SUMMARY

Kucoin Shares (ticker: KCS) is the native token issued by the Kucoin Cryptocurrency Exchange Platform, supplying holders of the coin with real-time revenue distribution and discounted trading/withdrawal fees. Originating out of Hong Kong, the self-proclaimed “People’s exchange” came to prominence in late 2017 climbing into the top 20 exchanges by volume according to CoinMarketCap. Although they have fallen to the #65 position of exchanges with adjusted reported volume, the future's still bright for this Chinese exchange [1]. In fact, KCS still holds a position in the top 100 cryptocurrencies by market cap, sitting at #85 on that list [2]. Built upon the Ethereum blockchain, this ERC-20 token serves as the backbone of Kucoin’s spot-trading functions [39]. Kucoin Shares were amongst the first exchange tokens to be created following the success of the Binance launch and token sale earlier the same year, resulting in a large spike in interest that has wound down since their all-time high token price in January of 2018. Aside from a share of the platform’s profits, as well as discounted withdrawal and deposit fees, Kucoin Shares serve as a way to receive special offers and vote for new listings to their exchange. 

Team

Kucoin was founded in May of 2017 with their platform launching in August of the same year. Much like many cryptocurrency companies founded during the 2017 bull run, Kucoin Shares were offered as part of an ICO that was open to public investors in August of that year. The public ICO followed an initial funding round by a group of angel investors, helping Kucoin release a working exchange while running their initial offering. They later followed their successful token sale with a Series A funding round that was headed by notable firms NEO Global Capital, Matrix Partners, and IDG Capital [5]. The money raised from this round was used to fund development of version 2.0 of the platform, global expansion, increased customer support, and to help create a blockchain talent education sector. Version 2.0 has since been released in February of 2019 resulting in a major increase in traffic to the improved platform design and functionality [5].

The Kucoin project was founded and lead by Michael Gan, the company’s CEO who has had notable financial leadership roles prior to the exchange. According to the KCS whitepaper and Gan’s own LinkedIn, he was the former technical expert at Ant Financial of retail and tech giant Alibaba Group. He graduated from Chengdu University in China, later gaining experience as a key member of Chinese internet companies Kf5.com and MikeCRM, as a CTO and Full-Stack developer respectively [6]. As an experienced developer and leader, Gan was able to gather an initial team of six others before releasing the initial whitepaper. It is worth noting that they no longer list their team on Kucoin.com but Crunchbase and LinkedIn report only four remaining C-Level executives including Johnny Lyu as VP, Nemo Lee as Senior Operations Manager, Rita Cheung as CCO, and Gan still remaining the company CEO [3]. Gan is reportedly the only high-level employee still involved with Kucoin that was on the original team at the time of launch. Gan brought Lyu, a fellow Chengdu University Alum, onboard following his stints as an Advisor to MultiVac and CEO of IMOOLO [6]. As for Nemo Lee and Rita Cheung, they have limited past experience listed with a degree in international business from Jiangxi University and Nanyang Tech University respectively. It is difficult to determine the true influential members of the team due to their relatively little amount of public exposure. There are 77 listed people having reported a working affiliation with the Kucoin Platform, many of which are not updates or are smaller supporting level roles [6]. Although the original team has not remained fully intact since day one, the additions being made and development having continued makes Kucoin an intriguing team to follow as they grow within the digital exchange sector.

Sentiment analysis

Open source: No

Github depositories: 6 total [40]

Github commits: 651 total [40]

Twitter: 6 Accounts

English: 325,600 Followers [7] (95% real via twitteraudit.com [8] )

Vietnamese: 319 Followers [9]

Russia: 338 Followers [10]

Spain: 895 Followers [11]

Turkey: 479 Followers [12]

Italy: 123 Followers [13]

Total: 327,754

Telegram: 7 Channels

            English: 76,308 members [14]

            Turkey: 1,462 members [15]

            Spanish: 1,614 members [16]

            China: 8,393 members [17]

            Vietnam: 1,909 members [18]

            Russia: 2,142 members [19]

            Italy: 398 members [20]

            Total: 92,226

Facebook: 6 accounts

            English: 10,070 followers [21]

            Vietnam: 1,262 followers [22]

            Russia: 158 followers [23]

            Spain: 284 followers [24]

            Turkey: 487 followers [25]

            Italy: 87 followers [26]

            Total: 12,348

Reddit: 6 accounts

            English: 16,700 subscribers [27]

            Vietnam: 142 subscribers [28]

            Russia: 88 subscribers [29]

            Spain: 111 subscribers [30]

            Turkey: 99 subscribers [31]

            Italy: 65 subscribers [32]

            Total: 17,205

Steem: N/A

Youtube: 2,709 Subscribers [33]

Instagram: 9,139 Followers [34]

Mobile: Yes, iOS and Android

Blog: Medium Activity, 1,700 Followers [35]

Utility and Incentives

At this time, Kucoin needs Kucoin Shares to incentivize users to trade on their exchange by giving them discounted fees and a share of the company’s revenue. Users may hold their KCS tokens in their Kucoin platform wallet to receive a proportional share of 50% of the platform’s daily transaction revenue. This means that if the platform generates the equivalent of 10 BTC in daily trading volume, then 5 BTC are to be split up amongst all KCS holders according to their percentage held. The platform originally distributed this value as a small amount of each token traded that day, later announcing that distribution would be done in KCS tokens for the foreseeable future. As for discounted fees, users who hold KCS are eligible for a 1% discount rate per every 1000 KCS tokens. This discount is applied to the standard 0.1% trading fee and cannot be discounted more than 30% [39]. In other words, holding 30,000 Kucoin Shares gives a user the maximum discount rate the platform allows. Besides dividends and discounted platform fees, KCS also serves as a voting mechanism for future listings. The platform also offers holders exclusive company promotions, offers, and even the opportunity for one-on-one trading consultation with a trading expert. Kucoin Shares were built as a means to fuel every function on the Kucoin platform, meaning more incentives are to come with the continuation of development.

Kucoin Shares currently reside in the top 100 of market caps by coin, with their total supply now residing at 179,939,916 KCS [2]. Each month the company uses an additional 10% of their profits to buy back circulating Kucoin Shares, further reducing the supply and increasing the overall demand. Nearly 21,000,000 KCS have been repurchased to date, as the platform eventually hopes to bring the total supply down to 100,000,000 KCS (half of the original minted amount) [39]. As an exchange token with ample utilities and incentives, KCS is an intriguing prospect for cryptocurrency investors. After the release of version 2.0, Kucoin looks to keep the momentum going and gain ground on industry leaders like Binance and Huobi [4].

Tokenomics

Kucoin followed up a traditional angel investment round in Mid 2017 with their ICO in August of that year [39]. Their initial angel investors, along with influential cryptocurrency stars to help promote the token, received 15% of the total 200,000,000 Kucoin Shares. It is unclear exactly who the industry stars or angel investors were in particular, but the remaining tokens were held by the founding team (35%) and the public (50%) [39].

kucoinpic.png

The public portion of the ICO was conducted from August 13, 2017 to September 1, 2017 at a rate of 0.00005500 BTC/1 KCS, or 20,000 KCS per 1 BTC. A total of $22.4 Million was raised from their public issuance resulting in an original token price of $0.22 USD [37]. It isn’t clearly presented exactly how the platform planned to allocate their ICO funds, but their inability to disclose said information did not hurt their sale. It is worth noting that the locked up KCS held by the founders and angel investors (total 50%) is set to be unlocked later this year on September 2, 2019 [38]. The founders will have a limited amount unlocked, but the 15% from angel investors an industry stars will be brought to the circulating supply. This means that the current circulating supply of 89,939,916 KCS could be increased by over 30,000,000 KCS resulting in a subsequent reduction in individual token price [36]. It bodes well that there is a community of over 55,000 holder addresses that interact with the platform and help to stabilize the value. This shows that KCS has seen a solid amount of adoption in comparison to other digital assets, but trails giants of the game such as Binance. The following is a depiction of the top KCS holders via Etherscan.org [36].

kucoinpic2.png

In the meantime, they remain a top 100 cryptocurrency by market cap, sitting at $44.2 million overall at $0.47 USD per token [2]. Aside from their token price, the exchange is currently sitting at 11.7 million in 24 hour adjusted volume which is good for 65th on CoinMarketCap’s top exchanges [1]. In general, Kucoin Shares are primarily traded on the Kucoin platform with any other transactions happening via a decentralized exchange. It is worth noting that an early referral system helped spike enthusiasm in KCS, driving the price to an all-time high over $20 per token. Since that time, the market has seen a major pull back in spending along with the conclusion of the referral system, that has resulted in a loss of value for Kucoin Shares.

Market Opportunity

Following major buzz around the quickly rising exchange called Binance, Michael Gan put his financial expertise to use and founded the Kucoin platform. At a time when the cryptocurrency market was experiencing a major increase in overall value, Kucoin was able to garner attention for their idea to implement company revenue distribution into their token design. Going a step further, Kucoin hoped to take the exchange industry by storm with their good-looking UI and top-notch security. In a crowded exchange sector, the platform was able to crack the top 20 exchanges by volume for an extended period of time before falling off for much of 2018. An exchange that was formerly posting numbers well over $100,000,000 in daily volume has now dipped to $11,700,000 per 24 hours at the time of writing [1]. That being said, there is a lot of room to grow and the sector allows for great profit even having just a small portion of the market share.

The digital exchange market has seen many viable projects compete against each other for a chance at increasing their share of the billions of dollars in cryptocurrency that gets traded daily. As such, Kucoin took an approach to launch that gave them immense traffic but put them in a tough situation. After promising large rewards for referring friends, the exchange climbed the ranks posting huge numbers. The problem with this approach was the minimal profit being made after distributing referral rewards and KCS dividends. Thus, Kucoin decreased the payout of the promotion which subsequently turned many away from the exchange. They were able to learn from this mistake and decided to launch version 2.0 which has seen an increase in popularity for the platform since its release in February of 2019.

At the time of writing, Kucoin has taken major strides to improve the functionality of their platform while also improving the value of their token. They may not be at the same level as their main competitor, Binance, but after receiving $20 million in Series A funding they have a lot to get excited about [4]. Much like Binance, they are known for their expert level security which will be sure to help them stand out in a sector that had been hacked for over $1 billion in 2018. That being said, they will have to continue to compete with the likes of Coinbase, Gemini, Bit-Z and others on top of market giant Binance [41]. Thus, the focus of Kucoin is to keep development up and continue to avoid any negative attention that plagues any rising exchange.

Current Status and adoption analysis

As part of their plan to become “The People’s Exchange”, Kucoin’s initial roadmap contains goals for trading volume and number of listed assets. The goals set forth by the team included daily volume numbers like 100,000 BTC traded and over 1000 listed assets [39]. Not only is it difficult to predict consumer volume, but a bear market has been in effect for the past year which also was not foreseen during their launch. The 1000 listed assets is also quite the difficult goal to achieve since many projects in the industry remain too volatile or untrustworthy to warrant a listing at this time. Besides these two goals, Kucoin has consistently hit milestones and continued development of the exchange. They haven’t been able to hit their trading goals, but they were able to get $20 million in funding to improve the platform even further. Said funding was to be used on version 2.0 which saw its release earlier this month, a sign that the company can fulfill its potential [5].

For a while, the discussion in the crypto world was whether to trade on Kucoin or Binance. Although they are not thought of in the same light anymore, there is potential for Kucoin to make it back into the upper echelon of exchanges. From a user standpoint, reviews are generally positive and security remains a top selling point. That being said, their token has a long way to go in becoming as valuable as the comparable BNB coin. The major difference being smaller discounts on fees with KCS than with BNB. So far, the winner has been BNB in the race to top exchange token by market cap.  That said, as KCS gets used more and more, whether it is to stake or to receive fee discounts, the potential will grow as well. There are currently over 100,000 transfers of KCS to date which shows that there is a large community that believes in the platform [36]. As long as Kucoin continues to list and trade new digital assets, the community will remain intrigued. Kucoin Shares will continue to pay users just for holding tokens, while incentivizing holders to drive more volume to the exchange. It will be interesting to see if Kucoin can get back to a top 20 exchange, hopefully going even further to accomplish what was planned in the whitepaper and become a top 10 platform.

References

[1] https://coinmarketcap.com/rankings/exchanges/

[2] https://coinmarketcap.com/currencies/kucoin-shares/

[3] https://www.crunchbase.com/organization/kucoin

[4] https://cointelegraph.com/news/hong-kong-exchange-kucoin-nets-20-million-investment-from-major-vc-firms

[5] https://news.kucoin.com/en/kucoin-raises-series-a-round-of-funding/

[6] https://www.linkedin.com/company/kucoin/

[7] https://twitter.com/KuCoinCom

[8] https://www.twitteraudit.com/kucoincom

[9] https://twitter.com/KuCoinV

[10] https://twitter.com/KuCoinR

[11] https://twitter.com/KucoinSpain

[12] https://twitter.com/KucoinT

[13] https://twitter.com/KuCoinItaly

[14] https://t.me/Kucoin_Exchange

[15] https://t.me/kucointurkiye

[16] https://t.me/KucoinSpanish

[17] https://t.me/KuCoin_Exchange_CN

[18] https://t.me/KuCoin_Exchange_Vietnam

[19] https://t.me/KuCoin_Exchange_Russia

[20] https://t.me/KuCoin_Exchange_Italy

[21] https://www.facebook.com/KuCoinOfficial

[22] https://www.facebook.com/KuCoinExchangeVietnam

[23] https://www.facebook.com/KuCoinExchangeRussia

[24] https://www.facebook.com/KuCoinExchangeSpain

[25] https://www.facebook.com/KuCoinEXchangeTurkey

[26] https://www.facebook.com/KuCoinExchangeItaly/

[27] https://www.reddit.com/r/kucoin

[28] https://old.reddit.com/r/kucoinvietnam/

[29] https://old.reddit.com/r/kucoinrussia/

[30] https://old.reddit.com/r/kucoinspain/

[31] https://old.reddit.com/r/kucointurkey/

[32] https://www.reddit.com/r/kucoinitaly/

[33] https://www.youtube.com/c/KuCoinExchange

[34] https://www.instagram.com/kucoinexchange/

[35] https://medium.com/@kucoinexchange

[36] https://etherscan.io/token/0x039b5649a59967e3e936d7471f9c3700100ee1ab

[37] https://www.icogrind.com/kcs/

[38] https://news.kucoin.com/en/kucoin-to-extend-white-paper-token-lock-up-period-for-an-additional-year/

[39] https://assets.kucoin.com/kucoin_whitepaper_en.pdf

[40] https://github.com/Kucoin

[41] https://blockonomi.com/binance-vs-kucoin/