ICOrating. DMARKET Rating Review ( )

Transcription

1 ICOrating DMARKET Rating Review ( ) ICO dates ( ) Web: icorating.com info@icorating.com

2 1. Ratings 3 2. General information about the Project and ICO 4 3. Description of the services and scope of the project 7 4. Engineering features of the project Market review Team Competitors and competitive advantages of the project Development strategy and roadmap Marketing strategy Economy of the project Risks Token investment attractiveness 28

3 1. Ratings We assign the DMarket project a Stable+ rating. When making an investment decision, we believe that the focus should be on the credibility of the team members qualifications. We recommend participating in the ICO to the investors who have independently assessed the team s qualification and experience and accepting of the risks specified in the review. DMarket is developing a universal platform for trading gaming items based on blockchain technology and smart contracts. The project leaves an ambiguous impression. On the one hand, the project s idea is very well developed. The team s qualifications and make-up also do not give rise to any concerns. On the other hand, we find the project economy to be very detached from reality. If the Key Metrics given in the white paper are not just a marketing ploy, then DMarket investors will take on a serious risk. Competitive risks should be separately noted. There are quite a lot of similar projects, some of them have already completed their ICOs, some are still planning ICOs. WAX is staging their ICO at the same time as DMarket. At the time of writing, WAX has raised more funds during its crowdsale than DMarket, which will obviously give WAX a headstart in terms of further promotional marketing of its service. This is the reason for putting the team s qualifications and effectiveness in first place when making a decision about participating in the DMarket ICO.

4 2. General information about the Project and ICO DMarket is developing a universal platform for trading gaming items based on blockchain technology and smart contracts. The service will allow players from any game on the platform to evaluate their virtual goods, sell and exchange them. And all of this can be done in just one click. Blockchain technology will ensure one hundred percent security and will become a universal trading link between gaming worlds. Website: Whitepaper: Slack: (+846) Twitter: (+4318) Telegram : (+2481) Facebook: (+2137) Bitcointalk: ( ) GitHub : Reddit: (+1278) Medium: (+123) YouTube : ( ) Smart contract platform: Ethereum blockchain Token: DMarket (available on sale), DMarket Coin After the end of the second stage of the token sale all participants will receive ERC20-standard DMarket Tokens on the Ethereum network. After the launch of the marketplace, DMarket Tokens will be exchanged for DMarket Coins at a 1:1 rate. DMarket Tokens will be issued once. The number of the issued tokens will correspond with the number of tokens sold during the crowdsale, but it will not exceed the Hard Cap.

5 Soft cap : 5,000,000 DMarket Tokens Hard cap: 136,037,245 DMarket Tokens Accepted currencies: ETH, BTC The ICO will consist of 2 rounds: Token sale round No. 1 (has already ended, with 36,037,245 DMarket tokens sold) : Duration period : (12:00 PM NYC Time, UTC - 4) until (12:00 PM NYC Time, UTC - 4) Tokens allocated to round 1: 5,000,000 DMarket Tokens Price: 1 ETH = 1,000 DMarket tokens Number of tokens per person: unlimited Minimum sum of transaction: 0.1 ETH Minimum sum of transaction in Bitcoin: 100 DMarket tokens (the exchange rate depends on the BTC exchange rate fluctuations) Maximum sum of transaction: unlimited Bonuses: Day 1: bonus +10% Day 2: bonus +5% Day 3: bonus +3% Day 4: no bonuses Token sale round No. 2: Duration period : (12:00 PM NYC Time, UTC 5) until (12:00 PM NYC Time, UTC - 5 Tokens allocated to round 2: 100,000,000 DMarket tokens Accepted currencies: ETH, BTC, LTC Token exchange rate: 1 ETH = 750 DMarket tokens

6 Number of tokens per person: 25K DMarket tokens ( ETH)* Minimum sum of transaction: 75 DMarket tokens (0.1 ETH) Maximum sum of transaction: 25K DMarket tokens ( ETH) * If during the final round, a backer desires to buy an amount of tokens that exceeds the limit (2.5 DMarket tokens or US$1,000,000 during the pre-sale; 25,000 DMarket tokens or US$10,000 during the crowdsale), after the final audit, any sum exceeding the limit will be automatically rejected. This will happen if the presale Hard Cap ( DMarket tokens) is reached. If the Hard Cap is not reached, then the whole sum (including funds exceeding the limit) will be automatically converted to DMarket tokens, which will later be transferred to the investor s wallet. Exchange will be carried out turn by turn depending on the time of receipt of a contribution. After the end of the second round of the token sale, 15% of the sold DMarket tokens will be additionally issued: 10% will be allocated to the reserve for providing future product development; 5% are intended for the DMarket team. DMarket will be transferred to a user s personal wallet after the end of the second round of the token sale.

7 3. Description of the services and scope of the project Each minute spent in a game brings virtual goods to gamers. These goods can include a new armor suit, a fantasy car or just a stack of crystals. Unfortunately, to date, there is still no simple way to trade virtual goods among billions of gamers around the world. Gaming universes are not connected to each other. There is no easy and secure way to trade between them as there is no way to sanction such trading. Previously it was technically impossible to build a bridge between dozens of game engines, independent and international game developers, mobile and console worlds. Until now, existing technologies were unable to unite gaming universes and platforms. So, gamers have no way of benefiting from their in-game items, to say nothing of time and effort spent. The growth in the size of the gaming audience and the development of the virtual reality (VR) and augmented reality (AR) markets have only exacerbated this situation. DMarket is a global marketplace which turns each virtual item into a real article of sale. In this ecosystem, gamers, developers and entrepreneurs will be able to efficiently and securely evaluate virtual goods and trade them. Thus DMarket is creating a new economy. The team is developing a marketplace based on blockchain and smart contracts, which will allow the evaluation, sale and exchange of any virtual item from any game on any platform. DMarket coins will be the only currency on the DMarket platform. They will provide different options for influencing each transaction, exchange, commission, and smart contract. In this way, a player will be able to exchange any object that was won or received in a game for platform coins or for any other item from another game. All in all, the project offers an efficient way to exchange virtual goods. Any collaboration between gamers and game developers on the DMarket platform will be regulated by market demand. Thus, gamers will be interested in collecting rare items and game developers in creating and maintaining a unique, relevant and saleable game content. Users (both gamers and developers) will be able to gain from their own achievements and time spent, either to improve the game experience or to make a profit.

8 For successful interaction on Dmarket, a user needs an account. The system automatically creates a wallet based on the DMarket Coin, a cryptocurrency which is already operational in the system. After registration, a user can immediately start using the wallet (deposit a necessary amount of DMarket coins or items from games available in the marketplace). For trading operations, the system automatically synchronizes a user's game items with their personal account on blockchain and in the marketplace. Synchronization is performed using an API, with user account data for authorization. Benefits for players: Trading in-game items and receiving profits Ability to create content for games and participate in its flow on DMarket Guaranteed security of any transaction within DMarket An opportunity to acquire unique, collectible game items The ability to switch games without losing one s acquired game items. Benefits for the creators of virtual objects: To create and destroy virtual objects To establish the base price of items Conferring properties on different items (for example, a virtual item can be premium class or expendable) Creation of items in collaboration The ability to prohibit certain users from conducting transactions with items.

9 The internal currency of the project will be the DMarket Coin, the only cryptocurrency on the platform, and all operations (including commissions) with digital products are performed with this coin. The main functions of the DMarket Coin on the platform are as follows: For purchase/sale of in-game items (such as cryptocurrency) Copyright royalties Payment for the purchase of premium accounts for wholesalers and retailers Payment for BigData analytics Types of digital items that can be purchased: Gaming virtual currency Games/products/services Game items and expendables Skins and designs Modes, maps and supplements Music and sound effects Each transaction has a commission of up to 5% of the total. Most of this commission goes to the creators and beneficiaries of the transaction publishers and developers. The rest of the commission goes to DMarket. Billions of gamers own rare, unusual, or memorable items. All of them are in great demand, but their trading possibilites are technologically limited. The DMarket network will help gamers evaluate their virtual capital, and video game developers will be able to increase their incomes. The DMarket team believes that virtual objects will go beyond the limits of game worlds and become an integral part of real life. If this happens, game items can be insured or obtained from a bank against security. This is what DMarket is aiming for. In other words, DMarket aims to make virtual objects real.

10 4. Engineering features of the project The current version of the DMarket blockchain network, implemented using Rust and C++, has the following characteristics: Performance. Capability of processing up to 3000 transactions per second, allowing the platform to provide an appropriate speed for transactions Elasticity. Provides uninterrupted operation (even if up to 1/3 nodes in the blockchain network are disabled or compromised). Increased security. Because the system is written on Rust, a fast system programming language without segmentation errors (segfault) and with thread safety guarantees, the blockchain guarantees increased security for all processes on the platform. DMarket is using the Exonum blockchain framework. Currently this framework is the best solution for realizing the potential of DMarket and allows for the creation of an efficient blockchain product in a short period of time, with all the necessary characteristics listed above. The DMarket system is divided into two independent parts: The first is a decentralized blockchain database, a fully independent distributed system for storing information on all transactions that take place in a game and/or on the commercial platform. All functions are performed through smart contracts: checking the availability of in-game objects (based on HASH) and their quantity verification of the solvency of the users who wish to acquire an item other parameters that will be predetermined by the user or within the system. The second is an independent trading platform that can process hundreds of thousands of operations per second and interact with the blockchain. This layer is developed using GoLang and PostgreSQL languages. To ensure the platform's high performance, DMarket developers chose a microservice architecture with the RestFull API. Clusters built on Kubernetes guarantee stable operation of microservices. A large number of additional modules is also being developed. Architecturally, all modules are built independently from each other, which improves the stability of the system as a whole. One module going down will not lead to the failure of the entire

11 system. All the components of the platform interact with each other using the RestFull API, specifically designed for data exchange between internal and external modules of the system. The DMarket API will be offered to game developers, which will greatly simplify Dmarket s integration with games. The development of services, which will help make the process of adapting a game written on Unity 3D, CryEngine or Unreal Engine as fast and simple as possible with the help of API and specifically developed integration modules, is currently underway.

12 5. Market review The video game market is already very large, but is continuing to grow dynamically. New technologies support video games. It was not that long ago that mobile applications became commonplace, and they already occupy almost half of the entire gaming market. The following is a graph from the NEWZOO growth forecast up to 2020 for this industry. According to the forecast, CAGR is expected to be at the 6.2% level up to the end of 2020, and the market will be worth $128 bln. The increase in the popularity and technical capabilities of VR platforms may, however, lead to a much higher growth rate than the one given. The market for game items is relatively new and has more modest volumes. However, even according to the data provided by only one platform (Opskins), turnover for the first half of 2017 was around $250m. The market for virtual goods as a video game market sector is also actively developing. The turnover of exchanges and trading platforms operating on the virtual gaming platforms for trading game virtual goods now exceeds US$23 bln. According to expert estimates, another US$23 bln is used for making transactions directly between users. For example, the annual skins turnover of the CounterStrike game: Global Offensive (abbr. CS:GO) is estimated to be more than US$10 bln. The skins in these games

13 usually have a bright design and serve to decorate the appearance of objects, including players' models. It is possible to place skins on weapons, helmets, sunglasses, shoes, and so on. At a time when not all computer games allowed players to exchange virtual products, CS:GO publishers included such a feature and started to extract profits from the thriving in-game trade. World of Warcraft is the most famous game with the world's first trading ecosystem. In the World of Warcraft virtual realm, Gold_farming occured in large quantities; the virtual gold was then bought and sold on trading platforms. Because of the increasing value of transactions, the number of virtual item deals between players is now in the billions. There are goods that are sold for cents, and there are those that cost thousands of dollars. 400m players all over the world choose to sell virtual goods for fiat currency and cryptocurrency such as BTC and ETH, which are the ideal solution for eliminating 1 issues with microtransactions and transferring money between countries. Experts have predicted that an increase in the market turnover of US$30-50 bln is already around the corner. This assessment is based on the fact that the high market turnover of today is being created in the trading ecosystem by online players, whose number exceeds 400m. Online players make up only 22% of the 1.8bln players around the world. Over time, the process of trading virtual products will become simpler, and more and more game publishers will use it as a way to earn regular income, realizing that virtual goods are valued by the gaming community. As a result, the market for virtual goods will continue to grow. Another segment of the market that has a major impact on the in-game item exchange market is the skin gambling market. The skin gambling market, which was born in 2011 when Valve first introduced the possibility of exchanging in-game objects within Steam, has long since moved beyond just the gaming industry. In six years, the market has grown almost 2 exponentially: In 2015 Bloomberg estimated that the market turnover was $ billion, and by 2016 it was already $4.8 $7.4 billion according to Narus Advisors. The total market volume of the online bets in the past year was estimated at $

14 billion (data from the statistical portal Statista and the H2 Gambling Capital 6 agency ). Thus, skin gambling in 2016 held a 10.5% 16.8% share of the total online casino market volume. After the trials (the so-called "Valve Crackdown"), last fall, the Washington State Gambling Commission threatened Valve with criminal prosecution, after which Valve began to block Steam accounts using in-game items for betting. It turned out that the best year in the history of the young skin market has also become the worst one in terms of future prospects: Chris Grove, an analyst at Eilers & Krejcik Gaming and a partner of Narus Advisors, who previously saw the prospects of the skin gambling market in a positive light and predicted an increase in growth, has revised his views. In his review "ESPORTS & GAMBLING: WHERE'S THE ACTION?" three scenarios for the development of the skin gambling market in are considered in relation to the future actions of the Valve and the United States regulators. In a negative scenario, the market will gradually be reduced to $166 million by 2020, the basic scenario is to assume a decline to $670 million, and according to optimistic forecasts, the market volume will first drop to $848 million in 2018, and then it will be gradually restored to $969 million by the year Interestingly enough, several months before that, a specialist predicted market growth of up to $20 billion by Had it not been for the "Valve Crackdown", the market for in-game items could have been much more aggressive, but judging by market trends as a whole, these events will only partially slow the development and growth of the market for the sale of in-game items

15 6. Team The DMarket team consists of 82 professionals in all the important areas: developers, marketing specialists, designers, support specialists, financial experts, etc. It is probably one of the most sizeable project teams that we have ever reviewed. We would also like to note that both founders have the necessary experience and a direct relation to the field of the project. Top-management: Vladimir Panchenko founder and CEO: Vladimir is presented as the no.1 private merchant for digital games in the world (15m games sold over the last 5 years via Ebay, G2A and Kinguin) Founder of skins.cash the 2nd biggest virtual items marketplace (12m items sold over the last year) Founder and owner of SunTechSoft Alexander ZeroGravity Kokhanovsky founder: 17 years of experience in the Esports industry Founder of Na'vi (Natus Vincere), one of the most successful Esports teams - the second most popular in the world In 2016, he became a shareholder of ESforce Holdings, the 3rd largest Esports organization founded by USM Group (Mail.ru, VK.com, Megafon) with more than $100 million of investments in the last round Sergei Nemesh CTO Blockchain development specialist 10 years of experience in Big Data Solutions development 8 years of experience in AI development (Smart sensors, Databases)

16 Andrei Havrjuchenko Blockchain architect Senior developer of the DASH cryptocurrency (one of most popular cryptocurrencies in the world with market capitalization of $1.4 billion) 4 years of crypto-development experience 26 years of experience in software development To summarize, the project has assembled a skilled and professional team, and there are prominent specialists in blockchain technology and smart contract programming. We would also like to note that most of the advisors are from the gaming industry, that is, the target industry of the project

17 7. Competitors and competitive advantages of the project Among the competitors for DMarket we should mention Steam initially. Despite the fact that in-game content trading has not been fully implemented by them, the potential of the largest gaming marketplace is enormous. Currently, it does not seem as if Steam s management is concerned about the game items market, but this situation may change once infrastructural solutions are developed. Apart from Steam, there is also the Opskins platform, which is now the largest trading platform for virtual goods. In fact, they are doing part of the work for Steam just by supporting the market. The DMarket white paper describes Opskins in sufficient detail with all its strengths and weaknesses; the main weakness is the lack of official support from Steam. In addition to Opskins there are also the following similar projects: BITSKINS ( ) A platform for trading skins in the CS:GO game. Payments are accepted in BTC. A proprietary API connector has been implemented. LOOTMARKET ( ) A platform for trading skins in CS:GO and DOTA 2. CSGO ( ) A Russian market platform for trading skins in the CS:GO game. SKIN HUNT ( ) A Russian market platform for trading skins in the CS:GO game. CSGODEP ( ) Provides a matchmaking service.

18 The above-mentioned platforms provide a roughly comparable type and quality of service. There is a competitive struggle for loyalty via the setting of attractive prices and unique offers. ICOs for gaming and near-gaming projects (including those hinging upon game objects) are actively gaining momentum. In this context, it is worth mentioning the Skincoin project, an exchange service project based on the universal cryptocurrency, designed for instantaneous trading of skins from games such as CS:GO, Dota 2 and Team Fortress 2, as well as for betting on Esports competitions. The project s capitalization according to Coinmarketcap is now estimated at $1.2 million, although at its peak immediately after the ICO it was estimated at nearly $5.7 million. Skincoin is one of the ICO pioneers of the gaming industry. Another notable and already completed ICO is that of Enjin, a virtual ecosystem project using blockchain technologies where developers, players, and the community will be able to manage virtual goods and in-game items on a cross-platform basis. Capitalization for Enjin at the time of writing exceeds $17 million. Gameflip is a project for creating a marketplace for virtual gaming items using blockchain technologies and Ethereum smart contract architecture, in particular. The project is a product of the Gameflip.com team, a large functioning platform for trading in in-game items, distribution of games and other virtual goods. The Gameflip ICO will start on November 28, the team set the hard cap at $62 million. WAX, a project by the Opskins founders, is running a crowdsale at the same time as DMarket. Worldwide Asset exchange (WAX) is a decentralized, fully functional platform on Ethereum blockchain, which is designed for trading virtual goods in the gaming industry using a widget. It is expected that with the help of the blockchain protocol, platform users will be able to use an unlimited number of scalable retail sites to buy, sell, and exchange virtual values. At the time of writing (8 days before the end of the ICO), according to the official landing, WAX has already raised over 140 thousand ETH:

19 This is far from the complete list of the ICOs of gaming projects that involve trading virtual items. It is clear that the supply of tokens in this segment is off the charts, and an investor does have a choice and there are no issues with unresolved demand for the sector. Moreover, two major crowdsales, WAX and DMarket, are being held at the same time, and apparently WAX is diverting liquidity, which could potentially be directed to the DMarket ICO.

20 8. Development strategy and roadmap The DMarket project describes its development plan up to the second half of 2020, and the main objectives of the project are clear and understandable. The project roadmap states that the alpha version of the platform will appear as soon as Q4 2017, and in the same period the DMT token will be listed on exchanges and available for trade. Here is the further plan that the founders have provided in the white paper and on the project site: Q DMarket security audit and product launch Q API integration in 10 games with 1M users, in-game items value exceeding $200M Q API integration in 100 games with 10M users, in-game items value exceeding $2B Q API integration in 2000 games with 100M users, in-game items value exceeding $40B

21 Overall, the development plan is adequate and boils down to speeding up the process of launching and developing the product, but we believe that the growth rates are overestimated. Also, the project white paper provides developers' plans for the project depending on the sum raised in the first round. Four key values were identified for the attracted funds: up to 5M tokens, 5 15M, 15 25M, and 25 50M. As we know, it was possible to place almost 36M, which falls into the 4th group and gives hope that the plans will be realized in full and in the stated time-frame. The following table gives the basic parameters: The development strategy involves interaction not only with gamers but also with game developers for whom the project aims to offer a unique solution. The DMarket API is a ready-to-use tool for conferring value on any virtual object (whether this be a sword, an armor suit, or gemstones), as well as for the monetization of such objects. The project libraries will cover most popular engines, such as the Unreal Engine, CryEngine and Unity3D. This will allow DMarket to be integrated into most of the games on the market. The support of custom engines will then be added and integration into mobile games (ios and Android) will be carried out.

22 We would like to note the following key benefits for developers: An increase in profits. Publishers will receive most of the commission from each transaction involving their intellectual property game items. Lifetime Value increase. The increase of the life cycle of a game due to the anticipated increase in gamer interest in in-game objects; Gamers will not only spend time playing their favorite game, but also earn profits from their hobby. The creators of virtual objects presented on DMarket will receive most of the commission fees (up to 80% of the commission from each transaction on DMarket). The solution is aimed at the emergence of new ways of monetization and the increase of the total gains. Thus, by providing game developers with an additional tool for monetization of their products, it is expected that they will start customizing their developments (games) for the DMarket platform and the gamers would automatically use DMarket services. The API developed by DMarket provides a range of opportunities for entrepreneurs. Game assets presented on DMarket could be integrated into popular online stores, used as payment for goods or services. After surpassing the 10-million-user mark, DMarket developers will then focus on creating their own blockchain solution.

23 9. Marketing strategy The DMarket project has received strong marketing support. Announcements and reviews in a variety of blockchain publications, both global and Russian, can be easily found online. The project site itself provides links to the most important publications. They include the New York Times, Forbes, CoinTelegraph, Bitcoin Magazine and many others. It is clear that the founders and the numerous project team understand the role of marketing in the ICO s success and in the further promotion of the project. Partners of the project include: Pantera Capital - Founded in 2013 as the first U.S. Bitcoin investment firm, Pantera Capital is the leading blockchain investment firm and one of the largest institutional owners of bitcoins. 4A Games - Video game development studio (Metro 2033, Metro: Last Light and Metro Exodus). 4A Games is releasing two games soon: Arktika.1 (a game in full VR) and Metro Exodus (one of the top 25 upcoming games in 2018). GSC Game World - A leading developer in Europe (S.T.A.L.K.E.R., Cossacs game series). Latham & Watkins - Latham & Watkins' global fintech industry group advises clients from New York, London, Frankfurt, Hong Kong, Singapore, and Silicon Valley on trailblazing corporate transactions and complex regulatory matters.

24 Tatem Games - Tatem Games develops versatile games for mobile market (Carnivores, Vivesector, Cryostasis). KISS Ltd. - A premium UK based publisher of independent PC games. Focusing on finding notable independent games, KISS Ltd. has launched over a hundred titles (Pixel Puzzles Ultimate, The Culling of The Cows, Nosferatu: The Wrath of Malachi, etc.) Cooley - Cooley is the leading U.S. legal advisor for cryptomarkets and ICOs, and is ranked as one of the 50 largest law firms in the world. The project is also popular on social media. Each official page of the project has many subscribers. There is a very active discussion on the Bitcointalk forum and a sufficient number of views on the YouTube channel. 32% of raised funds will be allocated to further marketing; this figure is almost $5 million already. The project documents do not disclose the specific mechanisms that will be used by the team in detail, but their marketing competence is unquestionable. DMarket also offers a special program for developers and publishers. Up to 18% of the investments attracted by DMarket as a result of the two rounds of the token sale will be directed towards encouraging developers and game publishers to create and develop profitable and attractive business models for in-game objects circulation on DMarket.

25 10. Economy of the project DMarket will be monetized through the commissions charged for sales of various items on the platform. The white paper states that the commission will not exceed 5%, which is important given the competitive environment. Most of the received commission fees will be transferred to copyright holders. The white paper provides a projection of expenditures through 2020 and a revenue projection through In total, in the period until 2020, DMarket is planning to spend $63.5 million: Expenditures will, as usual, be financed both from funds raised during the ICO and from profits after commencing operation. If the hard cap is reached during the second round of the token sale, DMarket will be able to attract 133,000 ETH. Another $11 million has been raised by the team during the first round of the ICO. Thus, with the current rate being ETH/USD = 370, DMarket will not fully cover its own expenses. This fades, however, after looking at the DMarket forecast Key Metrics:

26 According to the white paper Key Metrics, by 2023, the total value of gaming assets will reach $900 billion, which is equivalent to the current capitalization of the world's most expensive public company, Apple (Apple is even slightly less that this). The same forecast says that by billion people will be using the DMarket platform, which is 12.5% of the entire world population according to UN projections. If DMarket charges a 5% internal platform turnover commission, the revenue in 2020 will make up $1.08 billion, and in 2023 $5.4 billion. With such profits, the company will certainly be able to finance the operative costs mentioned above. However, we believe that the given estimates are pipe dreams and have nothing to do with reality. An unrealistic financial model is the project's weakness that should be brought to investors' notice.

27 11. Risks The economic risk is stated above: we cannot adequately calculate future revenues for the platform, given high competition in the market and the utopian nature of the financial calculations presented in the white paper. At the same time, we believe that the costs given in the table we show, were estimated with a substantial margin. So the DMarket project is most likely to be viable in the coming years, but the growth rate of its client audience is unlikely to be as fast as expected in Key Metrics. Having compared the project with its competitors, the following should be acknowledged: all the projects have their strengths and weaknesses, and DMarket is no exception. It is most likely that the market will be divided in proportion to the value of the marketing budget and its efficiency, at least until Valve decides to take game item circulation under control. From a marketing perspective, looking at the successful WAX ICO, it has to be noted that this project is more likely to take the larger share of the market, simply because they can afford to invest more in the promotion of the product. External risks include possible further steps taken by the Valve company to combat online services using the exchange system developed by Valve for their own commercial purposes. These risks are very difficult to calculate: on one hand, the transition of online services that work with skins to the new business model solves the current legislative requirements. On the other hand, no one can guarantee that laws or Valve policy regarding the terms of the Steam license agreement will not change or become tougher. It is also worth noting that the actions that were taken by Valve at the end of 2016 with regard to online services already have a negative impact on the size of the skins market. It is difficult to determine the speed with which the market will restore itself. In fact, the entire grey market for skins is based on one problem the lack of opportunity to withdraw money from the Steam official platform. If Valve decides to rectify this situation and add such an opportunity to its platform, such a decision will "bury" the whole skins market as it functions currently.

28 12. Token investment attractiveness DMarket tokens are being sold during the ICO. These are ERC20 compatible tokens that will be listed on cryptocurrency exchanges, according to members of the team. DMarket token can be converted to DMarket coin at the rate of 1:1, at the owner's discretion. Only DMarket Coins will have infrastructural significance since they will be used as an internal currency. As already stated above, the following will be nominated in DMarket coin: Purchase/sale of in-game items Copyright royalties Payment for the purchase of premium accounts for wholesalers and retailers Payment for BigData analytics The mere increase of DMarket platform turnover is not enough for the DMarket token price to grow. It is important that the turnover be predominantly internal, i.e. that funds that were once put in the DMarket ecosystem should not be withdrawn. In other words, DMarket coins received for the sale of game items should not be converted to BTC/ETH/fiat but have to remain within the system to be used for counter transactions with other game items. A positive balance is required for depositing and withdrawing BTC/ETH/fiat assets from the DMarket infrastructure. The specificity of the target audience is instrumental to this. So, the most important point is the quality of implementation if the team can really make a competitive product and position it in the market among competitors, given the smaller marketing resource, price growth for the token is possible. Therefore, when making an investment decision we believe that the focus should be on the credibility of the team members qualifications. We can recommend participation in the ICO to investors who have independently assessed the team s qualifications and experience, and accept the risks specified in the review. We find that the Pantera Capital investment fund being among the partners of the project is an additional risk to the token price. Pantera Capital acts as an early DMarket investor. The DMarket team did not provide us with information about whether Pantera Capital is an investor in the capital or in the tokens of the project and whether a lock-up period is provided. Therefore, as always in such cases, we

29 are obliged to note the risk that the ICO will, among other things, be used as an exit for previously attracted speculative capital, which could put pressure on quotes for the token. The information contained in the document is for informational purposes only. The views expressed in this document are solely personal stance of the ICOrating Team, based on data from open access and information that developers provided to the team through Skype, or other means of communication. Our goal is to increase the transparency and reliability of the young ICO market and to minimize the risk of fraud. We appreciate feedback with constructive comments, suggestions and ideas on how to make the analysis more comprehensive and informative.