there is no activity in the thread on Bitcoinatalk. It is the platform where developers often share important information that can change the opinion about the project among potential investors. As a response to this challenge, the team said that it had to focus its resources on improving the product after the hype in the mid-May when the number of players exceeded 20 thousand people per day.

Competitive Advantages of the Project

It is necessary to analyze the True Flip competitive advantages according to two categories – by comparing them with classic offline lotteries and with similar online projects. First of all, we will reveal the main advantages of the platform in relation to traditional types of gambling.

One of the main problems of offline lotteries is the participants’ distrust to the process of winning combinations, in spite of all attempts of their owners to create the likeness of “openness” and independence of falling numbers. In this respect, the blockchain technology together with “smart contracts” the True Flip project is based on provides owners of lottery tickets with a real opportunity to make sure that there are no frauds from the interested parties.

In addition, the use of the blockchain-based solution solves several other important problems that are peculiar of traditional draws:

1) Participants of the True Flip lottery do not need to disclose their personal data, which becomes especially important in case of winning a large amount,

2) Payments on prize tickets are accrued automatically and transferred after the drawing. It allows avoiding errors related to the human factor, and significantly speeding up the funds withdrawal as compared to offline lotteries where the receipt of money in some countries may take several years.

3) As the project develops, all transactions related to purchasing tickets, distributing the revenues from selling them and replenishing the jackpot will be open and available for everyone to analyze. Thus, the participants of the drawing can be sure that all the money they have spent will be honestly divided in accordance with the goals stated by the developers, and will not settle in the pockets of unscrupulous entrepreneurs.

4) The platform structure assumes the possibility to vote for the change in the volume of cash flows sent for advertising, dividend payments or operating expenses. And although it will require investing a certain amount of money in purchasing the project tokens, to our mind, the probability of such functionality in offline lotteries tends to zero.

In addition to the above, a great advantage of the True Flip platform will include the entire decentralization of the service the developers plan to implement in the first quarter of 2018. If this task is successfully completed, it will be almost impossible to block access to True Flip by using the existing methods of traffic control which will considerably increase the project audience because anyone will be able to take part in the drawings.

Among the online projects that have a similar to True Flip functionality, it is possible to single out the Kibo platform that was firstly introduced to the public in July 2016. This is a project of the decentralized lottery that works on Ethereum “smart contracts”. During the ICO that took place in November 2016, Kibo managed to raise 290,697 ETH, but at the moment only a test version of the product for a small number of participants has been launched, and there is no information about the plans for a full-fledged launch of the platform. For these reasons, the True Flip project has all chances to succeed, because their service already sells not less than 1,000 tickets per day, and after the Pre-ICO the amount of the jackpot has exceeded $100,000.

Besides, the Internet has a lot of online lotteries, casinos and other gambling games that to some extent use the blockchain technology. However, all of them have disadvantages related either to the centralized management and distribution of funds or to the absence of a large prize fund which has key importance for popularizing the drawing.

Technical Parameters of the Project

Technical audit

The Truе Flip project has a public repository on github.com4. The repository contains one code file written in Python. On June 16, 2017 the developers deleted the most of the algorithm code: 291 out of 329 code lines were cut out.

They commented on their actions and called it the code optimization. Now the Github repository contains only the algorithm for determining the winning numbers. The functions that determine the distribution of the prize among the tickets are not available any more.

The algorithm script is not enough to fully evaluate the project. The developers have not posted the announced blockchain solution that allows excluding the manipulation of the lottery process and payment to the winners. We will also note that at this stage it is impossible to verify the compliance of the used algorithm with the announced one.

Technical conditions for purchasing tokens

The process of buying a token is an ordinary crypto-currency transaction that indicates special information: address, data, and gas limit. There is an important point: the payment is made only from a crypto-wallet. It is prohibited to pay directly from the exchange. Example of the payment field:

After the crowd-sale, the collected funds will be placed for the cold storage in the wallet with the multi-signature the developers will not have access to. This will provide certain security for investors.

For tokens holders the website has a special section where it will be possible to monitor online the financial state of the company. Using their personal accounts, the tokens owners will also be able to take part in voting on the issues related to the project development and management.

Overview of algorithm

Overview

True Flip is a gamble game project built on probability system. Gameplay is a follow:

1. Gamers select 6 numbers in different ranges;

2. 5 of them are marked as a white. They must be in range 1-49;

3. 1 of them is marked as a red; This color must be in range 1-29;

4. Once a day the game operator run equability function to select win combination.

Prize calculation rules:

Getting the Bet

Getting the users’ bet is the one of the most significant part of the game. Process has to be transparent, immutable and fraud tolerant.  There some rules must be achieved:

● Every Bet must be verifiable by anyone. User should be able to check the bets correctness on the whole process, from gathering the bets until the winners selection;

● System should not allow to change the bet after the end of the spin;

● User may put their game combination at any time, but strongly before spin time;

● User pays for the Bet in different currencies and cryptocurrencies. Truе Flip​ uses payments gateway to accept fiat payments.

Game spin

Gamble games are based on equability functions, which guarantee that some events will be happened not more than other ones in the long term usage.  Truе Flip​ provided prize counter function (​https://github.com/TrueFlip/prizecounter​) which is used to calculate winner bet. We ran 2 tests with 1 million seeds to get ​the expected value of a random variable​. Test seeds were pseudo random generated values with the length equals to the hash of the Bitcoin blocks. Goal of the test is to get ​expected value for a whole range of white and red balls and calculate dispersion.    

1. Black Balls: Expected Value

2. White Balls: Expected Value

From the charts above we can conclude that all values from the range for white and red balls happen with equability. Test values weren't true random because this is unreachable on the modern hardware. However, Truе Flip ​ uses hash of the Bitcoin Block which is unpredictable and unforgeable. This is the good incoming data to use as a seed. During the test 1 bug was found which caused infinity loop. Last update of the sources was 2 years ago. We informed the team and expecting that sources will be updated.  

Summary

Truе Flip ​ uses hash of future bitcoin block as a seed. It a good idea, because of hash is a good random value. After winning combinations are determined, service calculates reward amount in BTC and sends them to appropriate participants. We recommended to add transparency to the payments and put winning combination directly inside the Bitcoin transactions. Transactions are distributed between all participants and it can be verified by everyone. Probability function has a good expected value which means that no any predictable values. 

We recommend to do Betting process more transparent and verifiable. E.g use public Blockchain to get Bet from the users. Smart Contract there can be legal agreement between parties. It allows to verify that no special Bets are added during the new spin round.

Project Economy

The project economy is entirely based on distributing revenues from selling lottery tickets. According to our calculations, True Flip will be able to allocate not more than 28% of the revenues from selling tokens to finance operating activities.

We have audited the financial model of True Flip. Subject to the full placement during the ICO, we have made the following conclusions:

By the end of 2018, less than 60% of the development budget will have been spent,

By the end of 2018, 65% of the marketing budget will have been assimilated, and

By the end of 2018 the accumulated operating loss will be not more than 70% of the funds raised to finance it during the crowd-sale.

The safety margin of the project is great: potential funding will be enough by the end of 2018 even if the total sales goal is not reached. According to our calculations, the threshold value of attracting during the crowd-sale is 4,300 BTC: if the volume of attraction is lower, there will be a risk of lack of funding to complete the project development in the nearest year and a half.

Project Risks

No specific risks that could considerably affect the performance of the True Flip platform have been revealed at this stage. Nevertheless, we cannot entirely exclude traditional risks that are peculiar of business relations in general, as well as typical threats associated with information technologies that are used to create the project.

The most significant threat is related to the counteragent’s risk associated with the failure of True Flip or Escrow's guarantor to fulfill their obligations on paying out the prize in case of the win. The platform architecture is arranged so that the main jackpot funds will be held in the cold wallet of third parties who will have to manually transfer them to the draw winners. This scheme is stipulated by the fact that it would be even more risky to store a large amount of money on electronic wallets connected to the shared True Flip server. As a result, thanks to the wide popularity and high confidence in the declared Escrow agents in the industry, it is possible to say that the project team has chosen the optimal solution for this risk.

The second most important risk, to our mind, is the legislative one associated with the peculiarities of the legal aspects established in relation to gambling in various countries. As it is known, this area is rather rigidly regulated by states, and in some countries online casinos and lotteries are prohibited at all. The fact that the True Flip website has been found in the list of the prohibited online resources in the Russian Federation since May 31, 2017 is a vivid example of this danger. However, such blocking is not efficient in fighting against websites that do not comply with laws because there are many ways to circumvent them. Moreover, according to the True Flip developers, they have already started cooperating with one of the most well-known consulting companies to create the necessary documentation to meet all legal requirements.

Another risk investors should take into account when taking the decision on participating in the ICO of the True Flip project is its recent launch and, thus, possible errors in the code that can be exploited by trespassers. Despite the fact that the main prize will be stored in a cold wallet, which minimizes the possibility to steal it, hackers can take advantage of potential gaps in the computer platform protection or errors in open code areas and, thus, dishonestly take possession of the jackpot or cash of other participants in the system. However, even here the project developers chose, in our opinion, the most acceptable solution for this problem. They limited the amount of the prize to 200 BTC until they pass an independent code audit and make sure about the stability and security of the entire system. The team states that it will carry out these works within 3 months after the ICO completion.

Assessing the aggregate of the project risks, the team qualification, development stage and market potential, we rank True Flip as “Stable +”.

Investment Attractiveness of the Token

The True Flip tokens are not an infrastructure tool. They are not required to buy lottery tickets. Moreover, now it is not even assumed to provide an opportunity to pay for the lottery ticket with a TFL token (without converting the latter into BTC or other crypto-currency).

Thus, the TFL token is only an investment tool. According to the True Flip statements, it will be quoted on exchanges, but the team has not yet disclosed these exchanges and time. The issuer of the token provides the payment of dividends at the rate of 10-15% of the revenues from selling lottery tickets. The following points are important:

1) Dividends are accrued every day but paid once a quarter,

2) Payment is made only to the “parked” tokens, i.e. the tokens blocked on the lottery server during the dividends payment period,

3) The total amount to be paid is divided into the number of the “parked” tokens rather than into the total number of the issued tokens, and

4) The payment within the corridor boundaries in the amount of 10-15% of the revenues from selling lottery tickets is determined by voting of the tokens holders.

These are details on every point.

1) The True Flip team announced a convenient tool to monitor the accumulated but not paid dividends - Token holder panel.

The scheme related to the tokens that are accrued but not paid resembles the accumulated coupon yield in bonds. It differs only by the fact that the bond trades organizer guarantees that the accumulated coupon yield will be paid by the buyer to the bond seller if the sale is made before the date of the actual payment of the coupon.

2) Payment is made only for “parked” tokens

It makes dividend payments for the token very similar to dividend payments per share: the list of the shareholders who are entitled to obtain dividends for a certain period is also formed as on a certain date (register of shareholders). However, traditional shares as on the record date are not withdrawn from trading - it is possible to carry out transactions with them in the usual manner. In case of True Flip, “parked tokens” are excluded from the exchange turnover for the “parking” period.

It means the following for token holders:

- It is important not to miss the moment and timely “park” the tokens (all tokens holders will be informed and announced in advance),

- Liquidity of tokens as on dividend payments will be greatly reduced due to the decrease in the number of circulating tokens,

- The actual dividend may be more than the calculated one: due to the fact that not all tokens can be “parked”, the total amount of payments will be divided into a lower number of tokens, which will contribute to the increase in the dividends yield, and

- The token will be subject to “dividend gaps”: fall of the dividend price after determining the persons entitled to obtain the dividend.

3) It has already been noted that the amount of the actual dividend can be higher than expected due to the fact that not all tokens can be parked. The opposite effect of this is the decrease in the liquidity of the TFL token market which can be used by some trades participants to manipulate the price of these tokens. In other words, strong non-market changes in the token price are possible during these periods.

4) The ICO documentation provides for voting of the tokens holders on important issues, including about the share of the revenues spent for dividends.

The Whitepaper describes the voting procedure in some details. It is important that only two answers will be available for voting: YES or NO. It means that it will not be possible to select the amount of the dividend in the corridor from 10 to 15% of the revenues by simple majority of votes. Apparently there will be an offer from the founders: for example, do you support the payment of the dividends at the rate of 12.5% ​​of the revenues from selling lottery tickets? YES or NO? Such mechanism resembles the recommendation of the Board of Directors to the general meeting of shareholders of a traditional corporation. In addition, it is assumed that the tokens holders will be able to recommend the issues to be voted on.

In the future taking into account the growth of the market share, according to our calculations, the dividend yield of the TFL tokens can reach 49% in BTC, without taking into account the risk of changes related to the quotes of the crypto-currency pair. The forecast of the future volume of the market is based on two assumptions:

- The share of the online lottery market in the aggregate online gambling will remain stable - about 8.3%,

- The online gambling market is growing, CAGR = 10.8%.

In order to understand the probability of True Flip occupying a larger market share than stated in the Whitepaper, we compared the project with the traditional Powerball.

As on the date of this review, the Powerball jackpot is $32.4 million (the jackpot cleared of all mandatory payments). The ticket price is $2. Thus, the rate of the ticket price to the jackpot is 1:16,200,000.

A True Flip ticket price is 0.001 BTC. For the rate of the ticket price to the jackpot to equal to the classic Powerball, the jackpot must be 16,200 BTC. However, it is necessary to correct this figure because the probability of winning in True Flip is higher than in Powerball by 30% (according to the True Flip calculations, see Chapter Description of the Project Services and Their Application).

As a result, according to our calculations, the target value of the jackpot is 12,460 BTC. In other words, today with the jackpot of 12,460 BTC, the market share of True Flip should be equal to the market share of Powerball.

Next, we have calculated for how long the True Flip lottery should function in order to achieve the target jackpot under the following assumptions:

  • The turnover grows equally from 1 BTC immediately after the ICO to the declared 50 BTC by the end of the first year, etc.

  • Every day lottery participants will win on average 30% of the sold tickets amount, and

  • The jackpot will not be won.

The target value of the jackpot under these assumptions will be achieved in 716 days - less than in two years: a very short period of time to become the largest lottery in the world.

Of course, when taking a decision about participating in the ICO, it is necessary to estimate the risks if the market share is not reached: in this case, the dividend yield will be low, and the payback period of investments will be extended. Nevertheless, we see a huge potential for the growth of the TFL token price if the lottery succeeds on the market, and we assign the “better than the market” investment rating. That is why investments in TFL tokens should be diversified by other crypto-currency tools.

 

 

 

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.