ICOrating

DEHEDGE Rating Review (https://shivom.io)

ICO dates (TBA)

Web: icorating.com

Email: info@icorating.com

Twitter: @IcoRating

1. Rating 3

2. General Information about the Project and ICO 4

3. Description of the Services and Scope of the Project 7

4. Market Review 10

4.1. Market analysis 10

4.2. Competitors 11

5. Team and Stakeholders 13

6. Token Analysis 17

7. Analysis of Factors Affecting the Future Value of the Token 18

8. Investment Risk Analysis 20

1. Rating

We assign DeHedge a “Stable+” rating.

DeHedge is a decentralized platform for hedging risks for crypto investors. DeHedge

protects investments in ICOs and cryptocurrencies in cases of currency fluctuations,

fraud and project liquidation. Using DHT tokens, the platform offers to insure such risks

by fixing "insurance" parameters in a blockchain account via smart contracts.

The project’s services have already been developed to a high level, and have a good

degree of uniqueness and potential relevance. The project offers a solution for flexibly

managing the risks of investing in ICO projects and cryptocurrencies. There is a working

MVP for the platform, which enables investors to insure risks for several ICO projects.

This shows that the basic services offered are readily available, and offers greater

opportunities for further development.

The team's competence is at a high level as well; the staff includes a large number of

investment business professionals with rich experience in market trading, derivatives

development and asset management. The team is capable of bringing proven ideas

from the traditional investment world to the crypto industry.

However, we also see a number of risks for the project, including: Centralization - a

strong dependence on what projects the hedging platform will permit, what models it

uses in calculations, and how it manages its risks. Complexity in scaling - the project is

implementing a complex product, and it is difficult to cover a large number of ICO

projects; the total risk assumed by the platform is leveled to a greater extent with a

larger number of participants. Regulatory, legal and business risks that may affect the

future development of the project, as well as a large number of factors that affect the

price of the token and others.

Despite this, we see potential for the project and assign it a "Stable+" rating.

2. General Information about the Project and ICO

DeHedge is an insurance hedging platform for investors in ICO projects and

cryptocurrency traders. Users of the service will be able to insure their risks from strong

fluctuations of cryptocurrency and also reduce the likelihood of losses when investing in

ICO projects at the stage of a crowdsale. users pay a premium for insurance (hedging).

Thus, they will potentially receive less profit but will partially protect their investments in

the event of strong depreciation.

Hedging tokens is the main service the project focuses on. This service is suitable for

ICO investors that wish to minimize risk for their investments in various tokens. The

DeHedge service enables them to buy the right to sell tokens at the same price they

paid for them at the crowdsale stage. In the event that something happens to the project

(it turned out to be a scam or the token price falls sharply over a certain period), the

user will be able to sell tokens at the same price for which he bought them and not lose

more than the amount he paid for insurance. This service thus minimizes the risk of

being deceived by fraudsters or being subject to price risk after listing on exchanges.

The second service that cryptocurrency traders can use, offers buying and selling

options (the same insurance) at a predetermined price with certain insurance risks. In

the event of an insurance situation (a decrease or increase in price), DeHedge

undertakes to compensate for price movement, thereby minimizing losses for crypto

investors.

Website

Whitepaper

Twitter

Telegram

Facebook

BitcoinTalk

YouTube:

Medium

Pre-ICO information

preICO start date: 15.03.2018

preICO end date: 20.04.2018

Token name: DHT

Soft cap: no data

Hard cap: 5000 ETH

ICO price: 1 ETH = 36,000 DHT 1 BTC = 490,000 DHT

Bonus: 25%

Minimum Buying Transaction: 0.1 ETH or 0.01 BTC

Maximum Buying Transaction: -

Accepted currencies: ETH, BTC

ICO information

ICO start date: no data

ICO end date: no data

Token name: DHT

Soft cap: no data

Hard cap: 50,000 ETH

ICO price: 1 ETH=28,800 DHT 1 BTC=392,000 DHT

Minimum Buying Transaction: 0.1 ETH or 0.01 BTC

Maximum Buying Transaction: -

Accepted currencies: ETH, BTC

Tokens will be sent to investors after the ICO completes.

Unsold tokens will be frozen and transferred to a common pool of frozen tokens.

DHT will be issued to the amount of 10,000,000,000 (ten billion) units. No more than

2,500,000,000 (two and a half billion) tokens are offered for placement at the ICO. After

the ICO, 7,500,000,000 unplaced tokens (75%) will be frozen until another round of

placement, if such is decided on.

Distribution of tokens during the ICO is as follows:

The funds raised during the ICO will be allocated as follows:

80% - hedge reserve

12% - platform development and team provision

6% - marketing and promotion

2% - legal and financial services

3. Description of the Services and Scope of the Project

The risk of losing money from investing in ICO projects or trading cryptocurrencies is a

problem for the crypto industry. Reasons for this may be varied, but the most significant

are the complexity involved in analysing early-stage projects for ordinary investors, and

a lack of convenient tools to insure portfolios without selling them at unprofitable prices.

Traditional investment markets have a rich set of solutions to protect investors. These

are options, futures, forwards and many other tools which can help investors create a

strategy for trading and protect their positions on exchanges.

DeHedge is designed to expand the toolkit for crypto investors and create a convenient

mechanism to protect both ordinary investors and crypto funds against losses using

proprietary models for evaluating projects and their tokens, as well as creating a pricing

mechanism for insurance - premiums on options.

DeHedge offers hedging (insurance of risks) in two versions:

I Hedging risks of investing in ICO projects.

II Hedging price risks for cryptocurrencies and tokens in the secondary market.

I Hedging risks of investing in ICO projects

DeHedge is developing services designed to protect investments in ICOs and

cryptocurrencies in the event of currency fluctuations, fraud and project liquidation.

The project is making its own selection of ICO projects, token prices of which can be

hedged. For this purpose, an analysis of projects using various parameters is carried

out using DeHedge’s own scoring model involving artificial intelligence mechanisms.

Further, after the first stage of selection, projects are submitted for evaluation and

approval to an investment committee, which conducts additional checks. After approval,

tokens are bought at a discount at the pre-sale.

Any investor who wants to insure risks when investing in a project offered on the

website can buy tokens issued by this project with "insurance" for a certain period (the

standard one is 6 months). If something happens to the token or its price, DeHedge

compensates for losses to the investor. An additional token, DHT, is used for insurance,

i.e. hedging - which enables writing all transactions to blockchain and tracking them.

II Hedging price risks for cryptocurrencies and tokens in the secondary market

The project assumes the future development of a service for hedging price risks. This

will insure positions against adverse and sharp price jumps in one direction or another.

The service will operate as follows:

The investor selects a token on an exchange, the time range for protection

against depreciation and the range of rate change. The investor then pays for

options of protection against rate decrease using DeHedge tokens or ETH.

When the token rate decreases, a refund is paid automatically. DeHedge enables

personal payment settings.

The platform’s products may be of interest to the following crypto market participants:

1) ICO Investors

2) Cryptotraders

3) Investment and crypto funds

4) Hedge funds

5) ICO projects

6) Miners

It is worth mentioning separately that the project has an MVP and already enables

hedging the risks of participation in several ICO projects.

We highly appreciate the thoughtfulness and potential of the products and services

offered by the project. The audience’s needs were studied and a lot of work has been

done done to create a unique trade offer.

4. Market Review

4.1. Market Analysis

The crypto world and the ICO market were booming in 2017. Previously there were

isolated cases which immediately gained publicity, but in 2017 crowdsales gained a

much wider popularity among start-ups, including those not directly related to the crypto

ecosystem, and investors followed suit.

The number of token Ssales launched in 2017 was 382 - more than one ICO per day.

Currently, a number of research studies of the ICO market have been published, in

particular Coindesk’s and Autonomous reports. Summarizing these reports, we note the

following:

In the first half of 2017, blockchain projects attracted $797 million via ICOs, while only

$235 million was raised by traditional venture capital investment. In the first three

quarters of 2017, 201 ICO projects raised about $3 billion. There are already more than

100 institutional investors participating in token sales.

In total, $6,037 billion was raised via ICOs in 20171. Average amount of funds raised

was $16 million per project.

It is worth noting that the proportion of ICOs not reaching their goal is increasing: in

June this was 7% of projects, in August - 54%, in September - 66%. With an increase in

the number of ICOs, the share of failures also increases. In addition, it should be noted

that not all successful ICOs are successful in the future development of their product or

with increase of their token rate.

We see a certain potential in the development of hedging in such a rapidly growing

market. Despite the cooling seen during Q1 2018, we think that the business cycle will

return to a growth phase and we will see the continuation of the trend for ICOs as a

source of financing for companies.

In this regard, if we cover ICO projects for hedge at 10-15% and keep the same

indicators for ICO revenues in future years, we believe that the project could count on a

market volume of $30-100 million annually. In our calculations we take into account a

market volume of 6 billion dollars, 10-15% coverage for projects and 5-10% of

consumers willing to insure their risks in these projects. In general, this figure may be

greater with the development of derivational desks and an increased emphasis on

hedging the price risks of cryptocurrencies and tokens.

4.2. Competitors

There are few competitors due to the relative novelty of the crypto market. At the same

time, the insurance of ICO risks has been present for a long time; it is offered by

investment companies to its clients in the form of options for the sale of purchased

shares. Likewise, there are a large number of derivative instruments enabling

consumers to flexibly manage their positions and risk in futures markets.

There has been no wide range of instruments in the crypto industry enabling investors

to hedge their positions in cryptocurrencies and there are no companies that offer

investment insurance in ICO projects. Nevertheless, we distinguish several companies

and projects that have functions partially resembling DeHedge’s and which may

compete with it for market share.

BitMEX is a trading platform for creating derivatives. The platform enables its users to

conclude contracts with a large leverage on different assets, which enables having a

large position in one direction or another for a smaller security. BitMEX offers various

types of derivative contract; all purchases and payments are made in Bitcoin. The

platform has sufficient popularity and a good liquidity in many instruments. One of its

key features is an ability to bear the market, which can theoretically be viewed as an

insurance position.

Derebit is a trading platform that enables trading options and futures. There are also

"leverages" for trading, and insurance against the fall or growth of crypto assets. The 1 Source – icodrops.com coinschedule.com, tokendata.io

platform positions itself as a service for professionals with good liquidity support and a

risk management system. The option desks appear alive and relevant but there is a

serious counterparty risk for the platform itself. It also offers only the larger

cryptocurrencies, with no altcoins.

Tokenbox is a platform that combines crypto funds managed by professional portfolio

managers and investors. Investors are given access to the best management strategies

in the crypto market with a high degree of safety for these processes. Portfolio

managers and traders, including teams of professionals, receive a ready-made "box"

solution for creating their own tokenized fund operating professionally and openly, within

the legal framework. The solutions offered by Tokenbox make the fund management

process and its development efficient and safe. The project offers "Access to the

marketplace of ICO campaigns: centralization and a corporate approach enable you to

purchase project tokens at the best prices (bonuses, discounts and guaranteed

purchases). Tokenbox provides projects access to the platform and also offers

tokenization, processing, escrow, security audit, and legalization services." This enables

us to talk about potential competition mainly in the interaction with crypto and hedge

funds.

Tether (USDT) is a cryptocurrency asset released on the Bitcoin blockchain via the

Omni Layer protocol. Each USDT block is supported by the US dollar, the entire amount

of which is held by Tether Limited. The technical documentation for the project states

that USDT is issued when the dollar equivalent is paid to the company's account and

that tokens are redeemed when money is withdrawn. USDT enables using "fiat money"

when trading with cryptocurrencies, thereby reducing risks of their ownership. However,

regulatory risks often arise around this company, and it is not as transparent and open

as it could be for maximum credibility.

CME and CBOE - US exchanges launched futures trading on Bitcoin in 2017 (Cboe

Global Markets - December 10, 2017 and CME Group on December 18, 2017), which

suggests potential competition in hedging the risks for Bitcoin price decreases.

It should be noted that the project has a number of competitive advantages and offers

the market a wider range of solutions than its competitors. However, future development

of the crypto industry will entail the appearance of new competitors both in the crypto

environment and in traditional investment markets (mutual funds, structural notes,

options, etc.). DeHedge needs to evolve a step ahead of changes in the competitive

environment to achieve success and capture its estimated market share.

5. Team and Stakeholders

DeHedge has a strong team featuring many specialist professionals. There is a high

level of experience offered in relevant investment and management areas. Let us

consider some key members of the DeHedge project team, their positions and

competences.

Mikhail Chernov

Founder and CEO

Founder of several IT companies. Mikhail has been investing

in the stock market since 2007. He was a mentor for

Sberbank in the Google Business Class program. Skolkovo

school graduate. Specialist in Corporate Economics, Crisis

Management and Evaluation.

Skolkovo Moscow School of Management graduate.

Bogdan Leonov

Co-Founder and CCO

Has more than 20 years of experience in the development of

client relations in the investment banking sector. Bogdan has

occupied executive positions for large banks including being

the former vice-president of Military Industrial Bank.

Skolkovo Moscow School of Management graduate.

Dmitry Ansimov

Co-Founder and COO

Has more than 12 years of experience in the investment

business, the major portion of which he gained working for

Troika Dialog and Sberbank CIB. Has a Ph.D. in Economics;

a professional in investment banking.

Graduate of the Executive MBA of the Moscow School of

Management Skolkovo.

Mark Feldman

Investment Director

Investment banker with more than 25 years of experience.

CEO of Standart Capital Group.

From 1991 to 2001 he was Partner and Managing Director

of investment corporation Prime Charter Ltd.

Mark graduated from New York University and completed an

Executive MBA program at Wharton School of Business.

Vasilii Artemev

CTO

Has more than 10 years of experience in Software

development. Participated in the creation of mobile

applications for a wide range of users. Developed a security

system for cloud computing platform. Designed the

architecture of a distributed storage system. Developed the

concept of the MTS incubator for the formation of product

teams and the development of staff competencies.

Received a Master of Science degree in Software

Engineering from Carnegie Mellon University.

Kamil Vildanov

Marketing Director

Has more than 8 years of experience in marketing. Kamil is

the founder of the online marketing agency Rise24 and IT

company Sapron.

Maria Andrianova

Head of Legal

12 years of experience in law, including eight years in

consulting (Baker Botts LLP, Chadbourne and Parke LLP),

including major international projects and four years in

senior positions in multi-profile holdings (AltraVita).

London University of Queen Mary, specialization -

international commercial law.

In our opinion, the team has sufficient competence in its field. Team members have

experience that enables them to create a product based on the strengths and

weaknesses of solutions available in the investment market. However, in our opinion,

very little attention is paid to blockchain development; there are only a few specialists

who are capable of implementing complex solutions such as the ones planned.

The team includes other specialists with positions that presuppose management,

marketing and development.

In general, we rate the team highly, and note its high motivation and openness for

potential investors and users. The team’s high level enables us to predict the successful

development of a complex investment product with a high degree of probability.

Key project advisors

Jack Hunter

Advisor

Manager with more than 20 years of experience. He has been

dealing with cryptocurrencies since 2013. Over the past few

years, Jack has worked as a director of Rock Financial

Associates, as a senior partner in the management and

partnership of Belgravia Wealth Management and as a partner

in the Moscow office of the DeVere Group.

Jack is also an entrepreneur and financial advisor for

insurance and investment insurance.

Taras Yakovenko

Advisor

Taras has 17 years’ experience in banking and investment. He

has been engaged in management of credit and counterparty

risk for Corporate & Investment Banking and Global Markets in

large commercial and investment banks, including MDM Bank,

Troika Dialog and Sberbank CIB.

Harold Kim

Advisor

Harold is an entrepreneur, a crypto investor, and the founder

and CEO of a crypto data analysis company located in Seoul,

Korea. He has 8 years of experience at Hyundai Capital and

HSBC. He is an expert in the trading and analysis of foreign

currency, securities and bonds.

The project’s advisory board includes highly-qualified specialists, and even stars of the

industry in some instances. Its composition is multidirectional. The fact that

professionals of this level are involved indicates the seriousness of the project and its

high appreciation by industry participants.

6. Token Analysis

DeHedge uses DHT tokens on its platform.

DHT is required to use the platform’s services. It is necessary both for hedging the risks

of ICO projects and for insuring price changes of listed tokens and cryptocurrencies.

A user enters the project website and selects the projects available from a list of ICO

projects that can be hedged via a special web interface. Each project has several

temporary options (validity periods) for hedging and a corresponding price. A holder of

DHT tokens can choose a project, the risks he wants to hedge and the hedging period.

The user pays for the hedge by transferring DHT tokens to the DeHedge platform.

During the crowdsale, the DeHedge platform is creating a reserve fund, designed to

offset losses for investors, if applicable. When a smart contract is concluded and DHT

tokens are transferred to the platform, the following parameters are written on

blockchain:

The client to be hedged (the wallet number from which DHT was sent)

A hedged item (a project whose tokens have been hedged)

The price for hedging

Coverage (amount to be paid out in the event of hedging)

Duration of the hedge

Conditions for the occurrence of a hedging event

An investor can track the size of the compensation reserved at any time through the

blockchain. It is worth noting that when a smart contract is concluded, a special security

is created which can be monitored.

The cost of hedging in tokens is worked out using the company's internal calculation

models, including use of the Black-Scholes model but with certain modifications

necessary to adequately reflect cryptocurrency’s particular features.

In general, we consider the introduction of the token to be justified. Theoretically, it

could be replaced by other cryptocurrencies. However, in this case, the flexibility of

managing the reserve fund and the token itself for future services and the needs of

investors will decrease. Tokens and the use of smart contracts enable users to record

important hedging parameters and the provision of a reserve fund is designed to

guarantee execution of all contracts for holders of the hedge.

However, many aspects of the token economy are still unclear. For example, when

hedging changes in the rate of tokens and cryptocurrencies traded on exchanges, the

question arises regarding how to cover the risk that the platform assumes on third

parties. Taking on market risks can jeopardize the existence of a reserve fund,

especially since this fund consists of cryptocurrencies that have their own dynamics. It

turns out that when hedging, for example, Ethereum from decrease, the platform has a

double risk: a decrease entails a payment to the investor, plus the provision of the

guarantee fund itself is reduced.

7. Analysis of Factors Affecting the Future Value of the

Token

In the process of analyzing the factors affecting value of tokens, we note that the project

is implementing a complex product that is challenging to evaluate in full.

There are many factors; we distinguish what we consider to be the most important ones:

Sufficient number of ICO projects possible for hedging. The question of

scaling the service is extremely important. There are a large number of different

projects that conduct crowdsales every month and for the full success of the

project, we think it is necessary to cover a large number of them. In the event

that this coverage is not sufficient, the community will quickly become

disillusioned with the platform, which will complicate its future development.

Listing on major exchanges and liquidity of the token. Since the price of

hedging and other services will be calculated in tokens, listing on major

exchanges will be an important element, where users will not be afraid to store

funds and will enable a market-making program creating almost instant liquidity,

at least on a small scale. This is necessary for easy "entry" to the service

without volatility and long transaction times.

The success of the platform as it develops and releases new products in

accordance with the roadmap. The launch of a derivatives platform with full

functionality for hedging positions and a developing product line looks especially

interesting. The successful introduction of new services will positively affect the

long-term value of the token.

Demand for hedging and the platform’s services. The demand for services

that the project assumes is very difficult to estimate at the current moment.

Important factors will be the pricing of the hedge and the state of the crypto

market. Participation in an ICO is inherently very risky; it is often difficult to

imagine that ICO investors really want to hedge those risks.

Sale of tokens in the market by the team and advisors. The team and

advisors are given 17% of the total crowdsale. This is a fairly large amount that

would affect prices if sold.

Investors selling at the pre-sale stage – traditionally investors want to sell a

portion of funds when tokens are listed on exchanges.

The platform selling its own tokens. The platform, in the process of collecting

tokens for its services, accumulates a certain number of tokens which could

cause strong depreciation when selling in order to maintain current operations.

Buyback. In the event that the accumulated tokens are not sold by the platform

to the market, there will be a gradual buyback from the market, which will

reduce the market supply and cause the price of the token to grow in the future.

Increased volatility of cryptocurrency and its dynamics. The dynamics of

cryptocurrencies have a serious impact on the ICO market, its popularity and

the popularity of related services. The market will make adjustments to the

number of ICOs, and volatility will determine the price to be paid for hedging.

New rounds of token placement. As far as we understand, new placements

are possible when the reserve fund is exhausted. It is difficult to answer

unambiguously how this will affect the price of the token; however, we see a

huge risk for price changes during a period of additional placement.

8. Investment Risk Analysis

As with any ICO project, investment in DeHedge carries a large number of risks.

However, we distinguish several key risks that could affect the project and its

development in the future, namely:

Business risks of an unclaimed product

We have already noted that investing in an ICO is already a bet on success.

When investing in the initial stage, a traditional investor expects to increase the

price several times or "write-off" his investments. Additional hedging may

become redundant for him and may not find a takeup. For institutional investors,

there may not be enough credibility for the platform to fulfil their obligations; they

usually invest large amounts, the hedging of which would carry major risks for the

hedge seller, i.e. the DeHedge platform.

Legal risks

The platform’s role, in fact, is to create options and trade them, where the project

itself is one of the parties to this transaction. Despite the fact that the project

does not accumulate funds and has conducted an independent analysis of its

own legal risks, leveling some of them out (which we consider to be a huge plus),

in developed markets such activities could be classified as intermediation in

financial markets, which certainly should be licensed and may create obstacles in

the future development of the platform.

Strong dependence on the dynamics of the crypto market. As the project’s

main services are pegged to the dynamics of cryptocurrency, a decrease in

volatility and / or a decline in rates for cryptocurrencies will greatly affect the

project’s indicators. In this case, we see two principal points: 1) a decrease in

currency rates and / or their volatility will cause a decline in the ICO market.

There will be fewer projects and, accordingly, the product will lack takeup. 2) Low

volatility will not facilitate the purchase of hedging positions on cryptocurrency, as

there will be a decline in demand for cryptocurrency from speculators.

Exhaustion of the reserve fund. The project sells options and accumulates a

certain risk. The lack of mechanisms for overlapping (rehedging of own risks)

creates additional market risks, as well as errors in models, the influence of "thick

tails" of probability distribution, credit risks, counterparty risks and other factors.

Regulatory and political risks. If obstacles for staging ICOs in different

countries occur, the popularity of this method of attracting financing will rapidly

fall. There will be not only fewer projects but declared amounts of funds raised

(softcap and hardcap) will be smaller. This will create a strong decline in demand

for products similar to those developed by the project.

The information contained in the document is for informational purposes only. The views

expressed in this document are solely personal stance of the ICOrating Team, based on data

from open access and information that developers provided to the team through Skype, email or

other means of communication.

Our goal is to increase the transparency and reliability of the young ICO market and to minimize

the risk of fraud.

We appreciate feedback with constructive comments, suggestions and ideas on how to make

the analysis more comprehensive and informative.