Blockchain and its associated technologies have opened up a new deregulated financial market across the globe. Millionaires have been made, billions raised in ICOs and now everyone wants a piece of the action. Getting started in crypto is without a doubt difficult, it’s a new frontier of technology that doesn’t typically mesh well with traditional financial institutions. 5 years ago getting a hold of some BTC to pay a hosting provider or to support a shady torrent site would take hours of signing up across a dozen different payment processors to find a company that would sell you it direct. It was that or trading on forums with EVE ISK or a World of Warcraft timecard.
These days it’s a little easier, but still difficult in comparison to other digital goods. You have Coinbase or Cex.IO where you can instantly purchase with a credit or debit card after waiting for your Know-Your-Customer documentation to be verified, or rely on long established bank transfer systems such as SEPA which can take several working days. Then once you’ve got your crypto, it’s then figuring out what the hell to do with it to make money. Using exchanges for the first time can be intimidating to those who aren’t used to share-trading or forex. This is where CoinLion hopes to make an impact.
The firm hopes to create a user-friendly exchange that combines education, research, and tools for newcomers to the market. The platform will consist of three key systems:
- An exchange that delivers a best in class trading experience.
- A portfolio manager that allows simple creation and control.
- Portfolio sharing and strategy discussion.
If Coinlion can position itself as a home of newcomers to crypto trading, it has a fantastic opportunity to grasp a large chunk of incoming retail investor money. Coinbase is probably the best-known onramp into crypto, but with its premium pricing and high fees, there’s certainly room for a competitor. Especially a platform that could has the support of a community incentivized by the $LION token to help newcomers trade profitably.
The token itself will be used on the platform for a variety of functions, such as: tracking and duplicating other users portfolios, paying for trading fees (ala $BNB, $KCS), creating and managing multiple portfolios, accessing research and data within the CoinLion Library, advertising own user content or portfolios on the market. Coinlion has stated their ambitions to host other tokens ICOs on the CL platform, and $LION could be used to contribute at a discounted rate. Users of the platform can earn $LION by allowing others to track your portfolios, sharing strategy, research, analytics, and allowing advertising on your public profile.
Audience, Exchange and Competition
CoinLion has a clear target market in mind from what I can gather from interviews with the CEO and the whitepaper. Retail investors, who are new to trading and keen to make good returns on their funds. In the past year with previously Bitcoin and now Ripple and Ethereum hitting mainstream the press on a daily basis has seen a huge influx of customers to exchanges, with several (even Binance) having to temporarily close to new users while their infrastructure is upgraded or patched. A few years ago, the Forex market underwent the same influx as crypto is now seeing now, retail investors, unfamiliar with trading who fell for the marketing of making a quick buck with individuals reselling “signals” with apparently guaranteed success. In the whitepaper, section 6.4, CoinLion states:
CoinLion believes that users should be able to easily interpret the risks within their portfolios. The platform tools allow users to better understand the risks they are exposing themselves to within their holdings.
Crypto is in its infancy and the less dodgy marketing (for example, Youtubers who will remain nameless that shamelessly plugged BitConnect, then deleted their videos) the market fosters, the better it will be taken seriously by traditional institutions. If CoinLion can market itself properly in a respectful manner, and there’s no reason to believe they won’t so far based on the slick ICO marketing, then becoming the new on-ramp onto crypto isn’t unrealistic. That’s not to say they don’t face some huge challenges based on their aims stated on their roadmap. I believe these challenges are:
- Kickstarting initial volume on the CL exchange
- Dethroning Coinbase
- Attracting experiences traders to the CL trading element (is the $LION token enough on its own?)
- Maintaining enough trading pairs to be competitive and attracting FOMO traders with the latest ICOs tokens
- Beating other exchanges with processing of KYC data and withdrawal/deposits
Binance and KuCoin are both fairly new exchanges. Binance within 6 months has shot up to #3 based on overall exchange volume, and a big part of it, and KuCoins success is down to its quick additions of trading pairs for hot new altcoins, and its trading contests that awards lavish prizes. These so far have included an BMW i8, a Lamborghini Huracan RWD Coupe and a Masertai 3.0T Levante Classic. Not a bad idea for attracting larger traders right? It can come across a little tacky however and makes it look a little like a casino website. These traders though, will they really be attracted to start trading on the CoinLion platform for some $LION though? Is the CoinLion platform features enough to power the value of the token? It’s going to be tough to keep the value of $LION high enough to be seen as a good deal for experienced traders to move onto the platform, and to warrant creating content for.
The whitepaper states the desire to support a wide variety of cryptocurrencies, fiat and digital assets. CL will maintain markets in BTC, ETH and $LION. New pairs will have a simple and efficient access to the platform but will undergo strict due diligence, keeping liquidity and volumes across these pairs could be difficult. The best way previously for exchanges to establish volume was by have first-mover advantage on new pairs, and keeping this process of addition streamlined could be key in CoinLion getting its foot in the door. Another angle of attack is the proposition of underwriting future ICOs:
CoinLion will offer an ICO underwriting service which will list new coins to the platform. LION holders will have access to purchase these ICOs at a discounted rate. CoinLion will use a rigorous due diligence process when evaluating adding a new coin to the platform.
All that being said, Coinbase and it’s exchange service GDAX only offers a total of 11 trading pairs, across four cryptocurrencies and three fiat. Starting small and building up once the portfolio manager and exchange has had proven volume experience would seem to be the smart move. Every major exchange with any kind of volume has experienced downtime during major price fluctuations, and if CoinLion exposed the same kind of outages at peak periods to first-time retail investors could leave a bad taste in their mouths. Finding the right balance between trading pairs and volume with uptime is key to building the reputation CoinLion will need to succeed.
So, the portfolio manager and exchange is not actually a working product yet, but a UI demo is here to view. It’s pretty nice, and the portfolio-sharing feature has the possibility to be huge. Some of the features touted in the whitepaper are:
- Portfolios can be created using quantity, amount or percentage parameters.
- Trade multiple positions with a single click.
- Create and manage multiple portfolios (ideal for those who have a holding stack and trading stack).
- Research and analytics available from community contributors
- A built in digital assets screener.
Crypto has been crying out for a good portfolio manager and Blockfolio and Cointracking have done a fantastic job in filling that need with easy-to-use apps. The lament of Blockfolio users at peak price-moving events as nothing updates for an hour is something i’ve experienced all too often. However, can CoinLion be that next level in portfolio management as it combines analysis and exchange features all on the same platform. If they can, users will flock to it for easy of use. Keeping the platform consistently working over spiking periods of trading will be key to retaining users, just like with the exchange. 65% of the ICO funding is earmarked for platform development, which seems great. But considering they are hoping to launch in July, and the sale ends in February I just hope CL are not being too ambitious with its project, and doesn’t end up throwing money at it to hit deadlines with a poor product.
Having a Solid Team is a bit of a running joke now when it comes to ICO marketing, but lets see if the experience listed by the firm can atleast match their whitepaper ambitions.
The CEO Joshua Dewitt is a former employee of Merrill Lynch’s wealth management team, and a legit miner judging from the rig he posted on BitcoinTalk. Justus Luthy the Chief Technical Oficer is the guy i’m really interested in though, with experience in designing and maintaining scalable applications for some big names such as Citigroup and HSBC. He has also previously maintained financial applications for managing over $1mil USD in daily transactions. This will of course be invaluable in developing a platform as complex as CoinLion is aiming for. The rest of the C-level team such as Zach Neugebauer, Nathan Pitz and Caleb J. Veldhouse also post impressive CVs with solid corporate experience, and a mix of blockchain background with Isaiah Croatt. The other members of the technical team also have some fantastic levels of experience when it comes to webdev and systems engineering. The creative director Kia Adams,who I imagine is responsible for the terrific logo must have already earned her salary judging by the whitepaper and identity the brand already has at an ICO level. The mere existence of a customer services lead in the form of Erin Zimmerman speaks volumes regarding the level of customer engagement the firm wants, building it into the platform as it develops. Most ICOs rarely mention customers, but CoinLoin with it’s 5% ICO funding allocation and service posts already filled, clearly has it as a priority.
My only concern is Mark Eaten and other such names being on the advisory team. Is someone a big Utah Jazz fan or something? I’m guessing he must have come into the CoinLion office and hosted a leadership event or something as it just seems to cheapen the ICO a little, along with Judge Alex. Don’t get me wrong, it might appeal to the typical retail investor market CL is aiming for, in fact I think the sponsorship recently of the two-time Bellator champion Michael Chandler was great as it was a clear plain sponsorship, but having just plain celebrities on your advisory page when you want people to take your high-tech crypto exchange seriously for me doesn’t work. I mean, it’s not as bad as Stoxx with Floyd Mayweather or LydianCoin with Paris Hilton, but still.
ICO & Token Economics
CoinLion’s base goal was to reach 15 million $LION tokens sold, with a token sale hard cap of 250 million $LION. If 15 million $LION did not sell, purchases would be refunded via the smart contract. The base exchange rate being 1 ETH to 2500 $LION with a pro rata distribution at the end of the token sale. However during the beginning of the token sale, it reached as high as 3000 $LION per ETH in the first week, and in the penultimate week of the sale it will again rise to 2625 $LION per ETH.. There is a hard cap of $18 million USD, and a fixed total supply of 500 mil LION tokens. The pro rata distribution of 24.75 million $LION will be distributed with the following formula at the completion of the sale.
$LION is an ERC20 standard token housed on the Ethereum blockchain, and the token allocation between CoinLion and purchasers set at 50-50, with any excess held burnt via smart contract at the end of the token sale. So with a fixed supply of 500 mil, and 250 mil available for the token sale, the total supply following the token sale could be much less if the token allocation is skewed heavily. The tokens reserved for the team can only be sold after a lockout period, 25% every 6 months for 2 years, funnily enough they can begin selling just before the launch of the platform according to the roadmap! That’s assuming the lockout began from the opening of the token sale however.
The allocation of the funds can serve as an indication just how seriously CoinLion respects the regulatory bodies and any regulation that could be coming over the horizon. The 5% dedicated to customer service looks like they are serious of their whitepaper declaration to processing KYC documentation in one business day and the 15% earmarked for security seems natural considering the amount of crypto and fiat they are looking to handle on the exchange.
Allocation of tokens is as follows:
You can find the LionCoin telegram group here, and can participate on the ICO on their homepage. They are also very active on BitcoinTalk (the CEO being an active miner!) and Twitter. Do not consider this financial advice, please read the whitepaper and do your own research before contributing any form of fiat or cryptocurrency.