SUMMARY

FToken (ticker: FT), originally named the FCoin Token, is the native currency for the FCoin digital asset trading platform, which originated a new method of handling transaction fees. Currently based out of China, the “trans-fee mining” platform rose to prominence in June of 2018 after introducing the new structure to the cryptocurrency world. Priding themselves on being the first  autonomous community-based trading platform, FCoin offers a liquid environment for investors to exchange various digital assets while having the opportunity to gain back their paid fees in FToken. Although they currently rank #37 in reported volume, they are currently unranked in adjusted volume due to the nature of their fee structure (essentially trading without fees) [2]. FToken is currently built upon the Ethereum blockchain as an ERC-20 token, but has plans to move to the Fractal blockchain later this year  [13]. The Fractal testnet was released in late February. Beginning as the reward for trans-free mining, which is a method the company has proprietary claim on, the token also serves as a means to distribute revenue back to the community as well as to vote on upcoming operational decisions.

Sentiment analysis

  • Open source: API available but no open code yet

  • Telegram: 2 channels (Chinese 31,203 // English 5,603) [4][5]

  • Twitter: 4,454 followers (96% real followers via TwitterAudit.com) [3][7]

  • Facebook: 85 followers [8]

  • Reddit: 361 subscribers [6]

  • Blog: High Activity [16]

Team

FCoin was introduced to the public in April 2018 as a beta and officially began publicly trading in May of that same year. They did not take the traditional ICO or airdrop approach, instead opting to take a small portion of private investments while distributing the remaining tokens to the team and those who would trade on their platform. Unlike various other asian exchanges, FCoin is still based out of China, managing to avoid sanctions in the indecisive nation [10].

The company was founded by former Chief Technology Officer of Huobi Global, a top 10 exchange by volume, Zhang Jian. The former C-level Huobi executive was able to garner private investments from firms such as Danhua Capital, Node Capital, Singer Capital, Timestamp Capital, 8 Decimal Capital, Zipper Fund and a few others that are not named. It is worth noting that Jian is credited with coming up with the first platform to implement transaction-free mining but may not be as involved in future operations. Since FCoin is distributed to its users and they can gain more stake in company operations (80% of fees go to token holders), the FToken will shift into a community driven project. This means that holders will be allowed the opportunity to apply, campaign, and elect board members to vote on future FCoin decisions. It is unclear who else other than Jian works for FCoin as their crunchbase account only lists the founder [12]. It is clear that Zhang Jian is respected in the cryptocurrency industry as the former CTO of a top ten exchange, but the uncertainty surrounding the rest of the team and the move to a community project brings risks along with intrigue. The goal of becoming the first successful autonomous community-based trading platform with no CEO or board executives is a tough task but one FCoin looks to take on head first.

Utility and Incentives

At this time, FCoin needs the FToken as a means to incentivize users to trade on their platform by giving them the chance to reimburse all of their transaction fees in the form of FT tokens. This will be done using up to 51% of the total supply of FTokens, which is locked at 10 billion. The tokens are used in a smart contract reward system to track and distribute revenue from the platform (80% of which goes to holders), as well as to vote for operational decisions and to elect/supervise company officials. Now, the plan is to move from the Ethereum chain to their new chain, Fractal Core, in the coming months. The testnet has been released, leading to the subsequent upgrade in name from FCoin Token to FToken.

FCoin Token currently resides quite low on the list of market caps by coin, with the circulating supply having been increasingly difficult to track for platforms such as CoinMarketCap. That being said, the future of FCoin and the FToken look to be bright. The hope is their implementation of Fractal Core will help FToken to lead the development of the token economic environment and become one of the basic and core token representatives in the field.

Tokenomics

Foregoing traditional launch methods like an ICO or airdrop, FCoin decided to take the approach of community distribution. Original funding came from investment firms such as Danhua Capital, Node Capital, Singer Capital, Timestamp Capital, 8 Decimal Capital, and Zipper Fund resulting in 14% of the total supply being distributed to private investors and their strategic partners. It is unclear how much Zhang Jian raised from these early investors, with vesting options on the deals being obsolete as well. [1]

FCoin Initial Token Allocation

FCoin Dist.png

FT is using a primary trading pair for USDT, BTC, and ETH on the FCoin exchange and is not yet trading in any other locations. The FCoin site reports a circulating volume of 4,905,988,296.60062990 FT with a current price of $0.024 USD at the time of writing, showing their is no clear indication whether the reserved early investor funds have hit the market or not [11]. In fact, Etherscan currently has no record of their circulating supply and suggests a community of only 699 holders present [14]. Of course, this number may be skewed with most FT funds being held on the company platform. In addition, CoinMarketCap has been unable to derive a market capitalization for FT at the time of writing. These numbers make for a difficult read in terms of adoption rate, but even so they still report over $100,000,000 in trading volume per 24 hours [2]. It is worth mentioning that a lot of controversy has surrounded FCoin since their launch due to their essentially feeless trading structure [17]. As a result, many in the industry expect that FCoin partakes in wash trading (trading between two user controlled accounts using automation to mimic high volume) as there is no real fee taken no matter how many trades are completed. This has lead to discouragement in the actual value of FT and has lead to it’s fall from a high of almost $0.06 to their current value of $0.024. The following is a depiction of their top holders via Etherscan.org [14].

FCoin top addrresse.png

Market Opportunity

As a revered member of the crypto community, especially in China, Founder Zhang Jian helped create an initial buzz that took the industry by storm [9]. As evident by the major difference in chinese telegram group members to English members, the Chinese community reacted with enthusiasm to the initial launch. Following such, FCoin has seen a decline in FT transactions regardless of their reported $100,000,000 volume performances [10]. Whether it was due to news there would be no CEO/board members or because of the increase in competition, FCoin has taken a step back since its introduction as the first trans-free mining platform.

The digital exchange sector of the industry is littered with competitive companies ranging from Coinbase, to Binance, to OKex and Huobi, with many following suit. FCoin made an initial mark by appearing in the number one spot for a number of days in exchanges by volume, but the change brought about by their model increased the difficulty of FTs adoption. After trans-free mining became popular with FCoin, companies such as CoinEx soon followed the structure releasing their own trans-free mining token. Since trans-free mining potentially promotes wash trading and the popularity of the structure was increasing, CoinMarketCap decided to divide its exchange data by reported volume (exchanges reported volume to users) and adjusted volume (actual trades done by real people) [15]. As a result, trans-free mining exchanges such as FCoin were seen as untrustworthy for a time with people believing they were tricking users. Subsequently, FCoin is nowhere to be found on the adjusted volume list but trading remains active with an apparently solid liquidity pool.

At the time of writing, FCoin has taken strides to improve the value of FT by moving to a seperate blockchain and beginning work on a community-based ecosystem. It may be a more unique path than most companies that perform an ICO or STO but they still received funding and created a widely used platform. Trans-free mining is a method that is still quite young in the industry so leading the way in this sector can be very fruitful for FCoin. That being said, they are still a digital exchange and will have to compete in the same industry that touts names like Bit-Z, Binance, and Gemini to name a few. Thus, their main focus has been to build their community from the ground up allowing them to lead the way for future endeavors.

Current Status and adoption analysis

As part of their initiative to become the first autonomous community-based trading platform in the field, FCoin’s roadmap was quite short to begin with even at time of launch [1]. Their main marketable asset when coming to market was their trans-free mining structure which has worked as planned in distributing revenue as well as transaction fee refunds. They have hit each of their milestones for 2018 including beta release, official trading, FT smart contract voting, automatic revenue distributions as well as new methods to obtain liquidity [1]. This now brings them to their final goal of establishing a community committee which is set to take place in April of 2019. They have also established a partnership with Fractal to help implement the Fractal Core chain as part of the FT and FCoin ecosystem. The Fractal mainnet is set to launch later this year with the testnet having been released in late February, hopefully broadening their use cases [3]. Few companies came out of the gate with as much hype as FCoin, but notable barriers have brought them back to earth and continue to pose a danger to their growth [9]. Issues like lack of trust in their volumes was previously mentioned and has remained a prominent barrier, while others such as the adoption rate of cryptocurrencies are a more overarching barrier to most digital asset exchanges. FCoin’s main disadvantage comes from their lack of representation since there is no official team to look for when assessing future value and since there is only a real incentive to hold, resulting in a lowered transactional use case [12]. As a result, FToken remains an intriguing asset that powers a platform with a newer approach to trading, but has issues to overcome. It will be interesting to see how this “trans-free” pioneer takes it’s next steps in establishing itself as a trusted and go-to platform in the space.

References

[1] https://www.fcoin.com/static/ft-en.pdf

[2] https://coinmarketcap.com/rankings/exchanges/reported/

[3] https://twitter.com/FCoinOfficial

[4] https://t.me/joinchat/JN-FyRCKHtppF4plTI2-mQ

[5] https://t.me/fcoinofficial

[6] https://www.reddit.com/user/fcoinoffical/

[7] https://www.twitteraudit.com/FCoinOfficial

[8] https://www.facebook.com/fcoin.exchange/

[9] https://www.coindesk.com/new-crypto-exchange-draws-fire-over-controversial-business-model

[10] https://www.reuters.com/brandfeatures/venture-capital/article?id=37548

[11] https://ftoken.com/

[12] https://www.crunchbase.com/organization/fcoin#section-current-team

[13] https://fractalproject.com/assets/pdf/fractal-technical-whitepaper-en.pdf

[14] https://etherscan.io/token/0xd37532d304214d588aeeac4c365e8f1d72e2304a#balances

[15] https://bitcoinist.com/6-billion-volume-faked-coinmarketcap/

[16] https://www.ftfan.org/

[17] https://cryptobriefing.com/transaction-fee-mining-exchanges/