modum.io AG is a Swiss start-up combining blockchain technology, smart contracts, and internet connected sensor devices to address opportunities in the supply chain industry, with an initial focus on the pharmaceutical sector. Specifically, modum’s system of proprietary sensor devices, software, and blockchain-based reporting focus on the question of data integrity and the challenges of monitoring conditions during transit, allowing manufacturers and shippers in the pharmaceutical industry to document adherence to a precise range of environmental conditions throughout a product’s delivery cycle. modum is relatively advanced, having completed a number of pilot tests of its system and technology using modified off-the-shelf sensor devices . They have also begun to develop custom, pharma compliant sensor devices with the first manufactured output expected in October, 2017. An initial commercial contract with a major Swiss logistics company is scheduled to begin in Q1, 2018.
modum’s system works by employing its dashboard to generate shipments and encode the specific parameters for conditions during a shipment into an Ethereum smart contract. After being synched with both the smart contract and the package, modum.io’s custom sensor devices monitor a package during transit, measure the stipulated conditions (which in the initial stage will be exclusively temperature), and pass that information to its smartphone app through Bluetooth communication, avoiding any need to open the parcel to assess conditions. The results are then passed to the blockchain where the smart contract confirms (or not) the fulfillment of the contract. If the smart contract confirms a positive result the contract is unlocked, authorizing additional actions such as notifying the shipper or regulator, releasing payment, or transferring possession or title.
modum was founded in 2016 to explore potential blockchain projects related to the supply chain, quickly focusing on a lingering yet unaddressed problem that was the result of a 2013 European Union regulation requiring pharmaceuticals intended for human use to be transported within a strict range of temperatures ensuring product safety. The challenge created was requiring distributors and transport firms to be able to demonstrate that the transported pharmaceutical had remained within its intended range. While a large majority of pharmaceuticals are safely stored and shipped at room temperature, this regulation has forced shippers to ensure compliance by shipping virtually all their products in expensive, specialized refrigerated shipping vehicles–effectively proving they haven’t been exposed to unsafe temperature levels, even if those levels are in most cases extremely wide and likely not exceeded in almost all normal conditions instances, e.g. 40 – 110 F. modum’s solution allows products not requiring refrigeration to be shipped in non-climate controlled vehicles and containers, while providing sensor devices capable of documenting that the range of temperatures was neither excessively hot or cold, and always within the product’s safe ranges. Allowing shippers to employ standard vehicles, which commonly represent only one quarter of the cost of climate-controlled vehicles, promises considerable savings to the industry, while demonstrating the business case for shippers to employ modum’s technology and its relatively modest fee-per-shipment model.
Ultimately, modum’s product provides two valuable services to the industry for shipping temperature sensitive consumer products. First, their environmental sensors monitor package conditions throughout the delivery and provides instant feedback upon arrival. Second, Ethereum smart contracts act as an automated compliance auditor by providing trustless evaluation of the data collected by sensors and determining if regulatory requirements were satisfied. modum’s system represents a way for companies to assure quality and satisfy both regulators and consumers regarding the condition of goods.
As modum is the first targeted solution to this EU legislation it has access to a sizeable market representing an estimated 200 million pharmaceutical shipments in the EU during 2016, of which 60% or more could potentially employ modum’s technology. The possibility of moving beyond the EU to address similar opportunities in the global pharmaceutical industry is an obvious avenue for expansion. Beyond pharma, modum intends to develop a range of additional markets and applications for its product by incorporating additional sensor types into its technology, allowing it to measure environmental variables such as moisture and humidity, light, and acceleration, amongst other possibilities. The result is a range of possibilities for modum to expand both within and beyond its initial pharmaceutical and temperature-based focus, and to develop a range of products meeting the needs of different industries and types of shipment. This expansion can be pursued either independently or in partnership with other companies working in the supply chain space. Despite considerable attention focused on opportunities for blockchain technologies to address supply chain issues, there is nevertheless good reason to consider that modum is in the process of carving out a unique niche for itself where very considerable product growth and market penetration would appear to be attainable goals.
modum.io’s Founding and History
modum was founded in 2016, beginning with an initial partnership with the Communications Systems Group at the Swiss University of Zurich. The company has participated in a number of start-up incubator programs and competitions, winning several cash prizes as well as acquiring access to various kinds of guidance and mentorship, and has completed three different pilot studies where its developing product was tested by operating companies.
As the founders describe, they began with a conviction that the blockchain would have profound impacts upon global supply chains, and set out to explore different potential applications and use cases. Pharmaceuticals quickly emerged as a promising sector, both because of a clearly defined need due to the above-mentioned regulatory decisions, unique opportunities given the number of pharmaceutical companies based in Switzerland, and because pharmaceuticals were seen as a solid foundation from which to expand into other sectors.
One early relationship that developed was with the Swiss group Schaer Pharma, whose CEO sits on modum’s board. Schaer was the first company to participate in a pilot study with modum. This initial trial, beginning only months after modum’s founding, tracked multiple shipments from manufacturer to wholesale over a six week period, with over 10,000 data points tracked and provided a first test of the company’s software using modified off-the-shelf sensor devices.
modum’s second trial monitored deliveries from a pharmaceutical wholesaler to clinics and pharmacies, adding scale and complexity while also introducing modum’s dashboard for order creation, monitoring, and analysis. modum’s next pilot was a paid project working with a third party shipper and a mail order pharmacy to track a still higher volume of shipments and to test the performance of modum’s system’s under increasingly demanding conditions.That trial was successful, as the shipper recommended broader adoption of modum’s technology and is preparing to become modum’s first commercial client during Q1 of 2018.
modum.io’s Technology and Product Development
modum’s logistics tracking system is composed of three parts, a dashboard for generating shipments and setting the parameters within blockchain based smart contracts, the custom temperature loggers that monitor conditions during transit, and a mobile app for recovering and reading data from the loggers before transmitting that data back to the blockchain.
Prior to dispatching a shipment, modum’s dashboard, which also contains tools for analytical and statistical calculations on past data, is used to create a shipment-specific smart contract, with the receiver able to verify the stipulated parameters prior to the shipment getting underway. During transit, the waterproof and tamper-resistant temperature loggers store records of observed conditions in their internal flash memory. Upon arrival, Bluetooth Low Energy technology allows the data from the sensors to be read and conditions confirmed by the receiver, with information sent to the blockchain where the conditions stipulated in the smart contract are verified.
Communications between modum’s front-end systems of dashboard, loggers, and mobile app and its back-end’s HTTPS server are via RestAPI/JSON. modum’s back-end system uses a PostgresSQL database to store the actual data points, runs a full ethereum node, and is used for data retrieval and analysis.
The role of the blockchain within modum’s operation is to record the smart contract then preserve immutable records of the satisfactory maintenance of the contract’s conditions during individual shipments. Specifically, once a smart contract is created for a shipment, sensors collect data that is ultimately sent back to the blockchain where the smart contract evaluates the results, makes a decision regarding adherence to the terms of the smart contract, and stores the measurement hash of the yes/no outcome relative to the contract terms, as well as a pointer to the actual shipment data preserved either in modum’s PostgreSQL database or the customer’s own database.
As a central portion of its product, modum’s sensor devices can be considered critically important to its overall project. While the initial trials used modified commercially available sensor devices, modum began developing a proprietary line of sensor devices. In addition to be being waterproof and tamper-resistant, they have a number of security features into its reusable sensor devices, including registering stamped serial numbers of critical sensor components, having sensor devices shield their secret keys used to create digital signatures of measurements from probing attacks, and incorporating multiple levels of access control permitting only authorized users of the shipping and receiving companies to interact with the loggers.
modum is also quite clear that while it is currently using ethereum for its blockchain needs, it is ‘blockchain agnostic,’ and the company has specifically embedded into its milestones the extension of its platform to include other blockchains. modum has assumed this stance in order to retain flexibility to work with customer systems and requirements, and to preserve the ability to incorporate alternative blockchains that may represent more affordable alternatives, as well as permissioned blockchains, should a customer desire. modum leadership has also indicated it is exploring the possibility of incorporating the IOTA blockchain into its system in order to reduce blockchain fees.
What is the Token Being Sold?
The modum token (MOD) is an ERC20 token that confers both voting and profit sharing rights to holders, as such citizens of the United States are not eligible to invest. Voting rights of the token are limited, allowing token holders to vote on the staged release of the escrow shares reserved for the modum team according to predefined business and product milestones, with a simple majority of the tokens represented by participants in the election voting yes sufficient to unlock the escrowed shares. MOD token holders will not have broad voting rights as are associated with the rights of shareholders in a traditional corporation. Dividend rights will allow token holders to receive, on a fractional basis and in Ether, any dividend amounts established by modum’s Board of Directors after those amounts are converted from fiat to ether. Also of note is that tokenholders have a contractually guaranteed to payments equivalent to any dividends that might be granted to modum.io AG shareholders at any point in the future. The tokens are also represented as a liability on modum.io AG’s balance sheet, meaning that any potential merger or takeover activity would require tokenholders to be compensated or otherwise included in the transaction.
Of the 30 million tokens the company intends to issue, 20.1 million will be available in the crowdsale, with a base price of $1 per token and varying discounts on offer. 900,000 tokens will be reserved to pay for the ICO and to fund bounties for bug detection, and a final 9 million will be escrowed for the modum team. The escrowed tokens will be released in stages over a minimum of three years–each achieved milestone triggering a token holder vote after a stipulated waiting period, thus the three year period could be extended should one or more milestones require a longer time to achieve.
Escrow Milestones and Project Development
Perusing the milestones for the release of escrowed shares provides a clear glimpse into how the modum team sees the project developing. The general trend is for an expansion of product capabilities and blockchain platforms over a three year period, and illustrating how modum’s leadership sees expansion beyond the pharmaceutical industry as a highly attainable objective in the near-term.
The first milestone is largely an administrative one, with 900,000 shares planned to be released in October 2017, once a proper token minting and distribution process has taken place. These tokens will compensate modum’s advisors and represent rewards for the bounty program. The next milestone, planned for Q1 of 2018, will be triggered upon the release of modum’s initial product and including the mass production of the company’s sensor device. This milestone will include the incorporation of at least two types of sensors into the hardware (these are intended to be temperature and motion) and the incorporation of a second blockchain, from a list including IOTA, NEO, Fabric, ETC, or Rootstock. This achievement of this milestone will release 3 million escrowed shares to the modum team.
The third milestone, estimated for Q1 of 2019, foresees the arrival of a 2nd generation sensor device incorporating real-time monitoring, the incorporation of an additional environmental sensor–light or humidity appear to be the most likely at this point–and the incorporation of two additional blockchains back-ends from a list including IOTA, NEO, Fabric, ETC, Rootstock, Waves, Tezos, EOS or Cosmos. Upon a positive vote by token holders recognizing acknowledgement of the achievement of this milestone a further 3 million escrowed tokens will be released to the modum team.
The final milestone, expected not before Q1 2020, will see release the final 3 million tokens to the modum team upon approval. This milestone calls for the release of the next generation of sensor technology incorporating a real-time, on-chip blockchain node, another environmental sensor such as light or humidity, and a software upgrade to make the entire system a decentralized one.
A number of conclusions can be drawn from careful consideration of these milestones. The aggressiveness of the roadmap provides some telling clues that modum’s leadership envisions considerable growth supporting continued business development, in particular moving beyond the current focus on pharmaceuticals and temperature monitoring. One might also speculate that modum’s repeated references to its ‘blockchain agnostic’ stance, and its references to of potentially incorporating IOTA as blockchain platform alongside plans for the development of sensor device able to maintain real-time communication with the blockchain suggests modum foresees eventually hosting all its data points on the blockchain, but that has not been explicitly stated amidst the range of more immediate challenges the company faces. That modum’s leadership is willing to allow its share of tokens to remain in escrow until it has achieved these milestones suggests they are confident about the company’s future prospects
Growth opportunities in the pharmaceutical sector
modum’s initial focus rests upon the European pharmaceutical sector, the result of the specific and largely unfulfilled need by a particular legal guideline for the shipment of pharmaceuticals intended for human consumption established by the European Parliament in 2013. Because no effective solutions to this law have emerged, shippers routinely pay to ship all of their products within refrigerated containers or vehicles, even when in some cases not more than 20% of products actually require that degree of environmental control in order to remain within their stipulated safe ranges. modum’s ability to document that shipments not requiring refrigeration have completed their journey while remaining well within safe ranges should allow shippers to reduce their use of refrigerated transport, and to generally enjoy a wider range of shipping options, thus realizing substantial savings.
modum’s roadmap foresees its initial commercial relationship developing with a leading last-mile logistics firms in the Swiss market, a relationship that should be formally announced in Q4 2017 once modum has received its initial batch of its manufactured sensor devices. With a population of around 8 million, one assumes Switzerland’s portion of the 200 million pharmaceutical shipments made within the EU in 2016 is a relatively modest one, suggesting that an initial commercial relationship with a leading Swiss shipper represents an excellent moderately-scaled place to begin operations. Q4 2017 should see full integration of modum’s system with that of the Swiss shipping company, including the first deliveries of its proprietary manufactured temperature logger. Q1 2018 should see the initial commercial operations of modum’s system. While the relatively slow roll-out represented by initial operations being confined to the Swiss markets does not bode well for prospective token holders hoping for massive early profits and quick dividends, the longer term value of a moderately paced introduction to the market may provide the team with a better opportunity to address any issues that may emerge, and ultimately to create a stronger foundation for future expansion. modum’s leadership has indicated it expects to be cash flow neutral early in 2018, suggesting the company will not face issues of cash burn while ramping up operations and thus will have time to focus on expanding in a controlled manner. Once successful implementation of the technology is established with the initial Swiss operations, expansion should move more quickly, both within the Swiss market as uses are negotiated upstream from last-mile distribution, and across Europe as modum’s initial commercial proof-of-concept system addresses opportunities within the pharma supply chain of larger markets such as France and Germany. Beyond Europe’s core, modum has had discussions with potential clients in both Turkey and Vietnam, and modum could potentially expand these services around the world.
Competition and Opportunities in the Logistics and Supply-Chain Space
Efforts to apply blockchain technologies have appeared in a number of forms over the last few years. Perhaps most prominent is IBM, which has devoted considerable resources to understanding how blockchain technologies might be applied to different components of the supply chain, developing partnerships with firms such as Maersk to study the shipping container industry, and Walmart, where the two companies have been working on food safety and supply chains. Other companies applying blockchain technologies to supply chains include Provenance, a UK based group focused on allowing retail consumers to be able to track and verify the social and environmental sustainability of products at the point of sale, and Everledger, using the blockchain to allow banks and insurers to reduce fraud and which has also developed a tracking system that seeks to ensure that only diamonds of identifiable origin enter the market, to mention just a few of the most significant.
Despite the size and scale of the above-mentioned companies, modum’s target appears to be unique component of the broader subject of supply chains. modum’s role as first-mover within its targeted sector will presumably change at some point, but modum’s solid industry contacts and advanced product development should allow it to consolidate a meaningful position, assuming it achieves its operational and performance targets. A second reason to be optimistic on modum’s prospects is that the capability of internet connected sensor devices has now expanded considerably beyond mere temperature monitoring, and modum’s existing infrastructure should be able to incorporate additional measurements such as light, humidity and moisture, acceleration/impact, roll, thereby providing modum with relatively straightforward opportunities to gain exposure to additional industries. modum’s announced intentions to develop its products, as described above, suggest these opportunities have already been considered and a roadmap towards addressing them is already part of modum’s plans. A further range of opportunities includes potential partnerships, where modum’s sensor devices and analytical tools are incorporated into existing systems developed by other companies developing blockchain-based tools to track physical movement of the goods throughout the supply chain.
Overall, modum appears to be a very strong new entrant to the blockchain space, with a well-thought out product with considerable potential going forward. The company’s leadership, with its range of relevant business, blockchain, logistics and industry experience both explains the solid nature of its ideas and their implementation to date, and gives reason to be optimistic that it will be able to address the diverse challenges that will surely arise as modum moves forward.
modum’s CEO Malik El Bay, focused on sales on marketing, has founded several startups and has experience building companies.
COO Stefan Weber, focused on the supply chain and operations, has experience with supply chains, the Internet of Things, and sensor technology.
CTO Sacha Ulman, previously the founder of a software company, brings both technology and project management skills.
Business development and product strategy lead Simon Dössegger is a mechanical engineer who exited his previous start-up creating autonomous flying drones to GoPro.
Head of Communication Mike Taylor, brings marketing experience from major tech- and innovative startup environments into the modum team.
modum also has a strong board of directors, led by Chairman Werner Sporri, who brings an investment banking and corporate advisory background; Michel Schaer, founder of Schaer Pharma; Pascal Degen, head of sterile packaging at Novartis; Thomas Bocek of the University of Zurich who works on decentralized and peer-to-peer systems; and Marc Degen, blockchain investor and CEO of Hotelcard International AG.
In addition to this diversified group, modum’s links with a number of startup incubators, universities, and industry associations suggest the company will be able to access specialized advisory and technical skills as it confronts new challenges in the future.
|Incorporation status||modum.io AG|
|Team openness||Fully transparent|
|Blockchain Developer||Thomas Bocek|
|Technical White Paper||Yes|
|Available Project Code||Not available|
|Role of token||Voting and Dividend rights|
|Token supply||30 million|
|Distributed in ICO||21 million|
|Emission rate||No new coins created|
|Consensus method||Proof of Work|
|Sale period||September 1, 2017 to September 22, 2017|
|First price||1 USD|
|Accepted currencies||ETH, BTC. IOTA|
|Investment Round||First public offering|
|Token distribution date||30 days after crowdsale|
|Min investment goal||1 million USD|
|Max investment cap||16.35 million USD|
|How are funds held||Smart contract|
|Minimal Viable Product||Existing|