PROTON

DIGITAL ASSET REPORT:

XPR Review and Investment Grade

Crypto Briefing Research Department

May 12, 2020
Grade-B-minus

Quick Facts

TickerXPR
Current Price$0.019986
Market Capitalization$5,435,925
Buy Up To Price$0.075000

Funding information

The project has gained funding (in an amount not disclosed) from several individual investors, and a venture fund.

Circulating Supply271,983,710 XPR
Total Supply10,000,000,000 XPR
Top 10 Addresses97.89%
ATH Price$0.100900 (Apr 27, 2020)
30-Day Average Price$0.034207
24H Volume$5,386,602
30-Day Median Volume$1,109,523

Contents

Fundamental Factors

Market Opportunity 70;
Ecosystem Development 68;
Token Economics 65;
Token Performance 65;
Core Team 75;
Underlying Technology 70;
Roadmap 70;

Combined Score: 6.92

Introduction

Payment is arguably one of the top blockchain use cases. However, projects that have been tackling this use case, have struggled with adoption and user onboarding.

High volatility of crypto assets makes it difficult to use crypto as a payment instrument. However, many crypto enthusiasts around the world still accept crypto as payment and, although slowly, data suggests adoption is growing. 

Proton is building its infrastructure to foster the growth of peer to peer payments and crypto around the world. However, this is not just another payment coin. In fact, the project is aiming to be “currency agnostic,” and will interact not only with different cryptocurrencies, but also with fiat.

Traditional financial technology and web3 do not openly communicate. In order to solve this problem, Proton is building a bridge with its identity and financial settlements layer that should help users to easily link their crypto and fiat accounts and enable use of their currencies seamlessly in dApps, websites, and physical point of sales, etc.

Founders of the project have a long experience working in the crypto industry.  Proton is a joint venture of Metal and Lynx teams that have come together to create a consumer wallet experience that combines the best of both companies. 

The project is also backed by some notable investors, such as Erik Voorhees (CEO of Shapeshift), Brian Kelly (CNBC Fast Money), and Alphabit Fund

If the team realizes its vision, the project has a good chance to significantly grow the adoption of its payment infrastructure in the crypto as well as the traditional finance space.

Market Opportunity

The Global Digital Payments Market was valued at USD 3.8T in 2019 and is expected to more than double by 2025, recording a CAGR of 13.7%.

The market presents huge opportunities for projects that are building payment solutions.The competition in the space, however, is already intense and will only grow with time.

Cryptocurrencies have definitely revolutionized the way payments work, especially when it comes to cross-border payments. Compared to fiat, crypto cross-border payments are much more cost effective and much less time consuming. 

For Proton, competition within the crypto space is less intense. The project is not aiming to compete with Bitcoin, stablecoins, or any other payment focused altcoin. Instead, it is going to aggregate all of these payment options under one interface and make crypto acceptance easier for both payers and merchants.

Moreover, using Proton, merchants and payers will instantly gain access to a variety of fiat options, which should make their lives much easier.

However, when it comes to fiat payments, the competition here is much heavier. The fiat payments space is dominated by global giants like Paypal, Stripe, Square, and many others. Moreover, companies such as Revoult already have support spending and withdrawals in more than 100 currencies and provide access to large cryptocurrencies. 

As the adoption of crypto grows, it is likely that more traditional financial companies will start integrating blockchain technology in their infrastructure and allow crypto payment options. Given that these companies already have enormous user bases, this can become a potential threat to Proton. 

For now, it looks like Proton has time to build its user base and start onboarding merchants and dApps that need easy and compliant infrastructure to process these transactions. This can give the project a head start over the potential competition, and create a necessary community that can further promote and grow the project.

Underlying Technology

Although Proton is a relatively new project on the market, it has already launched its mainnet. Its protocol is based on the EOSIO consensys layer, “that allows verified user identity and applications to generate signature requests (transactions) that can be pushed to signers (wallets) or authentication and signature creation.”

EOSIO-based blockchains use delegated proof-of-stake to elect block producers who will be authorized to sign valid blocks in the network. The Proton network is already supported by 26 block producers, some of which are also top 100 block producers on the EOS blockchain.

Block finality is achieved after a supermajority of active producers have validated the block according to the consensus rules. 

To get a better understanding of how EOSIO works, you can read our Simetri Research Report on EOS.

According to the team, they have started on EOSIO, but are forking it and moving in a completely different direction with fiat integration. In fact, the team is planning to integrate fiat-processing commands on chain as part of the core infrastructure.

Currently, Proton looks very similar to EOS. However, as the team gets closer to the product launch, we expect more divergence from the original EOSIO.

Overall, the underlying technology satisfies the current needs of the project. And given that the Lynx team is very familiar with EOS, this should help Proton achieve developmental progress in a timely and secure manner.

Ecosystem Development

Proton was launched as a joint effort by two companies: Metal and Lynx. Both teams have a goal to make the experience of buying, using, and converting crypto and fiat seamlessly. Therefore, the ecosystem of Proton will be highly integrated with both of these projects.

The Metal team has already built a fully compliant platform for peer to peer payments. Its wallet already interacts with fiat and has on boarded over 150K users. Using Metal, you can buy and sell 24 cryptocurrencies directly from your FDIC-insured cash balance. Lynx has developed an app-focused blockchain.

According to the Metal Roadmap, the team is planning to launch Metal Pay 3.0, which will establish the first wallet capable of interacting with the Proton blockchain. While Metal is currently only available in the United States, Metal Pay 3.0 will be available worldwide, including banking features for territories where the company has licenses, as well as crypto features for everyone. 

The protocol is governed by the Inner Steering committee of the Proton Foundation, which is currently composed of the EOSUSA, Greymass, EOSCafe, Lynx, Metal, and CryptoLions. All members of the governance committee must register on the chain with a verified corporate identity. 

Overall, the verified identity aspect plays a large role in the project’s ecosystem. One of the key features of the Proton blockchain is the unique and immutable @name that can be easily used to send funds between different users or from users to merchants.

Proton is adding verified KYC flags on chain, and is planning to use multiple KYC providers for verification of users’ identities.

The information that the project is planning to collect will be stored in a central PCI-compliant database.

The KYC information will be especially important for the project’s traditional partners that are working with fiat. According to the team, it is working on building partnerships with the largest payment processors, such as PayPal and Mastercard. Although these partnerships have not been announced yet, it is reasonable to expect they will do so in the future.

Moreover, the project’s early investors will likely help foster relationships with traditional financial companies.

  • Investor Brian Kelly, Founder & CEO of BKCM LLC, a digital currency investment firm. He is also a CNBC Fast Money Trader.
  • Investor Alphabit Fund - the fund was launched in 2017 (with a target to raise $300 million) and invests in the growing blockchain sector. 
  • Investor Erik Voorhees - CEO & Founder - ShapeShift.io, a zero-commission, self-custody crypto exchange.
  • Advisor Andrew Lee, the founder of Handshake protocol
  • Advisor David Sica, partner at Nyca fund with ~$500M AUM. He previously worked as a Director at Visa for more than 5 years.

Overall, while the project’s ecosystem still remains in development, the team has very ambitious goals for its future. As Proton progresses with product development and onboards more partners, the ecosystem will likely grow accordingly.

Token Economics

The project has designed its protocol’s XPR (not to be confused with XRP) token as a short term store of value for dApps and allows blockchain governance. 

The total supply is equal to 10,000,000,000 XPR, while the current circulating supply is around ~271M XPR. According to the project, the team is not planning to release more than 1B tokens into circulation per year. 

Most of the current circulating supply was airdropped to MTL (Metal native token) and LNX (Lynx native token). 

The released XPR will be used to give grants to partners, fund exchange listings, marketing, and ecosystem development. 

There will also be a 5% token inflation that will be spent between block producers (2.5%), token stakers (1.5%), and the Proton Steering Committee (1%).

  • Block Producers — receive their rewards for validating blocks on the network
  • Token stakers  —  vote for block producers on a one token/one vote basis. They also have to agree to a month-long un-staking period in order to receive the staking reward and be allowed to participate in the voting process
  • The Proton Steering Committeeaccording to the project, “the mandate of the steering foundation will be to compensate the Metal and Lynx development teams for work done on wallets, apps and marketing initiatives to benefit Proton

While the centralization of token supply looks concerning, according to the team, they are not planning to sell these tokens on the market. Going forward, however, the team will have to find more use cases for its native token to support the growth and decentralization of the Proton network.

Team

Marshall Hayner, Co-Founder & CEO. Hayner is also the CEO of Metal Payments. He also founded blockchain companies QuickCoin and Block.io and acquired Dogechain.info. Hayner studied at Northwestern University.

Fred Krueger, Co-Founder & President. Kreuger is also the CEO of Lynx. He is also the founder and Chairman of the publicly traded company Minds and Machines as well as many other companies and startups. Kreuger graduated from Stanford with a Ph.D. in Philosophy and from Cornell University with a B.A. in Mathematics.

Jennifer Sum, General Counsel. Sum has over 15 years working in the legal and regulatory space. She worked at the Federal Reserve Bank at San Francisco for over 10 years. Sum graduated with a Bachelor of Science in Biology from Yale University. She also studied law at Stanford Law School.

Overall, the team consists of over 30 people with expertise in blockchain and business development. Both Metal and Lynx teams have made a great deal of progress working on their projects.

Now they are combining the best of both companies to build Proton.

Roadmap

The project’s roadmap is divided in two phases: “Red Falcon” and “Snow Owl.” 

During the “Red Falcon” phase, the project is planning to launch Metal Pay 3.0 with four key components:

  • a new username model, where every Metal Pay user will have a unique @name that is stored on the Proton blockchain
  • a new non-custodial “crypto tab” available globally (Metal Pay is currently US only) that allows the user to send and receive Proton tokens
  • the ability for the new Metal Pay wallet to respond to Proton Chain payment push requests
  • the ability to wrap tokens from the “exchange” tab and move them to the “crypto” tab and back

During the “Snow Owl” phase the project is planning to start integrating more fiat currencies. Four main components of this phase are:

  • ability to hold multiple currencies in the “Cash tab,” in particular EURO, GBP, and KRW.
  • development of a native Proton stable coin USDX
  • a web client for full screen desktop use, utilizing the Proton mobile login and effectively replacing the old Lynx Desktop wallet
  • ability to post payment pending transactions to the Proton chain

Although the dates for when these phases will be complete are not specified, most of the work is likely to be completed this year, which could significantly move the project and its adoption forward.

Token Performance

Due to the recent announcement on the Bithumb Korea listing, the XPR token price has been quite volatile. After the announcement, the token more than tripled. The price, however, later gradually decreased.

Current market capitalization of the project is somewhere around $4.5M. Given its potential, it does not look overvalued. More listings and announcements are likely to come in near-term, which can affect capitalization significantly.

Conclusion

Proton is a young project that has all the necessary prerequisites for success. It has a highly ambitious roadmap and a team with a track record of success, which should help it adapt and grow its business. 

As the project progresses with its product development and unveils more information about its plans and partnerships, there should be a significant influx of new users to its ecosystem. Therefore, it receives a grade of B-.

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

How to purchase XPR

Choose your preferred exchange. XPR 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.

For US residents the best method is to buy from Bilaxy and then move coins off the exchange into a wallet that you control.

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

On Bilaxy, XPR can be purchased with Bitcoin so make sure to first send over some BTC 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 the easiest way to buy them is through Binance US or Coinbase.

Step 4. Choose your trading pair

Head over to the exchange and choose USDT to purchase XPR with.

Step 5. Purchase XPR with limit order

XPR has low liquidity because of the low circulating supply of tokens. Hence, the order books are thin and the volatility of the token is high. In other words, buying or selling a large amount of Proton will significantly affect the price.

You need to accumulate XPR within a certain price range. To do this, you can either buy from the existing sell orders or try to set limit buy orders at your desired price levels. Buying directly from sellers is the fastest way to acquire XPR, but it will move the price up instantly. On the other hand, placing limit orders below the current price is better for getting XPR cheaper, but there is a risk that the order will not be filled before the price goes up.

If you want to go the first route, check the selling orders in the order book, which is located on the left of the terminal to see how many XPR are being sold at what price.

If you hover the cursor over the order book, you will see the average price of the order, the number of tokens and the cost of the order in BTC. If the average price suits you, click on the lowest sell order and all the necessary data will be automatically filled in in the terminal. Adjust the total amount of BTC to match what you have available. To execute the order, press ‘Buy XPR.’ Keep in mind that because of the low liquidity there is a high chance that the order will take some time to be filled.

After you execute your order, the price will go up. You need to give the market time to bring the price back. It may take several hours, so take breaks between your trading sessions.

For the second route, specify the desired price for XPR and place the order. It will take time before it will get filled and there is a risk that it will not happen at all or you will end up with a partially filled order.

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

Once you have accumulated the desired amount of XPR, it is a good  idea to store your tokens somewhere secure. You can either go with decentralized web wallets like https://mycrypto.com/ or go with even safer hardware wallets like Trezor or Ledger.