VINchain Rating Review
|Start ICO||01 Feb 2018|
|End ICO||15 Apr 2018|
We assign the VINchain project a "Stable" rating.
VINchain is a project developing a decentralized ecosystem that is an aggregator for information at various levels regarding the life cycle of a car. The team is seeking to create a marketplace that will be in demand not only from car owners but also from other car market participants - auto dealers, insurance companies, maintenance stations, banks and leasing companies. The most important product of this marketplace will be a database of cars from which all interested parties will be able to access information or a report about each particular car by its VIN number.
The project is being conducted by a team with experience in the auto business. High-level managers from the American divisions of global car manufacturers are among its advisors, which could contribute to the successful implementation of the project.
VIN tokens perform exclusively utility functions, being a means of payment in the VINchain ecosystem and a currency for remuneration of information providers. In the event that the team manages to realize its ideas, the system will be closed; this could positively affect the price of the token if popularized. Since a beta version for the US will be released in Q3 2018, the token should be in demand within a relatively short time.
Key risks for the project are the feasibility of its plans and the value of information to be contained in the VINchain database. Despite a system of rewards and ratings, it is practically impossible to verify information from data providers, which means that the blockchain will solve only one problem of existing centralized databases – a possibility to alter recorded information. There are also questions regarding a number of additional services the team is planning to implement - automatic vehicle diagnostics and others.
General Information about the Project and ICO
VINchain is a project for a decentralized ecosystem that is an aggregator for information of various levels regarding the life cycle of a car. The team is seeking to create a marketplace that will be in demand not only from car owners but also from other car market participants - auto dealers, insurance companies, maintenance stations, banks and leasing companies. The most important product of this marketplace will be a database of cars from which all interested parties will be able to access information or a report about each particular car by its VIN number.
It is important that the VINchain team not only sets itself the task of creating a global database with different levels of access to information about events occurring during operation by previous owners, but also to change the used car market as a whole, making car purchase more transparent and reducing the risk of losing funds, thereby affect pricing in the segment. The project is also planning to reduce operating costs for car owners due to a wide range of services, for example, reducing the cost of insurance policy by accumulating data on driving styles and providing these indicators to the insurance company.
We appreciate the idea of the project but nevertheless, we see risks in implementing the complex technical component of collecting and verifying information from various sources (the rating component of information source assessment is clearly insufficient), the correctness of working with cars from various manufacturers.
The team is staging an ICO to raise funds for project development, marketing and expansion into various territories, as well as the financing of operating expenses.
Crowdsale – 60%
Founders - 25%, with a restriction on sale within 2 years.
Future partners and third parties - 8.75%, with a restriction on sale within 2 years.
Advisors - 5%. Unallocated tokens will be burned.
Early investors - 1.25%, with a restriction on sale within 3 months.
Total emission: 1,000,000,000 VIN, no additional emission
Round 1: Private pre-sale (01.12.17 – 24.12.17)
Price: 1 ETH = 28,000VIN
Cap: 12,500,000 VIN
Collected: 293.6 ETH, 8,220,800 VIN
Round 2: Public sale
Soft Cap: 3,330 ETH
Hard Cap: 23,250 ETH
Step 1 (Cap 1290 ETH) – 28,000 VIN
Step 2 (Cap +3660 ETH) – 25,000 VIN
Step 3 (Cap +3660 ETH) – 24,000 VIN
Step 4 (Cap +3660 ETH) – 23,000 VIN
Step 5 (Cap +3660 ETH) – 22,000 VIN
Step 6 (Cap +3660 ETH) – 21,000 VIN
Step 7(Cap +3660 ETH) – 20,000 VIN
Step 1 + 40%
Step 2 + 25%
Step 3 + 20%
Step 4 + 15%
Step 5 +10%
Step 6 +5%
Minimum buying transaction: no minimum
Maximum buying transaction: no maximum
Accepted currencies: BTC, ETH, LTC, DASH
26% - Project development
25% VINchain product and VINchain network infrastructure development
20% - Marketing expenses
10% - Integration of partner projects
6% - VINchain, VINchain network and VINchain Power Plant development
5% - Law expenses
5% - Legal service expenses, organization setup and their activity, chosen as service providers for Vinchain network
1% - Vinchain Power Plant development and developers platform promotion
1% - Study
0,3% - Activity expenses
0,3% - Other administrative goals
0,2% - Account expenses
0,2% - Recruitment
Token Issue Date: 17-19.04.2018
Lock-up: 2 years
Escrow: no data
The VINchain project is widely promoted in the media and has a large amount of feedback.
Description of the Services and Scope of the Project
The VINchain project is not limited to providing information about a car on request; its functionality is quite wide. In the documentation, the founders provide an overview of the project and describe its benefits for virtually all participants in the automotive market, i.e. not just for car purchase and sale transactions but also, for example, for car servicing. All services will be merged within the framework of a single marketplace. The functionality is described above in more detail:
1. The most important service offered by the marketplace to a user, from our point of view, will be the ability to access information from a decentralized database provided by all ecosystem participants for car purchase and sale transactions. The scheme of work is assumed as follows: A user, for example a potential car buyer or a dealer, accesses the system with a request for the VIN code of a car, and the system provides a brief report on this car. After viewing the summary report, the user can then pay and receive a full report which will include data such as registration or re-registration of owners, servicing, registered accident information, photos of the car and other events occuring during previous ownership. The report is created from information provided by various third-party suppliers and recorded on the blockchain. The fee paid for the report will be distributed among suppliers, minus the system fee. At the initial stage this distribution will be equal, but the developers promise to develop a gradation of the usefulness of this or that information, having analyzed a sufficient amount of data on user preferences. In addition, VINchain is planning to rank information providers as an attempt to verify it. The higher the rating, the higher the reward distribution coefficient. At the initial stage, the distribution will be equivalent.
2. Car owners will be asked to install a special device to access various data via the diagnostic connector for full operation of the marketplace (most modern cars use the OBDII system). This device will enable:
Owners: to receive a diagnostic report on the status of a vehicle’s systems at each launch, to receive recommendations on adjusting driving style based on analysis, remotely control some of the car's functions and to perform remote software updates.
Companies in the automotive business: Dealers will get more detailed information about the condition of a car for making a decision on warranty repairs or for targeting special offers for car owners; insurance companies will provide more favorable conditions for careful drivers and analyze whether an accident is genuine.
3. The service on the website being developed will act as a kind of platform for placing offers from dealers, carwashes, service stations, etc. Users can acquaint themselves with special offers, sign up for a service, pay for services with tokens, benefit from discounts from partners, call the nearest tow truck or receive a maintenance reminder.
The program will also implement its own navigator which offers use of geolocation for searching, for example SRT.
4. We positively assessed the positioning of the platform as an analytical program that will provide companies with analytical data on the behavior and preferences of auto business customers based on artificial intelligence.
The VINchain ecosystem will be an application, a website, blockchain built on Graphene, API and White Label.
Speaking in general about the project and its functionality, we positively assess both the idea itself and the team's desire to endow the project with necessary services primarily for car owners. Information will be useful to all participants within the framework of a single ecosystem: Car owners will know the history of their cars and car dealers, insurance companies and all other market participants will be able to make personalized offers on the basis of available information. However, the project needs to establish relationships with almost all market participants to achieve this goal, to bring the quality of car history reports to a level significantly higher than those of competitors and to implement a technical connection between cars and the application.
The VINchain team is writing its own blockchain based on Graphene technology. The choice of the Graphene Framework naturally gives the project certain advantages. Factors such as immutability of information once entered into the system, different levels of access, the identification of sources of information and system speed positively affect the level of trust in information and usability for all services. Nevertheless, blockchain does not solve problems arising from entering wrong data into the ecosystem. The team has not disclosed details of development either, and does not describe the mechanism of node operation - who can become a node and what kind of stake is required for this. Excessive centralization of nodes can reverse many of the advantages of blockchain.
The VINchain team estimates the project’s market at $20 billion, based on the number of cars in the world multiplied by the cost of a report.
The market for both new and used cars actually shows growth, reaching 90 million new cars and 38.5 million used cars by 2016, but not all car owners are potential project clients. In this regard it should be borne in mind that given the large number of accidents, a significant number of cars are written off and leave the market, a certain number of cars are sold to friends/relatives and often do not pass any verification procedure; in the Japanese domestic market (used cars are also exported in other countries) VIN numbers are not used for identification (a shorter frame number is used for such cars), many 1-3 year old cars are sold via special dealer programs (buyers often do not check cars on any database due to trust in the dealer) and many other factors. Thus, market volume available for the project is much less than the declared volume; however, if we take into account CarFax with its 14 billion records and millions of users worldwide, for example - the market is still significant.
It is necessary to understand that there are no completely successful analogues of the VINchain concept. Services for the automotive industry are not integrated within a single marketplace and information is asymmetrically distributed across the market. The project probably has competitors for its potentially most popular marketplace product - car reports.
In our opinion, the market position and competitive component will vary depending on the country where VINchain is operating. In many countries, the provision of information on participation in road accidents, the number of owners and mileage are provided by government agencies. The number of commercial structures and the volume of information provided also vary significantly depending on, for example, the relevance of fraud issues within a country.
Regarding the US market which the project is primarily focused on, we mention the internationally known CarFax (which creates reports on numbers of owners, approximate mileage, accident information, etc. based on long-term co-operation with virtually all vehicles in the US and Canada) and Autocheck (creates reports displaying information about car registration, technical support, completed works, sales, registration locations, road accidents, visits to disaster zones, etc.). Searching for a photo of a car via auctions is also available (for example, Copart and Manheim). In any case, such databases are faced with the same problems that VINchain anticipates: the lack of data on body repair carried out in non-specialized SRT, errors in mileage when entering data on databases along with other false information, concealing facts, etc. The advantages of VINchain at this stage consist only in a more favorable price offer which is not so important given occasional referring to databases when a car changes hands every few years.
American services such as NMVTIS (National Motor Vehicle Title Information System) are also relevant; this organization is partially state-owned and provision of false information is prosecutable. The cost of a report is significantly lower, around $3.50.
To summarize, the key to the product’s success can only be its global dissemination and provision of true information, which at first glance seems extremely difficult to achieve.
The VinChain team is strong on specialists with experience in the areas of marketing, project promotion, software development, blockchain and naturally the global automotive industry. Currently, the project employs more than 20 professionals.
Information bulletins indicate that employees and consultants have sufficient experience in software development, database management, and analysis of the automotive industry, as well as a thorough understanding of the systematization, organization and possible problems in the scope of the project. However, there are no specialists in the auto business working on the project’s technical component. Implementation of the functionality described in the white paper will require qualitative technical expertise and experience not represented in the team. The team has great managerial experience and extensive sales experience.
The website and the white paper provide the following information about team members; key figures in this project are as follows:
Alex Miles – Founder of the project and CEO. Technological enthusiast and blockchain expert. Graduated with honors from University of Florida in 2016. (Business governance and management); this University is among the top 10 business schools. Since 2017, he has been developing the VinChain project as CEO; until then he worked for A Better Bid Car Auctions LLC, where he quickly became head of business development.
Andrei Krainik – Founder, Chief innovator for the project. He has several higher education qualifications such as from Belarusian State Aviation Academy (from 1994 to 1997), and the Belarusian University of Informatics and Radio Electronics (1997-2000). A founder of VinChain from October 2017, CEO for large companies such as EasyExport.us (with an annual turnover of over $45 million by its own estimate, among the top ten companies in Inc. 500), and Autoinspect.us to the present time.
Aleksey Listopad – CMO, Director of marketing. Graduated from Belarusian National Technical University in Minsk with a degree in marketing (2011 to 2014), and Applied Logistics Business school in 2012. CMO of VinChain since March 2016, in parallel he is the director of marketing for A Better Bid Car Auctions LLC (2014 to present).
Jurgis S Plikaitis – Strategic partner. Graduated from Moscow State Open University (Bachelor of Economics). Since October 2017 he has been a consultant and strategic partner to the VinChain project. He is an online expert in auto auctions.
We should mention that the founder, Alex Miles, actively participates in numerous conferences such as the North American Bitcoin Conference, and Blockchain Expo 2017 as well as ininterviews with ICO Talk TV and CryptoCanucks.com. Here are examples:
The website and the white paper list a group of consultants and project advisors. A number of consultants and advisors such as Matt Carpenter (Chief Financial Officer for Audi America and Audi Canada) and David Carp (former Remarketing Director of Kia Motors America) will certainly play a positive role in the development and promotion of the VinChain project. The project team must eliminate information asymmetry in the market relations between seller and buyer, but this task is technically difficult. The experience and knowledge of the advisors increase the chances of success. The website indicates project partners which include car-checking services.
In general, it can be concluded that the project team has a fairly high level of knowledge, competence and skills for the use of distributed registry technology in the automotive industry. The team also includes experienced IT specialists, marketers and analysts, as well as consultants with extensive experience in establishing partnerships with carmakers. In our opinion, the team lacks specialists with the technical experience of working with cars; this is reflected by some aspects of the functionality of the service, which are complex or impossible to implement.
The VIN token is a utility token to be sold during the ICO. The VINchain team is not planning to impose restrictions on the purchase of VIN tokens for investors from the US; the team has provided legal opinion on this matter.
VIN token is the currency of payment on the VINchain platform, used along with fiat and other cryptocurrencies and is the sole currency for charging bonuses. It will be used in the following cases:
Payment for VINchain reports: Users will be able to pay for access to reports with VIN tokens, fiat or other cryptocurrency. VINchain will pay rewards to information providers in VIN tokens, most likely making an independent conversion.
VINchain API: paid with VIN token, fiat or other cryptocurrency.
VINchain White Label: third-party companies will be able to display and sell verified VINchain information on their platforms.
VINchain app: all services will receive VIN tokens in exchange for information provided by the platform, or use VIN tokens to purchase the necessary information.
Using the Graphene blockchain for the VINchain project will have a positive impact on the speed and cost of transactions, which is important when distributing rewards to information providers. However, the team does not disclose either the parameters of their blockchain system or parameters of the algorithm, nodes in particular. The economy of nodes is an important element of token economics; it is not revealed in the documentation.
Analysis of Factors Affecting the Future Price of the Token
VINchain’s founders are striving to create an ecosystem in which all participants are in some way interested in obtaining the information contained in the decentralized database. As this information is paid for using VIN tokens, this will ensure that the system is a closed one if the development succeeds as planned. Closure means that the price of the token is likely to increase as the platform is popularized.
Currently, anyone can view the alpha version of this service demonstrating the appearance of future reports. VIN tokens are not required for this. Utility token demand will be seen no earlier than the beginning of the second half of 2018, when a beta version of the API, APP and report are planned.
In Q3 2018, VINchain is planning its full launch in the US; in Q4, subject to raised funds of at least 15,000 ETH, a launch in Europe. Further global expansion is planned for 2019, also depending on funds.
Potentially, the more regions that VINchain covers, the greater the utility demand for VIN tokens will be. In this sense, it will be beneficial for token holders if the project achieves its hard cap and is able to market the service in new locations.
In this section, we raise some doubts about the feasibility of some of the ideas intended to be implemented in VINchain.
Firstly, we do not see many fundamental advantages for the service as a car history database in comparison with already existing services of this type. The value of the car reports to be obtained on the marketplace will consist precisely in full operational histories. According to our information, this is technically impossible; for example a car may have been involved in an accident with no other participants and have subsequent repairs via an uncertified SRT; clearly this would not included in the report. Another point related to the transfer of car information to the database is that firstly, a dealer would not be able to disseminate information about the service without a client's consent;secondly, there is no 100% certainty that such information would be absolutely true; for example if an owner and a service representative agree on a fixed run at the time of a service. Thus, the problem of the verification of incoming information has not yet been solved by the platform and blockchain does not solve the problem in this sense. Another problem of centralized databases is solved however, that of making changes. The team understands this problem and tries to solve it through the creation of additional mechanisms - artificial intelligence and a rating system for information providers.
Secondly, car diagnostics (scans of fault codes) will work differently for different models: some cars provide fault codes without decoding; there are few options for determining the problem only by fault type (for example, diagnosis for a modern Mercedes can take place online with a step by step manual). Many faults require component testing (for example, an owner will not necessarily be able to understand a problem with the car if the fault is stated to be "lean mixture", "misfiring", "loss of communication with any block", etc.). Thus owners, after all, will not be able to obtain reliable information about the current technical condition of their cars without visiting a service station, other than learning about the presence of a problem in electronic blocks identifying the fault (in any case, for this information there are control lamps in the instrument panel and deciphering of the problem in the premium segment) or an owner will be able to obtain accurate information on the repair required only with simple faults (for example, "low efficiency of the catalytic converter" or "interruption of the heating of 1st oxygen sensor"). This service will be useful only for dealers able to quote for repairs knowing about the problems of a particular vehicle.
It can be assumed that a working device permanently connected to the diagnostic socket, regardless of when the system is interrogated for the presence of fault codes, could cause malfunctions in the operation of electronic units on some cars; testing is required on almost all brands and models. As for remote engine start and the opening/closing of doorlocks, we doubt that it will be possible to implement this technically. In order to start a car remotely, it is necessary to bypass the regular immobilizer and also to prohibit the launch command, for example, with gears engaged, if the vehicle is equipped with a manual gearbox. This assumes a key engaged as well as integration with the ignition system. To close the doors remotely, you need to connect to the lock activators; this is a signaling function that works on radio channels. The documentation does not specify how this will be implemented via the application, but we have discussed this issue with the team. The team is aiming to realize this through partnerships with professional players in this segment.
Thirdly, regarding updating a car's software, we note the following: A software update for most dealers and brands is a paid service that is unlikely to be abandoned by delegating it to a mobile application. Also, some updating is possible online only via dealer equipment, for example in the case of Mercedes, and often an update itself requires a certain procedure that an ordinary owner will not always be able to perform correctly. It should also be noted that when a software update procedure is carried out, the old version is erased and if something goes wrong (for example, the battery sits and the process aborts), the car will remain immobilized. In other words, the realization of this idea involves an indefinite time horizon.
As for the analysis of driving style, we note that given different technical devices in different models, information will differ regarding completeness of analyzed components; it is not clear what data will be used to provide recommendations. For example, a car with an electronic throttle actuator will inform the program about using the accelerator pedal, in contrast to a car with a mechanical drive. Summarizing, the ideas are so far ahead of time.
Fourthly, regarding services for car market participants, it is worth noting that full information is stored in the memory of electronic units in most modern cars (for example, at what mileage, at what speed, at what engine temperature a fault occured). It is likely that if dealers use driving style data when deciding on warranty repairs, this will cause litigation with the owners that a dealer would be likely to lose. Regarding special conditions for clients from insurance companies, we should note that this practice already exists; there are insurance companies that use trackers which convey information about driving style; this service is not innovative. In general, most insurance companies have years of established standards for calculating costs of users; VINchain must work hard to convince insurers of the reliability of their data and the revision of their calculation policy. It is also not clear why discounts will be given for the service, taking into account analysis of driving styles.
Regarding traditional risks for ICO projects, the team does not provide an economic model, which prevents the community assessing any correlation between the amount raised during the ICO and the feasibility of the plans. However, this issue was discussed with the team, and their approach seemed quite correct to us.
The team does not provide a description of the development of the blockchain or its economy. It is not clear who will be able to perform master node functionality, nor what kind of stake is required for this. It is unclear what measures the team is planning to take in order to avoid centralization of the developed blockchain.