Project Spotlight: Confido
Confido completed Stage 2 of their ICO today, selling out within seconds to the chagrin of many.
What is it?
Confido is a trustless escrow smart contracts cryptocurrency payment solution which links with a delivery company's shipment tracking codes to act as a decentralised trustworthy intermediary, paying out to the seller only once receipt of goods is complete.
What problem does it solve?
Confido aims to reduce the likelihood of being scammed when purchasing goods or services off someone you do not know, a particular problem with the inherent irretrievable and often anonymous nature of cryptocurrency payments.
How does it work?
Person A wants to buy a good off Person B, who is unknown to him/her, using his ETH. Instead of paying Person B directly, they use Confido to make the transaction. This new transaction generates a smart contract which links in with the delivery company's shipment tracking code. Person A's payment goes to the Confido escrow; Person B then submits the shipping details to the smart contract. The Confido app then tracks the delivery status of the goods automatically and the funds are unlocked 24 hours after the delivery of the package. Confido charge 0.7% per transaction for use of this system.
There is still the issue that goods may be delivered, but they might not be the goods purchased. There is no real solution to this, but Confido works by introducing a dispute function. If Person A believes the goods are not what they paid for then they can submit a dispute resolution. This resolution will be handled by justice protocol Kleros. However, with the funds unable to be released without agreement from both parties, the motivation to deceive and defraud is substantially lowered.
What does the token do?
There is no need for the team to have used a token; it is purely to fund the development of the system.
Normally this would be a automatic red flag, rendering the project of no further interest. With Confido, however, there are two mitigating factors:
- All payments made through Confido are distributed to token holders, which is why the team have kept 30% of the total tokens themselves
- The hard cap is just 1250 ETH, c. $375k, a refreshingly low total
Also, if you use the Confido token as the payment method then there are no transaction fees.
Reasons to invest
Although those reading this now are too late to contribute to the ICO, Confido has sufficient scope for price growth to make the effort at purchasing off EtherDelta when trading launches.
- The market cap is startlingly low (and this, frankly, is what makes it as near to a certainty as you can get in the space and is the main appeal)
- It has an actual use case with a realistic road map
- It will be utilising ChainLink, a prominent project, in order to liaise with the shipping companies API's
- The Alpha is launching Q1 2018
- Community engagement has been very good
- It has generated a significant amount of interest with no marketing to date
Areas for concern
- The four man team seem inexperienced, with little concrete evidence of experience or existence provided
- With such a small ICO, there will be no money for any real marketing. The team noted that they do not need more than $400k but have not given any breakdown of how funds will be used - what happens if ETH dips significantly before they liquidate?
- The project has low barriers to entry - could be easily replicated by competitors or sites acting as intermediaries for selling the goods initially
The biggest issue is that this would be a very easy new route for potential scams. The low cap taps into the scepticism and cynicism surrounding high raise ICO's to launch the exact opposite, a tiny one that is bound to garner organic interest on a large scale from the likes of Reddit and 4Chan. The team then allow themselves to invest in a presale with a few whales (in this context). With Confido, there were a number who were allowed to invest 60 and 25 ETH, a massive amount compared to the others who had a 2 ETH cap. I have a suspicion this is the case anyway, although no proof, but it makes sense - the sums are so small that it is not going to be 'strategic investors', it is most likely to be the team or their friends/families. The team can then keep a significant proportion of the tokens back for themselves (in this case, 30%), which means that post launch and any price explosion you can a) enrich yourselves and b) manipulate trading owing to your stack size.
Despite these issues, there is such limited downside with Confido it is hard to not invest. The team's community work so far has been peerless and with a personal cap of just 2 ETH per person and a hard cap of $375k, it would be a surprise not to see a 10-20x return.
Disclaimer: I have invested the max 2 ETH in Confido
Update: 20 November - Confido did indeed quickly rise and see 3000% gains, before swiftly crashing back down upon first news of 'legal issues' and then subsequently the project being confirmed as an exit scam - a further reminder if ever it was needed to start from a point of distrust of all teams and projects as well as taking profits along the way in smaller coins. I took profits at 10, 20 and 30x but still had c. 6000 CFD left when the news broke.