ICO REVIEW: EMX

Hi everyone, it’s CryptoGabby from Crypto Round Table.

EMX, formerly known as Evermarkets, is about to commence their private round token sale at the end of this month. What’s exciting about EMX is that it is the first crypto exchange to offer non-crypto products in addition to crypto products.. This means you can trade futures on commodities, equities and cryptocurrencies, all on a single exchange, without the need to convert to fiat. This gives you the ability to diversify portfolios, hedge risk and implement advanced trading strategies.

Please note that this review is based on my own personal opinion and research and I have not been paid in any form. This review is also not to be taken as financial advice and it is recommended you do your own research to factor in your own personal circumstances.

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What is EMX?

  • EMX is an innovative, institutional-grade derivatives exchange that bridges the crypto and real-world financial markets. With EMX, crypto holders can trade global futures contracts on equities, commodities, bonds and cryptocurrencies — all without the need to convert to fiat.
  • It will give you access to liquid futures contracts such as the following:
  • Commodities e.g. crude, oil, gold
  • Currencies e.g. Yuan, Yen, Korean Won and USD
  • Cryptocurrencies e.g. BTC, ETH and other ALT coins
  • For a better understanding of what derivatives and futures are, you can find a detailed explanation in the whitepaper.

Main Features of EMX

  • EMX feels the current crypto exchange ecosystem is not well-equipped to offer derivatives trading opportunities for three major reasons:
  1. Limited products: There are limited derivative products available on the major exchanges. Most exchanges don’t even offer the ability for traders to take a position against a cryptocurrency.

2. Unreliability and are basic: Today’s crypto exchanges lack advanced, institutional-grade features and infrastructure. This leads to shortfalls in security and functionality.

3. Costly and inefficient: To trade futures contracts, crypto traders have to convert to fiat. Costs can quickly add up if you have assets scattered across multiple exchanges.

  • EMX has built their system with scalability in mind and will add additional contracts over time in collaboration with their community and dictated by what traders around the world desire to trade. Some of the initial contracts include: BTC-USD, ETH-USD, S&P 500 Equity Index & Oil.
  • Futures on EMX should function largely the same as they do on traditional futures exchanges with a few exceptions. EMX will administer a frequent based auction-based matching model versus a central limit order book, and contract quantities traded may be fractional, while on traditional trading platforms, they are whole numbers. The majority of their contracts will be highly correlated with existing products on liquid exchanges and EMX may utilize leading benchmarks as part of the settlement process for EMX settlements.
  • EMX feels slower traders are often disadvantaged when participating in today’s competitive environment. This is why they have chosen to use utilise frequent batch auctions as they believe it is a much fairer method of trading, but one which still facilitates efficient price discovery. This is a mechanism used successfully by some of the largest exchanges in the world, such as the London Stock Exchange, and is a preferred method for many traders around the world.
  • It is envisioned that a batch schedule will occur every 250 milliseconds. A batch schedule is the recurrent loop of the matching engine — upon which orders are received from a trader, incorporated into the order book, executed if there’s a cross, and multicasted back to all listeners. It is hoped that creating a fairer marketplace will awaken competition based on price and execution.
  • They are launching a web-based trading platform with REST and WebSocket APIs that includes a native Android App & iOS App, which allows you to trade anywhere you go. A preview of the user interface for both the web and apps are available on the whitepaper.
  • Users will be charged a fee when exchanging, withdrawing & liquidating. Fees may also be charged when new features for the platform are implemented. I felt this section of the whitepaper was quite vague as EMX hasn’t mentioned what the fees will be or how it will be calculated. As a potential user, I would not be able to determine how much it would cost for me to use this platform and how it would be more cost efficient compared to other exchanges.
  • Here is a diagram showing the features of EMX compared to today’s exchanges

CRT’s Project Score for EMX                                                           

Token Utility

EMX tokens will have the following uses

  • Exchange: Buy & Sell both crypto-based futures and global traditional markets. It also allows you to earn discounts on your fees when you pay with the EMX Token
  • Leverage: ​EMX tokens can be used as collateral for accessing leverage, so traders can attempt to profit more with less.
  • Liquidity: ​The EMX Token is required to access the liquidity on the exchange. Hold EMX alongside your collateral in proportion to your desired position size. A large pool of tokens is also reserved for market makers, which will be used to jumpstart the virtuous liquidity cycle, as liquidity attracts more liquidity

Token Metrics

  • Hard Cap: $28 Million USD ($5 Million already sold in seed round)
  • Total Token Supply: 1 billion
  • Tokens for sale: 250 million
  • Private Round sale: September- November 2018
  • Public sale: 30th November 2018
  • TGE: Q1 2019
  • Token Prices and vesting period for each round:
  • Seed (Completed): $0.09
  • Private Sale Round 1: $0.105
  • Private Sale Round 2: $0.1225
  • Public Sale: $0.15
  • Vesting period for each round:
  • Seed: 2–6 months
  • Private Sale Round 1: 6 months
  • Private Sale Round 2: 4 months
  • Public Sale: None

CRT’s Token Score for EMX

Community (28/9/18)

  • Telegram: 6,723 members
  • Twitter: 1,853 followers
  • Mentioned 0/17 bloggers on top7 ICO.
  • EMX has been growing their community since the start of the year when they started their seed round. It has not been mentioned by any of the top 17 bloggers and still flies under the radar. It will be interesting to see if EMX will generate more hype when they begin their referral campaign and host their roadshows over the next few months, as well as finalise partnerships with popular crypto influencers that include Shill Nye.

CRT’s Hype Score for EMX

Roadmap:

  • Q3 2018: Private Beta launch and token sale begins.
  • Q4 2018: Non-US exchange launch, Trading competition begins
  • Q1 2019: TGE, android app launch, Launch external market making
  • Q2 2019: iOS app launch, CFTC application filed, EU expansion
  • EMX appears to be on track as I was able to see a live demo of the beta in person at the private brunch EMX hosted for investors and funds during Singapore Consensus week

Team:

  • EMX is built by a team of 22 traders, technologists, exchange operators and marketers from leading institutions and universities, including Citi, Amazon, Microsoft, the CME Group and Apple. 13 members are full time, along with several contract engineers from Creatix in Central Europe (Slovakia) and 2 individuals who look after the market making side.
  • The team is led by Jim Bai: He has 9 years’ experience at Citigroup & Graham Capital where he managed a $1B+ futures and options book.
  • Craig Austin is the CTO. He has 12 years at Microsoft & AQR Capital Management. He led asset allocation research engineering at AQR and managed a team of 18 developers.
  • Jerald David is COO and he has 20 years’ experience in finance and exchanges, including executive-level positions at CME Group, Dubai Mercantile Exchange and NYMET. He has diverse experience in emerging technology, regulated financial markets and commodities and broad Exchange experience across multiple asset classes.
  • The rest of the team’s profiles can be found on their official website.
  • This is a strong team who have a strong traditional finance background. Although they do not have much previous blockchain experience, they have plenty of development experience which is what’s important when building an exchange. Having also hung out with Jim and Craig and some members of their team when we were all at Korea Blockchain Week in July, I can see how passionate and dedicated they are to what they are trying to achieve at EMX.

CRT’s Team Score for EMX

Advisors:

  • On their official website, they are working with a total of 7 advisors. The ones who stand out are:
  • Simon Sejoon Kim: CEO of #Hashed, leading South Korean VC. Frequent speaker and advocate of crypto-currencies.
  • Kevin Guo: Founder & Co-CEO of Dianrong.com, leading Chinese P2P lending platform, and leading blockchain advocate in China.
  • Stephen Klein: Founded discretionary macro fund Abingdon Global. 15+ years of futures trading experience. Portfolio Manager at Graham Capital and AT Global.
  • The rest of the advisors can be found on the official website
  • This is an all-star team of experienced advisors who hold C-level positions in the quantitative trading, technology, blockchain and regulatory sectors.

CRT’s Advisor Score for EMX

Investors:

  • At the moment the seed round funds who have invested are Hashed, Luna Capital & XSQ
  • Multiple funds have expressed interest to participate in the private round pending release of the beta on Sept 17th
  • I have been advised that several funds that had originally invested during the seed round had their contributions refunded when one of the founding members was let go by the team.

Pros:

  • EMX is on track with their development and roadmap as their private beta is now live. I was able to see a live demo of the beta in person at the private brunch EMX hosted for investors and funds during Singapore Consensus week.
  • EMX will start very smartly as a centralized exchange and when blockchain technology improves, it will be the first in the world to be a Hybrid Decentralised Exchange for Futures (on chain transactions, off chain order book). The exchange uniquely appeals to both institutional and retail traders and fulfills the growing demand for an institutional-grade exchange in the cryptocurrency space. Unlike BitMEX and other exchanges, EMX plans to be fully regulated, compliant, and have market surveillance in place so that it will draw in institutional interest.
  • EMX is very cost cautious unlike other start-ups that have a tendency to blow money early on. Aside from meeting the team in Korea, I have previously hung out at their start up house based in Palo Alto where all their furniture was purchased off Craigslist. They appear to be very conservative on spend and the money raised will go to good use and will be spent well.

Cons:

  • The CFTC application can take 2 years before it is approved and there is the chance that it can be rejected. This means that EMX cannot be used by US citizens or institutional investors.

Questions:

  • The section regarding fees for users was quite vague. How are the fees for exchanging, withdrawing and liquidating going to be calculated?

Summary:

  • Short: It was unfortunate to see some FUD around the funds refunding when team members were let go earlier this year, however the team has still continued to develop in the meantime and this shows the true dedication of the team. I think EMX will do well in the short run if they are able launch their web platform and apps on schedule and eventually become the world’s first Hybrid Decentralised Exchange for Futures. The ability to use Crypto to trade gold or even the Yen is extremely appealing as it opens up more opportunities in any market as well as allowing diversification and hedging.
  • Long: This project has the potential to do well in the long run if there is wide spread adoption amongst users and becomes one of the top exchanges like Binance or BitMex. Although there is the chance that EMX cannot be offered to US citizens and institutional investors if the CFTC application is rejected, EMX doesn’t believe this will affect their plans. This is because they believe most of the volume will come from Asia and they will just have to continue to not offer to US customers which is the same boat as all other exchanges.

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