- Established business, established brand, solid pre-existing client-base
- Evidence of Minimum Viable Product
- Functional value of token unclear
- Business model has regional focus
- Communication is minimal / difficult
As of writing (Oct 12 2017) the entry-level for participating in the HeroToken ICO issue is 10 ETH.
Whilst HeroToken has been on the radar for a few months now, specific details relating to both the token pre-sale and sale processes have been repeatedly postponed. Check the HeroToken site for the latest updates.
We undertook our analysis of the HeroToken ICO as anyone should begin any analysis of any ICO: we read the white-paper, we looked at the business model, we looked into the marketing budget, and we looked at existing media coverage. All of the initial signals were extremely positive.
HeroToken itself is intended as a Blockchain-based expansion of an existing business model. That existing model is PawnHero, a popular application-based Pawn House that serves the traditionally cash-strapped demographic within the Filipino population. The vast majority of Filipinos (c. 80%) are classified as “unbanked”. This is a country of 100 million people, of which 10 million work abroad with families back home dependent on the money which relatives wire home.
The Philippine’s Pawn Culture
As a result, whilst some of these unbanked families are waiting for what may be intermittent payments from their relatives abroad, they often find themselves turning to pawn houses in the mean-time as a means to finance household costs.
It was within this context that PawnHero developed its original business model which today serves up an application-based Pawn House service.
Users in need of short-term access to cash will submit a personal valuable via the application for assessment by the PawnHero team who will dispatch a rider to pick up the good, transfer it to a centralised depot where it is then assessed. Subsequently, a monetary value is then assigned by Pawn Hero to the good and a proposal for a loan arrangement is then made with the user via the app.
The HeroToken ICO itself seeks to expand upon this model by introducing some advantages offered by the Blockchain – by exploiting the transparency it can offer, for example, in relation to tracking user credit history.
High Credibility, Doubts Relating to Inherent Token Value
It was evident from the beginning that this was an ICO being headed up by a team with high credibility and piggy-backing on the back of an existing and successful business model. The ICO initiative has also received coverage from high-profile media outlets such as Forbes Magazine and it is also enjoying solid backing from big backers like Alibaba.
However, despite all this, we found ourselves scratching our heads somewhat. We really struggled to identify what exactly imbues the token with the inherent value that any ICO should be seeking to offer. There is mention within the white-paper of a profit-share model – i.e. token-holders receive anywhere between 1% to 20% of profits.
The interesting aspect here is that this will essentially make the token a virtual equivalent of a perpetual bond. The problem, however, is that there is no indication of how exactly the profit-share is calculated – which might leave one naturally suspicious that the profit-share will be more akin to 1% than 20%.
With no indication of other mechanisms which might lend value to the token, it becomes difficult to identify token value with the business model outlined in the white-paper.
We also feel that the 10 ETH entry-level cuts against the grain of a banking institution which claims to base its business philosophy on making banking accessible to disadvantaged demographics.