Analysis of Enjin Coin – Smart Cryptocurrency for Gaming - Crush Crypto

Analysis of Enjin Coin – Smart Cryptocurrency for Gaming

Summary

  • Project name: Enjin Coin
  • Token symbol: ENJ
  • Website: https://enjincoin.io/
  • Whitepaper: https://enjincoin.io/enjincoin_whitepaper.pdf
  • Hard cap: 50,000 ETH (assuming all tokens are sold in the first week; public crowdsale ICO contributors own 30% of total token supply if hard cap is reached)
  • Conversion rate: 1 ETH = 6,000 ENJ in week one, 5,000 ENJ in week 2, 4,000 ENJ in week 3, and 3,000 ENJ in week 4
  • Maximum market cap at ICO on a fully diluted basis: US$31 million if hard cap is reached assuming hard cap is reached in week 1 and taking into account the pre-sale contribution of $12 million
  • Presale or white list: Presale is over
  • ERC20 token: Yes
  • Crowdsale date: October 3, 2017 (please refer to Enjin’s website for the most up-to-date information)
  • Token distribution date: Once the crowdsale has ended
Video summary (video is 9:23 long):

Project Overview

What does the company/project do?

Enjin is an established all-in-one website content management system (CMS) for the gaming community.

The most common use of Enjin is for building community / clan / guild websites. The modules built on the Enjin platform such as Wiki page, support ticket system, forum board, and application system, allow users to create a highly customized website specifically for their communities.

Some of the popular communities on Enjin are games such as Minecraft, World of Warcraft, Guild Wars, Rust, etc. 

Enjin is going to introduce Enjin Coin (ENJ) that gives game developers, content creators and gaming communities the currency and tools for implementing and managing virtual goods.

With the introduction of ENJ tokens, Enjin will develop a framework of open-source software development kits (SDKs), wallets, game plugins, virtual item management apps and a payment gateway platform to support the ENJ ecosystem.

Here is an interview of Enjin’s CTO by Boxmining (video is 25:17 long):

How advanced is the project?

Based in Singapore, Enjin was founded in 2009. According to the white paper, Enjin is the largest gaming community creation platform online with the following data on user base/usage:

  • 250,000 gaming communities across thousands of games.
  • 18.7 million registered and 3.5 million active gamers.
  • 60 million global views per month.
  • Millions of USD per month in virtual goods sales across Enjin community stores.

It is expected that within 6 months following the crowdsale and the deployment of the wallet and core ENJ features, coins will slowly be released to approximately 30,000 verified gaming communities on Enjin.

An Early Adoption Bounty program will be put in place for any game, server, or community that begins utilization of the ENJ coin with a verified history of monetizing game content.

What are the tokens used for and how can token value appreciate?

Enjin Coin aims to be a common currency between multiple games that implement it, providing portability and transferability of virtual goods and digital assets.

ENJ tokens can be used for various things including the following:

  • Trade between gaming items from the same or different games for liquidity.
  • Tie-in the community rewards with in-game goods on servers or games.
  • Create new tokens to represent virtual currencies, game items, or privileges.
  • Setup a virtual goods store.
  • Ability to take the token across any community or game and retain value.

As ENJ tokens can be used to perform various actions on the Enjin platform, the more usage of ENJ tokens and integration of ENJ tokens to the Enjin platform, the more valuable ENJ tokens should be.

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Team

Enjin has a team of 8, with the majority of the team having worked in Enjin for a few years already.

Below are the bios of the key team members:

Maxim Blagov, Co-Founder & CEO – 15 years of expertise in creative direction, project management, and UX design.

Witek Radomski, Founder & CTO – Overseen the technical engineering of Enjin for nearly a decade. Leading the Enjin Coin currency implementation and integration within the online gaming ecosystem.


Opportunities

  • The gaming industry is large and growing rapidly. If Enjin can achieve its vision, the ecosystem can be much greater than the $25 million beginning market cap (and $31 million on a fully-diluted basis).
  • The team behind Enjin grew the website from scratch to having tons of traffic, indicating the ability of the team. According to Alexa, Enjin.com is the #7,132 website with the highest traffic globally.
  • Enjin will introduce ENJ tokens to its communities rather quickly, so ENJ tokens are likely going to gain traction in the near future. This is something that most other ICO tokens cannot do.
  • There are lots of market statistics about the gaming industry in the white paper, demonstrating that the team knows what they are talking about.

Concerns

  • Presale investors receive (1) a much more favorable conversion rate of $0.03 per ENJ (or roughly 1 ETH = 10,000 ENJ as opposed to 1 ETH = 6,000 ENJ at the public crowdsale), and (2) bonus ranging from 5-50%, depending on how much the contribution is. This means presale participants’ cost basis can be as low as 40% of the price to be paid by public crowdsale participants.
  • Presale participants contributed 38,800 ETH in exchange for around 500 million ENJ tokens (not the 400 million number stated on the website or white paper), or a conversion rate of 1 ETH = 12,886 ENJ. This is equivalent to a 115% bonus on top of the best conversion rate available in the public crowdsale. That’s going to provide a lot of selling pressure after tokens are traded because presale participants are willing to sell at a much lower prices than public crowdsale participants.
  • This is kind of a related point to the above – generally, the more bonuses/discounts a project is willing to give to large participants, the lower quality the project is, unless those participants can genuinely add strategic value to the project. Giving 50% bonus for anyone contributing more than $2 million is not a good practice and is unfair to public crowdsale participants.
  • During presale, a group of participants worked out a group-buy deal with Enjin and created a group-buy Ethereum smart contract that was reviewed by Enjin’s CTO (another source here). However, the contract was found to have a critical flaw and kill switch for the contract had to be activated. This doesn’t speak well to the team’s technical competency, at least in relation to the blockchain development area. (we have received some feedback saying that the CTO didn't review the contract, so here are some screenshots. Honda69 is the one who negotiated the deal with Enjin, Smart ICO is the team who created the group-buy smart contract):
  • We are not sure if in-game trades be made in a trustless fashion on the Enjin platform. The escrow feature seems like it requires a redesign of the game to integrate with ENJ and escrow account. For example, in a trade involve ENJ token in exchange for an in-game weapon, where can the weapon be sent to? There is no escrow account for the in-game items to be sent to, unless the game redesigns and specifically creates one.

Conclusion

Overall, we are negative about this ICO for its short-term potential but neutral about its long-term potential. Our thoughts of the tokens for short term and long term are as follows:

For ​short-term holding

Negative. Presale participants are willing to sell their ENJ tokens at a much lower price than the public crowdsale price because they received, on average, a 115% bonus.

Additionally, presale participants were allocated more tokens than those in public crowdsale (500 million vs 300 million), meaning that the volume from presale participants will be substantial.

For long-term holding

Neutral. While the potential is very large, we believe there are a lot of technical difficulties integrating ENJ tokens into different games.

This project is a great concept if it works. However, if Enjin cannot make it work, then ENJ tokens can only be used on the Enjin platform (websites, forums, etc.), which is going to dramatically reduce the use case of ENJ.


For more information about the ICO, please visit the following links:

Enjin Coin website: https://enjincoin.io 

Enjin website: https://enjin.com 

Whitepaper: https://enjincoin.io/enjincoin_whitepaper.pdf 

Blog: https://medium.com/@coinfork 

GitHub: https://github.com/enjin/enjincoin

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