Substratum recently launched the website and released the whitepaper for its upcoming Amplify Exchange (AMPX) ICO. I’m in the midst of putting together a long-form analysis of why I think this is a money grab. In the meantime, here are a few initial thoughts after taking some time to go through and think about the token metrics of the AMPX ICO.
- Substratum is looking to sell 740 million AMPX tokens in four phases – private sale, pre-sale ($0.10/token), ICO Phase 1 ($0.13/token), and ICO Phase 2 ($0.15/token). With a conservative average token price of $0.08, Substratum is valuing AMPX at $59.2 million. If we put more weight on the public ICO phases, an average token price of $0.12 would yield an $88.8 million valuation. Considering Substratum still hasn’t released SubstratumNODE, SubstratumHOST, and CryptoPay, this valuation is laughably astronomical and unreasonable.
- The AMPX ICO has a hard cap of 740 million AMPX, which also happens to be the total amount of tokens allocated for sale. Most legitimate ICOs denominate hard caps in liquid and value-known assets like BTC, ETH, or USD. Substratum is choosing to denominate their hard cap in a value-unknown token. This suggests the team is adopting the “we’re too lazy to do financial projections, so let’s get all the money we can and think about it later” strategy. Very sketchy.
- The total supply of AMPX is 1.2 billion tokens. 61.66% is allocated for sale, 33.33% goes to the “operational team”, and 5% will be airdropped to SUB holders. I think 33.33% (400 million AMPX) for the team is unreasonable. Using AMPX’s undiscounted rate of $0.15/token, 400 million AMPX is equal to $60 million. Yes, the team that has yet to deliver on their first two products thinks it’s appropriate to create $60 million out of thin air for themselves.
- On a related note, it’s important to consider these percentages reference the total supply. If Substratum fails to sell 61.66% of the tokens, the team will control an even higher percentage of the circulating supply. To justify this unreasonable token distribution, Substratum and Amplify Exchange CEO Justin Tabb stated the 33.33% allocation for the team is “almost identical” to that of Substratum’s first ICO, which allocated 19.42% to the team. In what world does a 13.91% difference qualify as almost identical?
That’s it for now. My general opinion is that AMPX is a blatant money grab. I’m going to spend the next few days digesting the whitepaper and finishing a more lengthy analysis of why I think Amplify Exchange will fail to become a leading cryptocurrency exchange.