TokenStub is a new blockchain coin offering launching on August 23rd that breaths innovation and disruption into the $33 billion event ticket sales industry. Although the road to mainstream adoption will be long and with many hurdles, significant value will be realized for the project team, coin holders, event holders, and consumers if TokenStub executes on its vision. When evaluating a coin, I often consider the following questions:
- Is this project innovative and does it solve a problem?
- Are there competitors and is this the best team to solve the problem?
- What monetary return can I realize by holding this coin?
Based on my analysis of these questions, TokenStub feels like a project worth investing in as the team has a clear understanding of the industry issues and a plan to solve them.
Problems Addressed
TokenStub identifies and provides solutions for an impressive number of industry issues. Below I list the major industry problems along with a synopsis on how TokenStub addresses each issue:
- Consumers buy the worst tickets or pay several times the face value on the secondary market because bots or scalpers buy and resell the good tickets
TokenStub evaluates a buyer’s resale history and will give preference in the buying queue to accounts with a low history of ticket resale. A process will exist via a third party to ensure new accounts are not at a disadvantage for being new to the TokenStub ecosystem. Giving preference to accounts with a low resale history ensures consumers actually interested in attending the event have a chance to buy the tickets they want at face value.
- Ticket retailers are knowingly selling tickets at prices that are much less than the secondary market. This leads to lost revenue and occasionally retailers selling directly on the secondary market
A 5% fee on the resale profit is charged to the seller (not counting the initial retail sale) and the funds from that fee are evenly distributed across all previous ticket holders. This ensures revenue is not lost from additional transactions taking place on the secondary market.
- Ticket retailers charge high buying and selling fees which result in tickets costing more than advertised or sellers receiving less than expected for their ticket sales
There is no buyer’s fee, but there is a 1% seller’s fee (plus the 5% fee previously mentioned) in place which will be used to cover TokenStub’s operational expenses. This 1% operations fee is significantly less than the fees traditional ticket retailers charge, but this is possible due to significantly less overhead achieved from a distributed vs. centralized architecture. Per the whitepaper typical seller’s fees can be around 10% and buyer’s fees greater than 20%. A fee structure in this manner makes using the TokenStub platform significantly more enticing for buyers and sellers compared to traditional ticket platforms.
- Retailers’ websites struggle to manage the demand and traffic associated with buying tickets to high profile events
TokenStub’s distributed architecture means there is no single point of failure making the platform more accessible during periods of high traffic. No longer will consumers patiently wait to buy their tickets only to find the website has crashed from high network traffic.
- Consumers are sold tickets that are fraudulent or have already been sold on another ticket exchange platform
Blockchain technology allows for the tracking of assets as they change hands from one user to another. Buying tickets within the TokenStub ecosystem ensures the ticket you purchase is legitimate as there is an audit trail of the current and all previous owners.
- Members of the artist’s or event holder’s audience are alienated due to fierce competition that prices them out of the market
The ticket queueing system described above ensures that consumers truly interested in attending the event have a fair opportunity to buy the ticket they want at face value. When determining a platform to sell tickets on, an artist or event holder may be persuaded to use TokenStub because of the buyer’s equality being created in the ecosystem.
In summary TokenStub solves real problems for the many parties involved in the ticket selling process. What I like about this project is its ability to identify issues and provide approaches for a solution. Having determined real value is being provided I reviewed the competitive landscape to see who else may be trying to disrupt this industry.
Competitive Landscape
The competitive landscape for TokenStub consists of two categories: traditional retailers and other blockchain projects. TokenStub’s value proposition is that it fixes many of the issues currently plaguing the event ticket sales industry. With that said companies like Ticketmaster and StubHub currently dominate the market and are the trusted source for purchasing tickets. Taking market share from these giants will not be easy as these firms are also taking steps to reduce the industry problems themselves. According to an article on futurism.com entitled Broadway Hit “Hamilton” Has a Plan to Stop Bots From Buying Up Tickets, Ticketmaster is offering “Verified Fan” which allows Ticketmaster to verify a user's purchase history to prove he or she is not a bot or scalper. Despite this step forward towards a fairer buying experience, TokenStub’s offering is better considering the significantly lower service fees, 5% resale kickback, and distributed architecture which lowers the likelihood of platform downtime
Other blockchain projects is another category of competition that needs to be analyzed. Based on some Google searches the only project I see that is in relatively in the same space is Blocktix (TIX). Blocktix completed their ICO on July 25th, 2017 and is an Ethereum based project. From reading the whitepaper it does not look like they had a proof of concept built prior to their ICO. I say this because looking around the TokenStub website I also do not see anything indicating a working product or proof of concept. This essentially puts the two platforms relatively level assuming TokenStub can get development going by late September.
As far as comparisons, I reviewed Blocktix’s whitepaper and think StubToken is going to be better positioned to disrupt the event ticket sales industry. My biggest issue with Blocktix was a lack of specificity and focus. If you read Blocktix’s whitepaper you will notice that it starts by mentioning the need for a blockchain solution to lower expenses and assist with fighting fraudulent ticket sales. Very quickly however the whitepaper takes a turn and begins discussing its advertising platform without addressing any of the problems present in the event ticket sales industry. After that the whitepaper breaks down into a quasi-design document which really does not feel appropriate for a whitepaper. In my opinion this demonstrates a potential lack of understanding within the space as well as an inability to communicate a value proposition to the mainstream. This will pose an issue for a project trying to disrupt an established market. What I like about TokenStub’s whitepaper is it is easy to digest and talks specifically about their value proposition.
Coin Value
While initial coin offerings are initially used to raise project capital, investors want to understand the factors that will drive the value of the coin upwards. Based on the whitepaper there are a variety of factors that could cause the price to increase:
- To be a masternode, an individual must have at least 100,000 STUB
Masternodes will likely be established early in the project’s lifecycle while the coin is relatively cheap. 100,000 STUB is .05% of the total supply so given several masternodes .05-2.5% of the tokens are removed from the tradable market putting upward pressure on the price.
- A non-refundable amount of 500 STUB must be submitted to the masternodes to create a change to the governing principles
This amount is small compared to the total supply but it shows there will be demand from those wishing to change the governance principles which inherently has a positive effect on the price.
- 500 STUB is required to vote on matters of governance on the network
Like point two, while 500 Stub is not a substantial amount of the total supply, those wishing to participate in the networks governance are going to need to acquire these coins which has a small but positive effect on the price.
- Event holders not on the list of pre-vetted organizations must pay a fee of 10,000 STUB to list events
As the mainstream begins to understand TokenStub’s value proposition there should be more demand from the event planning companies to distribute via the TokenStub platform. For those not on the list of pre-vetted organizations, there will be demand to acquire the 10,000 STUB needed to list on the platform. While not detailed in the whitepaper, as an investor I would like to see a fee associated with listing any event on the platform which would create demand for STUB.
- Consumers will need to use STUB to buy tickets within the ecosystem
While consumers will be using STUB to buy tickets on the network, it will remain to be seen how consumer demand to buy tickets will affect the price. Artists and event holders are likely going to have a fiat value in mind, for example $35, for the ticket they are trying to sell. Given most individuals will not want to buy coins on an exchange like Bittrex, I see a platform where people pay for tickets with a credit card or cryptocurrency and a background transaction takes place to acquire the necessary STUB. A similar concept was mentioned in the whitepaper. STUB can be $2 or $100 a coin, but that is irrelevant given you can buy the necessary coin 17.5 STUB or .35 STUB respectively as needed. While the tickets may be finite, to the event goer STUB is a means of acquiring the ticket rather than a scare resource to use the platform as the previous point would support.
In summary, there are a couple of factors that support an upward price movement for the STUB token. While STUB needed for governance and masternode purposes has a minimal impact on the price, eventually requiring a certain amount of STUB to host events on the platform would make it a scare resource that could significantly drive the price. The effect from event goer demand will likely leave the coin’s price unaffected as consumers use the coin to interact with the platform rather than a scarce resource.
Conclusion
This is the first ICO I will try to participate in and am feeling good about the team’s vision and value proposition. The COO has experience with transactional and internet law, and the CEO is the former CTO of ebooks.com which makes me feel confident in the leadership team. While any evidence of a working prototype is lacking and there will be challenges in garnering mainstream adoption, the $20 million starting market cap (200 million tokens x $0.10 per token) seems like a great entry point into what could be an extremely disruptive technology.
What are your thoughts on TokenStub and the upcoming ICO? Is this bound to flop or is the team onto something exciting here? Would be greatly interested to hear your feedback along with any constructive criticism around my write up. Did I write at the correct level? Were there other topics you wish I had delved into? Thanks to all for the support.
Website: https://tokenstub.io/
Whitepaper: https://d2987rzq4y1hnp.cloudfront.net/TokenStub-WhitePaper-EN.v1.pdf
This document is for information purposes only. It is not, and should not be regarded as “investment advice” or as a “recommendation” regarding a course of action