Category: Discipline

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Blockchain Software Technology

6 pitfalls to avoid in blockchain application development

Knowing your target audience is important to launch a successful dApp. With any dApp blockchain technology should form the basis of a product and deliver utility to end-users. So many blockchain application development projects so far have focused on the buzzwords and not on how the product will actually work. When people ask me about their dApp, they want to know why they haven’t seen much user adoption. I often have to list some of the things that could have made their blockchain application development project more profitable.

When users buy your tokens, they become part of the project in a similar way that shareholders become part of a company. Therefore, it’s important to have the interests of all actors aligned with similar goals. In this article, I will present 6 reasons why projects lack user adoption and ways to do it differently.

The dApp is unusable


Creating a profitable dApp blockchain business is all about finding the right product/market fit. Launching a product that your users will like for what it is and not because of the technology behind it is critical. After all, few really care about how services such as Paypal work under the hood.

All that matters in blockchain application development is that the product works and that it’s convenient to use in the end. Adopt this approach when dealing with any new technology, but blockchain especially.

Don’t assume that your users will know how to use MetaMask, or MyEtherWallet. The customer experience must be as smooth as possible, to remove as many barriers between the company and the customer. Good UX design also goes a long way to improving usability and building trust in any dApp

Every operation that requires an active behavior from your users (token sale, airdrop, interaction with the platform) should be an opportunity to educate them. A resource center where users can find small videos and/or presentations to guide them through your platform is essential to success.

The tokenomics model is not sustainable

Usability aside, token supply and demand play a huge role in the success of any blockchain application development project. Most dApps have a native token. Since the token — in theory — gains value, it’s important to design an economic system involving the token (tokenomics)  that will regulate that value.

Usually, blockchain application development projects choose a deflationary model inspired by bitcoin. In the bitcoin model, there is only a fixed set of tokens in existence and because of that, the price of the token will go up. 

However, this system only works for projects that aim to use the token as a store of value — as digital gold — not as a utility for the dApp blockchain platform. If we compare the storage of value effect and the utility effect of a token, there’s clearly a divergence of interests between users. Some want to use the token and thus don’t want its price to fluctuate. While others want to speculate. Since most projects are based on a utility token, the deflationary model alone does not work.

Some projects use an inflationary model, this model reflects real-world monetary systems. While this is very complex to design and set up, it brings unique advantages. One of the most famous blockchain projects implementing inflationary tokenomics is STEEM.

Carefully designing the right tokenomics model for your blockchain application development project is a crucial step that will contribute to the longevity and the economic stability of your project. Do not underestimate the importance of a well-thought tokenomics.f the token price drops to zero, the project is dead.

No one can find the token on exchanges

Once the blockchain application development is over, it’s time to list on exchanges. Centralized exchanges are big actors in the decentralized landscape. As strange as it sounds, the activity of an exchange (even a crypto exchange) is highly regulated and people have been fined and shut down for running illegal exchanges.

High listing fees and tough conditions are typical for the major players. This tremendously complicates the listing process. In order to list your dApp blockchain token with big exchanges such as Kraken or Binance, you need to have a large community and plenty of funds. If you go for smaller exchanges, users might find it difficult to use their platform and to find your token. Listing on smaller exchanges also means less liquidity.

One of the suggestions that we have is to look for alternative ways of distribution. There are different ways of distributing a token without going through exchanges. For example, airdrops, private shops, and atomic swaps are all solutions that can help consumers access tokens.

The dApp attracts the wrong crowd

Many entrepreneurs, not specifically in the blockchain industry, fail to grasp the importance of attracting the right users. They’re fooled by the lofty promises of a network effect and feel compelled to attract as many users as possible. Regardless of who they are.

A quick glance at major dApp blockchain groups on social media reveals that the main topic of conversation is the price of the token. Of course, this is usual in the crypto community. But should the price-obsessed be the main target of your platform?

At its core, there is a chasm between the interests of users who want to spend your token and the users who want to hold it to make a profit.  Since your goal is to drive mass adoption of the platform, you shouldn’t target the crypto community specifically because the vast majority of its members only care about price.

If we look at how usual companies operate, the share price does not necessarily reflect how the company is doing financially. Companies like Tesla, Pinterest, Facebook do not (or did not for a very long time) generate any profits.

As opposed to companies quoted above, most blockchain projects do not have any products because they focus on the price of the token rather than building one.

The reason why internet companies have value is because of their users. User adoption is the most important metric out there. A quick look at DappRadar can show that most dApps have no more than 50 users apart from airdrop groups.

If you target users in the crypto community, yes you’ll have some traffic, yes you’ll give the impression that your project is hot. But as soon as the selling window of your tokens expires, those users will simply switch to another project.

Aside from the number of users, the quality of those users is a far more valuable measure. I always suggest my clients avoid only targeting users in the crypto community. Some of them just want to pump and dump. You want to build a sustainable decentralized business.

The airdrop was poorly organized


As explained in a previous article, airdrops can be your best tool as they can be your worst enemy. There ’s always a risk in attracting the wrong users to your profile. You don’t want to have your main communication channels polluted by a flood of “when exchange” and “when moon” messages.

On the contrary, you want to have smart users that are asking critical information about your product and engage with the community. If you do it well, a lot of the support can be performed by those same users who will educate the newcomers.

There are numerous mechanisms that can prevent users from selling their newly acquired tokens on the exchanges and causing a major drop in price while still benefiting from the exposure offered by the airdrops. However, you have to organize each airdrop in a unique way, tailor-made way. We at Espeo have a history of successful airdrops and will be happy to talk about your options with you.

The dApp does not have a clear competitive edge

Before you start a blockchain application development project, ask yourself: What is my edge, what is my unfair advantage?

Time has passed where you could simply copy an ICO website, quickly write a sloppy white paper and expect to raise $20 million. If you want to make it, you need a strong value proposition. What is your value when you’re literally using the same pitch as 100 ICOs before you, what is your edge when you develop the 10th KYC on blockchain solution that will change the world?

Building a strong project takes time, efforts and resources. Creating a fancy website, adding some animations, and hiring content writers to produce “sales-y content” is pretty easy. But what’s your edge on your competitors? What will drive the users to come to your platform, apart from the tech?

A dApp blockchain platform has to actually create value for end-users. This can get very complex and it requires an extra mile of work. It may also require a second-layer of reflexion regarding the goal and project architecture. Yes, it takes more time, but it’s worth it. We always forget the time spent on a project, but the value of a project remains. And that’s where Espeo stands for.

Our team of experts can help you strengthen your projects by understanding the technical challenges that you’ll face as tech entrepreneurs. We can help lead you toward a profitable blockchain business.

Conclusion

As already mentioned above, many dApps lack a basic proof of concept. There are a lot of new concepts, and indeed a lot of nice investor pitches. However,  there are very few established prototypes.  For any successful dapp blockchain technology has to actually benefit end-users. Fixing this is already something that will set you apart from your competitors.

After, all technology is a tool. But how people adapt and react to technology has not changed. This is why it’s crucial to think about the way you target your users and how you present the product. People react to what you say. If you create a project that’s simple to use and solid economically you’ll have no problems finding the right users. Before any blockchain application development project, follow a few of these tips to launch a great product the market actually needs.

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Blockchain Finance Financial Services Uncategorized

Blockchain tech companies' guide to attracting VCs

As the era of the ICO fades and new blockchain tech companies projects enter the market, entrepreneurs are looking to more conventional methods to raise capital. STOs are still an option, but attracting VC investors to your business is another method. Navigating seed round funding can seem like a huge challenge, but like any business, finding investors for a blockchain tech company boils down to an open and honest plan and a confident pitch.

As I mentioned, launching a security token offering an option. As ICOs came under greater regulatory scrutiny, STOs emerged. While they do speed up fundraising compared to VC rounds, you may prefer to seek venture capital. Unfriendly regulations or legal limbo in some jurisdictions have forced some to avoid token offerings altogether.
Attracting VCs to your project may seem daunting, but with careful planning and some guidance, securing capital for your project can get your business off the ground. Here are some helpful tips we’ve found that help startups attract VCs.

Lay out a seamless business model

Before you start pitching VCs, lay out a seamless business model. This is true for all new startups, but it’s especially important for blockchain tech companies. Many are still skeptical of the technology.
A general lack of understanding of what blockchain can and can’t do is common. So be clear about what you plan to use the technology to do. The shadow of the ICO scams may limit investor interest. Be as transparent and trustworthy as possible.
Do some digging beforehand and be sure the VCs you’re pitching have a history of funding successful blockchain projects. It shows that they’re open to blockchain projects. This won’t waste your time — or theirs.

  • Check to see if the VC has funded blockchain startups or other tech ventures of a similar size.
  • Be sure the VC hasn’t invested in any of your competitors — they could be checking you out.
  • Build a network of blockchain experts that can help with this research and provide valuable insight into the investment landscape. A blockchain accelerator can connect startups with VCs.

In the business plan itself, be clear about how the business will operate. A sound business model will attract the attention of venture capital. Run it by people with critical eyes. A clear idea of how the blockchain business will operate and how it will be profitable will get your feet in the door.

Create a robust technical plan

For blockchain tech companies, developing a sound tokenomics model and making sure smart contracts that underpin the application are secure are a few of the major aspects of the business to consider.
If you have a great business idea but aren’t as sure about the deep technical things, reach out to experts who do. Blockchain consultants can help develop a full picture of a project and even create a full pitch deck to take and show to VCs.
A blockchain accelerator can be a valuable resource as you flesh out your business plan. Most have a network of industry experts willing to help blockchain tech companies succeed.

  • Reach out to a blockchain accelerator to consult with seasoned experts.
  • develop a concrete technical plan focused on tokenomics, smart contract security, and great UX.

Before they invest, VCs want to be sure that a project will be successful, so knowing both the technical jargon and business value will help you answer those tough questions and make a great pitch. The more you know, the more confident you’ll be in your presentation.

Research your customers

Aside from drafting a solid business plan, find out who your customers are. building products that fill real people’s needs is fundamental. VCs will want to know who your users will be and why they’ll use the product. Be specific about the niche you want to target and the reasons they would use your blockchain app.
Pinpointing the people who will actually pay to use the product is an important early step. In software development, we create user stories to take a complex problem and boil it down to its essential parts. mapping out user stories helps not only you but also busy VCs see the value proposition.
Clearing up who will use the product and why will help make VCs understand product/market fit. Product/market fit is vital in order to convince VCs to fund your project. Finding a clear niche of customers who will benefit from the product you’re launching will mean the difference between getting funded, or staying on the drawing board.

  • Make sure your product fits a market need and be painstakingly specific about that niche.
  • How will your customers use your product?

Along with product/market fit, make sure that your blockchain product actually solves a problem and be specific about how. What may seem obvious to you and your team may not be obvious for outsiders. Don’t assume anything is a given.
Take a critical perspective or seek out outside advice. Finding this niche can seem elusive, but putting in the work to find it will clearly show the value to investors.

Showcase a solid team

Along with finding a niche, crafting a robust technical foundation, and coming up with a seamless business model, gather and show off the team behind the project. Engaged teams in blockchain tech companies are vital to attracting VCs to your project.
Show the experts in your team — especially ones who know are well-versed in blockchain technology, or marketing. Demonstrate a committed team of people behind a project — people who are passionate and committed to the project’s long-term success.
Demonstrating that a team will work well together is another important point. Team cohesion and a common vision will communicate stability and seriousness to potential investors. For blockchain businesses, this is even more important. Building trust in a product is one of the biggest challenges facing the your niche.

  • Build a driven team of people in the project who are engaged and enthusiastic about the product you’re developing.
  • Highlight the team in discussions with VCs who may want to know detailed information about who works with you and what their commitment level is.

Conclusion

Attracting VCs to blockchain tech companies takes a bit of careful planning and good communication. Building trust through a transparent, straightforward goal is how to attract investment capital to a new project. Along with the things VCs want to see in standard projects, blockchain projects take more trust. So show the people behind it.
Running all this by industry insiders is also a helpful step before you pitch VCs. consultants in a blockchain accelerator can be valuable resources. They can not only guide you through the whole process but also play devil’s advocate. The network that a blockchain accelerator provides can be a great place to start looking.
They can also help draft a full pitch deck that lays out all the major aspects of a business plan, revenue stream, technical aspects, team, and the customer niche. Since many have been through funding rounds before, they know the ins and outs of the market.
Getting a great idea off the ground with VC funding takes dedication and some advanced planning, but an innovative idea coupled with a confident pitch will help convince investors to take a chance.

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Blockchain Finance Financial Services

Tips on estimating the time for blockchain software development

Following up on our recent post about blockchain ROI , I’d like to explore how to estimate the time for a blockchain software development project. This is one of the many questions our clients want to know when they’re looking for blockchain solution providers. Of course, the answer depends on several factors. As with all software development projects — blockchain or otherwise — the time it takes from idea to finished product depends on what you want it to do. You’ll likely get a ballpark figure. This is something our clients don’t really like to hear. So let’s take a look at why it’s such a challenge to estimate blockchain software development: and how can this challenge be tackled.

Though the process is similar to standard projects, blockchain software development presents new challenges. Balancing speed and accuracy is something blockchain solution providers have to do. Fixing mistakes in the code is not an option — so having a solid team of developers working on a project is vital. Aside from skill, however, the team you work with shouldn’t just write code, but also actively deliver business value through proactive work.

Outline what you’d like your product to do

Blockchain software development is a fairly new frontier for many companies — Espeo included. But that’s something we’re transparent about. Be wary of blockchain solution providers that give an exact deadline without grilling you on every tiny detail of the project. This is one of blockchain consulting director Dominik Zyskowski’s tasks.

Zyskowski collects as many details as possible and finds a close equivalent from our portfolio. “In the estimation phase,” he says, “you always break down this application into tasks.” As in any other development project, he splits the time into modules and functionalities to work on in two-week sprints. “But the most unpredictable elements in blockchain development are integrations,” he says.

In our experience, linking two blockchains together, or using several blockchain protocols in an application increases the time. He wants to do it right and deliver a solid product so he’s open and honest about the things that will take longer to figure out.

Treat it like R&D

Project manager Sylwia Rogowicz echoes Zyskowski saying we treat many of our blockchain software development projects as R&D. She’s also open about the difficulties in giving a timeline. For standard development, she can estimate how long the project will take because there are plenty of similar solutions. For blockchain, however, every project is a bit different. Some require pioneering innovations.

Take derivatives trading platform CloseCross, one of our recent projects, as an example. Espeo developers designed the blockchain backend and used some innovative technologies to address long transaction times the Ethereum blockchain is infamous for. Our team of blockchain solution providers implemented state channels vastly improving the UX of the app. Of course, we didn’t set out to use state channels to solve this pain point. After testing several other options, we found this was the best solution for the client and we decided to pursue it together. With blockchain, even well-defined functionalities from clients bring up new challenges to address.

“When you work with blockchain,” says Rogowicz, “you need to be very careful. You have to think about what can happen. When we put a project on the mainnet, there is not much possibility to fix it. We can’t change the code that’s already on the blockchain — it can be very problematic. In many cases, it’s impossible to fix.”

This means that developers have to be focused on accuracy while also keeping the big picture in mind. Blockchain solution providers need a keen eye as well as an understanding of how end-users will interact with an app. They also have to be careful and write clean code. “It’s not only about the knowledge but also the ability to predict what can happen. Blockchain developers have to obsess over user behavior,” says Rogowicz.

Developers work in tight-knit teams where they feel empowered to propose good solutions. This exposes the drawbacks, but also the real benefits of agile development. On one hand, it’s more difficult to estimate development time, but on the other, it helps ensure that the finished product delivers the best business value.

Trust your developers

Our head of blockchain Marcin Zduniak says agile development is ideal. “No client can give us all the exact requirements up front. We developers also aren’t able to collect them all. For projects that no one has done in the past, it’s a guessing game. A healthy relationship is when a client trusts our expertise, we simply charge for any time spent on the project weekly. Clients see the project’s progress every second week and they can stop it at any time.”

Zduniak encourages most clients to attend a blockchain workshop so he and the team can fully tackle the technology challenges. The workshops give clients a glimpse of how we work and allows the team to make more precise estimates. The workshops really help us come up with a plan to divide the work and a clear plan of attack.

Let a project unfold

Blockchain developer Tomasz Cichowicz explains that the technical solution in his mind often changes as blockchain software development unfolds. Understanding client expectations is a key part of his process. Once he has all the materials from a client, he wants to sit down and really hash out what they need.

“Some mid-level detailed functionality scope is really helpful to us. These include what users will actually do with the application — it doesn’t have to be thirty pages of specifications, but if it’s only ten points, it doesn’t give us that much. We need a little more context. Diagrams, where you see the user flow, mockups, wireframes, and designs, give us a visual that we can rely on.”

Clients often know exactly what they want, but lack the technical language. Having a team of experts not only write code, but also deliver the best product is perhaps the most valuable line item.

“We want to be agile — alter stuff as we go. It’s not a waterfall project where we try to meet a specification but forget about delivering actual value to the client. The thing is that we start with only so much detail and learn the domain as we go,” says Cichowicz. “What we end up with is often not what we agreed on initially. We want to work with the client week-by-week. So they can decide, ‘alright, this is the top priority now.’ With each sprint hey can get a feel of the product or change something and see that this is what they really meant. These constant alterations obviously can’t be estimated upfront but in the end, the clients receive what they actually want instead of what they roughly specified months before.”

Conclusion

Our clients want to get their products to market as quickly as possible. However, rushing it through without expert input could mean you’re not launching your best product. Of course, some blockchain solution providers will give you a set deadline for a blockchain software development project, but an expert team that’s transparent about effective solutions is far more valuable.

Working with blockchain solution providers that not only design but also deliver a sound product is what makes estimating development time so challenging. Releasing shoddy code onto the market could be disastrous. Balancing a reasonable development time and a stable, secure blockchain product will be worth it in the long run.

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Blockchain Financial Services Technology

Blockchain ecommerce is keeping the secondary luxury market honest

Florian Martigny, founder of Hong Kong-based platform Luxify plans to launch a new standard in blockchain ecommerce. Espeo Blockchain consultants laid out ways the company can leverage the technology and corner the pre-owned luxury goods market. We’d like to share how we did it and what we learned from the project. 

If you’re a bargain hunter with expensive tastes, finding a legitimate seller can be a challenge. At the same time, legitimate re-sellers face a suspicious customer base. This feedback loop limits demand and drive prices down. We’re helping Luxify and their network of pre-owned dealers change this. A blockchain marketplace can help verify and track luxury items — such as art or real estate — making the assets much easier to buy and sell.

Pain points

Luxify already connects affluent buyers with luxury retailers. We found that counterfeit goods pose a real risk to the business. Knock-off watches or forged handbags can make their way into the system limiting consumer trust. Ordering online takes a leap of faith. As ecommerce grows globally, the industry needs effective ways to fight fakes.  The blockchain authentication system we proposed will help close the trust gap. If there is one thing that blockchain technology excels at it’s establishing immutable records among key stakeholders who may not otherwise trust each other or share information. Blockchain ecommerce will boost trust and attract more consumers.

Martigny reached out to Espeo Blockchain with one question: how can blockchain help my business? His experience running Luxify gives him a unique view of the market. Through our consulting project, we answered his questions and delivered a solid business plan for a blockchain authentication solution. Our proposal lays out a system to verify brand authenticity, track ownership, and protect the value of items through tokenization.

Luxify blockchain ecommerce

Since 2013, Luxify has been a market for new and used luxury goods. The company plans to meet the ever-growing demand for high-end western brands, especially in Asia. The company’s mission is to be the first to innovate luxury ownership by establishing an integrated mechanism for authenticity and traceability. However, blockchain is not a solution in itself — only a tool to streamline the business.

Customers ready to spend want stronger guarantees. Deep cooperation between the Luxify platform as well as a network of external sellers and experts help establish credibility. ERC-721 tokens do the rest. Our plan for a blockchain marketplace uses these to transfer ownership. Experience with fakes on other online platforms limits the overall market. Tech innovation especially blockchain will help the market expand.

Market Challenges

One of the main threats facing the $1.2 trillion luxury industry is as I mentioned counterfeit goods. Whole workshops of counterfeiters have perfected their techniques to roll out a steady stream of imitations. To the untrained eye, they’re hard to spot. While some of the existing methods to verify and trace luxury goods are somewhat adequate, they’re not particularly scalable. The profit from producing counterfeit products keeps pace with the overall luxury market giving an ever-increasing incentive to traffic fakes.

This not only erodes consumer trust but also helps fund criminal networks. Despite efforts to combat the spread of fakes, online retailers such as Amazon and Alibaba are still plagued by counterfeiting. Efforts to limit the spread so far are ineffective or simply don’t scale. They mostly involve banning scam sellers from the platform, which is not sustainable. Market forces are far more effective at deterring the practice.

With these challenges in mind, blockchain consultants Francois Devillez and Marcin Zduniak dove in laying the groundwork for a workable blockchain solution. Devillez recalled the project saying he always wants to know what product the market needs before starting a consulting project.

“Don’t try to disrupt a whole market,” he said. “Try to find your niche. If blockchain tech can help your business, then we can work on that, but if blockchain is not necessary, I don’t hesitate to say it.”

Obviously, by the consultation phase, we already have a pretty good idea that blockchain is a good fit for the client. For a luxury good ecommerce platform such as Luxify the lack of trust between buyer and seller is the major stumbling block — something we can solve. Everything else comes down to scalability.

Blockchain authentication

Over several days of consultation, Devilez and Zduniak crafted a tailor-made pitch deck for Martigny finding the best way for him to launch a blockchain ecommerce network. While he had a vision for using blockchain tech, refining this vision into a workable solution was our goal. Questions about public/private blockchains and STO/no STO were vital.

Of course, due to the counterfeiting and consumer trust issue, blockchain technology addresses a real market need. Verifying authenticity and establishing a clear ownership history helps to increase this trust. But how will the company actually do it? For digital assets, tokenization makes sense, but tracking physical assets with blockchain proved more challenging and still requires a level of centralization. One of our proposals is for the company to hire a team of vetted experts that they can send to sellers, verify the pricey watch is authentic, apply a tamper-proof RFID tag, and create an ERC-721 token to represent ownership.

We chose the RFID route precisely because an attempt to remove one breaks it and renders it useless. This solves the problem of trying to transfer the tag to a counterfeit item. Solutions like this already exist without the need for blockchain technology, of course. However, the real business value comes from the fact that only one expert needs to authenticate an item one time. Once approved, it will be on the blockchain ecommerce platform forever. Instead of hiring experts every time you’d like to sell your watch, you only need to do it once. This both reduces the cost and time of buying and selling luxury items.

Technical solutions

Our proposal for a blockchain marketplace uses Ethereum to handle transactions on the blockchain authentication system. Ethereum offers a robust network we’ve used for many of our clients. In terms of Ethereum scalability, we proposed using Plasma techniques to maintain asset storage. Platforms such as the Loom Network use similar solutions with sidechains to maintain a safe state of token assets.

Luxify tokens themselves will be non-fungible ERC-721 tokens which represent item ownership. As mentioned above, RFID tags attached by a team of experts will establish authenticity and enter the asset onto the blockchain ecommerce registry. Users will also have to keep their tokens in a wallet. We proposed a wallet integrated into a UX-friendly React native mobile application. This will reduce the time of development considerably.

Conclusion

We believe that Luxify and their partners will corner the luxury market with their blockchain marketplace. Our consultations with Martigny allowed us to get a better grasp of what the company would like to do with blockchain technology, and how to best achieve these goals together. Espeo Blockchain consultants produced a detailed pitch deck to show to investors. Having a clear, detailed plan allows the company to set development milestones and calculate ROI.

Luxify and a network of re-sellers are leveraging blockchain technology to cut down on fake goods and introduce greater trust into the market. Their first-mover advantage sets them apart in the region allowing them to reach their target ahead of the competition. Ecommerce will greatly benenfit from blockchain authentication — especially in the luxury sector. While blockchain technology is not a cure-all for every business, authenticity and traceability challenges make the second-hand luxury market a solid use case.

Thinking of leveraging blockchain in your business? Reach out to us for valuable insights into this fast-paced ecosystem.