Dear HybridBlock Community,
This update is written to address some important questions the community has been asking. As 2018 has closed, we think this is a great opportunity to provide a recap of the year and also share with you our vision moving into 2019.
First, let’s review the year.
HybridSummit– We hosted 2 major HybridSummit series, Macau and Bangkok. Each brought in over 1,000 guests and speakers. We firmly believe in collaboration and education as a fundamental ethos to getting new users on our platform and our events received great feedback from the community.
Team Growth– We started with 5 members in August 2017 to nearly 50 full-time employees across Singapore, Philippines, and Hong Kong. Check out our LinkedIn to see more about them. Everyone is very driven and focused to grow HybridBlock into a world-class ecosystem. We couldn’t do anything without this dedicated team of professionals.
Beta Testing – Our development team fixed most of the original issues’ resident on Hybex. It’s still not perfect, but we’ve seen significant improvement since our initial beta launch and we aim to continue to work on making improvements. New token listings and our zero-fee promotion are positive milestones and a complete front-end overhaul is coming in 2019.
Additionally, closed beta testing is ongoing with BaseTrade. There is a lot of positive feedback and we are instituting a few small changes to the UI/UX. We strongly believe this will be a popular application for users looking to move between fiat and crypto without unnecessarily high fees and clumsy UX/UI.
We’ve had a lot of delays this year. In the spirit of complete transparency, we want to put them “on the record” for the community to see. This is important for us to be accountable to you but also important to see our vision moving forward.
Community Interaction– Sporadic updates coupled with slow communication and a declining market mean YOU, the community, feel neglected, unheard, and emotionally charged. You have every right to feel this way. Our plan is to provide timelier updates while also being reachable by the community frequently in the telegram group chat.
Technology Delays– We’ve had a series of technology delays from the get-go. After many setbacks, we’ve brought most of the development in-house.
Central – The HybridCentral app did not gain the traction that we expected, nor was it anywhere near as popular as our HybridSummit series. We will continue to focus our efforts on our Summit and Seminar series, while allowing participants/sponsors to access these summits at discounted rates through the use of HYB tokens.
Hybex – Conducting the public token sale on Hybex brought a lot of issues right away, which immediately affected potential token purchasers and actual users. In hindsight, we can openly admit that an open beta may have been a mistake. The motivation was to show everyone progress and a real product, but ultimately, the platform needed more time.
BaseTrade – In July, upon delivery of the back-end architecture for Basetrade, our team discovered that it was not fit for public usage. Four months later (December 2018), we have a working beta with a much better design.
Banking/Payment Processors– Through 8+ months of applications, many rejections and restarting the process over and over, we’ve managed to onboard a few partnerships at reasonable rates. But it took much longer and was more expensive than expected.
Market conditions– A +90% loss of value in most crypto assets, meant the entire market was hurt, inclduing HybridBlock. This also meant a decline in new users entering the space and many leaving in general.
The Token Sale– HYB raised over 41,000 ETH ($24.6 million USD at the close of the token sale)* between the pre and open token sales. Mixing USD values and a declining price of ETH caused a lot of confusion on this number. Initial contributions came in when ETH was around $1,200 USD but at the close of the token sale, the value of ETH had dropped dramatically. A more in-depth explanation of the logic of HODLing is below in “The Ugly”.
*As a note of finality, the above numbers were submitted to Malta as part of our class 3 & 4 VFA Service Provider notifications.
HODL– Keeping a significant proportion of our treasury in ETH and other cryptocurrencies for an extended period was arguably the most regrettable decision that we’ve made. This was, to a certain extent, unavoidable (given the advice that we may come under legal scrutiny if any of the funds received from the ICO were liquidated prior to token distribution) but, in hindsight, we perhaps let our ideals cloud our economic foresight by both underestimating the severity of the 2018 bear market whilst at the same time overestimating the amount of operational costs that would be settled in cryptocurrency.
A positive takeaway from this, however, is that this has taught us to be extremely calculated and efficient in order to run the business and be successful, an ethos that we will continue to practice in future bull markets as well.
Even if the crypto market takes another 1-2 years to recover, the team at HybridBlock is still committed to fighting, surviving, innovating and thriving.
We project that, in 2019, we will see a significant growth in the security token market. This new opportunity is a major focus for HybridBlock. One challenge with utility tokens has always been a misalignment between token purchasers, token users and token issuers. A lack of practical ideas, reduced liquidity and other limitations have weighed the ICO market down and may well continue to suppress growth until a significant recovery and practical use cases reignite capital investment in the market.
Security tokens have the potential to modernize existing capital markets and integrate them into the blockchain ecosystem.
An unlimited pool of companies with real underlying assets, holding intrinsic and verifiable value, represented by a security token are, in our view, likely to be the future. The ability to run institutional-grade KYC/AML and programmable features means that these security tokens will meet the requirements of regulators in their respective jurisdictions. This system can revolutionize the capital markets by making the process of fund raising more transparent, flexible, accessible and practical for companies, while also promoting a global exchange of value to grow these projects efficiently.
We also see the security token market recreating utility for cryptocurrencies in general, which in turn will benefit the rest of our business. A large part of the rise in prices of ETH, BTC and other token trading volumes in 2017 were attributable to the increase in demand for ICO investments. Our view is that, by facilitating the growth in the security token market, we will also reignite demand for cryptocurrencies for both the companies that raise capital through STOs (and integrate cryptocurrencies into their business model) as well as those that invest in such companies (potentially using/receiving cryptocurrencies as payment, dividends or coupons).
HybridBlock is fully committed to obtaining the licenses required to deal with and operate an exchange for the trading of security tokens in 2019. This takes time. Not only to work with regulators, but also for the market to mature and develop in ways that will allow us to take full advantage of the licenses we obtain. Many companies have already approached HybridBlock to tokenize and list their security token. We believe this will attract even more participants into the space as stronger investment alignment develops. Security tokenization is a huge opportunity to bring even more value to the HybridBlock ecosystem. Not only could HybridBlock customers trade these security tokens on a regulated and licensed platform, but HybridBlock could assist businesses in building the entire token framework for them through security tokenization software (currently in late stage development). This software coupled with a security exchange license and the appropriate service provider licenses has the potential to place HybridBlock as an early leader for companies looking to transition into digitized securities on the blockchain.
We have been quiet about this because of the sensitivities revolving public announcements of our progress with regulators. As we get closer to achieving these goals, it gives us confidence to soon start talking more about where and how we are applying for these licenses.
Second, let’s answer some questions.
What’s your vision for HybridBlock by December 2019?
First and foremost, to be a leader in Southeast Asia in the security token (or digitized securities) space. We have invested so much time in the processes necessary to provide the platform to issue and/or trade these tokenized securities.
Second, to continue servicing our existing communities through Hybex and BaseTrade, giving new users an easy and intuitive way to buy their first cryptocurrency.
Mass adoption has not occurred yet. Millions still don’t understand the functionality of different coins and cryptocurrency exchanges. This market correction is a sign that we are NOT ready yet. How do we move forward in 2019? Create applications and layers that are seemingly invisible to the user. Just like a phone call or a text, you don’t necessarily know HOW but you know it works. We want crypto to be the same experience.
Our vision is a fully functioning fiat-crypto onramp, BaseTrade, that makes cryptocurrency just as easy to use and trade as traditional currencies. We say “use” because BaseTrade could ultimately become an everyday payment system. Pay for that candy bar, pay your bills, buy a plane ticket, all using BaseTrade – that’s the vision by the end of the year. Integrating major payment systems and BaseTrade’s technology into everyday transactions. Using familiar techniques that have proven successful like shopping carts, basket of items, and marketing plans that create buzz and ease of use.
For the Exchange, we see a streamlined listing process, user-friendly trading tools, a robust referral system, HYB token staking, margin trading and other exciting features
A lot of rumors and concerns in the Telegram group, any comments?
There are rumors going around about nearly every project. When token values drop 90-99% in a year, people are going to inevitably question what’s going on. There have been concerns that HybridBlock is not visible enough on social media, not active enough with video updates and demonstrations. We hear those concerns and have made a concentrated effort to improve over the last month and will aim to continue this trend going forward.
There are some obvious improvements needed on Hybex, what’s the plan with this specifically?
The biggest issue is exchange volume. How do we attract new users away from existing platforms or bring completely NEW crypto users to our platform? It comes down to financial incentive, attractive trading tools and incredibly user-friendly interface.
Throughout January 2019, our design team will be updating the Hybex look and feel to be more user-friendly and one of the most optically appealing trading platforms in the market.
Financial incentive comes through trading fees and liquidity. For fees, we aim to run zero fee promotions, implement an attractive HYB staking model and keep the standard trading fees extremely competitive. Hopefully, liquidity will slowly improve as we bring more exchanges online with our global order book. Some unique pairings are not available (anything with HYB) on other exchanges, but we expect to continue preferred API integration into global exchanges throughout 2019.
We aim to add new trading tools throughout 2019 like margin trading, crypto lending, enhanced charting tools, in-depth trade analysis and market insider news from our trading team, and many more unique features.
A long overdue referral program is also being designed. We hope to make this a profitable model for those who bring users to the platform, allowing supporters to enjoy a revenue stream from their referrals. For example, if someone you brought to the platform is actively trading, you would share those trading fee profits with HybridBlock. This is just one of the ideas we are trying to work into the referral system.
Keep in mind we are also juggling the financial side of running the exchange. As the market consolidates, we need to be increasingly cautious about which avenues to pursue. Listing a bunch of tokens is costly, and while it may bring short term growth after a token sale, it would not ultimately equate to longevity. Our priority is longevity and runway, and each decision we make to spend money needs to be justified with a foreseeable return.
What’s the plan for HYB token? More use cases? Staking?
We remain committed and will continue to think outside the box as to how we can bring value to the HYB token in 2019. Many of those hurt by the market are our close business associates and personal friends and we want nothing more than to bring value back to HYB. We are still determined to deliver great products throughout 2019.
Our immediate plans for HYB are likely to be “staking” on BaseTrade. We are still finalizing the exact number, but users that stake or hold HYB tokens on BaseTrade will be able to buy and sell without platform fees (currently estimated to be around 1%).
Once we have a good handle of staking on BaseTrade, we would like to transition a more complex staking model into Hybex.
Other potential plans for HYB Tokens include: internal token burns from treasury, using HYB tokens for service fees across other platforms within HybridBlock, token swaps, online shopping and reward systems for holders, and many more. We also plan on allowing Hybrid360 clients to receive discounted services when paid for in HYB tokens, and we are looking into providing discounts to our security token exchange users via the use of HYB Tokens as well. Bringing more utility to token holders is a huge focus of effort for the team.
As a note: The core team has not taken payout in HYB Tokens. You can follow the treasury wallet on Etherscan to see Hybrid’s core team have not distributed tokens for payout. Hopefully this will also help with token value by keeping these from circulation for as long as possible.
A quick reminder of the breakdown, about 210 million HYB tokens are set aside for the core team and another 200 million HYB tokens are set aside for marketing/partnerships. The current balance of the treasury is over 400 million HYB tokens, meaning, marketing, angel investor and core team tokens haven’t been fully distributed.
What else is HybridBlock working on? I heard about HybridPremier and Hybrid360 in August.
HybridPremier began trading in November 2018 for high net worth clients looking to move in and out of large cryptocurrency positions. A full-service OTC desk. They are a full-service, professional trading team offering highly personalized services.
Hybrid360 began advising projects in July 2018. A team of advisors in legal, token economics, white paper, concept development, marketing throughout Asia, treasury management, and other critical services help new token projects. The Hybrid360 team is made up of our core team and some trusted advisors.
Both product lines give HybridBlock important access to exciting projects for Hybex and help our team maintain critical access to the industry through connecting with some of the newest ideas in the space. Additionally, these revenue streams help sustain growth and operations as Hybex transitions out of beta and BaseTrade gets running. Moreover, keeps us on the forefront of industry development. Hybex and HYB Token can benefit from the additional trading volume, exclusive access to the newest projects, and a deeper understanding of how new projects in the market are adapting.
A great example of how this plays out is that we’ve discovered STOs are generating a lot of attention in 2019. We’ve partnered with a software team to roll out a security token platform, capable of assisting companies looking to tokenize real world assets or other financial instruments (and there are many!). We are pursuing relevant security token licenses in more than one jurisdiction – this is a big reason for full compliance activity on Hybex even at a cost of market opportunity. Our plan is to be among the first few to be able to guide companies through the STO process, create a security token, and list on a fully regulated and licensed HybridBlock security token exchange.
Why so many projects?
We may be delayed or paused on some of the original projects, but we are still focused on bringing value to the ecosystem. As the industry completely evolves and transforms, it is important to us that we are flexible enough to take on parts of our business that will benefit the community and increase adoption and use of our token. We need to prolong the financial runway of HybridBlock to be in a strong position when the next major movement in cryptocurrency happens. The projects above are all potential revenue generators today. On the other hand, we paused a few projects that we deem too risky right now (like Terminal and the Central application development). We will pause these until we have a surplus of revenue coming in and market demand is more favorable for release.
It seems like you’re very aware of the monthly burn, runway and other financial considerations. How are things looking?
Operating in a bear market is extremely sensitive. It is easy to be distracted and chase down various rabbit holes looking for phantom profits. Since day one, we’ve been extremely cost conscious. Our team-members each bring vital skills to the project, our use of marketing is very strategic, and we’ve learned to choose our business partners much more carefully. The drop in crypto has hurt us, but our financial management team is doing a great job of keeping our burn to a minimum. What does this mean for users? We won’t have an aggressive token listing regime (each token is expensive to build, maintain order book, maintain reserves, devote resources, etc.), some projects will be shelved (like Terminal and Central App) and we will have to use more cost-effective and innovative marketing strategies to develop our brand.
Who’s making the decisions?
Hybridblock is committed to furthering a transparent, responsible and value-based corporate governance framework that includes effective oversight and appropriate information disclosure.
The Hybridblock team understands that corporate governance is a joint obligation and aims to ensure that the provisions and the spirit of our corporate governance framework is followed correctly. The team also collectively discusses ways in which we can come to consensus for decision making.
Since Jonathon Bates’ departure, all material decisions are now ultimately made and/or affirmed by the executive team and the founders.
We also hold weekly management calls attended by all of the department heads from Head of Exchange, Head of Legal, Head of Marketing, Head of Security, Head of Treasury and Head of Operations, each of whom give updates on their respective departments. These calls provide synergy and focus towards the same objectives.
How does the rest of the team look?
We’ve hired a hyper focused team in Asia. It took a lot of time to put the team together, but they are finally onboarded with Hybrid. Most of them have started just recently joining our team in Q3 of this year. They had no choice but to jump head first into the fire.
Our Head of Exchange comes from a prominent crypto exchange in India; our Chief Investment Officer comes from a very successful Wall Street trading background and is finally able to help us with treasury management; our Chief Legal Officer comes from a world class firm and is positioning HybridBlock in the best possible direction to be fully compliant and ready for a securities license; our newly appointed Head of Compliance has over 19 years of cumulative legal, compliance and regulatory experience; and our customer service team is full of linguists and agents ready to respond.
When is the next HybridSummit?
Our first event in 2019 will be at Hong Kong Blockchain Week. We want to ensure HybridCentral’s education line – HybridSummit Series – provides a stage for up and coming companies to learn more, spread their innovative ideas, and collaborate with industry leaders at zero cost to us financially (i.e. each summit event must be at least revenue neutral for us). The consolidation of crypto companies in 2019 means there are great opportunities for collaboration and partnerships to ensure the community thrives and retains the best talent, the best ideas, and the passion for change that began in 2009. HybridSummit events are the perfect venue for these partnerships to emerge.
Is there any plan to open signups to United States and Chinese users?
From the beginning, we were adamant about our focused markets and regulatory compliance. Chinese law is very strict regarding cryptocurrency, and we will be compliant with those requirements. This is a long-term strategy while we seek guidance to understand how we can operate and serve these customers in a compliant way.
For the United States, it was never our target market, never marketed to, never sold to nor have we ever allowed United States customers on HybridBlock platforms. We went so far as to block the IP in the US and through our KYC process, US residents/citizens cannot obtain verified accounts on Hybex. We firmly believe in the future of blockchain tech is in Asia and that is our focus. Our team is in Asia (Singapore, Hong Kong, Taipei, Philippines, Bangkok). Will we open to the US one day? There is a good chance that we will, but until a clear and transparent regulatory framework is developed, we are not ready to open our doors in the US.
We believe that the US market is one of the biggest and strongest in the world – however, we don’t think we can compete with the long-time proven legacy companies, at least for now. Our strength and focus is Asia, and the potential for growth here suits perfectly for our business model.
There’s a lot going on, what’s the roadmap going forward?
In the short term – our roadmap is focused on the following;
Launching BaseTrade – we began closed beta testing last week, and plan to launch once we are totally satisfied with the functionality. We urge you to visit basetrade.io and share with your friends and associates who want to learn more about this new platform by signing up for updates and early access via email.
Stability on Hybex – featuring smooth trades, quick deposits and withdrawals, useful tools, new and exciting project listings. We want to focus on updating the design interface, implementing community feedback on UI/UX and making a NOTICABLE upgrade to Hybex to attract and retain new customers.
Central to Summit– After our second HybridSummit, in Bangkok, we pivoted HybridCentral to focus on summits and seminars. We found these events are more impactful throughout Asia, bring more interest to our platforms, and provide more focused education opportunities. Our team and many others established beneficial networks and relationships during these events. Education is simply not revenue generating for us right now, and we need to be conservative on what resources we spend, and where. So, for the immediate future we are shelving development of the app and focusing on successful events for Central.
HFX – Our native stable coin solution. BaseTrade is a natural fit for HFX, with Asia-focused currency backings. As we aim to finalize more banking partnerships in localized regions and BaseTrade’s core functionality, we will look to implement Asia-focused HFX stable coins. The original idea for us was to have a central bank support this stable token, but we have seen how difficult that may be. Hundreds of hours of discussions with regulators on how this would not threaten their own native currency has not been an easy path, but we believe that the increased demand for stable tokens will help pave the way for our own stable token that is backed 1:1 with fiat.
Terminal – we have a basic functioning software with about 12 months of completed development. However, we believe the institutional investor marketplace is not ready for it. To consolidate and ensure we have enough runway for the next 1-2 years, we feel it’s important to shelve this product line until BaseTrade and Hybex are profitable and the marketplace is ready. For now, our internal trading team is pressure testing the software, recommending fixes and making notes on better features.
STO platform – Developing an end-to-end automated system in which tokenizing assets is seamless, simple, regulated, and with proper KYC/AML controls in place. Security token listings is the next step following this platform.
What do you wish you could tell the HybridBlock community?
First off, we value our community immensely, and thank you for your patience, understanding, and loyalty as we progress and grow as a company!
It’s a tough time in the market for so many projects, but we MUST remain positive for the future. Two years ago, Bitcoin was not a household name, governments feared it, people associated it with the dark web and nefarious activities. The whole ecosystem has come so far, the world knows Bitcoin (or has at least heard of it) and we are at a critical tipping point with government regulation and widespread adoption.
While there is absolutely space for criticism, we strive for constructive criticism so that we can build verses being ripped apart, and to improve the platforms and projects we’ve begun. Asia has so much potential and while the world understands blockchain and DLT technologies, we see this as an incredible opportunity for all of us to win in this space. For projects that are smart, spend wisely, and go after a strong business niche, there is so much opportunity to be a part of a global financial movement. The internet didn’t become an online shopper’s paradise overnight, it took nearly a decade before people really trusted and understood online shopping. Imagine the missed business opportunities of the internet if everyone ran away after the “.com” bubble burst?
Innovative companies are all working collectively to grow digital assets, build products, form partnerships, and shape regulatory frameworks so that we can become better educated about how economies are impacted. We believe that 2019 will be filled with collaboration, alliances, and mergers that will drive institutional growth and participation. Building this infrastructure requires new and creative ways in which we can improve the security token liquidity and arena. The entrance of institutional players creates a lessening of the decentralized movement, and brings familiar crypto trading that involve crypto contracts, derivatives, and physically delivered products. Crypto-digital assets and the entire token industry is a volatile and early space. We want to remain nimble while focusing on regulatory acceptance and licenses so that we can capture opportunities in 2019.
We are hungrier than ever and excited to remain hyper focused on building our platforms, partnerships, and more. Introduction of our security token platform, Basetrade, and overhaul Hybex will be huge milestones for us.
We look forward to a great year together. Thank you again for all that you have done and continue to do to make our platforms stronger!
HybridBlock does not make any express or implied warranties or representations with respect to the information contained in this communication (the Information) and, to the extent permitted by applicable law, HybridBlock expressly disclaims all implied warranties (including without limitation, any implied warranties of originality, accuracy, timeliness, non-merchant infringement, completeness, ability and fitness for particular purpose) with respect to any of the information. Without limiting any of the foregoing and to the maximum extent permitted by applicable law, in no event shall HybridBlock have any liability regarding any of the Information for any direct, indirect, special, punitive, consequential (including lost profits) or any other damages even if notified of the possibility of such damages. The foregoing shall not exclude or limit any liability that may not by applicable law be excluded or limited, including without limitation (as applicable), any liability for death or personal injury to the extent that such injury from the negligence or wilful default of itself, its servants, agents or subcontractors. Information containing any historical information, data or analysis should be taken as an indication or of any future performance, analysis, forecast or prediction. Past performance does not guarantee future results. The Information should not be relied on and is not a substitute for the skill, judgement and experience of the reader, its management, employees, advisers and/or clients when making investment and other business decisions. All Information is impersonal and not tailored to the needs of any person, entity or group of persons. of the Information constitutes an offer to sell (or a solicitation of an offer to buy), any security, financial product or other investment vehicle or any trading strategy.
“B2B reporter – Content Manager – Contributor – Fintech – Blockchain – Cryptocurrency”
Simon Chou is a B2B reporter and content manager specializing in technology and finance. He has worked with many clients in the fintech and blockchain space. He holds investment positions in bitcoin and other large-cap cryptocurrencies, and has been reporting on cryptocurrency since 2017. Currently, Simon is the content manager for a major cryptocurrency exchange @HybridBlockHQ.