Covesting is a cryptocurrency-focused trading and information platform aiming to bring a range of new tools to crypto traders and investors. Specifically, its peer-to-peer trade-following model, where traders can present strategies that investors with accounts on the platform can subscribe to and follow, will allow investors to access advanced trading strategies. Covesting will support this service and broaden its appeal by integrating an advanced trading platform with a crypto news and intelligence platform. Covesting’s token sale seeks to raise up to 25,000 ETH through the sale of 15 million COV tokens.
What is the project?
Covesting intends to become a leading asset management platform in the crypto space by offering investors and crypto traders the opportunity to spend COV tokens to follow the trading strategies of professional traders through a copy-trading model. Traders will present specific strategies, accompanied by historical return data, that will allow investors to choose both trading approaches and specific allocation amounts relative to different strategies they might follow. Once an investor elects to follow a strategy, COV tokens will serve as payment for access to the trading signals, while funds allocated to that strategy will be placed in a segregated account. The segregated account is not an escrowed smart contract but a third-party maintained account that ensures the designated funds are not in the possession of a trader being followed. Itt will be programmatically traded according to the signals generated by the chosen strategy. Any gains from chosen strategies will be split between the investor (72%), the trader (18%) and the Covesting platform (10%).
Beyond the appeal of this service, particularly for small investors who would otherwise be generally unable to access sophisticated professional trading programs which are often held within hedge funds or other vehicles with restricted access, Covesting intends to further increase the appeal of its site through two measures. One is the creation of an advanced trading platform that will connect to a range of cryptocurrency exchanges, thereby offering increased liquidity and a wider range of trading vehicles than individual exchanges might offer.
The second is the creation of its crypto-intelligence service that will host news, commentary, and discussion for crypto traders and enthusiasts. If successful, this should presumably allow Covesting to develop a community of users on its site and help create an audience for the trade-following service that will be its primary revenue generator.
What is the Token Being Sold?
Covesting’s ICO will see up to 15 million tokens offered for sale, with a hard cap of 25,000 ETH. As described, the ERC-20 COV tokens will serve to acquire access to trading programs within the Covesting platform. In addition to providing access, the underlying smart contract governing the tokens will accrue revenue from fees generated on the site–specifically the 10% fee on trading gains when investors are subscribed to particular trading strategies, as well as a 2% fee at the time funds are allocated to a strategy. While funds from the token contract will not be returned directly to token holders in the form of dividends, 50% of fees entering the token contract will be allocated to the repurchase and burning of tokens, thereby reducing the token pool with the intention of increasing the token price.
The 15 million tokens available in the ICO represent 75% of the total token supply, with 13% reserved for the Covesting team, 7% for the pre-ICO contributors, and a further 5% for advisors and bounties. 40% of funds raised in the ICO will be allocated to development of the platform and research into potential high frequency trading operations that Covesting intends to develop. 25% of ICO funds will be dedicated to marketing and customer acquisition, with an additional 30% for initial capex including licensing and operations. In terms of a roadmap, Covesting has an existing MVP of its application and user interface, and intends to present a beta version of the trade-following system in March 2018, with a beta version of its trade platform targeted for July 2018.
Who is the Competition?
The general space into which Covesting is entering has been a relatively busy one, with 2017 having seen considerable interest in the range of finance, asset management, trading, and exchange related ICOs that, broadly speaking, overlap with elements of what Covesting is attempting to achieve. This range of ICOs illustrates the extent of market interest in the space, particularly as many such offerings have raised substantial funds. While the space could be considered a somewhat crowded one, it does appear that Covesting’s relatively novel approach of a trade-following platform hosting strategies by professional traders and crypto-funds, combined with what could become a comprehensive news and education center attracting traders and investors to the site, creates a path within which Covesting could potentially carve out a successful niche.
Unlike BlackMoon Crypto’s efforts to create a fund management platform that effectively brings blockchain infrastructure to an established industry, with an objective of attracting both existing fund managers and the existing audience of hedge fund investors to its own platform, Covesting’s objective of allowing individuals to follow managers with even modest amounts of capital promises a platform that will be considerably more accessible. Likewise, compared to NapoleonX’s sophisticated algorithmic strategies largely targeting institutional investors seeking crypto-based exposure to a range of traditional and crypto assets, Covesting’s exclusive focus on crypto and, generally speaking, on a target audience that will likely take shape as a more retail clientele, also appears as distinct.
There are also questions about Covesting’s prospects that will be worth monitoring, both for their insights into the company’s progress but also relative to the broader evolutions of the general crypto markets. Specifically, with a 2% upfront fee and effective 28% performance fees, return models look to be lower than the with traditional ‘2 and 20’ model of hedge funds. Whether the ease of entry and exit into Covesting’s trade-following agreements, and the lack of investment minimums, are considered to outweigh these fees remains to be seen. On the other hand, whether top professional managers will themselves consider presenting their strategies on the Covesting platform, when good strategies could presumably be monetized in a variety of manners, is also worth considering. In the best case, where both investment managers and high net worth individuals begin to migrate to the platform–a move which would only be plausible if the highest quality strategies are made available on CoVesting’s platform–then a scenario where Covesting begins to attract funds that might otherwise be destined for a manager like Blackmoon Crypto becomes imaginable.
Who is the team Behind the Project?
Covesting is led by a strong team with a range of relevant financial industry background. The project has three cofounders, Dmitrij Pruglo, Tim Voronin, and Dinis Guarda, all of whom have experience trading traditional assets with established European firms. In addition to a range of fintech and related industry experiences, the three share a background of having worked at Saxo Bank. They are supported by a diverse team with experience in markets and technology that should prove adequate to the challenges the project will likely face. Of note, blockchain lead Alex Strakh has experience with Solidity and has developed smart contracts for several projects. A diverse advisory team with financial and blockchain expertise suggests the team will be able to acquire resources and address developing challenges as the project evolves.
|Team openness||Fully transparent|
|Blockchain Developer||Alex Strakh|
|Technical White Paper||non-technical white paper available|
|Available Project Code||Not available|
|Role of token||Payments within the platform|
|Distributed in ICO||15000000|
|Emission rate||No new coins created|
|Consensus method||Proof of Work|
|Sale period||Nov 24th, 2017 to Dec 24th, 2017|
|First price||(1 ETH = 800 COV)|
|Investment Round||First public offering|
|Token distribution date||2 weeks after crowdsale|
|Min investment goal||0 ETH|
|Max investment cap||25K ETH|
|How are funds held||Multi-Sig Hardware Wallet|
|Minimal Viable Product||Q4 2017|
|Bonus schedule||Price declines from 800 COV per 1 ETH to 520 COV per 1 ETH as the ETH amount raised increases.|