Analysis of ICO CoinJanitor
CoinJanitor is a project for the failed coins disposal. The product concept is as follows.
The coins that were launched more than 2 years ago, are not traded on exchanges and have a market cap smaller than $50,000 USD will be considered as failed. CoinJanitor will reach out to the coin’s creators, their users and their wider community to set up a buy-out program and have the creators turn over access to GitHub, other code repositories and all marketing assets. The buy-out program will have a deadline. All buyouts will be done using the CoinJanitor token to avoid pump and dump schemes, and to avoid becoming a de-facto exchange service for coins that are otherwise not exchangeable.
Once the buy out on a given project ends, CoinJanitor will proceed to burn the coins it bought. Then CoinJanitor will proceed to disable or decommission the underlying blockchain. To do this, CoinJanitor has access to mining equipment that can be directed towards these blockchains to implement its decommissioning process, if there is a need. The team will proceed to organize relevant code repositories, turning every piece of code it acquires from these projects, into an open source “blockchain library” that any member of the community will be able to access for future project development, for academic purposes or any other goal they have in mind. In parallel, CoinJanitor will start compiling relevant data about all the coins it buys out, to provide market information that is otherwise missing.
The idea is very interesting and useful, but it is unclear what its commercial value is. It turns out that investors will buy CoinJanitor tokens and sponsor the buyback of useless coins. It looks very strange and much more like philanthropy than business.
The business model of the project is as follows.
Despite the creation of the CoinJanitor token as the umbrella coin with which CoinJanitor aims to start cleaning up those failed or dead coins, this project is not a regular ICO. CoinJanitor is a community funded project that aims to do something that has never been tried before and contribute positively to the larger cryptocurrency community. In parallel, CoinJanitor and its creators are interested in starting the debate about how to deal with failed projects and dead coins in the space and how best to recycle resources back into future projects.
Unlike other projects, all contributions will go back directly into the market in the form of “buying” delisted tokens and introducing value-added services offered to the community.
The founders of the project say the following: «Ultimately this is an expensive exercise which already has thousands of hours and dollars invested into it and needs funding as well as widespread media coverage to achieve its goals». In fact, the project plans to raise funds for cleaning the cryptocurrency market. The project does not provide benefits for investors. The founders of the project plan to spend the funds for the research of failed projects. Interesting research. But do market participants need it?
Marketing strategy is as follows.
CoinJanitor token integrates users that are otherwise disconnected from the markets because the coins they hold are not tradeable, bringing more value into these markets. That delivers a total net benefit to the market and to the CoinJanitor economy which will grow every time it integrates another community. Each failed project that is absorbed also extends marketing reach and ability to influence further projects. Additionally, the CoinJanitor token will be strictly deflationary, generating a compounding effect on its value every time it absorbs a dead or failed coin. As CoinJanitor tokens are used to buy out failed coins, the CoinJanitor reserve becomes scarcer while the demand for it increases as more failed or dead coin communities seek a buy-out. It is possible that many of those dead or failed coin holders are also holders of top ranked cryptocurrencies. The utility of the CoinJanitor token for these users will be compounded: on one hand they will be able to move their trapped value out of a dead or failed coin, while the transfer of that value into exchanges will also have a positive effect on their other cryptocurrency holdings. But this is only an idea that may be very far from reality. People are primarily looking to make money, not to benefit the market. Marketing strategy must be very strong to convince people to invest in dead coins. It is planned to spend 125,000 dollars for marketing.
The project team includes 6 people who have experience in the field of crypto investment, marketing, trading. Information about the experience of team members is not very detailed. The White Paper says that the team seeks for analysts, researchers, blockchain specialists and community managers. This suggests that the project team is not staffed yet .
The Vision of the Market
The founders of the project give some statistics on "dead coins". They say that there is significant value trapped in projects that could be more effectively utilized by the market as a whole. The White Paper describes in detail the criteria by which failed projects will be selected for the purpose of buying and burning coins. The founders of the project understand the market. And it is obvious that there is no competition in this niche.
Understanding of the Target Audience
The founders of the project underline 4 main groups that may be interested in the project:
Users. The opportunity to get value back from coins that can’t be sold and to join a community that will grow exponentially, achieving a network effect through the amalgamation of communities that are otherwise cutoff from cryptocurrency markets altogether.
Project Creators. Creating the first project of its kind in cryptocurrency markets, opening the debate about what to do with failed coins and leading a newly created community in the development of more tools that will be useful to cryptocurrency markets altogether.
CoinJanitor. The creation of an economy that wouldn’t exist otherwise. This economy will grow with every failed coin that is disabled and with every community that is amalgamated under the CoinJanitor umbrella. CoinJanitor community members will have a say about how to achieve market concentration and the transfer of value trapped in failed coins in the future.
The Market. Cryptocurrency markets will benefit from the reduction of dilution and the transfer of value that would be otherwise lost, into top ranked cryptocurrencies. This is the main positive externality that CoinJanitor will create for the benefit of other cryptocurrency communities.
Undoubtedly, the first two groups will be interested. But to satisfy their interests, it is necessary to attract investors who wish to buy CoinJanitor tokens. The founders of the project do not explain what benefits to investors.
In ordinary sense, the project has no competitors, so it is difficult to talk about the benefits. But the lack of competition does not guarantee the success of the project. Lack of competition means that such projects are not in demand.
It is very difficult to talk about the advantages of this unusual project for the redemption of useless dead coins. Perhaps its main advantage for the participants is the exchange of information and mutual moral support of failed investors. As well as a complete lack of competition.
Among the disadvantages are the following:
- Lack of commercial sense in the project;
- The lack of demand of the product.