Analysis of Red Pulse ICO – Intelligence and Content Ecosystem for China Markets

This article was originally published on 2017-08-30.

Updates on 2017-09-04: In response to the ban on Chinese ICOs announced on September 4, 2017, we have downgraded our recommendation on the Red Pulse ICO from positive to neutral for flipping. Please see our updated Conclusion section.

Summary

  • Project name: Red Pulse
  • Token symbol: RPX
  • Website: https://coin.red-pulse.com/
  • Whitepaper: https://coin.red-pulse.com/wp-content/uploads/redpulse-whitepaper-en.pdf
  • Hard cap: US$15 million (ICO contributors own 40% of total token supply if hard cap is reached)
  • Soft Cap: No soft cap
  • Conversion rate: 1 NEO = 1,000 RPX
  • Maximum market cap at ICO: US$37.5 million if hard cap is reached
  • Bonus structure: Day 1: 30% / Day 2-3: 20% / Day 4-7: 10%
  • Pre-sale / white list available: Presale is over
  • Fundraising platform: NEO
  • Timeline: October 8, 2017 at 1300 GMT (please refer to Red Pulse’s website for most up-to-date information)
  • Token distribution date: No specifics given
Watch our video summary (video is 7:41 long)

Project Overview

What does the company/project do?

Red Pulse is a market intelligence platform covering China's financial markets, providing clients with the knowledge and context to make informed business decisions.

The company employs machine learning, Chinese natural language process, in addition to traditional research practices to help solve the problem of information overload.

According to Red Pulse, out of the thousands of independent research shops worldwide, Red Pulse is ranked around 70 for readership on Bloomberg globally.

Red Pulse has 50 paying institutional clients along with over 50,000 subscribers on its free email newsletter.

There is a lot of noise in the Chinese financial market. Red Pulse’s goal is to provide quality information not available from the traditional sell-side investment banks and news publishers. Red Pulse aims to fix the information overload problem and revamp the research content ecosystem in China, and eventually globally.

They plan to do it by introducing a sharing economy for research – content creators can sell their research for RPX tokens while consumers can purchase such content or even request to have specific research topics to be created.

Using this platform, industry experts, former employees, or investors can produce their own independent research that cannot be provided by legacy data providers.

Traditionally, there is not a lot of revenue sources for independent content creators. They can generate income from ad revenues but it is difficult to monetize their content directly. With Red Pulse’s platform, content creators can start bringing in revenues from their work.

How advanced is the project?

Red Pulse was founded in 2015, as a spin off from Z-Ben Advisors. The company is a participant in the 2017 FinTech Innovation Lab Asia-Pacific hosted by Accenture.

Progress to Date (2015Q2 – 2017Q2):

  • ​​​​Launched web-based real-time China financial research platform
  • 50 institutional clients including global asset managers and top investment banks
  • China markets newsletter has 50,000+ subscribers
  • iOS mobile app: bilingual English/Chinese content, content sharing, and improved search (currently, the app is only for Red Pulse’s clients)
  • Partnership and integration with Bloomberg, Thompson Reuters, S&P Capital IQ, and FactSet financial terminals
  • Prototype of machine learning-based market event data collection, classification, and transformation platform

Future milestones:

  • Launch of new RPX-based open research platform
  • Research coverage expansion to Asia-Pacific

What are the tokens used for and how can token holders make money?

RPX tokens are used as the currency on the Red Pulse open source research platform. Therefore, the more usage the Red Pulse platform has, the more valuable RPX tokens should be.

Research producers can earn RPX by producing relevant and valuable research on China’s financial markets. Red Pulse will also have a Credibility Score system so that content producers with a higher Credibility Score can earn more RPX for each piece of work.

Research consumers use RPX to purchase content. Additionally, holding RPX will also provide greater voting power, which can be used to upvote research articles. Users paying RPX to initiate research prompts will give those users exclusive access temporarily.

Unlike most other tokens, there is a 10% annual inflation for RPX – half of which goes to token holders and the other half goes to content providers. 

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Team

Based in Shanghai, China, Red Pulse was originally spun out of Z-Ben Advisors. Z-Ben is a Shanghai-based consulting company helping foreign companies navigate the Chinese market. Peter Alexander, CEO of Z-Ben, is a non-executive Chairman at Red Pulse. In addition, Red Pulse CEO Jonathan Ha was at Z-Ben as Head of Consulting prior to Red Pulse.

Here is some information about Red Pulse:

Below are the bio of the executive team of Red Pulse:

Jonathan Ha, CFA, Founder, CEO – previously Head of Consulting at Z-Ben Advisors, Management Consultant at AMS, IBM, EMC, MBA from UC Berkeley Haas School of Business, BSE from University of Pennsylvania

Stanley Chao, CFA, CAIA, Co-founder, Head of Data Science – 11 years of experience in investment management and financial services at various firms, Applied and Computational Math Sciences Program at University of Washington

Peter Alexander, Co-founder, Non-executive Chairman – Founder of Z-Ben Advisors, previously China Chief Representative at Prudential Financial (Shanghai) and Nationwide Bank (Shanghai)

Red Pulse has a strong team of advisors including Dr. Jiming Ha, former Vice Chairman of Goldman Sachs China, Tanfeng Cheng, former Head of China of BNP Paribas Investment Partners, Richard Wang, Partner, Draper Dragon VC, and Da Hongfei, founder of NEO.

However, with the exception of Da Hongfei, it is likely that the majority of the advisors will not work closely with Red Pulse, given their caliber. 


Opportunities

  • Red Pulse is a Chinese company that is well understood by Chinese investors.
  • The company is established since 2015 with revenues from institutional clients, making it more advanced than most ICOs out there.
  • The company is well positioned to benefit from the rising economy of China, especially in the news industry where information is opaque in China.
  • Red Pulse is trying to solve a genuine problem – information transparency in China. If successful, Red Pulse can be the leader in a very large market.
  • The company has a strong team and advisors.

Concerns

  • Since this is the first ICO on the NEO platform, the security risks are higher than normal. When large sum of money is involved, hackers will look into the smart contract to exploit loopholes and try to steal funds. 
  • Red Pulse announced that they will not accept any contributions from Chinese. As Red Pulse is raising fund through NEO, which is a predominately Chinese platform, this change is going to hurt the demand for the ICO to a certain extent.
  • The business and technology have nothing to do with blockchain. The idea doesn’t really need blockchain to work. The benefits of using cryptocurrency as explained in the white paper, for example, 1) allowing users to run a tab to minimize transaction fees, and 2) building a community, aren’t very good reasons.
  • Unlike most of the other tokens, there is a 10% per year inflation in RPX, half going to existing RPX holders, and the other half going to content producers. So effectively, there’s a 5% inflation for token holders.
  • The open research platform will not be launched for another year (ETA 2018Q3-4).

Conclusion

Overall, I am neutral about both the flipping and long-term potential of this ICO.

My thoughts on buying the tokens for flipping and investing for the long term are as follows:

For flipping [edited after the Chinese ICO ban]

Neutral. This company is one of the more established one that I have seen so far. However, after the Chinese ICO ban, it may be difficult for exchanges to list RPX after they are traded. Binance had an agreement to list RPX but it is unclear now that Binance is one of the ICO platforms affected by the Chinese ICO ban. We are waiting for updates from Binance and/or Red Pulse.

Size your bet accordingly because as mentioned above, this is the first ICO on the NEO platform. So the security risks are far higher than the usual ICOs on Ethereum or Waves platform. 

For long-term holding

Neutral. The token system is very new, especially in the China market. It is uncertain that Red Pulse can pivot from their current model of receiving subscription fees from institutions to a model that’s catering more to the mass market. Unlike institutional investors, the retail investors aren’t used to paying for data.


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

Website: https://coin.red-pulse.com/ 

Whitepaper: https://coin.red-pulse.com/wp-content/uploads/redpulse-whitepaper-en.pdf 

Subreddit: https://www.reddit.com/r/RedPulseToken/ 

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