Open Finance (OFN) ICO Analysis: A Marketplace for Alternative Assets

Executive Summary

Project Description

Alternative assets are investment vehicles other than the traditional asset classes — public equities, bond, and cash. Any asset that can derive its value from an interested market is an alternative investment, and according to a report released by Preqin in 2017, the global alternative assets market is worth ~$7.7 trillion. The problem is: in today’s market, it is not so easy to trade alternative assets. The marketplace for alternative assets can be described as a legacy system and trades go through lots of processes, making it cumbersome in comparison to the traditional assets market. The process may include steps like issuance, trading, clearing, and settling and presently, each step is disjointed from the other. Because of this complexity, most investors would rather avoid going through this process, even if they have alternative assets with tangible value.

The OpenFinanceNetwork wants to remove the complexity by introducing an end-to-end platform for trading securities. OFN is expected to help traders of alternative assets avoid the outdated infrastructure currently in place by providing a single protocol through which they can transact. For example, at present, a lengthy — legal and regulatory — process is required to list a new security on the market. OFN plans to solve this particular problem by connecting the participant directly with a validator that is qualified to register the asset on the Open Finance platform. The platform should also make it possible for assets to be tokenized, making them easier to trade.

During assets transfer in the traditional system, the “clearing” step is handled by Central Counterparty Clearinghouse, Central Securities Deposit, and other such entities. The process takes a long time and as a result, it is too expensive for small-time investors. OFN claims they can remove these costs by using the blockchain for record-keeping. They also claim that their platform will have a number of accessible entry points and lower fees. So, a distributed blockchain ledger will be used to record trades while time-sensitive operations like transaction matching are to be done off-chain. This gives a hybrid-chain model that takes advantage of the quick block time and data privacy of a side chain while leveraging the immutability and visibility of the Ethereum mainnet. Furthermore, OFN wants to close the gap between on-chain and off-chain capital markets by introducing a tokenized trading mechanism. The mechanism should support securities trading from the get-go, and as the adoption of blockchain tech improves, issuers can leverage the platform and connect to on-chain capital markets.

The project’s token, OFN, is ERC20 compliant and it should be used to transact on the network. It will also serve as a license that grants participants permission to use the network. The license may be sub-licensed to third parties, and based on off-chain verification, license holders may be given additional authorization on the framework.

Existing Product

Interested parties can sign up for Open Finance’s private beta.

Roadmap

Q2 2018: Complete Launch of OFN.

Q3 2018: First New features.

• Decentralized Exchange.
• CRM tools.

Q4 2018: Full process platform.

• Issuer template for securities.
• Advanced Investor tools.

2019 and Beyond

• Tokenization of REITS and existing securities.
• Decentralized Counterparty Insurance.
• Full proving system.

Hard Cap and Valuation

There will be a total of 125 million OFN tokens and the project aims to raise $50 million for 40% of the token total. The remaining 60% will be shared thus: 35% will be distributed among the project’s strategic partners, 20% will go to the team, and the final 5% goes to the advisors.

Price Per Token

1 OFN = $1.

Important Dates

OFN public sale is billed to start on the 30th of April, 2018.

Marketing Power

As of the time this post was published, Open Finance had over 600 members on Telegram, 300+ Twitter followers, over 60 followers on Medium, and 25 Reddit readers.

Prominent Advisors

William Mougayar

• Ethereum Foundation Board Member.
• Author of the Business Blockchain.
• Producer, Token Summit.

Team Members’ Areas of Expertise

Business experts

Juan M. Hernandez, CEO.

• Co-Founder and CTO of CFX Markets, a trading platform for alternative assets, for 4 years.
• Co-Founder and CTO of Endurance, a firm that provides e-commerce and marketing solutions for the endurance sports industry, for 2 years.
• Founder and CTO of Pop Stock Exchange, an online prediction market, for 2 years.
• Managing Partner at NL Ventures, an investment group, for 2 years.

Jordan Fishfeld, General Counsel.

• Founder and CEO of CFX Markets for 2 years.
• Board Member at Crowdfunding Professional Association for over 3 years.
• Co-Founder and CEO of PeerRealty, a crowdfunding platform and secondary market for crowdfunded assets, for 2 years.

Target market experts

Juan M. Hernandez, CEO.

• From his work at CFX Markets (see above).

Jordan Fishfeld, General Counsel.

• From his work at CFX Markets and PeerRealty (see above).

John L. Kelly, Advisor.

• Partner at McCarvill Capital Partners, a private placement firm that raises capital for alternative investment funds, for a year.
• Former CEO at Liquidnet, an institutional trading network, for over 2 years.

Marketing experts

Tor Bair, Advisor.

• Head of Growth and Marketing at Enigma for a year.
• Data Scientist at Snap Inc. for a year.
• Analytics Intern at Spotify for 3 months.

Toby McComas, Head of Sales.

• Director of Institutional Equity Sales at CLSA Americas, a capital markets and investment group, for over 4 years.
• Vice President of Institutional Equity Sales at Sanford C. Bernstein & Co., a research and brokerage firm, for 4 years.
• Director of Sales & Strategic Marketing Alliances at UnitedHealth Group for a year.

Lindsay Edelson, Head of Marketing.

• Director of Marketing at CFX Markets for 11 months.
• Senior Account Executive at Edelman, a communications marketing firm, for almost 7 years.
• Digital Strategist at MWWPR, a public relations agency, for 7 months.

Legal experts

Jordan Fishfeld, General Counsel.

• Juris Doctor (J.D.) at University of Miami School of Law.
• Associate at Katten Muchin Rosenman LLP for 2 years.

Software engineering experts

Juan M. Hernandez, CEO.

• Software Developer at several firms, including Infocus Technologies and HumanaOne.

Kael Shipman, Head of Technology.

• Senior Application Architect at CFX Markets (see above) for a year.
• Web Applications Developer at The Internet for 5 years.

Thomas McInerney, Head of Blockchain Development.

• Software Developer at CFX Markets (see above) for almost one year.

Ian Shipman, Head of R&D.

• Senior Engineer at CFX Markets for 4 months.

Blockchain development experts

No team member with blockchain development expertise.

Token sale structure experts

No team member with prior ICO launch experience.

Token economics

No team members with token economics expertise.

Conclusion

Strengths

• They already have a beta and their full-platform release is scheduled for Q2 2018.
• Strong advisor team.
• Solid use case (OFN aims to connect the “traditional” alternatives market and the emerging crypto capital market).

Potential risks for investors

• High hardcap ($50 million).
• Small community, negligible hype
• No team member with blockchain development, token economics expertise.

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Disclaimers:

• Nothing written in this article is a legal or an investment advice.
• Information is provided on a best-effort basis and is subject to change without prior notice. Be sure to verify everything you read with a project team.

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The analysis was produced by Research Center team members: Alexander Hinz, Mark Jedd, Anna Muratova.

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