ANEX Platform

  • Ratings Metrics: 0 = Bad; 1 = Average; 2 = Good; 3 = Exceptional
  1. Idea – 2.75
    1. A platform connecting every significant exchange in the crypto space. With one account, user will be able to find the best price in the market and buy through their account on the ANEX platform (ANA).
    2. Platform includes a sentiment analysis tool that is potentially industry changing. See more about sentiment analysis below.
  2. How it works – 2.0
    1. In the current alpha version, users have to hold tokens in their wallets on the 15 exchanges listed on the platform. When trades are executed on the ADEX platform, they will be executed on the relevant external exchange.
    2. The beta version will only be available for institutional investors (available to angel investors 5 weeks ahead of those investors). In this version, users won’t have to have accounts on the 15 different exchanges. However, they will have to preload wallets on the ADEX exchange. Those wallets will reflect the prices on the various exchanges.  
    3. In the final version, no preloading of any wallets will be necessary. Users will simply create an account and have access to the best prices on the market.
    4. The platform also has a four alarm fire engine. This means that users have the option of automating trades when these four parameters are met (they have the option to do so for other or additional parameters as well). The parameters are: 1) Price direction 2) Volume traded 3) Sentiment analysis 4) Volume of social conversation. The user can write algorithms that execute trades when some or all of these parameters are met. Users will also have access to other parameters.
    5. The sentiment analysis tool is potentially a big deal. The company trained neural networks to identify positive sentiment instead of deciding sentiment based entirely on mentions on social media platforms. Sid Belzberg claims to have spent 2 years developing this technique and is of the opinion that they will be at least 18 months ahead of any competitors in developing this technology. This assumption has obviously not been tested. It is worth noting that the difficulty in developing sentiment analysis isn’t simply gathering the data, it is in weighting the parameters properly to determine the quality of mentions across the different social media platforms. Interestingly, the sentiment parameters might even vary across assets. The company spent a significant amount of time weighting the parameters to correlate to price movements as it currently does (they’re still gathering information on how precise the correlations have been. However, it clearly exists). The company will continually collect information about how predictive the sentiment analysis is for different assets and continually update the weighting of different parameters. The sentiment analysis tool can potentially be used to identify pump and dump schemes as significant price movements that do not correlate to the right 4 parameters might be an indication of significant investment by a few parties seeking to manipulate the market.
    6. When an order is put in, the company checks to see if any users on the platform are offering the same prices (this takes 444 microseconds, which is several orders of magnitude faster than Binance’s matching engine). If not, the orders are matched on other exchanges. The latency with putting orders on the other exchanges are a potential issue. A consultant, Hongchen Luo, said there was github code allows for arbitrage across exchanges, however he has not attempted to do so. I talked to another company attempting to create a single platform with all of the information on one interface capable of putting in all orders across all the relevant exchanges. They quit trying to build one after 8 months of trying to design one. Sid argues that such github code is inherently inefficient and cannot function in the same way that their platform does. I tend to agree with him. I see no reason why someone else wouldn’t have made a platform like this if the github code was good enough to create one interface to interact with all of the various platforms.
    7. Currently, there is no way to tell what the actual lag time between orders placed on the ADEX platform being executed on other platforms. It varies from microseconds to 10 seconds. This variation exists because customers and servers for different exchanges are in different parts of the world. However, considering how inefficient the cryptomarkets are, it is not clear that this will be a major disadvantage for arbitrage traders. In Sid’s opinion, this should not be a big issue as most traders will be looking to take advantage of the arbitrage opportunities for some of the more obscure coins with much larger arbitrage margins.  The price movements on such coins are not as fast as they may be with a coin like bitcoin. Attempting to do arbitrage on the larger coins will simply mean that a smaller percentage of arbitrage orders will be filled due to faster price movements.
    8. Arbitrage opportunities should not make filling orders for regular customers more difficult as the arbitrage community is simply not a large enough part of the crypto community. However, as more players attempt high frequency trading, this is a possibility. Likely not one to be concerned about in the immediate future. 
    9. In 1994, the team did the first fully automated interlisted arbitrage system for stocks between Canada and the US for Morgan Stanley. Eventually, competitors figured out faster ways to execute trades on other exchanges. However, this came 10 years after they designed this program. Sid is convinced that the barriers to entry for competitors in crypto are even higher. To do so, potential competitors would need expertise in arbitrage systems, back office accounting AI and blockchain. This system would need to track all positions (amounts in each wallet) on all relevant exchanges, as well as tracking potential arbitration liquidity and marketbook functionality on all of those sites. The latter would require a consolidated book of orders across all of the relevant exchanges in order to size up liquidity and route automatically to those destinations. The best bid or offer on each exchange would not be enough. To exacerbate this point, he points out that earlier this year, he was assisting a fintech firm with crypto and they paid him $200,000 for a few days worth of architecting.
    10. ANEX argues that the potential latency across platforms will also be mediated by how large disparities are usually among the relatively lower volume coins. However, this introduces another issue. Lower volume might lead to difficulties in filling the orders. ANEX is arguing that even if this proves to be a problem, entire orders need not be filled for arbitrage opportunities to be realized. Moreover, to address this issue, the company will attempt to guess the possibility of the order being filled at different percentages based on the history of different sized orders being filled at different volumes on the different exchanges. This would give arbitrage operators another parameter in designing algorithms that would execute trades.
    11. The company will also factor in the transaction fees so that the users see the actual disparity in prices when executing trades.
    12. Fees on the ADEX platform are only charged for trades executed. Not for orders put on the market.
    13. Ig17 is a blockchain being built that does not require verification. This means it will be very fast. The trades on the ADEX platform (like every other platform) will be recorded on a database (as well as the respective blockchains of the tokens being traded. However, Once ig17 is released, trades on ADEX would be recorded on ig17’s blockchain. This means there will be no need for a database. If there is significant adoption of ADEX, this would significantly increase the value of ig17. Is it safe to work with a blockchain that does not require verification?
    14. While not certain of what the final version will look like, the current functionalities are positively exciting for the industry. If it functions as anticipated, it would be the first of its kind in a market with high demand.
  3. Profit generation – 2
    1. Company has a token much like the Binance (BNB) token. Platform charges a .2% fee in addition to the fees on any other platform for each trade. I have not confirmed whether there will be a charge for every order put in or every trade executed. Is it possible to confirm or then state it’s something the producer is working on.
    2. There will be a discount on platform fees for anyone holding ANA tokens.
    3. Fees are only for trades executed, not orders put in.
      1. Year 1: 50% discount
      2. Year 2: 25% discount
      3. Year 3: 12.5% discount
      4. Year 4: 6.75% discount  
    4. This discount is meant to increase demand for the coins.
    5. One question I had was the logic of decreasing the discount over a few years. Presumably, this would decrease demand for the tokens. The team’s logic was that with a certain level of adoption, the discount would not be a significant factor in demand. They pointed out that Binance has the same model.
  4. Existing product – 1.8
    1. Competitive context – 3
      1. There is a huge demand for a product like this and there is no company publicly attempting to do the same. A company whose platform I helped test attempted to do the same, however, they attempted for 8 months and found it so difficult that they quit. It is possible that there are other companies working on early versions of a product like this because of the transparent need for this product in the crypto space. However, I am not aware of any.
    2. The Product is in it’s alpha version. The interface is intuitive and has interesting features. However, there are more features that need to be added. Examples include information about the extent to which the market conform to the 4 parameters they’ve included. Moreover, more parameters are being integrated into the platform. Additionally, it is not yet possible to create one account and have access to all the different exchange via the funds held on their platform. It is only possible to do so if the user has funds on all the other exchanges. This would obviously take away from the point of the platform. Seeing these features added and working seamlessly would go a long way. In this context, trust in the team’s capacity to execute is critical.
    3. The team has also not negotiated the contracts with the exchanges they intend to work with. This is a potential issue. They are planning a trip to Malta to negotiate with Binance and Okex soon. Presumably, once those deals are signed, the others will follow. Good news is that the incentives with these exchanges would be matched as the deals should only increase the volume on the various exchanges. This is an issue worth getting more details on.
  5. Marketing – N/A
    1. The organization is not involved in significant marketing yet. Therefore, it is not yet possible to to make a meaningful determination about their capacity in this regard.
    2. The lead Marketer Sophia seems capable. However, this is yet to be seen. It may be something worth helping them with. Camilla McFarland excels in this field and she might be interested.
  6. SEC compliance- N/A
    1. Angel Investors get shares in the company and get airdropped a certain number of tokens (5M round gets 10M tokens. So corresponding percentages will be allocated to Angel investors). Other companies have used this method, however it appears a transparent method of getting around SEC regulations.
    2. I will be talking to their attorney once we evaluate the other issues. Worth noting, the Infignon group is an established company with a lot of resources that has operated for a while. They likely have very capable counsel.
    3. I do not rate this section. It is either acceptable or it is not. We do not invest in assets with significant uncertainty in this regard.
  7. Team – 2.3
    1. From an execution perspective, I trust the team. They developed trading systems for top institutions since the 1990s. They’ve developed trading systems for organizations like Morgan Stanley and Renaissance technologies.
    2. From a marketing perspective, there is simply not information to make this determination. They’ve largely been a B2B enterprise meaning the management team does not have a lot of experience doing marketing to the general public. We’ve seen how much marketers like Brock Pierce (EOS) have made a difference in the prices of companies. So this is a big issue. We will have to learn more about Sophia to make a determination. They have worked with Reuters. So presumably they would have contacts there that could make a difference. Yet the network of the parties responsible for marketing are not clear.
    3. Management Team
      1. CEO & Co-founder – Alicia Belzberg
      2. CEO & Co-founder – Sid Belzberg
  8. Corporate Structure
    1. Infignon is the mother company
    2. ADEX has a business relationship with Infignon
    3. Ig17 is a wholly owned subsidiary of Infignon.
    4. Worth noting: ig17 will have an immediate partnership with Infignon.
  9. Investment Economics – .75
    1. ICO participants: 100,000,000 ANA (50%)
    2. Founding Team:      90,000,000 ANA (45%)
    3. Angel Investors:      10,000,000 ANA (5%)
    4. PreICO price: 1 ANA = 0.40 USD
    5. Price :                   1 ANA =  0.50 USD
    6. Up to:           50,000,000 USD
    7. Accepting:                ETH
    8. Shares in Infignon: 32 million total. $1 million would net 320,000 shares.
    9. Ig17: 1B total tokens. $1 million investment would net
  10. 2 million ig17 tokens.
    1. Angel Investors get shares in the infignon group as well as tokens in the ADEX platform. However, this is not a great deal as we get the same deal as the ICO participants and not as good as the Pre-ICO participants.
    2. Worth noting, investors get shares in the infignon group, ADEX platform backed tokens and 1% of tokens tokens on the ig17 blockchain whose ICO is scheduled for Q1 2019. Ig17 is a blockchain that doesn’t require work by any party to verify the network. ICO for ig17 will likely happen in 2019 although no date has been set.
    3. So in total, angel investors (investing a total of $5M) get 5% of the shares in the company itself, 5% of the ANEX tokens and 1% of the ig17 tokens. This situation is further complicated by the fact that we have no way to value the stock of blockchain companies. It is not clear what the difference in valuation between  tokens and stock as most companies in the space only create blockchain related products.
    4. The uncertainty surrounding this dynamic, creates a situation where angel investors getting a worse price than pre-ICO investors not very justifiable.
  1. SWOT Analysis – 2.4
    1. Strengths
      1. First to market
      2. Excellent team from an execution perspective
      3. Huge need for platform. If price incentives are aligned properly and the latency issues aren’t prohibitive to the arbitrage market participants, adoption will likely be very fast.
      4. Investors get shares in company, tokens in ANA and tokens in ig17 (a smart contract platform with a verification mechanism that does not require proof of work or stake).
      5. Sentiment analysis is the first serious attempt to create reliable parameters for price prediction in a highly sentiment driven market. That any competitor would have to figure out how to weight the different parameters in addition to having to use neural nets to filter through the various social media platforms makes this more difficult. Moreover, continual updating based on how different assets perform will be a big deal. MOST importantly, this could be a tool to predict pump and dumps.  Currently, the data suggests that this might be the case. The team has found that the orchestrators are often ow clout users who consistently retweet information about a specific coin. Once the clutter dies down, they sell the coin.
    2. Weaknesses
      1. They are still in Alpha. Beta should be ready in 4-8 weeks. So we do not know what the weaknesses in the beta will be and how long it might take them to solve those problems.
      2. We do not understand the effects of the latency issue. In 1994, the team built the first automated arbitrage trading site between Canada and the US for Morgan Stanley.
      3. Currently, there is no reliable way to know as the servers for the exchanges are located all around the world. The argument is that the time shouldn’t matter much as it would make sense to do arb on the smaller coins with larger arbitrage opportunities.
      4. There is no clear track record of successful marketing
      5. The time frame is not clear.
    3. Opportunities
      1. This is a huge opportunity. Whomever wins this race will be worth more than a billion dollars. Ni
      2. This name recognition will be huge in the release of the ig17 platform. Considering how large their fundraising goals are with the ig17 platform, they will need it. However, success of the ig17 platform would put them on par with some of the largest smart contract platforms in the field. This is still highly speculative as they are projecting release in 2020. The entire field will look different at that point however, their platform will be smart contract 3.0. It is still highly speculative as the success of smart contract platforms are not simply about the efficacy of the platform. It is also about the community of developers surrounding that platform. Marketing of this sort is very different. It is obvious that part of the raise will be having a fund to invest in companies attempting to build things on their platform. This is a big opportunity that can’t be properly weighted.
    4. Threats
      1. No public threats as of yet
      2. There is likely someone else trying to build this product.
  2. Potential returns – 2.5
    1. Tokens will hit the market at .50c. With a 50M mkt cap.
    2. The three most valuable token backed exchanges are Binance, Kucoin and Coss coin.
      1. Binance: Currently a $2.8B Mkt cap. With a $4.2B high. Coins started at $0.15 and are not almost $15.00. CMC numbers appear to be incorrect ($1.6B current with $2.4B high). Either way, there was a hundredfold increase. The price change not mapping onto the market cap increase might be because Binance burns tokens with some of the fees through transactions.
      2. Kucoin: Currently a $336M Mkt. cap with a $1.7B high. Coin started at $.19c and are now worth $4.44.
      3. Coss: Current market cap is $46M with a $180M high. Coin started at $.15c and are now worth $.35c.
    3. These can be seen as three tiers of success. Coss coin’s main value proposition is not the fluidity of their exchange. Instead it is their business software that connects to their exchange. As such, adoption is not high since most businesses do not yet use cryptocurrencies.
    4. Should ANEX work as promised, I believe adoption would be very high. Perfect liquidity wouldn’t be the requirement. Only a reasonable amount. It is impossible obviously impossible to put numbers on it, but should the team accomplish this, I believe Kucoin numbers would be the floor. With a seamless enough interface, enough demand exists that the company could be as large as Binance.
    5. In the case of Kucoin type returns, selling at the highest point would have yielded 100X returns. Under the current token economics, with a 1M investment, this would be approximately $60M after taxes.
    6. In the case of Binance, selling at the highest point would have lead to 157x returns. Under the current token economics, with a 1M investment, this would be approximately $90M after taxes.
    7. Assuming the company is ever worth as much as Binance at its height, there would be 100x returns on investment. This does not include returns on ig17 and the actual shares of the infignon group.
    8. Investors would also get tokens in the ig17 platform. This is a blockchain that would not require verification. This would also be revolutionary if it works. They have a team in Toronto working on the platform and have a proof of concept. ICO is scheduled to occur in 2019. Platform release is set for 2020.
  3. Rating – 2.063 – Good potentially excellent.
    1. The biggest drawbacks are the average token economics and uncertainty surrounding marketing. Should these issues be addressed satisfactorily, it is my opinion that this would be an excellent investment.

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