ICOs, Initial Coin Offerings

PayperEx ICO: Evaluation and Analysis

PayperEx ICO

The Quick Pitch

The PayperEx network aims to decentralize the share market by creating an alternative trading network using blockchain technology. PayperEx’s goal is to give people from all over the world a fair, easy, and affordable chance to enjoy the benefits of the share market by buying “Paypers”. The use of blockchain technology is designed to make the network secure and transparent.

To fund the development of the PayperEx platform, the UK-based company is holding an initial coin offering. From August 21 until September 20, PayperEx held a presale where it enabled early backers of the project to receive up to 30 percent extra PAX tokens on their purchases.

The official PayperEx token sale launched in the week starting October 22. During its token sale, PayperEx is selling 4 billion PAX for a base price of 0.00002 BTC with a minimum purchase requirement of 1000 PAX tokens. The token sale will end on December 19.

To purchase PAX tokens, you simply sign up to PayperEx’s token sale site and enter the amount of PAX you want to purchase, select the currency in which you want to pay (BTC or ETH), and then click “buy” to create a PAX wallet address. Once you have created your address, you can scan the payment QR code or copy the wallet address to process the payment.

The Problem and Solution

PayperEx is developing the first alternative blockchain-based share exchange. The company thereby aims to make share trading available to everyone with an Internet connection by making the tradable “Paypers” affordable and easy to purchase.

Trading shares online involves a certain amount of capital to get started and online brokerages usually require you to complete lengthy signup processes. This makes it difficult for individuals with less investable capital and those living in developing countries to access this market.

PayperEx wants to solve this issue by providing “a decentralized peer to peer trading network that transcends these limitations and provide the same trading opportunity to all traders all over the globe,” according to its whitepaper.

The company intends to make its “paypers” affordable so that even investors will little capital can partake in the share market. Furthermore, a portion of all trading fees charged will be distributed among PAX holders, which will include every member of the exchange since PAX tokens are needed to buy and sell Paypers on the platform.

A company blog post states: “Paypers [will be] units based on this share market which stand on financial assets like Bitcoin or Ether, as well as other private companies which decide to issue shares in PayperEx. PayperEx will issue two types of Paypers for every asset: The BULL Payper, which will be used by everyone who thinks the asset’s price will rise. The BEAR Payper, used by those who expect the asset’s value to drop.”

The Team

The company’s two co-founders, Yaniv Baruch and Menahem Maya, have experience in financial trading as well as financial technology. Yaniv Baruch previously ran Daweda Limited, a forex and binary options trading company, and was head of trading at controversial binary options trading firm AnyOption for six years.

Menahem Maya previously ran MD Technology IL Limited, a technology consultancy that focuses on the binary options and forex industry. Other companies he has worked for prior to running MD Technology Israel are not detailed by name on his LinkedIn profile.

The two founders are joined by full stack developer and CTO Denis Rohlinsky, Product Manager Dror Shem-Tov, and chief advisor Tal Miller, CEO of payment services provider Fibonatix.

No blockchain industry leaders have been brought on board to advise the team on their ICO, which is rather uncommon these days. While cynics like to say that adding high-ranking bitcoin community members as advisors is simply a marketing tool, having trusted community members as advisors does add legitimacy to a project.

The Token

“The PAX Token is issued by PayperEx and is the only one used on the PayperEx network. Each activity in the PayperEx network is performed using PAX, making the token an integral part of the network and the driver of its economy. In any activity carried out on the network, PAX is transferred from one participant to another,” according to the company’s whitepaper.

This means that if you want to buy or sell Paypers, you will need to use PAX tokens. Furthermore, PAX token holders will receive a share of trading fees.

A total of 6.2 billion PAX tokens will be generated of which a maximum of 4 billion will be sold during the token sale period, 1 billion will be kept as a reserve by the company and 1.2 billion will be distributed for free as Extra PAX during the token presale. The price for 1 PAX is fixed at 0.00002 BTC during the token sale.

The PAX token will have a utility as the currency on the PayperEx platform and can be traded on cryptocurrency exchanges after the ICO has been completed.

The Community

As PayperEx is a very young startup project, it has not yet managed to build much of a community around itself. The PayperEx team has set up many of the most popular social media communications channels such as Twitter, Facebook, YouTube, and Telegram but has received only a low volume of followers throughout the two months it has been fundraising. Having said that, in its BitcoinTalk ICO announcement thread, the team has been very responsive to questions.

No code related to PayperEx’s platform has been publicly shared nor is there any mention of which blockchain the PayperEx team intends to use to build its platform. While not sharing proprietary code when launching a new platform is not abnormal, not detailing what blockchain will be used to build the exchange or whether an entirely new blockchain will be developed is rather odd given the importance that the underlying technology of the exchange will play in its future success or failure.

Next Steps

The PAX token’s unique selling points (USPs), which the company highlighted in a recent BitcoinTalk Forum post, are less than compelling. PayperEx highlights the token’s usability on its exchange, its private wallet, its liquidity, and its potential yield as its key selling points.

While it can definitely be argued that if PayperEx’s exchange platform becomes popular the PAX token will gain in value as its use increases on the exchange, stating a private wallet as a selling point is a bit redundant and whether the token will have any liquidity or not will be up to the market to decide.

Furthermore, the founders’ background in the highly controversial binary options industry should make investors cautious about using the PayperEx trading platform, let alone funding it through purchasing its token.

The grammar and spelling errors in the project’s whitepaper combined with a complete lack of technical detail will likely also deter investors from pouring funds into this ICO and puts the professionalism of the team into question.

PayperEx’s idea of turning assets into blockchain-based tradable units will surely become an element of the financial markets in the future and several blockchain startups are working on this already. However, the project’s lack of technical details and value-adding features do not bode well for its likelihood of raising substantial funds nor the future performance of its digital token.

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