STATUS TOKEN SALE ANALYSIS: “SUMMERTIME MADNESS”

Company: Status
Website: https://status.im
Year: 2016
Country: Switzerland
Blockchain competitors: Kin
Non-blockchain competitors: WeChat, Telegram, WhatsApp, etc.
Ticker: SNT
Token Sale launch: 06/20/2017
Token Sale end: 07/04/2017 or earlier
Cap: 12,000,000 CHF + hidden layers of caps
Whitepaper: https://status.im/whitepaper.pdf
Blog and updates: https://blog.status.im

Summer is here and we’re beginning to observe this summer’s craze in new market trends in token sales: sophisticated fundraising mechanics like hidden or layered soft caps go hand in hand with larger amounts of funds raised.
Status is somewhat of a new kid on the “messengers” block, and will be the first one to launch its token sale (Kik’s Kin is coming later — so watch this space). Status positions itself as both a messenger and a browser for decentralized applications (DApps) built on the Ethereum platform. The goal is to become a gateway for “everyday people” to access the decentralized web, while simultaneously creating an additional channel where DApp developers can find new users. 
The upcoming token sale for SNT (a token that will be used within the Status ecosystem to make purchases) has already created buzz within the crypto community: the Slack group is over 10,000 members strong and some industry heavyweights have voiced their support for the project. However, for a project that is primarily dependent on widespread adoption among a mainstream audience, will this vocal support from within crypto be enough? They say Status is a new WeChat, but wouldn’t the roadmap that assumes Status WILL BE a second WeChat — be suicidal for a good project? Are there any other potential pitfalls which could make Status a risky investment? 
The Tokenguide team looked into this token sale and we’re happy to share our findings with you.

PROs:

• Although Status is somewhat of a newcomer into the messaging industry, especially compared to mammoths such as Kik, it has been around for a fair amount of time. The Status team first published their roadmap in early 2016 and immediately began development. They’ve been focused on their product ever since. In the lead-up to the token sale, a working alpha of Status for both iOS and Android has been made available on the official website. Since Status is first in line for a messaging service token sale, it’s well-positioned to harness the first-mover advantage within this market segment, laying the groundwork for steady organic growth.
• All this points to the fact that the Status team is really committed to the development and success of their product. This is especially important considering the current token sale landscape. As you undoubtedly know, crowdsales have been gathering significant momentum in recent months. This has generated a whole strata of what we at Tokenguide like to call “meta-tokens” — parasitic tokens which don’t create any value for either the technology or the community, with the sole purpose of raising money in a token sale. We stay out of these sales and we suggest you do too! Status is a great contrast to these “meta-tokens,” since it’s actually delivering new, useable technology.
• The Status team has invested a significant amount of effort into community outreach, creating strong, vocal support for both the product and the upcoming token sale. As we mentioned before, decentralised messengers are becoming a hot trend right now, which obviously influenced many of 10,000+ Status supporters gathered in the official Slack channel an a huge amount of GitHub contributors. Status also effectively coordinated a highly desirable bounty program: the development team asked bounty hunters to find any remaining vulnerabilities in the product. This resulted in some much-needed media buzz and heated discussions throughout the token sale’s official channels. Overall, the Status team has demonstrated that it knows the ins and outs of effective community management, something that’s becoming more and more significant as token sales become more popular.
• The Chinese audience has the potential to really turn the Status token sale into a landmark success. Bo Shen, General Partner at the influential Shanghai-based Fenbushi Capital investment fund, is listed as an advisor for this token sale. Fenbushi is a well-known name in crypto-circles, one that holds a lot of weight. This “seal of approval” could produce tremendous interest from the Chinese community, including pre-sale participation and aftermarket support. Fenbushi is also known for upholding very long-term token distribution approaches. Usually, the investment team supports a model in which 80% of the tokens are distributed to the community, laying the groundwork for a healthy ecosystem. It also helps that the Chinese market is generally better positioned to grasp the idea behind Status, since people are used to WeChat, an extraordinarily popular multi-purpose social app. Status is largely seen as WeChat 2.0 by this audience segment, which makes it a potentially attractive investment.
• This pre-existing interest has been resonating throughout the cryptosphere. We know for a fact, for example, that Bitcoin Suisse accepted fiat investments for this token sale. This funding option is already closed at the time of writing this, reportedly having collected $2.5 million — but that’s just the tip of the iceberg. While researching this piece, the Tokenguide team has encountered rumours which point to the fact that Status has already gathered $40 million in pre-funds. Indeed, pre-existing interest is so high that SNT futures are already being traded on BitMex, which is a fairly rare occurrence for token sales

CONs:

• Unlike most recent record-setting token sales, Status is closed to US-based investors. At Tokenguide, we know that security tokens encounter major legal hurdles within the US, but SNT is definitely not even a borderline with a security token. There is no explanation offered as to why US investors are not welcome, which makes it seem as though Status has a shaky legal foundation. As we remember from the past few weeks, it’s the legal aspect that can really make or break a token sale (remember Metal?) and we sincerely hope that the Status team will avoid this pitfall.
• In terms of both the sale and the token economics, we are left with many questions. Primarily, it is unclear what will happen to the transaction costs within the ecosystem as the token price appreciates. If the transaction cost is tied to the token value, this could prove disastrous for the ecosystem’s health, since investors will prefer to hold, rather than use SNT for its intended purpose. From the token sale side, the fund cap has not been released to the general public — it will only be made available once the hard cap is reached. All we know at this stage is that 41% of the total token supply is allocated to the token sale contributors. A series of soft caps is supposed to cater to the “small fish.” However, to us it seems like a more sophisticated way to extract capital from a market which is currently suffering from a severe case of FOMO.
• On the positioning side, Status is setting itself up against industry giants. Kik’s Kin is nearly here and it’s breathing right down Status’ neck. Kik also brings its 300 million strong userbase along with it, which is some serious competition for Status, a newcomer that does not seem to have a clear roadmap for mass adoption. Indeed, mass adoption is by far our biggest concern with this token sale. So far, beyond some mentions in the token sale video, Status has made no effort to engage with a wider audience. If it’s intending to grab a chunk of the market currently occupied by industry mammoths (WhatsApp and Telegram, for example), this might not sit well with token sale contributors. The token sale participants would prefer to see a developed product with a clearly-defined audience.
• Indeed, even a perfect product does not guarantee adoption on a large-enough scale. For a messaging and social media framework particularly, mass adoption in a female, non-tech-centric audience is vitally important. We will be observing the way Status takes on this complex task. It’s important to strike a very delicate balance here: keep the early adopters’ audience from the crypto community, lure in the non-tech savvy generalist audience and pull some existing audience from WhatsApp, FB Messenger, Telegram, etc. Clearly, the team has their work cut out for them! We can only hope that they have a marketing mastermind on their team!

TOKENGUIDE CONCLUSION:

Here’s at Tokenguide, we’re in two minds about the Status token sale. As investors, we’re convinced that Fenbushi’s support will make this token sale very successful (a contender for a new industry record, perhaps?) The listings that follow will experience growth as well, easily rising x1.5 or even x2. As early technology adopters, we definitely need to see what Kik will bring to the table. It could either be a gamechanger, or latch onto Status’ presumed success. There is no telling at this point. We will therefore be investing in both Status and the upcoming Kik crowdsale in about equal parts. This will give us the opportunity to see where the market goes and leave us with the option to buy more Status tokens once they get listed, should Kik disappoint us.

PS No, we didn’t get any bounty SGT tokens for this review.

We would like to remind you that all opinions expressed in this piece are our own and are based on the research our team conducted independently. If you are serious about participating in an ICO, token sale or crowdsale of any kind, we strongly recommend that you conduct your own due diligence by familiarizing yourself with the projects, their background, white papers and the market(s) in which they operate. Stay safe!

Tokenguide Team

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