THE DEMAND / THE MARKET

This is probably one of the most interesting projects that I have researched recently. ICON is very well known to those immersed in the blockchain community, and you too may have heard about this project. Thus, this report is for those who may not be familiar or may have forgotten about the immense opportunity that this project presents. There is no doubt that the blockchain technology has begun to disrupt many different sectors and industries. However, without doubt this technology is still in its infancy and is faced with challenges such as ease of use and service quality. There is still much ground to be made to find a real-world application for various projects. There are significant short-comings such as performance limitations when projects attempt to connect to the real world. Additionally, the challenge now has also become the communication and exchange of information between one projects / communities / silos with another. To explain this concept further, as it is essential in fully grasping one of ICONs main functionalities, each blockchain community aims to bring something new to the table. However, each of these communities are in a way an island of their own and cannot truly communicate with other communities. ICON will provide the platform that will allow for the exchange of information between such communities/industries via an interconnected network.

One of the criticisms towards the centralized world is the number of steps sensitive information is transferred and the opportunity for exploitation of that information within each of those steps. For instance, buying a cup of coffee may be as simple as paying X amount of dollars for a cup of coffee through a POS machine, however, upon swiping your card, your name, credit card number, expiration date, billing address, and CVS are stored and transported to various databases. Not only there is the concern of having third parties being trusted with sensitive information – which has proven time and time again to find its way to the black market – there is also the high fees associated with this transaction. ICON, on the other hand, a decentralized network, removes the need of unnecessary intermediaries by verifying the transactions on their network via a shared ledger with in the community network itself. Thus, reducing risk and fees associated with transaction of information. Additionally, ICON’s network, allows each community to autonomously agree upon their system and policy, while being able to connect to other communities when needed. ICON is a bridge that is able to bring all different projects / communities together and is able to help facilitate the breaking of walls that currently separate blockchain projects and essentially our societies.

Figure 1 – ICT index ranking the fastest growing countries in the world in the technology sector.

ICON is a Korean blockchain company made with the blessing of Korean officials. This is important to note because south Korea’s government officials and their struggle with regulating the ever-growing cryptocurrency crave in their country has been well highlighted in the news. I am going to highlight why this partnership is so important in the market evaluation of ICON. Currently, south Korea is ranked 11th in the world with regards to GDP [1, 2]. South Korea is also ranked first between all countries in the information and communication technology development index [3] (figure 1). They are in the top three regions in the world with regards to cryptocurrency volume by currency trading in the world (figure 2), with Bithumb, Coinone and Korbit dominating majority of the Korean exchange volume [4]. ICON has yet to be listed on an Korean exchange. There is no doubt that the listing of ICON on a Korean exchange will have significant impact in its price appreciation.
ICON is based on theloop and loopchain. loopchain is an enterprise blockchain engine consisting of distributed ledger, smart contract, and management module. Based on its own modular structure, loopchain can be optimized for variety of financial and non-financial services, including authentication, settlement, trading, and IoT . To be able to explain how ICON works, I have to first explain how loopchain works. Instead of the traditional Proof of Work (PoW) used by blockchain technologies such as Bitcoin and Ethereum, loopchain uses an Loop Fault Tolerance (LFT) which is essentially an enhanced-Byzantine Fault Tolerance-based algorithm that promote faster consensus and will allow for fast transaction speeds. Significant portion of the whitepaper is used to describe how LFT provides consensus. In layman terms, ICON and loopchain will not have any issues with scalability.

Figure 2 – Korea ranked 3rd behind Japan and United states in total trading volume. With Bithumb and Coinone being the top two exchanges.

The ICON republic aka Nexus, is the “central hub” that connects every different community via a community representative. Any contribution to the ICON network is rewarded via the ICON tokens called ICX. The specific amount of ICX awarded is actually determined using another technology that is owned by the founders of loopchain and ICON (FDG – see below), called DAVinCI, which is an AI that determines the payout using ICONs incentive scoring system. Additionally, ICON will implement a decentralised exchange system or as they call it DEX, in which tokens used in different communities will be interchangeable for ICX tokens. In simpler terms, ICX can be used for funding ICOs and smart contracts similar to Ethereum (ETH), it can be used as exchange of value between communities and also function as payment/reward for contributing to ICON network.
I understand that the functionality of ICON may be hard to conceptualize so I will try to explain this using the following example. Assume you have to go to the hospital, the hospital itself has adopted a blockchain system for itself, your insurance company has also adopted their own blockchain as well. These are two distinct communities, however, in order to communicate with each other, i.e. insurance claim for your visit to the hospital. These two distinct communities that run their own specific blockchain system can communicate through ICON’s network i.e. Nexus (figure 3).

Figure 3 – A simplified diagram dipicting the ICON Nexus and Community-Represenative (C-Reps).

ICON’S ROADMAP

In 2017, ICON was able to quickly establish partnerships with major banks and insurance companies and also implemented U-Coin in three different universities. Below is the ICON’s 2018 roadmap:
Other notable dates:
  • March, 2018 – Token Swap, Mobile Wallet
  • April 2018 – IISS launch, ICO platform
2018 Q4
  • SCORE Improvement

ICON’S TEAM

ICON’s team consists of 50 people (and growing) that fill different sectors of the project. They also have 8 advisors on board. Their team sub-divides into the foundation council, blockchain department (technology and business), AI department, design, communication and security. The team consists of individuals who have worked in variety of different financial sectors and/or are associated with DAYLI Financial Group (DFG). I will not try to dissect the team here, because there are a lot of impressive individuals on the team, and I suggest you take the time and have a look through their profiles on their website [6] .
A note on DAYLI Financial Group (DFG): DFG developed theloop / loopchain which they have used to build tailored blockchain solutions for various institutions in Korea (such as Samsung [7]), also backed by a Korean government grant. DFG is a FinTech company, with 500+ employees, provides data tech solutions, digital wealth management, and lead-generation services mainly through its three core divisions – DAYLI Intelligence(DI), Quarterback, and DAYLI Marketplace(DMP) [8]. DAYLI in addition with Korean universities are working together to bring ICON to market. They also own an artificial intelligence company named DAVinCI which focuses on enhanced predictive analytics, automated report generation, sales and customer service innovation, big data collection and utilization [9].

TOKENS and SUPPLY

ICON’s tokens are called “ICX”. ICON has a finite supply of 800 million tokens, of which 50% was available during the initial coin offering. The ICX tokens were allocated as such, Token Sale – 50%, Foundation – 14%, Community Group and Strategy Partners – 10%,Team, Advisors and Early Contributors – 10%, and Reserve – 16%.
Use of Proceeds:
  • Tech Company: Development expense for blockchain engine, DAPPs, artificial intelligence, etc.
  • Reserve: Required for real-time DEX with other blockchain network. Reserve is divided into Reserve1 (ETH Reserve) and Reserve2 (Other Reserve) Reserve1 is required for DEX with Ethereum based networks, and Reserve2 is required for DEX with other non-Ethereum based networks.
  • Foundation expense: Covers operating expenses, marketing fees, legal & account fees associated with the ICON Foundation
  • Business development fee: Fees associated with the global expansion of the ICON Foundation, including offices and business development related expenses.
  • Strategy Partner: Costs associated with ICX expansion, which are provided to the Global Business Partner
ICX can be issued up to 20% of total volume annually with the consensus of ICON Republic, taking into consideration the ICX trading volume, DEX trading volume, freezing volume, and transaction fee. However, ICX is not directly issued but by providing nodes with the right to issuance. These rights are granted to the nodes on ICON Republic, and each node is entitled to receive ICX from the ICON Foundation by exercising its rights. Each Node may exercise its rights at any time and does not have to exercise immediately. Rights granted to each node are determined based on the ICX Issuing Scoring System (IISS), and each node is granted in accordance to its IISS score. Nodes in ICON Republic can acquire ICX by exercising their rights.
IISS (ICON Incentives Scoring System) – IISS is an artificial intelligence (AI) based evaluation system for effective ICX distribution policy. IISS is based on a financial AI solution called ‘DAVinCI,’ which uses machine learning technology to enhance CSS (Credit Scoring System) of existing financial institutions. DAVinCI’s AI algorithm provide s an optimal prediction model for ICON Republic. Moreover, components including ICX transaction volume, DEX transaction volume, freezing volume, and transaction fee will be used as important evaluation criteria for IISS. IISS relies on DAVinCI to continuously analyze, learn, and evolve relevant data on ICON Republic.

KEY PARTNERSHIPS AND ASSOCIATIONS

The partnerships of ICON are very impressive. Here is a summary of some partnerships:
  • CoinOne Inc. – founded in 2014 and owned by DFG’s cryptocurrency division, provides on of Korea’s largest cryptocurrency exchanges which consistently ranks in world’s top 10 exchanges based on trading volume.
  • Blockchain Interoperability Alliance – co-founded by ICON, AION, and WanChain, share the vision of promoting interconnectivity between disparate blockchain networks. This collaboration will result in sharing research and protocol architecture.
  • ChainToB (blockchain to business) – is a new Korean startup that aims to bring blockchain technology to business services.
  • Universities – Backed by government grant from the Ministry of Creation and Science, the three-top tier Korean universities have been, and have also signed on with theloop to develop university coin (U-Coin) bringing blockchain to the students, with MVP testing commenced in Q4 of 2017. Furthermore, U-Coin will expand its ecosystem by creating other cryptocurrency -based services that can be used in nearby communities and university towns, including cryptocurrency vending machines and easy payment/ transfer systems.
  • Capital Markets Consortium – ‘Korea Financial Investment Blockchain Consortium,’ the first industry-wide blockchain consortium backed by 27 securities firms, helmed by KOFIA. In addition to Companies such as Samsung and Hyundai Motors that may be familiar to the readers.
  • SBI Ripple Asia – A secretariat of consortium of more than 60 Japanese banks, have partnered with DFG’s DAYLI Intelligence to facilitate blockchain-based instant cross-border payments, enabling round-the-clock settlement at reduced costs.
  • Woori Bank – a subsidiary of Woori Financial group and one of the largest commercial banks in South Korea. They are working with DFG DAYLIN intelligence and theloop to commercialise Korea’s digital currency Weekbee coin.
  • Blockchain Consortium: Healthcare – Made up of major domestic hospitals, the plan is to build a secure precision medical data sharing network in a secure manner and intends to extend the service to global medical data distribution.
  • Blockchain Consortium: Insurance – With a government grant from Ministry of Science, ICT and Future Planning, the Insurance Consortium led by Kyobo Life Insurance, which consists of domestic insurers, medical institutions and medical IT firms aims to automate the entire insurance claiming process on theloop blockchain. Prototype testing underway in Q4 of 2017.

DAPPS AND NEW PARTNERSHIPS

  • Stove (Smilegate) – A social platform producing and distributing a variety of digital contents, including games, built by Smilegate, a global online gaming company listed on the Guiness Book of World Records for number of concurrent users of CrossFire
  • Bluewhale – A decentralized ecosystem of sharing economy for workers to receive fair rewards
  • TINK – A distributed application that helps your friends give credence to your social profile by making anonymous vote on what they like and think about you.
  • Silkroad – A platform that supports transparent history management and purchasing by reforming the semiconductor supply chain and SCM into a blockchain-based decentralized system.
  • UPPSALA – Security Intelligence Platform for Blockchain (SIPB) which aims to overcome the disadvantage of decentralization by turning it into an advantage of security
  • AD4th – A decentralized advertising platform with real-time P2P reward system
  • Nucleus Vision – An IoT-based, contactless identification system that empowers retailers to identify and better serve their customers.

COMPETITORS AND KEY CONCERNS

In their white paper ICON lists Ethereum, Bancor, and EOS, while stating that fees and transaction speeds are an issue for these platforms. Although true, to date, I have not been able to find transaction speeds from ICON itself. It is hard to specifically say how well ICON can scale if there are no real numbers presented by the company. They do however present us with a table that they use to compare and contrast themselves with their competitors.
ICON has also co-founded the blockchain interoperability alliance which consists of two of their competitors, WanChain and Aion. There is also the Fusion project as well. However, they are focused on transfer of payments and assets which is an interesting project on its own. However, there are no actual competitors for ICON, it is a Korean solution, made for South Korea (possibly the rest of ASIA and world), by Koreans. They have a clear monopoly on the Korean market.
Dilution of ICX tokens is a concern. C-Reps can vote every year to decide upon the amount of ICX tokens to be released into the market. This range can be between 0 – 20%. No one would like to see a 20% depreciation in their holdings. Thus, there needs to be some caution from the team with regards to how much they release so that the balance between supply and demand are met.

ICON’S HIGHLIGHTS

Let us discuss some of ICON’s highlights which the writer believes will make the long-term potential of this company a promising one.
  • They are the first to bring the concept of “hyperconnectivity” to market.
  • ICON is well positioned – essentially a monopoly – in Korea to be the first to bring connectivity within different blockchain communities by connecting governments, universities, banks, businesses, insurance companies, and hospitals.
  • They are the creators of theloop, which already exists and is functioning within the Korea Financial Investment Blockchain Consortium. They also have University Coin, along with hospitals and insurances companies as well.
  • The ICON allows for exchange of assets – can be tokens, value, coins, information, records (medical and academic), and payments
  • Impressive partnerships– backed by the government, universities, and also partnered with SBI Ripple Asia connecting them with the vast partners that Ripple Asia is in contact with i.e. 90+ Japanese banks.
  • Scalability could be an issue. They suggest that LFT is the solution to scalability however, there are no numbers to prove that to date.
  • There are currently 40 C-Rep nodes located across 10 regional areas.
  • ICONex (the ICON wallet) – A demo was shown during the Annual Summit. It functions as an Ethereum wallet as well. Your wallet can be a part of various different blockchain projects as well. They are also working on bringing a mobile app as well within the near future.
  • ICONick – Blockchain address naming service, which is essentially creating a simplified identification, such as John Doe, that can be used to send and receive information/assets on the network. This creates a simplified system for everyday users. This takes away the ray of numbers and they give someone a name/ID instead.
  • Important dates: March, 2018 – Token Swap, Mobile Wallet release and April 2018 – IISS launch, ICO platform
  • Currently trading at $3.80 USD, with a market cap of $1.43B USD.
  • The circulating supply of ICX tokens is 386M/400M.

FINAL WORDS

 

It is really hard not to get excited when reading about ICON. Blockchain is developing from a conceptual phase into one that can be applied to real-world problems. Decentralized-truest may have concerns regarding ICONs’ partnerships with government and centralized entities. However, as an investor that would give one a peace of mind and a level of comfort knowing that Korea’s blockchain project will be a great investment as the amount of funding and support that has been provided thus far cannot be ignored. There is also the level of comfort knowing that ICON is being built to incorporate theloop, which is actually implemented on various systems such as universities, government, and banks. The team is impressive as well, and their vision is something that provides comfort. In the ICON Annual Summit [10] they mentioned that they understand that this is a large undertaking, however, they have the support that they need to move forward. They may be the strongest team in the blockchain community. One needs to understand that the “team” is greater than just the 50-people listed on their website. At the time of writing this report, ICX is trading at $3.80 USD. At its peak, ICX was trading at $12.00+ USD. This is the hardest project of them all to put a future valuation on, as it is nearly impossible to place a future evaluation on the ICON network and all of its current and future partnerships. ICX seems to have found a support around the $3.60-3.70 USD area and has generally bounced off with a 30-50% gain from these levels.Thus, the writter is bullish and long on ICON Additionally, with the upcoming events such Token Swap, Mobile Wallet release and IISS launch, ICO platform coming in March and April of this year, it is hard to imagine ICX staying at these levels. Current market cap of ICON is $1.43B USD, however, without a doubt ICON is worth far more than this current market cap. Once the ICX Token swap occurs, and ICX is listed on a Korean exchange, there is no question that the value of ICX will increase 3-5-fold from this area. Thus, the writer believes that a $5.00-$7.00 USD ICX (35-100%) price within the next two quarters and $20.00 -$30.00 USD (4.4-7 fold 440-700%) within 3-5 years of writing this article. 

Resources:

  1. http://www.imf.org/
  2. https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?year_high_desc=true
  3. https://www.worldatlas.com/articles/the-titans-of-technology-the-top-countries-in-information-and-communication-development.html
  4. https://www.cryptocompare.com/coins/btc/analysis/KRW?type=Vol
  5. http://daylifg.com/business
  6. https://www.icon.foundation/contents/team/members?lang=en
  7. https://www.theloop.co.kr/partners
  8. https://www.crunchbase.com/organization/dayli-financial-group#section-overview
  9. http://daylifg.com/business
  10. https://medium.com/helloiconworld/icon-annual-summit-the-genesis-a-quick-summary-448d3e5d7016