Sat, 17 Nov 2018

LiveEdu Token Sale

LiveEdu Token Sale

Youtube for Online Education, the next-generation

Review Project

Introduction

LiveEdu is a remotely distributed company with team members working from the US, Europe and Asia. The parent company is legally registered in San Francisco, CA. LiveEdu Inc. owns the UK subsidiary Livecoding Ltd (where it is running it’s ICO through). Their product is a decentralized P2P learning platform that helps people learn technical skills in new technologies, their platform is focused on teaching people with some experience how to build complete products.

What makes this company so interesting, is that they have a veteran team with experts in education, they have been through Y Combinator (S15), and have had over a million users.

The company is looking to raise funding in exchange for their Education Token (EDU), the token enables users to watch premium content, it also acts as the payment system for all financial transactions, and a reward system for content creators, API developers, QA, and moderators .

Their ICO will start on January 15th, 2018. Their company is looking to educate people in technical skills through videos, as well as live streaming, both hosted through the platform. The company, LiveEdu Inc, has been operating since 2015. In those years they have provided video content to over 5 million viewers in 194 countries. Their company has over 10,000 streamers producing content. At an average 20 videos per streamer, they have over 200,000 videos on their platform, and increasing quickly through both recorded videos and streams.

The Idea

With the fast developments of new technologies, it is estimated that in the next 15 years, up to 40% of the population could lose their jobs due to Artificial Intelligence and other technologies taking over. This means that if the world population doesn’t learn how to learn, billions will become unemployed, or worse, unemployable.

LiveEdu’s CEO, Dr. Michael J. Garbade had the vision to create a video platform for technical skill development since 2015. The reason for building LiveEdu was because he believes that nobody is teaching people how to build products from start to finish.

The platform uses a subscription model, where videos can either be watched for their EDU token (premium) the platform also gives the user the ability to preview the video before committing to watching the full version. The ability to quickly go through transactions without a middle man inspired LiveEdu to use their own token as a payment system.

The Token

LiveEdu is running a standard ERC20 (Ethereum) token. They are building an environment similar to Steemit. Since their platform is a network collaboration of users, businesses, developers, moderators, and content creators, they felt like a Blockchain would be the best way to solve this. This is also very similar to other Social Network ICOs, such as Kik’s KIN.

Their token also works as a sort of membership to the platform, providing their holders with a 20% annual revenue from repurchasing tokens from the market, and enabling holders to vote on key decisions on the network.

LiveEdu is also building strong relationships with members of the cryptocurrency community, for example, LiveEdu is partnering with Bancor, giving users the ability to convert EDU token for other tokens within that network, providing incredible liquidity opportunities.

ICO Details

LiveEdu’s ICO will occur between January 15th, 2018 and February 10th, 2018. Token sale will close 48 hours after raising $4M USD. The ICO will have bonuses of 20% and 17% respectively, on the first two days and a subsequent drop of 1% per day after that.

How to Buy EDU

The EDU token can be purchased with both Ethereum (ETH), and Bitcoin (BTC). This is stable token (during their ICO period), so the conversions between cryptocurrencies are stable. The EDU token Will be listed through the Etherdelta exchange after their ICO. However, you can invest in the ICO by buying either ETH or BTC. A minimum of $3 have to be invested.

The following are the conversions for the EDU Token:

1 ETH (~$1,000 USD) = 10000 EDU (or about $0.10 USD per EDU)
1 BTC (~$16,000 USD) = 160000 EDU (or about $0.10 USD per EDU)

Their website has a clear step-by-step guide to purchase EDU tokens found here. The token is currently listed on the Etherdelta (which got recently hacked) exchange which implies some EDU is already in circulation, and going through applications to expand to many more.

Their Pre-ICO ran from November 2017 to December 2017. During this stage, the LiveEdu team allowed people to purchase EDU in exchange for BTC, ETH, and fiat money.

Blockchain Test

In the beginning of the paper they mention that they are developing a decentralized platform. This is misleading since LiveEdu still controls the entire platform, and there is no decentralization of trust or elimination of counterparty risk through decentralization. The content creator still has to trust that LiveEdu will pay him/her for his services or that they will not artificially inflate/deflate the LiveEdu token price when he wants to cash out his tokens, essentially giving them full centralized control. They also mention that product development and project decisions will be democratized through voting but give no details on that either.

The white paper presents what looks like a good use case for using Blockchain technology, i.e they have a social network wherein actions are monetized through a token platform. However, there are still valid questions that need to be answered for why this approach is better than traditional fiat based approach, especially since content creators expect to be paid in realizable currency as they create content.

Furthermore, the social-network as a Blockchain app model that monetizes through tokenization typically involves a free-market micro-economy where price is controlled by the content creators and consumers themselves, however in LiveEdu we get no insight into the micro-economy mechanics at all and thus remain skeptical about whether this claim of being suitable for the blockchain is grounded in evidence or not.

LiveEdu states that the tokenization will solve their chicken and egg problem of a marketplace and that is can definitely be true, however, they should be a bit more clear about how their actual blockchain implementation ties to the actions done on the platform. Specifically why a proof-of-work style decentralization is needed, since all of these can be replicated without issue on a non-blockchain app if the decentralization is not core to the reward mechanisms. They have no specification for this, and thus there is no way of determining whether the platform-action-as-a-blockchain-app model actually applies to the technology, or in what way a Steemit kind of token application applies to the network in a technical manner.

Since a reputable firm is overseeing the development of the ERC20 token and its implementation, we expect to see a technical white paper presenting these claims to answer these questions since they are not addressed in their current business white paper. However till we review such a document these concerns need to be noted with importance.

Technology

There are very sparse details about the token details itself. Since new alchemy is overseeing the technical development of this, they undoubtedly have expertise in the area, however we would still like to see details about how the smart contracts will work with respect to the actions in the network. It is safe to assume that EDU will be an ERC20 token, but beyond that we are left completely in the dark about what the smart contract entails.

Traction

One of the best aspects of this ICO is the fact that this is already an established company, with a user base, experience, a team that knows each other, and a fully developed product. Some of our favorite ICOs have been those that understood their audience, their product, and had a real reason to develop a Blockchain solution for their platform. Typically because their platform had a lot of digital assets being moved (data and currency), as well as strong network effects. LiveEdu is certainly one of these companies (Other example is Kik’s Kin with over 300 million users).

As of today, LiveEdu has been used by over one million users, from 194 countries, they have a library with over 200,000 videos generated by more than 13,000 content creators. Really impressive for a 3 year old company. The company has also been accelerated by the world’s largest, and most prestigious accelerator, Y Combinator. So both the team and idea have been heavily vetted, and invested by some of the top tech Venture Capitalists in the world.

Transparency and Clarity

Monetization

It is currently not clear if LiveEdu is planning on moving away from their current fiat-based monetization system completely, and replacing it with their token.

Criticisms

LiveEdu claims that their platform does not compete directly with existing online platforms (White Paper, page 5). However this is hardly true, there are other platforms that currently provide online education to people at multiple skill levels, such as Khan Academy, MIT Opencourseware, Coursera, etc. while some of these are not given through streaming services, they do provide interactive experiences for assignments, quizzes, and forums. What we think really makes LiveEdu special, is not the level of skills from the users, what we find incredible is the fact that it focuses on creating products from start to finish, this way of learning is much newer, and we think much better than others.

The company mentions that the ICO will give the token holders an opportunity to “vote” on the network decisions, however the white paper is extremely vague about what this means, and exactly how it works. Furthermore this should not be confused with any type of company voting or any such activity that would be carried with a typical investor preferred share. They have a blog article which goes into some detail about how the tokens are minted and used, however we suggest such details be included in the whitepaper.

We are also not sure about how the company is trying to maintain the price of the token, there is not a good explanation regarding the techniques that will be used to maintain the stable token, which is typically a very difficult job, and usually requires the token creators to back it with some form of asset. Furthermore, the vagueness of the mechanics of rewarding livedu tokens for actions on the network which can be changed arbitrarily (without seeing the smart contract spec) leaves open many questions about whether they can control the pricing entirely and thus artificially inflate the price of the token to their liking, completely taking away any free-market pricing we expect from a demand-supply market which can entirely remove the benefit of a social-network blockchain.

Furthermore the white paper is very vague about the benefits to users for switching over from fiat payments. They mention problems with paypal but not stripe and then they mention europe and Asia having difficulty acquiring fiat payment instruments. However getting a hold of bitcoin in those countries is often harder than acquiring a fiat payment instrument. Therefore the company seems to be offloading their fiat payment processing fee in the form of an “acquire cryptocurrency yourself and then come spend it here” fee onto the user.

Finally, we wish there were version numbers on the white paper. Currently there have been changes on the white paper before the pre-ICO and after, and those changes are not declared when reading new versions. Making it difficult to find consistency.

Conclusion

LiveEdu is a company with incredible potential, creating videos that help people make products from start to finish seems like the right way to go about learning. In a fast moving world like ours, it is becoming clear that learning new skills quickly will become a necessity for anyone who wishes to remain competitive in 2018.

That said, we have a lot of questions regarding the use of a cryptocurrency. The token will be sold to investors at a stable price during the ICO, afterwards pricing will depend on exchanges, and it is difficult to estimate what will happen after. It also seems that a “fiat” solution could be equally as good without requiring to use an ERC20 token.

Due to their incredible pedigree (Y Combinator) we have no reason to believe that this company won’t be able to both deliver on their technical goals, and be able to secure funding through their list of investors, and wide marketing efforts. The company was also able to reach $1M soft cap during their Pre-ICO. Off to a really good start.

LiveEdu also made a high number of changes to the Price of cryptocurrencies per EDU in their white paper to reflect the amount of volatility experienced lately in both ETH and BTC.

We wonder why they needed to create a cryptocurrency and an ICO, the white paper leaves out a lot of explanations regarding the Blockchain test (why Blockchain?), how the technology differentiates, and why ICO is the right type of investment for them.

Token Sale

Crowdsale Opening Date

15-01-2018

306 days ago

Crowdsale Closing Date

10-02-2018

280 days ago

Allocations

The platform will distribute 13% of their tokens within the team. From that 13% the team members can sell 25% immediately, and the other 75% over the next 3 years (maximum of 25% per year). This resembles a Shareholders Agreement with a no cliff period and 4 year vesting period. Similarly, another 13% of tokens will be allocated to content creators, which will be distributed over a 3 year period. In order for the creators to get tokens they have to generate content.

An interesting part about this ICO is the fact that the total amount of Tokens minted is not currently known, it will depend on the actual amount raised. The white paper is outdated with the pegging of token value, however, they have released an new post which explains that the token is pegged to $0.10 per EDU token. They take the average values of thirty days for ETH and BTC to determine its price, but currently the price of ETH and BTC they are taking is:

1 BTC (~$16,000 USD) = 160000 EDU (or about $0.10 USD per EDU)
1 ETH (~$1,000 USD) = 10000 EDU (or about $0.10 USD per EDU)

This means that the total amount of tokens distributed will not be known until the ICO closes,the maximum amount of tokens is currently unknown (depends on ICO success).

Instead, the company decided to give discounts based on bulk pricing. Which seems to have the same effect as a “price and time of payment arbitrage” purchase, since investors will be able to abuse this by purchasing in bulk and selling back.

Team

LiveEdu’s team is quite impressive and one of the most interesting aspects of this company. It makes that a company looking to educate people would be formed by people who understand education, technology and software. The founder of LiveEdu is Dr. Michael J Garbade, the core development team include: Alex Zhukov, and Ilya Toka.

Dr. Michael J. Garbade, LiveEdu’s CEO, has an MBA, a Masters in Physics, as well as a PhD in Finance (Venture capital). He has opened multiple companies before LiveEdu, and understands both software (he worked a python engineer), as well as finances. He’s had successful exists and worked at large companies like Amazon, and GE.

Alex Zhukov is also a software developer specializing in django, python, js, go, etc. He’s a self taught software developer with a masters in physics. Lastly, Ilya Toka is a JavaScript developer with a lot of front-end experience.

Written By

Isuk
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