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ICO Analysis: Quantstamp (QSP) Token

ICO Analysis: Quantstamp (QSP) Token

Quantstamp (QSP) is probably the most exciting Ethereum ICO of the year. They have done a fantastic job of building a great team, with well connected advisors and talented team members. The ICO valuation offers outstanding value, given the massive and probable growth they have planned. The community they have built is more akin to a cult of loyal followers, who are eager to see the longer term success of the company, just as much as the CEO, Richard Ma.

  • Solves a very concerning and expensive problem on the Ethereum (and NEO) blockchain.
  • Inspirational and knowledgeable team, with some great advisors, including the mighty Y-Combinator
  • Aims to become the Cryptocoin industry standard, and has the ability to achieve this.

  • Community reward system that does not reward hold-and-forget investors.

The Quantstamp protocol solves the Smart Contract security problem by creating a scalable and cost-effective system to audit all Smart Contracts on the Ethereum network. Over time, we expect every Ethereum Smart Contract to use the Quantstamp protocol to perform a security audit because security is essential.

Quantstamp (QSP) ICO Fast Facts

ICO Crowdsale Start Date: 15 November 2017 Maximum Discount: 100% (first $3m USD buyers) Platform: ETH Amount Raised (Valuation): $15m USD (with a 65% crowdsale, values the company at $46m USD)

I should also point out I have a background in IT security, so I get excited when Security and Blockchain technologies merge like this… I also get weary of yet another vendor over promising and under delivering in these sectors… So this review is a little personal to me.

Quantstamp (QSP) Utility

One of the major benefits which Ethereum and all Ethereum based tokens (known as ERC-20 tokens) offer is the ability to use a Smart contract. In its simplest form, a Smart Contract allows you to attach conditions on the payment of money. A very simple example would be in trading with an unknown person. To facilitate the trade with someone you have no trust in, you could write a smart contract that states I will pay you 2 ETH, once you pay me 100 XYZ tokens. Should either party fail to live up to their commitment, the Smart Contract fails and returns any payments to the original party. In this example, it would operate much like an escrow service with little to no cost and absolute, undeniable evidence of the requirements needed.

However, as demonstrated by the launch of the DAO token in 2016, a poorly coded Smart Contract can lead to disastrous consequences. The smart contract to facilitate the distribution of DAO contained a vulnerability which allowed a malicious hacker to divert all payments to a wallet they controlled. This led to a loss of tens of millions of USD and forced the Ethereum developers to fork the project in order to undo the loss of funds and confidence in the platform. As a side note, this is why we now have an Ethereum Classic (ETC) and Ethereum (ETH) blockchain now.

Quantstamp has entered the ICO market as a way to perform security auditing of smart contracts. This ensures that the creator of the smart contract hasn't put a subtle error into it, in which they can get out of the contract in future, as well as to giving investors piece of mind that their money won't be lost to another attack like DAO.

The initial target is to provide a semi automated audit of selected ETH Smart Contracts, before becoming fully automated and expanding to other platforms, such as NEO. With the expected growth of Ethereum and NEO, as well as the increasing number of tokens being launched on these platforms, this provides Quantstamp with a massive potential market

Quantstamp (QSP) Team

Cofounder and CEO Richard Ma has worked as a quantitative strategist at a number of high end investment groups and fund managers. He specialises in algorithmic trading, programming a set of rules in which a computer could perform automatic trades based on these rules. A key part of this is testing the code to ensure the system would not make reckless, irresponsible or even illegal trades. Cofounder and CTO Steven Stewart is a Computer Systems Analyst, with experience working with the Department of National Defence, a large government agency in Canada, and lecturing at the Universitery of Waterloo.

Richard Ma has demonstrated numerous times that he is very capable of being an energetic and passionate leader in this space, with frequent interviews and AMAs given during the ICO. It is clear that he is interested in building a long term and stable company.

It is extremely important to note that Quantstamp has the backing of Y-Combinator. A massive incubator which provides support to start ups in their early phases. Y-Combinator are one of the most successful incubators available, having led many startups to be the number one organisation in their sector. This is a huge and very influential platform to be backing Quantstamp and brings networks and connections that would not have been possible otherwise.

The cofounders are backed by an all star team of technical minded people with backgrounds in software development and security.

Quantstamp (QSP) Roadmap

Quantstamp have aimed to hit the ground running by completing four semi-automated security audits and partnering with major universities before the end of the year. Some of these audits have already been successfully completed and well received by the public.

In April 2018, they will look to deploy additional functionality onto the mainnet and have this peer reviewed by academics. Seeking academic peer reviews is an unusual step, but one which should be conducted more often. I applaud Quantstamp for their openness in this sense, as it will further validate their approach to automated testing. By mid 2018, they want to have a demonstrable product launched and begin working with 3rd parties to provide insurance on Ethereum Smart Contracts. This would give large organisations more confidence in the system and increase the acceptance of Smart Contracts by non-crypto based institutions.

Quantstamp (QSP) Value

A valuation of $46m USD is incredibly low from my point of view. It is looking to become the defacto standard in Cryptocoin Smart Contracts, perhaps one day becoming the required standard in all contracts. Being the first to market with such a thorough plan for this sector gives them a huge head start too. There is a very large potential for Richard to lead the product to a 9 or 10 figure value in a very short time frame.

I expect to see the value of QSP to grow as they audit more and more clients. The release of the automated system will give the team a significant boost and improve their ability to scale to meet their longer term goals.

Quantstamp (QSP) Transparency

The ICO is extremely well run as QSP provides a sound distribution plan and has communicated it effectively throughout the launch.

They have looked at new ways to build a community of investors, not just traders. Innovative new ways to reward those that hold on to the token have been put forward by the team, and although they may be strange to institutional investors, the public seem to enjoy them. I do have mixed feelings about this. On one hand, I do think this rewards those who hold on for longer term gains, but at the same time, it makes it hard for an investor to invest and forget in Quantstamp, when they are expected to perform actions in order to get additional rewards.

Social media and chat channels have been quite active, both promoting the coin before the ICO and providing support afterwards as well.

Quantstamp (QSP) Distribution

The whitepaper was released early, which clearly covers how the funds will be used by the team. It is extremely unusual to see such a large proportion of the tokens given to the public (65%). This is probably in response to having Y-Combinator in the background guiding their decisions to ensure maximum acceptance. A very low 15% is assigned to the administration and general funds of the team. A massive 30% is assigned to community engagement and ensures they are able to reward their supporters, turning them into long term investors.

It is also great to see a 5% allocation to increase the security of the token, by offering bug bounties and hack-a-thons to the general public.

Quantstamp (QSP) Summary

Quantstamp (QSP) is probably the most exciting Ethereum ICO of the year. They have done a fantastic job of building a great team with well connected advisors and talented team members. The ICO valuation offers outstanding value given the massive and probable growth they have planned. The community they have built is more akin to a cult of loyal followers who are eager to see the longer term success of the company, just as much as the CEO Richard Ma.

Quantstamp have found a fantastic use of the blockchain public ledger to provide assurance in a trustless manner. It gives the public confidence in the Smart Contract (and the validity of the QSP audit results), as well as opening a whole new sector of Smart Contract insurance options to mitigate risk for big money organsiations looking to enter into the crypto world.

Crypto Coin Disclosure

The author is participating in the public round of the Quantstamp ICO.
No payment or private consultation was sought for this article.

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