Post on 19-Aug-2020
ICOrating
Goldmint Rating Review (www.goldmint.io)
ICO dates (03.05.2018 - 03.08.2018)
Web: icorating.com
Email: info@icorating.com
Twitter: @IcoRating
1. Rating 3
2. ICO Information 4
3. Product and project analysis 7
3.1 Roadmap and product 7
3.2 Business and finance 9
5. Analysis of token behavior in the secondary market 15
1. Rating
We assign Goldmint a “Risky” rating.
Since the end of its ICO, the Goldmint team has only partially fulfilled the goals set for
the project. GOLD tokens have been launched on the Ethereum blockchain, but direct
purchase from the company is not possible. According to information provided on the
website, the company has the necessary underlying assets to secure the issued coins
and undertakes to buy them back at the request of any client who has undergone their
KYC procedure. Unfortunately, due to legislative immaturity in the field of
cryptocurrency, this option will not be available to citizens of the United States, Canada,
Singapore and China. The timing of the launch of the project’s own blockchain has been
postponed by six months, and no reference has been made to any progress in its
development.
Despite the results achieved, we are forced to lower the attractiveness rating of the
project tokens, for the most part due to an unfair method of distribution of MNTP tokens
in relation to ICO participants. Currently, only one-fifth of all tokens issued are in free
circulation, and the team intends to sell the remaining stake on the free market.
Whatever buying conditions for frozen MNTP tokens the project offers to original buyers,
such buyers even in a best-case scenario will receive a smaller profit, or in the worst
case the price of MNTP will drop even more.
The opaque aspects of project development and the disposal of tokens belonging to the
team also exert a negative influence on the rating.
2. ICO Information
Goldmint is a project for the creation of a cryptocurrency, GOLD, which is 100% guaranteed
by physical gold or another derivative financial instrument with a basic asset in the form of
gold. The provision of cryptocurrency in gold is expressed by the stated obligation of
CyberBridge OU, registered in Estonia, to buy out any number of GOLD coins presented at
the current LBMA1 price at the time of transaction, with a commission of 1 to 5%. Thus, the
price of 1 GOLD token will have to be 100% correlated with the price of 1 ounce of 999 gold
(31.1035 grams) traded on the London bullion market.
According to the original white paper, the GOLD cryptocurrency was planned for release on
the project’s own blockchain with a Proof of Stake consensus algorithm based on Graphene
technology. MNT coins released on the project's own blockchain will be used to confirm
transactions. The more MNT tokens a miner has, the more blocks he can add to the chain. In
this case, commission will be charged for transactions with GOLD coins, 75% of which will be
sent to the miners who confirm the transactions.
Initially, MNT crypto coins were released on the Ethereum blockchain, named MNTP and sold
during the project's token sale. After the completion of the development of the project’s own
blockchain system and its public launch, MNTPs will be exchanged for MNT tokens in a 1:1
ratio.
In addition to creating the GOLD cryptocurrency, the founders planned to launch a network of
devices called Custody Bots, with the ability to automatically determine the chemical
composition of gold products and their subsequent storage. These devices will look like ATMs
and they will each feature a spectrometer, a set of scales and a Linux-based computer
connected to the GOLD blockchain platform. The founders expect that Custody Bots will be
located in small banks, pawnshops and other relevant institutions. Thus, in their opinion,
Custody Bots could become full-fledged automatic analogs of pawn shops in the future, where
people would take their gold products and receive GOLD cryptocurrency in exchange almost
immediately.
The ICO for the Goldmint project started on September 20, 2017 and lasted until November
11, 2017 during which 4950 ETH and 830 MTC were attracted according to the founders,
taking into account the pre-sale stage. This amount was approximately $4.3 million at the
exchange rate at the time of the transactions, but the founders have publicly announced about
$7.3 million of raised funds multiplying these values by the market rate at the end of the ICO.
Taking into account the fact that during the period from the end of the pre-ICO held in May
2017 until the end of the main sale stage the rate of cryptocurrency increased approximately
threefold, and a portion of the funds raised was spent on the main stage, the logic of such
calculations is unclear.
Unfortunately, information about funds raised can be checked only by revenues in ETH - all
data is at the address of the smart contract at the following link. Having analyzed the
transactions of this smart contract, we can draw the following conclusion:
1 http://www.lbma.org.uk/lbma-gold-price
For the period from 20/09/2017 to 11/11/2017, Goldmint has raised 4955 ETH which value
was $1,425,753 at the time of the transaction. Thus, the project attracted the majority of funds
(about 66.7%, counting from $4.3 million) in the form of military technical cooperation and
about 33.3% in ETH.
During the token sale, more than 1800 non-zero transactions were made to the above-
mentioned smart contract with 1,400 unique ETH addresses. The minimum transaction
amount was 0.0025 ETH ($0.7), the maximum amount was 395 ETH ($112,006); the average
value was 3.53 ETH ($1017). The overwhelming majority of participants (95%) purchased
MNTP tokens for an amount not exceeding 10 ETH and only 64 people made purchases larger
than this. Indeed, there were only 16 large investors who bought MNTP tokens worth over 50
ETH.
The greatest number of ETH transactions (875) were made in the first two days of the
token sale after which their number was evenly low:
At the same time, the dynamics for purchases of MNTP tokens in the ETH equivalent
had bursts of different strength throughout the entire period:
As a result, the Goldmint project was unable to reach its hard cap, having raised just
over 10% of its value.
3. Product and project analysis
3.1 Roadmap and product
According to the website2 and the original white paper, the team planned to undertake
the following work by the end of the first quarter of 2018:
- Launch its own blockchain3.
- Create the necessary legal entities for conducting legal activities in Europe, Asia, the
USA and Russia.
- Choose partners for work with ETF and conclude partnerships with A+ banks.
- Choose partners for KYC procedures in Europe and Russia.
- Open representative offices in Europe and Asia.
- Develop a Custody Bot prototype and apply for the relevant patents.
- Test the purchase of GOLD for fiat.
- Develop a Goldmint mobile app interface for AppStore and Google Play.
- Develop a computer system for the purchase of GOLD for fiat and other currencies.
According to the team representatives, most of these objectives have been completed
but some plans and intentions had to be changed. Thus, the founders have published
the following results of their activities for the past period:
1. "We have created the team. A Financial Director, Marketing Director, PR Manager and
Customer Support and Office Manager have joined us. The staff have increased almost
twofold.
2. The Board of Directors was formed and established; 2 meetings have already been
held.
3. We determined a method to provide the GOLD token with gold and opened an account
for our Singapore company with a broker that enables us to purchase and sell physical
gold to CME (Chicago) with a deferred payment and store it in US Federal banks.
4. We have a registered company (exchange office) in Estonia and applied for a license
allowing us to perform crypto exchange operations.
5. The Ethereum smart contract enabling the turnover of GOLD has been audited.
6. We have prepared a personal cabinet for GOLD buyers integrated with the blockchain.
7. We have formulated the terms of reference for our PoS blockchain system and created
its working prototype.
8. We have formulated terms of reference for the Custody Bot and assembled the R & D
team (a decision was made to limit the development to R & D with further partner
search).
9. We prepared three development strategies (industrial superstructures) for our project
and have tested them with major market players (Rusal, Polymetal, Arlan).
2 https://web.archive.org/web/20170914033224/https://goldmint.io/ 3 Video on https://www.goldmint.io/team
10. We have carried out legal due diligence of our activity and identified the majority of
project risks.
11. We have listed MNTPs token on 3 exchanges and created a sufficient turnover to be
listed on coinmarketcap.
12. We carried out a validation of demand for GOLD tokens (6 crypto funds, more than 25
crypto traders, more than 50 investors).
13. We formulated a marketing strategy, redesigned the website and prepared an action
plan for 2018.
It is obvious that the team was not able to launch its own blockchain; currently, the
approximate terms for its launch are shifted to the 2nd-3rd quarter of 2018. However, in
early April 2017, the project issued gold-backed GOLD tokens operating on the
Ethereum blockchain. After the completion of the development of its own blockchain, all
issued tokens will be moved there.
We also found out that the team declined to open regional offices and decided to work
through regional representatives. No partnership with any A+ bank has yet been
concluded.
As for progress towards the creation of the Custody Bot, the team presented a video of
a working prototype4. The video shows how the device performs a spectral analysis of
a gold chain and its automatic weighing. It also becomes clear from answers provided
by project representatives that the company does not plan to carry out a full-fledged
development of Custody Bot, but will stop at conducting research and development
work, after which it will look for a partner interested in further development of the
technology.
In our opinion, the team is quite active in developing the product but the project obviously
does not provide public coverage of these processes. Despite the fact that
representatives answer almost all community questions in the Goldmint chat room on
Telegram and on the BitcoinTalk forum, the number and content of reports on work done
via the blog5 has dramatically decreased since the end of the token sale. The team has
published 6 posts since the end of the sale, the vast majority of which pertain to the
team’s participation in various conferences and meetings. In the process of writing our
review, the team released a quarterly report with a detailed description of the work done
and the results achieved. However, in our opinion, informing the community only every
3 months is not enough.
The process of developing the project’s own blockchain, with a launch originally planned
for the first quarter of 2018 and now for the second or third quarter, is also rather opaque.
The team's activity in its GitHub repository is not high compared with leaders in this
sphere6 and no progress reports have been published either. It is completely unclear to
an average user how the development of Goldmint's own blockchain is progressing or
4 https://yadi.sk/d/g_JEZKap3U26Qi 5 https://blog.goldmint.io/ 6 https://medium.com/@Darpalrating/darpalrating-we-went-through-133-blockchain-projects-github-heres-our-code-audit-report-for-5c060df3af44
what stage it is at compared to, for example, the weekly releases of Cardano7 or an
interactive Cosmos8 launch card. It became clear from the published quarterly report
that the team declined to develop a blockchain system based on Graphene, replacing it
with a solution using Sumus.
3.2 Business and finance
According to the Goldmint team, all funds raised were converted to fiat but they don’t
provide any confirmation to this, neither have they disclosed any financial report on the
company's activities. In this regard, it is impossible to verify the veracity of any relevant
statements or to analyze the effectiveness of the distribution of funds raised with respect
to the plans initially announced.
Nevertheless, we can analyze public information such as the distribution of MNTP
tokens, the smart contract of which is available at the following address.
According to the official blog9, on September 19, 2017 (before the start of the main stage
of the ICO) the team announced the next distribution of issued MNTP tokens:
At the same time, the white paper provided additional information on the team’s tokens:
«The amount of MNTP option pool tokens issued will be calculated by the following
formula:
If LEP < CEP: (1 – LEP / CEP) x Token Option Pool size, where:
LEP = The price of the token during the latest issuance
7 https://www.cardano.org/en/weekly-technical-report/ 8 https://cosmos.network/roadmap 9 https://blog.goldmint.io/goldmint-announces-ico-starting-september-20th-5f1710cff668
CEP = Current MNTP price on cryptocurrency exchanges. (This is calculated by
checking the volume of MNTP trading during the last two weeks on the three largest
exchanges and computing its median price)
Token Option Pool size = The number of tokens left in the “Token Option Pool”
If LEP >= CEP: Issuance does not occur.»
Thus, the team announced the following conditions:
1. 7 million MNTP tokens from 10 million will be available to customers.
2. 2 million tokens will be reserved for the team. At the same time, the team will be able
to spend tokens at its own discretion once every 3 months to an amount not exceeding
100,000 tokens per round, provided only that the current price of tokens exceeds the
price at the time of the previous issue.
3. 1 million tokens were planned to be used to pay bounties to campaign participants.
We must point out that different sources publish contradictory information. The English
version of the white paper stated that the team has the right to issue up to 500,000
tokens every quarter. According to the team, the Russian version of the white paper did
not mention any conditions for the team’s tokens, but we cannot verify this information,
since we do not have a copy of the white paper publicly presented at that time.
At the time of writing, the three largest holders of MNTP tokens own a total of 8,298,406
tokens, representing almost 83% of the total emission:
The first wallet containing 64.85% of tokens consists of coins unsold during the token
sale which are frozen by the smart contract for 1 year. According to the team, after the
end of the freeze period they intend to distribute this share of tokens among ICO
participants at a reduced rate, but we regard this decision as unfair to the original
buyers. Most likely, the original buyers will not want and will not be able to buy back
such a large volume of tokens, not least because it is more than 10 times larger than
the amount of coins sold during the ICO. In this case, the team will have to sell these
tokens in the secondary market, which will exert strong pressure on the price of MNTP,
as a result of which Goldmint's ICO investors will receive less profit, or the price of
MNTP will drop even more in the worst case.
The team may not sell but decide to keep these tokens. This scenario would not be
profitable for token sale participants either. Firstly, most of the commission from
operations with GOLD cryptocurrency will be received by the project team in this case.
Secondly, since the project's own blockchain will work on the basis of a PoS consensus,
the network of participants will be highly centralized and not safe from the point of view
of the other participants.
It turns out that the team has driven itself into a corner, and the only fair solution in the
current situation is the burning of unsold tokens. Ideally, the project also needs to reduce
the proportion of tokens intended for the team in proportion to the quantity sold to
minimize the risks of price reduction for initial investors. The project team does not state
any such intention.
According to the information provided to us, the second and third wallets containing
18.134% of MNTP tokens belong to the team. Clearly the team has already transferred
a portion of tokens from their original wallet - two transactions of 200,000 were made
on December 29, 2017 and March 2, 2018.
This step directly contradicts promises made by the team for at least two reasons.
Firstly, since the placement of tokens in the secondary market their price has never
risen above the price at which they were sold during the ICO. Secondly, the team has
violated the frequency and volumes of the available transfer of MNTP recorded in the
company's blog. Despite the fact that the total amount transferred does not exceed the
conditions fixed in the English version of the white paper, in this situation we take the
side of MNTP buyers – it is not their fault that the team has changed the ICO conditions
on the fly and does not have time to amend all documents.
Goldmint executives refuse to recognize these actions as a breach of their obligations,
as they "did not violate the conditions described in the Russian version of the white
paper." Their comment regarding this situation is the following: “Of course, the mistake
is that the versions do not match. We have edited these documents a lot before the ICO.
But the essence of this does not change - we did not violate any Russian or English
rules. We just issued 400,000 team tokens in 5 months. This is not more than 500,000
per month, and not more than once every 3 months. 55,000 of these were sent to the
Bancor smart token10. About 132,000 more were sent to different team members and
paid for services in the process of working on the project within 5 months after the ICO.
Many our team members work for tokens instead of a salary.”
It remains unclear to us why services rendered to the company are paid for in MNTP
tokens and some members of the team also receive their wages in tokens, since the
ICO fundraising was for this very purpose and the indicated conditions for token
distribution do not imply such spending. From the point of view of ICO participants, these
are factors that have a negative impact on the market value of MNTP tokens.
Apparently, the team will continue to spend tokens issued for themselves, as according
to them, the current smart contract allows withdrawal of 200,000 tokens every month.
10 https://etherscan.io/address/0x25D4AeF414Ea092FBCbD83fd30e89E15cF820D0a#tokentxns
4. Market dynamics and regulation
To date there are already more than a dozen11 projects for the creation cryptocurrencies
backed by gold. Some of them are preparing for their ICOs; others have already
completed theirs and are working on launching their product. In general, given the
creation of the necessary legal framework, competition in this area will seriously
increase within 2-3 years. The most successful and well-known competitors for
Goldmint are HelloGold and Digix, the development stages of which we will consider
further.
Digix (DGX) are cryptocurrency tokens issued on the Ethereum network. Each is
backed by 1 gram of gold from a store belonging to the partner company, Digixglobal
PTE Ltd of Singapore. The project launched its Marketplace on April 8, 2018; on April
14, 2018 it issued 10,000 tokens backed by 10 kg of gold. More than half of those
tokens have already been sold to their customers12:
The project has built a KYC verification mechanism for customers but the purchase of
DGX tokens is seemingly not yet available to US, Chinese and Japanese residents13.
Information provided on DGX token gold provision is absolutely transparent14:
11 http://www.goldscape.net/gold-blog/gold-backed-cryptocurrency/ 12 https://digix.global/app/#/marketplace/dgx 13 https://medium.com/@Digix/impt-announcing-the-launch-process-of-dgx-2-0-26-march-2018-9014619ff491 14 https://digix.global/app/#/provenance/assets-explorer/assets-list
HelloGold also shows significant progress in this direction and it has already issued
more than 3,000 GOLDX15 tokens backed by gold. Like the Digix project, they also
function on the basis of the Ethereum blockchain. The website provides detailed
documentation that makes it easy to verify availability of the required gold reserve from
the company – as at April 14, 2018 this is 10 kg and, as a consequence, covers the
issued GOLDX tokens three times over16. A verification function is available in a special
section of the website, successful completion of which enables a user to purchase
GOLDX tokens for BTC or ETH17.
Thus we can conclude that Goldmint lags behind its main competitors slightly in
providing key functions. Despite the fact that the project has already issued 100 gold-
backed tokens just before the writing of this review18, their direct purchase from the
company is not yet available. At this link, Goldmint provides evidence that the company
has the necessary underlying assets to secure their issued coins and a special section
of the website provides a package of legal documents proving the company's obligations
to buy GOLD tokens back at the request of any client who has undergone the KYC
procedure.
Nevertheless, if effective development of the service is to continue, Goldmint will still be
able to claim a significant market share, since this sphere is at the earliest stage of
development and companies can take advantage of the "low base" effect.
In our opinion, the Goldmint team took the right step deciding to issue gold-backed
tokens based on Ethereum blockchain, since any delay in developing its own solution
could be very expensive in this situation. There is no critical need for high-capacity
blockchain equipment at the current stage of the development of the crypto market, so
15 https://etherscan.io/token/0xeAb43193CF0623073Ca89DB9B712796356FA7414 16 https://www.hellogold.org/faq.html#about2 17 https://www.hellogold.org/buygoldx.html 18 https://etherscan.io/token/0x61d40b844ea5b68c9c504fccdb05b68c2d7ae965
the company can work in parallel both on creating its own architecture and attracting
new customers.
As for the market situation affecting Goldmint's work, there have not been any major
changes since the end of the ICO. The situation is specific to each country but generally,
regulators have not yet developed a clear position in relation to crypto assets.
While some countries are against cryptocurrencies and their banks are blocking
customers operating with digital assets19, others are making serious efforts to develop
this industry and create a legal framework around it20.
In any case, outright prohibition on the ownership of and transactions using
cryptocurrencies has taken place only in a few small states that do not play a significant
role in the world economy21. Leading countries are optimistic about the potential of
digital assets, but for the time being they simply do not understand how to regulate them
properly. In this regard, the prospects for the development of Goldmint will largely
depend on the speed and nature of the creation of a regulatory legal framework for
crypto by the world community.
19 https://www.investopedia.com/news/canada-banks-ban-users-buying-cryptocurrency/ 20 https://cointelegraph.com/news/france-and-germany-how-regulatory-traditions-in-two-countries-could-affect-eu-legislation 21 https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country_or_territory
5. Analysis of token behavior in the secondary market
As of March 14, 2018, MNTP tokens, according to Coinmarketcap22, are available for
exchange on 5 websites:
With a price of $3.55, the capitalization of MNTP tokens is $6,807,546. The
volume of trading for this asset is low - from March 15 to April 13, 2018, the daily average
was $159,314. The peak of trade turnover fell on February 27, 2018 - the value
exceeded $1 million and even news of the launch of gold-backed GOLD tokens could
not provoke higher volumes, although the asset price showed a sharp increase with a
subsequent correction:
22 https://coinmarketcap.com/currencies/goldmint/#markets
Having examined the MNTP price chart for the period from February 9 to April 14, 2018,
it can be concluded that the asset is not volatile and its correlation with bitcoin is low,
but this is most likely a consequence of the low liquidity of MNTP.
According to Etherscan statistics, MNTP tokens are stored at 5125 addresses23. A little
more than 19% of the total emission is in free float which is, in our opinion, the main risk
for the owners of this asset.
Since the appearance of MNTP statistics on Coinmarketcap, its price in dollar terms has
exceeded the price at the time of the ICO only once, calculated with the 20% bonus all
tokens were sold with during the main stage. Thus, the MNTP token reached its peak
value of $6.35 on April 11, 2018 after news of the launch of gold-backed GOLD tokens;
the full price at the ICO was $7, which with a 20% bonus was $5.83. This price lasted
only a few hours and soon fell to $4.8.
In BTC, the price of 1 MNTP token was about 0.001111 BTC at the end of the main
stage of the ICO ($6.300), which is 0.000926 BTC with a 20% discount. MNTP tokens
reached this value on April 11 only. The market value of MNTP tokens has since
decreased by 2 times.
In our opinion, this token performance may be due to high bonuses for pre-ICO
participants, as well as disproportionate distribution of tokens among various
participants after the end of the token sale. As a result, a large number of bounty and
other low-cost tokens became available in the secondary market, exerting strong
pressure on the price of MNTP.
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.
23 https://etherscan.io/token/0x83cee9e086a77e492ee0bb93c2b0437ad6fdeccc#balances