Waltonchain — Update II

01.05.2019

TL;DR. Ecology:2 (3). Technology:2 (2). Decentralization:2 (2). Valuation:4 (4). Rating:3/10 (3/10)

Six months have passed since the second BD Ratings article on Waltonchain was published. Here is how the predictions have turned out so far.

As the new review period started, Waltonchain supporters continuously inquired about the upcoming token swap. Mainnet was already up and running, but the mining rewards were still represented by Ethereum-based ERC20 tokens, which all had to be switched to real WTC tokens further down the road. In preparation for this token swap, a hundred Super Master Nodes (SMN) slots were open to the public, but interest from WTC holders turned out to be quite low. In the beginning of November 2018, less than 20 SMN had been reserved - each demanding a large stake of 100 000 WTC, meaning 0.1% of total WTC supply.

Worth noting is also the updated whitepaper that was posted around this time. In it, the Waltonchain team defined a new consensus mechanism dubbed WPoC (Waltonchain Proof of Contribution). WPoC consisted of Proof of Work (currently X11), Proof of Stake (masternodes), and the new concept of Proof of Labor (PoL). PoL seems to be the proof of facilitation of data between Guardian Master Nodes, Super Master Nodes and Master Nodes - a type of stewardship needed for the Waltonchain child chains.

On 16th of November, 2018, the team announced an airdrop to all GMNs. A month later, a letter from the Waltonchain CEO revealed that the network still contained a total of only 18 SMNs, and 2 281 GMNs or MNs. The letter also confirmed that the network was going to go open source in the near future, and encouraged individuals and enterprises to become manufacturers and suppliers of both related hardware and software products.

As further preparation for the token swap, a source code audit was ordered from cyber-security company Knownsec Inc. This audit was expected to take a month and a half, meaning the open sourcing of the project as well as the planned token swap were delayed somewhat.

On March 20th, 2019, the team announced an in-house ASIC miner dubbed Kirinminer. It was not initially clear if it ran the modified X11 algorithm or some new PoW-algo to be adopted by the project later on.

Ecology

The Waltonchain subreddit shows decent activity, especially compared to many other altcoins. But it still only amounts to a post or so a day, and the quality of these posts are generally not that high either as they too often focus on air drops. On-chain activity is abysmal, with just a couple of transactions per day according to this block explorer.

Speaking of the many airdrops made or planned by Waltonchain, BD Ratings is of the opinion that this is not serious chain stewardship and mainly stems from the issuance of too many tokens that are then used to market the native blockchain token as profitable (having a dividend function of sorts). In other words, naive investors buy up WTC tokens to get the airdrops. This is not how money protocols ought to work.

Grade: 2

Reasons: Low number of on-chain transactions. Still no fully working mainnet.

Technology

The February 2019 code audit was a good decision. As Waltonchain up until then was closed source, no external developers had been able to vet the code. The investment in third party auditors is a much sounder strategy than the ridiculous airdrops.

In an end-of-year summary, the Waltonchain team stated that they had more than 180 members, meaning the project allegedly boasts one of the largest teams in the cryptocurrency space. BD Ratings has no way of easily confirming this, but it is not extremely relevant anyway in this case. The team likely consists of many business- and marketing people, as well as RFID-related workers. Had there been a strong presence of cryptographers, it is unlikely that the project would see its token swap continuously delayed even though the code base is mostly taken from other projects. If the smaller team listed in the 2.0 whitepaper mirrors the current team distribution, the above assessment holds true.

Grade: 2

Reasons: Still closed source. Code audit. Likely relatively low cryptocurrency expertise in the team.

Decentralization

Waltonchain is still clearly a centralized blockchain. Time and time again, the Waltonchain company is out there working on partnerships. If a non-profit Foundation was trying to educate entities that it thought could benefit from building on top of the blockchain it represented, then that is one thing. But to have a for profit company treat the blockchain like it's product rather than an open value protocol causes long term harm to the integrity of the blockchain. Somewhat related to the partnerships is the intent to use SLAs (Service Level Agreements) for apps, which also sounds like something that ought to be skipped.

Again, the closed source nature of the project still means we have to trust it rather than verify it.

Grade: 2

Reasons: Still not fully open source. Tokens still concentrated.

Valuation

All 100M WTC tokens have during the period decreased in value from over USD 300M, to just above USD 200M. The decrease is Satoshis is around 20%. When only accounting for circulating supply, CMC ranks the project as #62. Even though the project is close to now being fully open source, bad fundamentals still stands and price will likely continue to decrease.

Grade: 4

Reasons: No considerable change.