The following is an objective review of ChiliZ ICO. The review is based on the criteria that we think are important for an ICO project to succeed. We measure a successful ICO by short and long-term ROI estimation. The following is not financial advice.
ChiliZ aspires to create a crowd-control eSports ecosystem, where the fans have a tangible influence on their favorite team’s management. The inspiration for the idea came from the most valuable sports franchises teams such as FC Barcelona and Real Madrid who are owned and partly managed by ‘Socios’ – groups of club supporters who actively vote to elect their teams’ boards & president. ChiliZ wishes to take this concept one step further, and create a unified global crowd-management environment, which is blockchain-based, trustless, and transparent. The core of the ecosystem will be the ChiliZ platform, a blockchain-based platform that will be powered by the ChiliZ ERC20 token (CHZ).
ChiliZ is a subsidiary of the Malta-based Mediarex Group, a global sports, and entertainment organization, founded in 2006, and a member of the Enterprise Ethereum Alliance (EEA).
Since its foundation, ChiliZ has established significant partnerships with several institutes across Southeast Asia as well as an important collaboration with Malta’s pro-blockchain government, who is actively promoting the project in the media. In view of this collaboration, it’s worth mentioning that OKex, who have a common shareholder with ChiliZ (Ceyuan Ventures); and Binance whose CEO, Changpeng Zhao, is following ChiliZ CEO, Alexander Dreyfus, on Tweeter (CZ is only following 15 accounts), has recently announced plans to move to Malta. These facts may impinge on future relationships between ChiliZ and OKEx, and between ChiliZ and Binance.
The eSports Industry
Market size: The global eSports market currently encompasses over 2.2 billion gamers and approximately 380 million fans. The market is expected to keep growing and reach over 550 million fans by the end of 2021. Along with the audience growth, the global eSports economy, which is currently valued at around 500$ million, is slated to experience a rapid growth in the next few years resulting in total market revenues exceeding 1.4$ billion.
Structural: in accordance with the above-mentioned growth, the eSports industry is also changing at the structural level. The reality of independent teams and disconnected tournaments is gradually being replaced with an environment where franchise teams are brought together to compete in organized game-specific leagues. ChiliZ seeks to take this growing industry one step further and implement fan-driven leagues and teams.
The ChiliZ ecosystem is comprised of four major components: the Voice mechanism (Voice Queue and Voice Marketplace), the main Ethereum blockchain, the permissioned sidechains, and the ChiliZ tokens. Let’s briefly explain them one by one:
- Voices Mechanism: All eSports teams operating in the ChiliZ platform will debut with a specified, finite number of ‘Voices’ (Voices tokens). Fans who obtain Voices by trading in ChiliZ tokens, gain voting rights for the team that Voice is associated with. Voice holders will be able to vote regularly on management issues, team roster creation, matchmaking (where applicable), etc. Here are some general examples:
The Voice mechanism consists of two components:
- The Voice Queue: an autonomous, democratic waiting room for all new Voices, either created when new teams are added to the league or generated for existing teams. Fans will be able to “tell” the queue system that they want their ChiliZ tokens to be queued for the first available new Voice, in either a specific team or a range of teams, for any team in a specific game type or League.
The queuing times will differ depending on how specific or general fans make their queuing requests.
- Voice Marketplace: a gamified platform where fans can acquire and trade their ‘Voices’ (Voices tokens).
Fans who are in control of 1 or more Voices for any ChiliZ-fueled eSports entity, gain access to the Voice Trading Floor. The Voice Trading Floor enables fans to auction off Voices under their control, and thus to leverage their position to exchange Voices for ChiliZ at ‘above prime’ rates. For example, fans can offer for a minimum ‘buy-out’ 2 ChiliZ tokens for a given Voice and leave the rest to a public ‘highest bidder’ auction. This live auction is subject to maximum ask ceilings and regulated via cancellation ceilings as well. A Voice holder can only cancel 2 auctions before being put into a scenario where their next auction cannot be turned off.
Comparison: The Voice Queue is a slower way to obtain Voices when compared to doing so at auction on the Voice Trading Floor. However, the Voice Queue guarantees fans Voices at their ‘prime’ rate: 1 ChiliZ token = 1 Voice. On the other hand, in the marketplace, fans can actively secure Voices in their favorite teams, but the Voice traded in the marketplace are likely to be more expensive.
- The Main Ethereum Blockchain: the core of the ChiliZ platform is the main Ethereum blockchain. Everything occurring on the ChiliZ platform in terms of ChiliZ ERC20 transactions, including new accumulation of Voices, converted from ChiliZ tokens, will be stored in an auditable and permanent way via public ledger on the main Ethereum blockchain.
- The Permissioned Sidechains: is where Voice Tokens (Voices) are emitted and allocated to fans through the Voice Queue or acquired via trading in the Voice Marketplace. Every eSports team operating on the ChiliZ platform will run as a Decentralized Autonomous Organization (also known as DAO) smart contract on this blockchain. Using that model, every team will be able to implement its own democratic rules and to poll Voice holders about every team-related decision. Having votes executed publicly and auditable in these sidechains will ensure that the ChiliZ platform and the organizations fueled by it cannot manipulate voting results or ignore fan crowd-guidance. Furthermore, running a permissioned sidechain may drastically reduce transaction costs by allowing the use of a Proof of Authority (PoA) consensus, instead of Proof of Work (PoW).
The ChiliZ ecosystem will be powered by two types of token:
- ‘Voices’ – Voice Tokens: as mentioned, all eSports teams operating in the ChiliZ platform will debut with a specified, finite number of ‘Voices.’ Fans who obtain Voices by trading in ChiliZ tokens, gain voting rights for the team that the Voice is associated with. Those tokens can only be purchased using the ERC20 ChiliZ Tokens.
- ERC20 ChiliZ Tokens: the ChiliZ ERC20 tokens are part of the main Ethereum chain and associated with transactions from fans funding and withdrawing from the platform. All the services and fees in the platform can be paid solely using the ERC20 tokens.
The ChiliZ platform will be powered by the following participants:
- Users: Esports fans, gamers and sports enthusiasts who wish to go from passive spectators to active managers in their favorite teams, game titles, events and leagues.
- Esports entities:
- Single-entity Leagues: Leagues with centrally owned teams, like the conceptual Global Player League.
- Independent eSports teams such as Team Vitality, whose CEO is an advisor to the project.
- Franchised eSports leagues. Analogs to the EU League Championship Series (LCS), a professional League of Legends league.
- Traditional Sports Organizations: teams and leagues operating in traditional sports environments which want to engage fans in a long-term way.
- Profit share: All team, league, and event entities who connect with the ChiliZ platform and have themselves ‘listed’ on its Voice Marketplace will collect a percentage of the revenue the ChiliZ platform generates from fees. The ChiliZ platform is thus providing the entities with a financial incentive to encouraging fan engagement.
- Fees: The ChiliZ platform will monetize its user base of esports fans by charging a micro-fee for all transactions and trades conducted on its platform. However, the act of voting and making decisions will always be free. In addition, all the social-competitive features, mainly in the GPL, will be subject to set provider fees for users.
GPL (Global Player League)
The GPL is a native League, powered by the ChiliZ platform, where all teams are controlled directly by fans. The league is expected to embrace poker games as well as digital competitive games such as CS:GO (Counter-Strike Global Offensive), PUBG (Player Unknown’s Battlegrounds), and Rocket League. The GPL will also consist of leaderboard leagues and P2P Daily Challenges. Every user in the GPL will have access to a personalized dashboard from which they can utilize every component of the platform – trading team Voices, entering leaderboard leagues and playing challenges.
GPL experiment (proof-of-concept): The GPL in its initial form already exists (check out GPL.com), and an experimental run was done with poker games. This experimental run was live-streamed online and broadcast via selected TV providers. All the matches were hosted by prominent pro players, while season end events played out live in GPL’s Cube Arena in Las Vegas. To date, the GPL encompasses 30 city-based teams from 10 different countries.
- Penetrating the Asian Market: Mediarex has already established strategic alliances in China (with JuzhongJoy Group) and in India with Kwan (an entertainment and marketing company in India), to develop GPL in those countries.
- Networking with host cities to create city-funded ‘home base’ venues for GPL teams, where fans can congregate for viewing parties.
- Partnering with regional sponsors to support their local GPL teams, leveraging local GPL fan bases to reach high-value demographics, and to create an aspirational connection between their brands and eSports.
Hard cap: 60$ M including all rounds for 34.5% of all tokens that will ever be minted.
Private allocation (Ongoing): 27$ M already raised during the private rounds, with 30-40% bonuses. 25 out of the 27$ M which committed during the private rounds are subject to a lock-up period of 6 months.
ChiliZ is currently not planning to launch a public ICO.
The early shareholders of Mediarex, the company behind ChiliZ, include Ceyuan Ventures (a Beijing-based venture capital firm, and early investor in the OKEx exchange.), Xavier Niel (French telecom tycoon, and majority shareholder of Free, Monaco Telecom, and Eir Telecom), and John Gleasure (Current Chief Commercial Officer of DAZN, a.k.a the ‘Netflix’ of Sports).
Token Allocation: the total supply will be 8,888,888,888 CHZ. These tokens will be allocated in accordance with the following graph:
The ChiliZ team consists of 20+ full-time members. The team is composed of highly accomplished leaders with a wealth of experience in multidisciplinary fields, including digital gaming, digital marketing, business development, regulation technology (Reg-Tech), and cryptocurrencies. The team also consists of eSports “celebrities,” with millions of followers, including Dr DisRespect, who, until recently, held the Twitch record for the most-viewed stream by a single streamer and Anomaly, who boasts 2+ million YouTube subscribers and 900k+ Twitch followers.
Alexandre Dreyfus (CEO) – 22 years of experience as a serial entrepreneur in the digital space building & maturing tech businesses. Alexandre was previously the co-founder of Winamax (the largest French online poker room) & Chilipoker. Subsequently, he founded Mediarex Entertainment & acquired the Global Poker Index and the Hendon Mob in 2013.
Thibaut Pelletier (CTO) – 13 years of experience in app and platform development for gaming and digital media. Previously he was the CTO in Chiligaming, and subsequently, a Director of Application Development at Scientific Games.
Max Rabinovitch (CSO) – 9 years of experience in creative direction & strategic consulting in the digital space. He previously helped bring USPCC (Bicycle Brand) and Morton Salt into the mobile arena as CD at ComboApp; and produced commercial concepts from pitch to production for clients including Famous Footwear, McDonald’s (NA), Nestle, and Sony (PlayStation) as a freelance consultant with MadHat Creative.
Sam Li – Sam was previously the Associate VP of the NBA, and he is currently the Head of Content Acquisition and Strategic Partnerships at Sina Sport (a leading Chinese digital sports media platform).
Stephan Tual – Former managing director of Ursium, founder of Atlas Neue, and former CCO of Ethereum.
- Launch: The ChiliZ token and platform will be launched publicly during Q4 2018. During this stage, the platform will only be available for early adopters and partners. The platform is expected to open up to all interested 3rd parties during Q1 2019.
- Expand to traditional sports: During the last stage, in Q3 2020, ChiliZ aims to move towards having its Voice crowd management and trading system utilized by conventional sports organizations across various game verticals (football and the like).
- Expand to the Asian market: after the token sale, Mediarex will be focusing on the Asian market. The company intends to set up Partnerships with organizations throughout Southeast Asia, open offices across the region and support the rollout of GPL in China.
Credibility and Financial Transparency: The project is backed by an existing reputable company which is working through the EU banking system under full regulatory oversight. Accordingly, all the company accounts are audited and publicly available. Such transparency and credibility are crucial in the unregulated ICO market.
Market penetration: The greatest advantage of the project is its beneficial collaborations. As mentioned above, ChiliZ has already established several strategic alliances in a wide range of disciplines as well as in a variety of regions. The project is involved with Malta’s government; partnered with Playtech, the world’s largest iGaming supplier; with esports “celebrities”; and with leading eSports and Digital marketing institutes in Southeast Asia. These collaborations significantly increase the potential of the project to swiftly penetrate the global esports market.
High ICO hard cap: The hard cap for ChiliZ project is 60M USD.
So far 27M USD was raised via the private sale with a bonus of 30-40% given to the contributors, the 25M USD of the cap raised is locked for 6 months. The rest of the capital will be raised via a public pre-sale and a public sale. Though ChiliZ is well positioned to penetrate the huge E-Sports market through their established partnerships and their experienced team, the high hard cap will lead to less growth potential for the project once the token reaches the exchanges.
CryptoPotato ICO Evaluation – result
Team & Advisory board: The ChiliZ team is composed of professionals in both the gaming and the crypto realm. The ChiliZ team also consists of esports celebrities with millions of followers and is backed by reputed shareholders. Score 9
Stage of the project: In its initial form the GPL already exists, and the ChiliZ token and platform will be launched publicly during Q4 2018. Score 8
Project potential: considering the project’s team and collaborations, ChiliZ has huge potential to swiftly penetrate the global esports market and capture a sizeable share. Score 9.5
Community and Media: ChiliZ recently opened their Telegram channel. Telegram community size: 3,000+ members, Twitter followers: 6,800+. The community score will be added later on, the stage is too early to evaluate the community strength. No Score- Early stage
Token use: All the network services and fees can only be paid using the CHZ tokens. Score 9
ICO: Hard Cap – ~60 M USD with 27 M USD already raised via the private sale, with 30-40% bonus (25M of the 27M USD raised in the private sale is locked for 6 months). Score 7.5
Whitepaper: Clearly represent the business side of the project. However, there is not much information regarding the underlying technology. Score 8
Backend and Technology: the public Ethereum blockchain, and permissioned sidechains where every eSports team will run as a DAO smart contract. Score 8
CryptoPotato ChiliZ ICO score: 8.55/10
ChliZ Media Links:
For private-sale communications, visit here
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Author: Ido Sadeh”