Ethbits is launching two platforms for trading and exchanging cryptocurrencies. The first, which is already in beta, will be Ethbits Local. Ethbits local borrows LocalBitcoin’s concept of facilitating face-to-face trades of cryptocurrency for fiat currency and adapts it to Ether, but with a lower transaction fee. Ethbits Local also allows for the digital exchange of cryptocurrency for fiat through bank transfers.
Ethbit’s second project is an ambitious cryptocurrency exchange platform with social trading functions similar to eToro. The platform, called iTrade (hosted on a centralized server) will support the top 15 cryptocurrencies by market capitalization as well as pool trading, copy trading, and auto trading. The Ethbits developers say that social trading features like these will help attract new crypto-investors to their platform. They are also in talks with Mycelium to offer a crypto-debit card to their users.
What is the token being sold?
The Ethbits token offered in the sale represents shares in the Ethbits platform and pays out dividends in the form of ETH on a quarterly basis.The Ethbits token is also required to pay transaction fees over both networks. Initially, users will be required to hold Ethbits to use the network. Eventually Ethbits plans on accepting fee payments in multiple cryptocurrencies by automatically executing conversions to the appropriate amount of Ethbits in the background.
A maximum of 4 million ETB tokens will be on offer, but the actual distribution will be proportional to participation in the token sale. All unsold tokens will be burnt. Depending on how much the sale raises, the total supply of ETB tokens will represent rights between 7.5 – 40% of Ethbits Local’s profits. More specifically, an additional 1% of profits will be shared for every 1000 ETH raised. As a bonus to token sale contributors, once iTrade is launched, 80/60% of profits from this platform alone will be distributed to ETB tokenholders over the first/second years respectively. In the third year, this reverts to the 7.5 – 40% base rate across both platforms.
What is the project status?
Ethbits is registered in the UK as an LLC and will be the legal entity which operates the token sale. In the near future, Ethbits plans on registering another legal entity in Gibraltar which will be used to run most of Ethbit’s business operations. The UK LLC will continue to operate as a service provider.
In May 2017, Ethbits Local plans to launch simultaneously in multiple countries, claiming to have partners in India, Spain, France, and England to facilitate the roll out of trading in those areas. Additionally, Ethbits will use a bot to help validate KYC and account information for bank transfers.
iTrade is farther down Ethbit’s development road map and is slated to go live in Summer 2018. Code for social trading functions will be written in GOlang, ecmascript and Ruby on Rails. The development team says that they will need to raise at least $400,000 in the token sale in order to deliver a fully functioning iTrade platform on time. Currently, no code for the iTrade platform has been made publicly available.
Challenges and Competition
Ethbits Local doesn’t have much competition in the p2p Ethereum exchange market, but they will be competing with LocalBitcoin for Bitcoin trades. Although, Ethbit’s lower transaction fees could help them carve out a piece of the $30 million per week market for themselves.
The iTrade platform will be competing with established cyrptocurrency exchanges such as Poloniex and Kraken. Exchange platforms are extremely vulnerable to network effects and it will likely be an uphill battle for Ethbits to peel away customers from exchanges that already have established markets and high trade volumes. iTrade’s social trading features could attract users.
iTrade will also have to compete with CoinDash, which is a start-up launching a social trading platform with features similar to iTrade’s. However, the CoinDash and iTrade projects do have some important differences. CoinDash won’t host a native cryptocurrency exchange and will instead use data from 3rd party exchanges. CoinDash also doesn’t feature a profit-sharing crypto-token.
Who is the team behind the project?
The Ethbits team is mostly transparent with many team members publically acknowledging their involvement in the project. However, several members on the team aren’t publicly listed on the website because they are still working their day jobs. If the token sale goes well, all members plan on working full time building up the Ethbits network.
- CEO Monty Singh has most recently worked as a recruiter and a travel consultant. He has accounting experience and worked for HSBC bank as mortgage sales advisor.
- Lead Developer Dmitry Sergeev is a full stack developer, the CEO of DevLab LLC , a web and mobile application development agency based in St. Petersburg. He will be developing the Ethbits platform in exchange for a share of equity in the company before returning to work fulltime at DevLab LLC.
- Founder and Advisor Pedro J Rodriguez is a student at Universitat Pompeu Fabra and mints physical cryptocurrency tokens
Token Market is providing escrow and consulting services for the token sale.
Smith + Crown Commentary
- Ethbits is poised to be the first platform in the market to adapt the LocalBitcoins business model for Ethereum.
- The Ethbits Local platform is already in beta and is scheduled to begin processing trades in May, 2017. It’s rare that a useable platform is delivered so soon after a token sale.
- $400,000 seems like a low estimate of the amount of capital it would take to develop and launch a cryptocurrency exchange with the features Ethbits is proposing in addition to the Ethbits Local platform.
- The combination of a profit-sharing token with a token that is used to pay fees, while not unheard of, is a little unusual. Profit sharing tokens generally have relatively small supplies and encourage hoarding while fee payment tokens have large supplies and high velocity. ETB’s supply is structured more like a profit sharing token (with a small supply) which might create shortages and make paying fees over the network expensive. It’s difficult to predict how these opposing dynamics will play out in the Ethbits token economy.
|Role of token:||Profit sharing and used to pay fees|
|Token supply:||Proportional to token sale participation–Max 5 million|
|Distributed in token sale:||up to 4 million|
|Emission rate:||No new coins created|
|Sale period:||April 15th, 2017 to May 15th, 2017|
|First price:||0.01 ETH per EBT|
|Token distribution date:||Distributed immediately|
|Minimum investment goal:||7500|
|Maximum investment cap:||None|
|How are funds held:||Four signature escrow wallet|
|Mainnet release date:||Summer of 2018|