Lydian ICO Analysis
The market for initial coin offerings (ICOs) is exploding, as early-stage startups turn to crowdfunding for capital raises. But there is a severe issue in this largely unregulated market: how can investors tell the difference between legitimate businesses and dubious copycats?
The SAFT protocol, and that the writer firmly supports, is 1 way in which the cryptocurrency community is vetting both coin investors and sales. Its proponents argue that SAFTs can create and sustain a self-regulated cryptocurrency market, something that is sorely needed.
Of course, regulators know nothing regarding SAFT, and are instead pursuing hard drives on ICOs. China and South Korea are the most prominent examples. As it happens, a number of the marketing and capital raise tactics utilized by ICOs can be downright abusive.
To its credit, Lydian has quickly grabbed onto the problems plaguing this nascent industry. Its gripe is not only with fraudsters, but anyone looking to bullshit their way to an ICO employing the unsavory practices of rent-charging, abusing marketing and half-assed campaigns. This is not entirely due to neglect.
Lydian’s market research finds that the ordinary ICO spends between $100,000 and $500,000 on electronic marketing. Regrettably, their delivery process is crude and poorly implemented. To make matters even more complex, companies need to continue to advertise aggressively long following the market has ended. After all, the conclusion of a token sale is when the work really begins.
The LydianCoin tries to fix the issues plaguing token increases by providing AI-powered digital advertising and marketing solutions. The coin itself does not have some magic powers; it only represents a means to pre-pay to the professional services of Lydian’s parent firm, Gravity4. Obviously, its services are not confined to ICO issuers, but almost any business in need of advertising analytics.
Gravity4 markets itself as “The World’s First AI Big Data Advertising Cloud.” It now boasts Fortune 1000 businesses and uses innovative technology to provide customized advertising solutions.
So, why are they launching the blockchain-based LydianCoin? Probably as a way to reduce costs, raise hype and continue to scale up its market marketing art. During MonaLisa, Gravity4 is looking to fight fraud in the advertising market.
Fraudulent marketing and advertising practices are actually a huge thing. Even Facebook has admitted to inflating its advertising metrics. (In reality, they came under scrutiny again in September.)
The LydianCoin Token
Lydian (LDN) is a ERC20-based Ethereum token which will form the cornerstone of the business’s forthcoming ICO launch. The market will take bitcoin and ether obligations for its funding increase.
LDN is called a “value-stabilized cryptocurrency,” that can be negotiated back to Lydian to attain marketing services which leverage years of aggregated advertising data. Including marketing placement and client interaction metrics and disintermediate advertisements stations. The end-user is guaranteed superior advertising metrics in a lower net price. The tokens could be used immediately upon issuance.
The whole worth of this projected increase is predicted to be 100 million. The business will use the proceeds as reservations contrary to the supply of prospective digital advertising and advertising solutions.
Lydian’s pre-sale is now busy and has increased $10 million in 72 hours. Until Nov. 20, investors will get a 25% incentive in their investment. The official issuance date is Nov. 20.
For 2 hours following the issuance date, the token will be accessible for a 15% reduction that drops into 10 percent during the next 22 hours. In the day following the issuance date through Nov. 27, no incentive will be accessible.
The minimum purchase quantity is 4,001 LDN tokens.
Lydian’s crowdsale is led by the executive group at Gravity4. As we mentioned previously, Gravity4 has already delved into the world of blockchain with its MonaLisa platform.
The creator of the business is currently Gurbaksh Chahal, an entrepreneur with 17 decades of experience in electronic marketing. He has his fingerprints on numerous successful internet marketing businesses, including ClickAgent and BlueLithium, which sold for a combined $340 million in separate deals.
However, the information surrounding Chahal isn’t all favorable. He faces prison time for violating probation in another case of violence against girls. He is also being sued by four previous employees for harassment and discrimination — asserts Chahal states are “baseless” and “frivolous.” (All according to Forbes.)
The provider’s Managing Director Grant Allaway and Kevin Huang have a combined 32 decades of experience.
Gravity4 has also retained Mazars Ireland because of its auditors and additional legal advisers Dentons U.S. LLP and Berger Singerman LLP.
Strong team, if you look past the potential legal issues facing the founder.
Lydian Is backed by a solid digital marketing and advertising firm. Its tokens function a workable business function for customers and sellers in pursuit of customized advertising solutions. For real investors, the advantages are somewhat less persuasive. (After all, the token is a book against future digital advertising and advertising services.)
That being said, the business faces several legal challenges that extend far past the key executive’s past behavior. These have to be weighed carefully to determine if the $100 million valuations is justified.
The company is also endorsed by Paris Hilton, so take that for what it is worth.
- The head of Gravity4, Gurbaksh Chahal, has pleaded guilty to domestic violence and faces possible jail time for violating probation. If you’re a holder of LDN, this doesn’t exactly stoke feelings of confidence in the executive team or its direction. Let’s also not fail to mention that the company has four outstanding lawsuits.
- The main purpose of the Lydian token sale is to pay for Gravity4’s services in dollars. So, really, what exactly is the point of the token? There are other ways to obtain upfront or advanced payments for your services. Why go through all the trouble of minting a cryptocurrency?
- The only real value proposition for giving Gravity4 your money is the promise of “exclusive access” to features it is developing in the future. What are those features, exactly?
- Industry experts, once again cited by Forbes, suggest that LydianCoin meets the SEC’s definition of a security. In deeming DAO to be a security, the SEC used what is known as the Howey test. Lydian seems to meet the criteria set out in that test, which could put it in regulatory hot water.
- For all the hype surrounding the ICO, the company makes very little effort to engage the community. There are a couple thousand followers on Twitter, but no direct engagement model on other channels. Also, there’s no team page on the main site.
- Lydian’s parent company has a proven track record in blockchain. This is somewhat of a rarity for ICOs, at least the ones the author has reviewed.
- Gravity4 has serious growth potential, especially in terms of scalability. The business model allows the company to grow without risking too much overhead or intermediary costs. The application of AI and big data to marketing has many people excited.
- The token sale raised $10 million in 72 hours, so clearly, people are lining up to participate.
As you’ve probably noticed, the author has omitted a single score on each of the risks and growth drivers. That is because he considers the risks far outweigh the benefits, but doesn’t feel justified giving a “negative evaluation.” That’s because Gravity4 appears to have a good business model and something real to supply the advertising community. How does this translate into an ICO raise? Well, it doesn’t.
Although the ICO has sucked in eight-figures in less than three days, that itself does not justify purchasing it. There are too many red flags involving Chahal as well as the regulatory circumstances surrounding the “utility token.” The writer doesn’t find any long-term benefits to this crowdraise, unless it’s to lender on the cryptocurrency craze.
Against this background, we have assigned Lydian a rating of 2.5 out of 10. The token might be different from a crowdraise standpoint, but it doesn’t mean you should purchase.
- Type: Crowdsale
- Pre-Sale: Ongoing
- Opening Sale: Nov. 27, 2017
- End Date; Dec. 4, 2017
- Platform: Ethereum (ETH)
- Total Supply: 40 million (20 million to be sold via token sale)
- Total Supply Available for Advertisers: ~800,000
- Token Price: $5.00 USD (with discounts available)
- Fundraising Goal: $100 million USD
- Payments Accepted: Bitcoin, Ethereum, Litecoin, Dash, ZCash, ZEC, Waves