MATIC Report Blockfyre

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1. SENTIVATE REPORT BY BLOCKFYRE | PAGE ‹#› BLOCKFYRE
2. Executive Summary • Aims to solve the biggest problems of blockchain technology: scalability and user experience. • Matic is trying to achieve this by implementing the Plasma MVP framework, the first implementation of the Plasma Whitepaper. • Many projects are already building apps & integrations with Matic. • Matic will provide an application platform for dApp developers assets interoperability via DEXs Highlights Risk & Concerns • Matic’s business model, product vision and market barriers are not revolutionary. As long as there is no substantial adoption, it would be fairly easy for a competitor to try and replicate Matic’s approach. • Matic will have a hard time keeping up the marketing efforts after the initial hype, with the Mainnet launch scheduled for Q4 2019, this is a long time to bridge and keep investors happy. • The challenge will be to succeed where others have failed. Long term success would generate great returns for investors but currently there is a lot of uncertainty involved, because of how ambitious this task is. Ticker MATIC Price $0.038184 USD Pre-Sale Price $0.00263 USD Market Cap $82.5 Million Circulating Supply 2.16 Billion Total Supply 10 Billion Token Type ERC20 Mainnet Yes Website matic.network Matic Network is working on a solution to fix the scalability issues of the Ethereum blockchain and blockchains in general, while not compromising on other important aspects like decentralization and security. Matic Network was the fourth token sale held this year on Binance Launchpad. Overview Source: Blockfyre Research | Matic website
3. What problem does it solve? Fundamental Problem: Scalability of Blockchains • Smart contract platforms and cryptocurrencies still have not been able to achieve mass adoption due to scalability and user experience issues. There are virtually no examples of decentralized applications achieving widespread usage outside of small niche markets with limited amounts of users. x • There have been a few cases where a particular application temporarily succeeded in achieving a significant user base, but it led to crippling of the entire network during the high network load times. A good example here would be Ethereum’s Cryptokitties, after its launch in late 2017 it was accounting for nearly 12% of all transactions on the network, causing the number of pending transactions to rise significantly and ultimately resulting in congestion and high transaction fees. • Recent attempts to solve this problem have often resulted in a dilemma of scalability vs. decentralization, where higher scalability always resulted in lower levels of decentralization. Source: Blockfyre Research | Matic website | howmuch.net
4. What problem does it solve? Technological Problem: PoW vs. PoS • Most Proof-of-Work based blockchain protocols have a limited block size and it takes a certain amount of time to generate a block. Each transaction also has to wait for multiple block confirmations due to potential chain re-organizations. While being theoretically the most secure blockchains, PoW based networks are typically very slow and have a very limited throughput. • Proof-of-Stake based blockchains try to counter these limitations using a staking mechanism, but the blockchains that are able to achieve high throughput with PoS are only able to do so at the cost of decentralization. These limitations are often a necessary condition for public blockchains to ensure security and decentralization where a block needs to be propagated through the network and validated by all the nodes to achieve finality. Problem: Usability • User interactions on DApps are often poor compared to the centralized competition. For decentralization to achieve mass adoption and really provide value to a large number of users, the user experience of DApps has to be on par with, if not better than, their centralized counterparts. x Source: Blockfyre Research | Matic website | stateofthedapps.com
5. Matic’s solution Solution • Utilizing the Ethereum mainchain, Matic Network aims to solve the problems faced by the blockchain ecosystem through building a decentralized platform using a modified version of the Plasma framework. • To tackle the problem of overall scalability, Matic Network first has to solve issues around slow transaction speeds of current networks. They do this by using a high throughput blockchain with consensus provided by a selected set of Block Producers and an additional Proof of Stake Layer, which is then subsequently batching the proofs of the Matic blocks to the Ethereum mainchain. • Matic will achieve level of decentralization while maintaining extremely fast (< 2 seconds) block confirmation times, which enables The Matic Network to theoretically achieve up to 2^16 transactions per second on a single side chain. This has already been demonstrated with the first Matic proof-of-concept in a test environment. Enhancing Usability • The team is expected to build a product ecosystem that includes user friendly mobile apps, desktop wallets, and browser extensions. Their mobile wallet is already available. • They built a feature called Walletconnect, which is already integrated. Walletconnect is an open protocol for connecting desktop Dapps to mobile Wallets using end-to-end encryption. It provides access to the features provided by the Matic Network, and acts as a medium that allows browser-based dApps to connect to the mobile app. • Another feature, which is laying the groundworks for seamless dApp development is Dagger, a fast and easy way to get real-time updates from Ethereum Blockchain. x Source: Blockfyre Research | Matic website
6. Matic’s solution System Architecture • Matic uses a dual strategy of Proof of Stake at the checkpointing layer and Block Producers at the block producer layer to achieve faster block times while also ensuring a high degree of decentralization. • Block Producers, who are selected by PoS Stakers form the base layer, they will create Matic Blocks. • The system’s checkpointing mechanism ensures that for every few blocks on the block layer of the Matic Network, a proposer will be chosen from among the stakeholders to propose a checkpoint on the main chain. • These checkpoints are created after validating all the blocks on the block layer of the Matic Network and creating the Merkle tree of the block hashes from the last checkpoint. • The system needs the approval of ⅔ of the stakeholders to propose a “header block” to the root contract, and once the checkpoint is proposed on the mainchain, anyone on the Ethereum mainchain can challenge the proposed checkpoint within a specified period of time. x Source: Blockfyre Research | Matic website
7. Product & Vision Use cases • Matic aims to provide a scalable and user friendly ecosystem for third party dApps. Matic will promote various Base-chain Dapps to build and migrate their user-facing applications/transactions on the Matic network. • Third parties can use the Matic Network to exchange any tokens for other tokens by leveraging 0x liquidity pool or other liquidity providers while transferring crypto assets. Fiat liquidity providers will come in the future • Matic will provide an interface and payment APIs and SDKs for dApps, merchants and users to instantly accept or pay in crypto assets • In-game assets represented as ERC721 tokens can be bought, sold and traded in large numbers on Matic’s sidechains. x Lending Providers Wallet Support Payments Atomic Swaps Smart Contract Infrastructure DEX Games Liquidity Providers Potential Use cases Source: Blockfyre Research | Matic website
8. Tokenomics - MATIC Token Information Symbol MATIC Decimals 18 Contract Address 0x7d1afa7b718fb893db30a3abc0cfc608aacfebb0 Type ERC20 Network Ethereum Token Swap TBA Utility • Participating in the Proof of Stake consensus: Participants stake Matic tokens in order to participate as validators. • Paying for the transaction fees in the network: The more users use the apps on Matic Network, the more the transaction volume and fees. • Matic intends to enable a separate staking mechanism for supporting the ecosystem project, also known as "protocol funding the ecosystem" model Supply Targeted distribution 2.333.000.000 2.186.000.000 1.200.000.000 400.000.000 1.600.000.000 1.900.000.000 380.000.000 Private Sale Launchpad Sale Team Advisors Network Operations Foundation Ecosystem 10.000.000.000 2.160.114.068 Circulating Supply Total Supply x Source: Blockfyre Research | Matic website
9. Tokenomics - Wallet Analysis Matic ownership Circulating supply • 10.000.000.000 MATIC are distributed over 579 addresses • Matic‘s main wallet holds the majority of the tokens (78.4%) • The circulating supply is around ~2.1 billion MATIC • The ownership of MATIC is highly concentrated with Binance holding 92.5% of the circulating supply. 67.1% MATIC Vesting Contract x Foundation Contract Marketing & Ecosystem Mining & Seeding Total Supply Matic`s Main Wallet Circulating Supply Vesting Contract Remaining 575 addresses Source: Blockfyre Research | Matic website, Etherscan
10. Exchange listings x 24h Volume (22.05.19) ????M MATIC, $507 Mio. 52.7% 31.9% 15.4% Type DEX Trading against BTC, ETH, BNB Fees -Withdrawal 100 MATIC -Trade (maker) 0.10% -Trade (taker) 0.10% Website Binance.com BINANCE • Trading opened on the 26th of April • The only substantial trading volume for MATIC is on Binance • Most popular trading against BTC • Bid-ask spread is very thin (below 1%) Overview MATIC/BTC MATIC/ETH MATIC/BNB Source: Blockfyre Research | Matic website, Exchange website 24h Volume (30.05.19) $40 Mio.
11. Price analysis • There was barely any trading of MATIC until mid of May, when the price began to spike • The price seems highly manipulated since then and has virtually zero correlation with ETH so far • The daily volatility (measured over the last month) has been ranging around 3-9% during the first weeks of trading, before spiking up to an ATH of 16% during the price increase. • MATIC price increased 200% during the last 7 days and over 600% in the last 30 days, nearly 1500% at ATH (based on pre- sale price) Comments x Source: Blockfyre Research | Matic website, Coincodex
12. Competition Analyisis x Competition Matic POA LOOM OmiseGO Liquid Network RSK Block Time High - 1 second Low - 5 seconds High Undisclosed Low - 2 mins Low - minutes Consensus Algorithm Efficiency High (3 Layers- POSA+POS+PO W) Low (POA) Medium (DPOS + POW) Medium (POS) Low (POW) Low (POW) Degree of Decentralization High Low High Medium Medium High (BTC) TPS 7000 70 Undisclosed 2700 Undisclosed 300 Interoperability High Medium Medium High High Medium Focus on User Experience High Low Medium High High Low Smart Contract Support Medium High Medium High Low High Programming Language Support High High Medium Undisclosed High Medium Valuation • POA • LOOM • OMG • Liquid • RSK • Matic (By Market Cap) $8.354.173 $58.529.617 $271.455.836 N/A N/A $61.179.270 • Apart Layer-2 scaling solutions there are a number of projects aiming to improve Blockchain scalability: Raiden Network, Cosmos, Polkadot. • The Team aims to develop working partnerships with projects such as Decentraland, Celr, QuarkChain, Ankr Network, and MakerDAO to build a product ecosystem to maintain a competitive advantage. Comments Source: Blockfyre Research | Matic website, Project Websites
13. Roadmap May June/ July August/ Sept. October November December March 2022 • Verifier/Watcher node - Alpha release • NFT exit token - Dharma integration - Kovan testnet • DEX support on Mobile App • API & SDK release v1.0 • Wrapped Bitcoin support • Verifier/Watcher - Fraud proofs challenges - beta • Mainnet Beta - Matic Network • 0x protocol implementation on the Matic testnet • Plasma Fast exit services • Governance research and pilot implementation • Dharma protocol implementation on Matic testnet x • VNFT exit token - 0x integration - Ethereum mainnet • Liquidity pool integration • Matic Network - Mainnet • Matic sidechain App Store • Bitcoin asset interoperability - testnet • Generalized Fraud Proofs - Testnet Alpha • NFT exit token - Dharma integration - Ethereum mainnet core • Enterprise support for Matic sidechains dapps • Enterprise services dapps Source: Blockfyre Research | Matic website
14. Team Description • Matic’s team consists of 12 members, including three co- founders, six developers, two marketing specialists as well as a product manager. • The founders have significant experience in blockchain development (Ethereum Network and associated projects). • While the founders are very experienced, many of the supporting team members generally lack experience of working at big companies in tech. Jaynti Kanani Sandeep Nailwal • Co-founder & COO • Holds an MBA in Technology, Finance, and Supply Chain Management • Founder of ScopeWeaver.com (dApp architecture design company) • Ex-Deloitte Technology consultant Anurag Arjun • Co-founder & CEO • Bachelor of Engineering from the Dharmsinh Desai Institute of Technology • Significant contributor to Ethereum based projects • Co-founder & CPO • Holds a Bachelor in Engineering and Computer Engineering • Experience in Product Management and health tech products. x Advisory board • Esteban Ordano, the founder and CTO at Decentraland, and Ari Meilich who is Project Lead at the same project make up two thirds of the advisory board. Pete Kim who is the Head of Engineering for Wallets at Coinbase completes the list of advisors, highlighting that the team are dedicating serious focus to integrating with the gaming sector. Source: Blockfyre Research | Matic website
15. Matic Rating Product 11/15 Community 11/15 Traction 5/9 Code 8/12 Trading 9/12 Network 10/15 Whitepaper Competition Speed Value Roadmap Website Social Media Communication Advisors Influencers Development Status Number of txs Partnerships Background Team Dev engagement Dev engagement (1 mo) Contribution Speed Profit (1 month) Profit (1 year) Exchanges Token distribution Google Trends News Mentions Twitter Follower Telegram Follower Reddit Follower Total score: 54 / 78 = good investment opportunity (Please note that some of these metrics are distorted through the recent hype around Matic. A more reasonable score would be around 52. x
16. Conclusion x General opinion about Matic In our view, the most likely path forward for the scalability of Blockchains is that a variety of solutions end up enabling Ethereum and Bitcoin to scale on-chain and off-chain and Bitcoin and Ethereum end up being the core networks the masses converge on. Matic represents one of these solutions and could become one of the most valuable parts of Blockchain ecosystems in the future, but it is still a long path to go for them. High upside potential If we consider the growth of Blockchain adoption as highly likely, the problem of scalability becomes even more pressing. Matic offers a solution to Blockchain’s biggest issues, if they deliver on their plans, the upside potential for Matic could be immense. Long-term investment Mainnet launch is still relatively far away and it is yet to be seen, if Matic really provides the solution others weren’t able to provide. We categorize Matic as a High risk but also high potential long term investment. Risk & Concerns Matic’s business model, product vision and barriers to entry are nothing revolutionary. As long as there is no substantial adoption, it would be fairly easy for a competitor to try and replicate Matic’s approach. However, once adopted on a large scale, Matic doesn't really leave room for any competition, at least on the Ethereum network.
17. Blockfyre Jonathan Habicht Simon Dedic Alexander Schätz Disclaimer We currently don't hold any Matic. We have not been in contact with the team If you like this review, don't forget to share it! Follow Blockfyre x