Suncontract Token Sale Review

I just found out about the token sale scheduled later this month for the “Suncontract” project, by clicking on an ad at coinmarketcap.

Here is their website. And here is a thread on bitcointalk announcing the project.

A first glance shows that this project is based in Slovenia, a country that became independent from Yugoslavia in 1991 and a Member State of the EU in 2004.

It is like many such token sales based on Ethereum. The token sale will run over four weeks from June 28th on and wants to raise up to 100,000 ETH, which would be the equivalent of around $36.9 million at the time of this writing.

I have an interest in energy as well as in cryptocurrency, so I would like to take a look at the project whitepaper.

Page seven of the white paper lists some goals of the project (they don’t seem to have any working product as of now). The first goal is:

Transform electrical energy into a digitally-tradable crypto-token;

A similar goal is stated in the abstract on page 4:

SunContract’s vision is to support a global self-sufficient energy community based on renewable energy by digitalization of electricity. By making it digital, electricity becomes a globally exchangeable commodity with added value.

If they can pull that off, that would be rather useful. Unfortunately, electricity can only be delivered over a power line. It is impossible to turn electricity into a digital token. That makes it impossible that “electricity becomes a global exchangeable commodity” without building global power line networks like the Asia Super Grid first.

 

The section “How does it work” of the whitepaper gives a rudimentary sketch of an electricity market. Producers can sell their electricity for Suncontract (SNC) tokens. They can then proceed to sell these tokens for fiat currency on an exchange. Consumers can buy electricity with tokens they purchased in the initial token sale or at some later point.

The whitepaper does not explain why a consumer or producer would want to add the extra step of converting their fiat money into SNC tokens, or SNC tokens to fiat, as opposed to using fiat currency or some other cryptocurrency in the first place. If you are using an exchange provided by a centralized entity (the Suncontract firm), why not stick with a much more efficient normal database? What’s the point of a blockchain in this scenario?

They advertise their idea as “cutting out the middle man”. Actually they are adding another middle man (the Suncontract platform).

I for one am not convinced that this has any merit at all.

I therefore predict that their token sale will finish by reaching their ETH 100,000 cap in a couple of hours. The price of the tokens will increase by a factor of at least ten in the weeks following the token sale.

Sure, their project doesn’t make sense. But neither does the ETH token market.

 

Edited to correct typo about the year of Slovenia joining the EU.

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