ONTOLOGY

DIGITAL ASSET REPORT:

ONT Review and Investment Grade
Grade-B-minus

Crypto Briefing Research Department

November 29, 2019

Quick Facts

Current Price$0.690901
Market Capitalization$440,346,805
Buy Up To Price$0.920000
ICO DatesN/A
ICO PriceN/A
Public AllocationN/A

*All coins distributed by airdrop and co-builder plan.

Circulating Supply637,351,170 ONT
Total Supply1,000,000,000 ONT
Top 10 Addresses58.95%
ATH Price$10.00 (May 03, 2018)
Sharpe Ratio-0.33
30-Day Average Price$0.796967
24H Volume$113,142,729
30-Day Average Volume$140,089,041

Contents

Fundamental Factors

Market Opportunity 68;
Underlying Technology 76;
Ecosystem Development 70;
Token Economics 75;
Core Team 75;
Roadmap Progress 70;
Token Performance 60;

Combined Score: 7.1

Introduction

Ontology is a sleeping giant. During the ICO boom it was considered one of the most promising projects focusing on the blockchain infrastructure layer. It was launched by Onchain, the company behind NEO, and was initially seen as the enterprise facing complement to the general purpose public chain.

During the crypto winter and much of 2019, Ontology has been working in the shadows, choosing to neglect publicity to focus on technological development. Media coverage was light, and Ontology became somewhat overlooked despite maintaining its status as a CMC top-25 project.

The team used the time to work on a number of technological improvements and has set up a solid foundation for long-term ecosystem development. With a number of updates getting close to release date, the team is looking to focus on meaningful adoption. Given brand, engineering resources and capital, it is capable of providing impactful support to dApp developers.

As the team turns its attention to growth and marketing, Ontology should start to come into the spotlight. 2020 is set up to be an important year for the project, and despite its impressive market cap, it may still be undervalued.

Identity for a Decentralized World

Ontology’s core proposition for business and users is built around decentralized identity and data markets. The project seeks to use blockchain technology to give users complete ownership of their data, and give business the opportunity to incentivize users to share it in a meaningful way. The end goal is to have a more fluid, secure, and commercially attractive data-driven application ecosystem.

Its two core products are ONT ID and DDXF. ONT ID is an identity framework on the blockchain that gives users full control of their personal data and identity. The comprehensive identity enables users to utilize data across multiple applications for a seamless and more secure experience. The approach aims to address a number of shortcomings of poorly connected legacy systems: a lack of individual roles, difficulty in achieving accuracy in identity verification, difficulty in tracing content copyrights, data oligopoly, and more.

Ontology uses trust anchors to achieve credential verification for users in the ecosystem. Currently, there are six trust anchors that verify six types of documents,

such as a driver's license, identity card, passport, residence permit, travel documents, and a visa for 208 countries.

The data self-management and integration into the global account system should open up uses in applications. Ontology is already expecting integration of the technology into MovieBloc, Muzika, and Minglechain. Furthermore, the team plans to integrate ONT ID for government agencies, universities, and the enterprise sector.

DDXF is a distributed data exchange framework, which allows users to tokenize any valuable data, and trade it on customized data trading marketplaces. It also enables dApp developers to create special decentralized data applications that can meet “the needs of various scenarios with various features.”

Users can exchange their data resources for ONG (one of two Ontology’s native tokens) and other OEP-4 tokens. DDXF also supports physical resources allowing users to transact off the main chain with a smart contract to meet the needs for compliance and security.

Data transmission

Source: https://github.com/ontio/ontology-ddxf

These products are part of an evolving base layer infrastructure. Ontology uses a blockchain and a VBFT consensus to process and validate transactions in the network. The algorithm combines PoS, VRF and BFT, and is considered as an improvement upon the traditional BFT algorithm. It is more resistant to potential attacks since the randomness introduced by VRF makes it’s difficult to predict the nodes that will participate in the next validation round.

Ontology has two types of nodes that serve as the backbone of the network: consensus nodes and consensus candidate nodes. As with the classical BFT algorithm, block creation is done by a relatively small number of nodes. Currently, there are 10 consensus and 43 candidate nodes.

Consensus Nodes

Source: https://node.ont.io/

Candidate nodes can someday become consensus nodes. The overall rank (and whether the node will become a consensus node) depends on the number of tokens staked at that node by users. Nodes attract users by sharing the transaction fees received for block validation. On average, top nodes give away around 80% of all the fees to their stakers.

The project tries to be efficient and developer friendly. Ontology has reached 5,000 TPS on the public mainnet, and is working on further scaling improvements. In addition, the project supports

three different VMs, so developers can utilize Native, NeoVM, and Wasm as needed. Wasm specifically supports advanced development languages, such as C++, Rust, Go, and Assembly Script, and can introduce promising third-party libraries for developers building on top of Ontology.

Applications and ecosystems that may utilize the ID and data market concepts can be expected to be traffic heavy. As such, Ontology appears to be preparing a foundation capable of handling potential adoption and growth.

Building in the Shadows

Sharding and interoperability have been hot topics for 2019. A number of projects, such as Zilliqa and Cosmos, have launched their mainnets to much fanfare. A few others, such as Near Protocol and Polkadot, are expected to launch in the near future.

What got lost in the hype is the fact that Ontology has quietly made a lot of progress down both paths.

Its sharding is currently in the testing phase, and, according to the team, it is 75% ready. It is expected to launch in the first half of 2020 and should support several network shards, smart contracts, cross-shard messaging

between smart contracts, and cross-shard atomic calls. A successful implementation of sharding may draw some attention to the development work Ontology has been doing.

Cross-chain functionality should also be released around the first half of 2020. Interoperability has been a popular topic this year, and while there are a number of projects working on various solutions, very few have something viable on the mainnet. Initially, the project plans to connect large public blockchains, such as Ethereum, NEO, and some of the large permissioned blockchains.

It is important to note that this is not a small-cap project, so its path to adoption should be simpler.

The project also has a top-level executive team, which includes professionals from various backgrounds. Founder Jun Li has over 17 years of work experience in IT and has extensive experience providing technical architecture and management support at top IT firms. Co-founder, Andy Ji, previously worked as deputy strategy management of Chinese conglomerate Dalian Wanda Group (Revenue $31.7 billion, 2018). He is also a Deputy Secretary-General of China’s Ministry of Industry and Information.

Moreover, the project has seen significant support from a number of strategic investors, including Sequoia Capital, DHVC, Hashed, and others. According to the CEO, the project is well-financed and has a roadmap for the next three to five years for its 160-member team of tech professionals.

So, while these sharding and interoperability developments have not gotten much coverage in the media, they could be major catalysts for Ontology in 2020.

Preparing for 2020

The past year, Ontology has been focused on technological development. Looking to 2020, however, the team is now focused on adoption.

The project already has over 190 partners, which is a good start to strengthen brand awareness and increase

market share. Given Ontology’s status as one of the large-cap projects from the early days, it likely will not be difficult for the project to further improve upon the number of partners.

Community and Ecosystem

Source: https://ont.io/

Among the recent partnerships is Chainlink. Ontology will be integrating Chainlink’s oracles into its platform.

In the summer of this year, the project partnered with the largest TRON Super Representative Sesameseed. Sesameseed has launched its own node on the Ontology blockchain and is helping build the community around the project. According to the team, they see Ontology as a more of a business-oriented blockchain, with a solid technological foundation and a good potential for growth.

The project has created the first decentralized exchange on Ontology, and has been stimulating staking on the network through airdrops, helping attract community interest to the blockchain.

Ontology has also been closely collaborating with MovieBloc, a project established by Pandora TV, a leading content service provider in Korea. MovieBloc committed to use Ontology infrastructure for its platform, while Ontology will support the project with capital, marketing, and operations as a core partner.

According to MovieBloc, its team will swap the project’s native tokens (MBL) to the Ontology network before the end of this year. If the project is able to attract enough users and create a sustainable business, this could seriously increase the transaction volume on the Ontology blockchain. Moreover, the team has been closely working with many other partners in different regions of the world.

Still, while the project has been focused on Asia, it is planning to do more business in the US and Latin America in the near future.

Due to challenging economic conditions, adoption of cryptocurrencies in Latin America has been high, and this should be a good market for the project development.

Ontology has also been trying to establish itself as a blockchain platform for game developers. According to the team, they are in talks with several non-blockchain gaming companies, and, in the future, will be integrating blockchain-based assets into the games that have not used blockchain before. However, the adoption of current games on Ontology still remains small, but this is on par with adoption rates in the industry.

As one of its awareness efforts, Ontology recently launched the Global University Workshop and intends to support and educate students around the world about blockchain technology, its business applications and overall potential. There are already more than 80 universities that signed up for the program. This could help the project popularize its network, as well as find more independent developers who would start building on top of Ontology.

Overall, the next year will be quite important for the platform since the project will transition from the development phase to the adoption phase. Although this might not be easy, the team has all it needs to build the adoption around the technology it has created.

Things to Think About

Still, the road ahead is not without obstacles. Ontology is a general-purpose blockchain and the number of such platforms has been growing dramatically over the past several years. There are a lot of blockchains that compete for the same market and have already been able to generate more developer interest than Ontology.

Tron, for example, has been continually building the developer community and has access to massive financial resources to grow the ecosystem. The project established $100M that will fund game developers building on Tron. While Ontology has been focusing more on a B2B sector, its developer community has not been growing as fast. So, it will be extremely important for the project to prove its business model to the market and start onboarding more enterprises that will utilize its public chain.

In fact, the team is trying to find a “real” use case for the network —

but this could be a difficult task given current market conditions and the fact that Ontology has been under the radar for some time. 

Also, the focus on the B2B sector may even prolong the adoption phase given that the general nature of the enterprise sector, where most kinds of integrations take a long time.

Furthermore, the project will also need to attract more node operators to its network, having just 57 nodes, might not be enough for the network sustainability in the long run. 

All things considered, Ontology will need to do much more in order to bring real users to the platform and drive the adoption.

Conclusion

Over the past year, Ontology has been quietly preparing itself for market expansion. By solidifying its technological base and working on scalability improvements, it has made itself better prepared to absorb increasing adoption.

Given the strong brand of the project, its capable team, its backers and financial resources, Ontology looks like a project ready to make an impact in 2020.

The fact that there has not been much media coverage of the project’s recent progress has caused the market to overlook one of the large-cap projects in the space.

Due to these factors, Ontology receives a grade of B-.

The author(s) of this report is/are invested in the following coins: ONT, ONG.

How to buy ONT

Step 0. Choose your preferred exchange.

ONT can be purchased from several cryptocurrency exchanges, the full list of available exchanges can be seen ​here​.

Step 1. Head over to your preferred exchange.

If you want to purchase ONT, it is a good idea to use Binance​. Not only it is one of the biggest liquidity providers for the token but the exchange is also among the most reputable on the market.

Binance allows withdrawals of up to 2 BTC without the KYC. However, users may be required to show evidence that their account registrations are consistent with Binance’s Terms of Use. In case of violation you will not be able to use the platform.

Step 2. Create an account on the exchange of your choice if you don’t already have one.

Step 3. Top-up your exchange balance with some of your BTC, USDT or BNB.

On Binance, ONT can be purchased with bitcoin, tether, or Binance Coin, so make sure to first send over some of the tokens to your exchange wallet.

(Don’t forget to double-check that the address you are sending your coins to is correct!)

*Optional​: If you don’t own BTC or USDT, the easiest way to buy them is through ​Coinbase​ and Bitfinex. To obtain BNB you can choose from Binance’s offerings.

Step 4. Choose your trading pair

Head over to the exchange and choose the currency (BTC, USDT or BNB) you prefer to purchase ONT with.

Step 5. Purchase ONT with a market or a limit order.

If you want to buy just a small amount instantly, it is easiest to use a Market Order.

Input the amount of ONT you want to purchase and press Buy.

If you need to purchase a large amount of ONT, it is best to use a Limit Order to get the best possible price.

Input the amount of ONT you would like to purchase, and the price at which the order should be filled at and press Buy. (It might take some time for the whole order to be filled if you are purchasing a large amount).

Step 6. Store your ONT on one of the supported wallets for increased security.

To store ONT, you can use Trust Wallet​, Trezor or Ledger for improved security.