Particl For Investors #1: Preliminary Valuation

Shadow Cash to Particl

ShadowCash just had a big announcement to rebrand the project to Particl.

We’ve seen rebrands of cryptocurrencies before such as DarkCoin to DASH in March of 2015 and recently the NXT to Ardor rebrand.

However, with ShadowCash, the mechanics of how the rebrand is happening is quite different from the other two projects due to many legal issues and challenges.

When DarkCoin became DASH, nothing really changed besides the labels. It was the same software, same chain, same coin.  The rebrand signaled a change in philosophy and direction rather than any immediate change in any of the technical aspects of the software.

When NXT launched Ardor, they simply issued new Ardor tokens to the existing NXT token holders on the NXT blockchain. Those NXT Ardor tokens will be exchanged for the real Ardor tokens when Ardor (still under development) launches.

ShadowCash Exchange Program

ShadowCash decided to go about the rebrand in a different way in an attempt to comply with existing securities laws.

Most of the previous cryptocurrencies would run an Initial Coin Offering (ICO) and sell the tokens used to run and fuel their network as a way to raise money to fund their crypto project.

The ShadowCash ICO needs to be called a ShadowCash Exchange program because “old” and existing ShadowCash tokens are being exchanged for the “new” Particl tokens.

The goal of the ShadowCash Exchange program is:

  • To get the existing community to exchange as many SDC tokens as possible to PART tokens, and…
  • To raise a little money by offering a bonus amount of PART tokens at a discount, diluting the existing supply.

Explanation Of
ShadowCash Exchange Program

Let’s look at the terms of the ShadowCash Exchange program and see if this is a good deal for investors.

  1. In order to get PART, you must trade in an SDC to exchange 1:1 for a PART. SDC’s are trading ~$2.
  2. Once you trade in an SDC, you have an option to pay US$0.15 for an additional 0.15 PART. Effectively, you can buy another 15% more PART for US$1 worth of BTC.
  3. We are paying $2.15 for 1.15 PART, or an effective cost of $1.87 per PART.
  4. There are a total of 7.64 million PART. That gives a fully diluted valuation of $14.3 million at $2 SDC. This is the theoretical maximum valuation if every SDC is converted to PART, and every SDC owner exercises the 15% bonus.
  5. However, every SDC will not be redeemed for PART. How many SDC’s are lost or forgotten? How many SDC’s are exchanged, but the 15% bonus option not exercised?
  6. According to ShadowCash Rich list, ~50% of the SDC’s are held in the top 10 addresses. Let’s assume these SDC’s are held by insiders and all of them exchange their PART, and exercise their 15% bonus. That would account for 3.8 million PART.
  7. For the remaining 3.3 million SDC’s, let’s assume 10% of the SDC’s are lost, leaving us with 3 million SDC’s exchanged for PART. Add this 3 million to the 3.8 million PART owned by ShadowCash insiders would equal 6.8 million PART.
  8. In early results, it seems that ~60% of the SDC exchanged opted for the 15% bonus PART. This adds another 450K PART’s. That gives a total of ~7.2 million PART.
  9. This leaves 400K PART (7.6 million -7.2 million = 400K), which 80% goes toward investors, 20% to the Particl foundation. That’s an additional 320K PART distributed to investors, 80K PART to foundation. 320K PART distributed to 7.2 million PART equal an additional .04 PART. Let’s round that to .05 PART. This .05 PART comes from the unclaimed PART from the 7.64 million total.
  10. Adding the .05 PART to 1.15 PART means we’re now paying $2.15 for 1.20 PART or  ~$1.79/PART.
  11. With these assumptions, $1.79 x 7.64 million PART = $13.7 million valuation with SDC’s trading at $2.
  12. At the time of this writing SDC’s are a little under $2, so let’s round down and call this ICO ~$13 to $14 million valuation.

What’s A Reasonable
Valuation For Particl?

The question for investors would be:

Is $13-$14 million a reasonable valuation for the Particl project?

Let’s consider other recent ICO’s such as Golem, Melonport, Iconomi, Augur, PEERPLAYS, etc. they’re all trading at $25-$50 million valuation.

What all of these projects have in common are that they are in similar stages of development. None of them are in production!

They have prototypes or at most working betas.

In my opinion, with SDC’s at $2 per Particl is a little high vs. other recent ICO’s, but not unreasonably so.

In the near term, I see ~2X-3X reward (return) in the next few months with 20%-30% downside risk.

That’s not bad, but it’s not a layup like the recent Melonport, Golem, ICO’s which came in under $10 million.

User adoption is not necessary for investors to make money at these valuations.

Rather what needs to happen to make money for investors at this stage is for developers to:

  • Successfully execute their roadmaps.
  • Hit their technical milestones.
  • Develop partnerships with big name investors, academia,  merchants, etc.

Also, if a dark net market decides to accept Particl as payment, we know from Monero and ZCash, that alone could easily send Particl’s market cap over a $100+ mil.