Well thought out project with a sound cryptoeconomic foundation. Appears scalable, secure, and has an engaged community backing it. Concerns include background of the Nebulous team and potential over reliance on Bitcoin. Resulting in a token score of 36.5 out of 50.
Overview of the process Crypto Jungle uses to to conduct token audits.
Sia is a peer-to-peer, cloud data storage platform built by Nebulous on technology originally forked from Bitcoin. Connecting hosts with spare storage capacity with users who need to store data.
The terms of the contracts between hosts and users are stored on the Sia blockchain. Hosts are required to stake Sia and periodically prove user files are available. Ensuring agreements made with users are lived up to.
Miners on the blockchain verify the claims of hosts and earn Siacoin as their reward.
Cryptoeconomics (5 points out of 5)
Siacoin employs proof of work for security and token emissions. Value is generated via transaction fees charged for storing data on the network.
Incentives are aligned across stakeholders by requiring proof of storage by hosts. Who need to periodically prove the files they’ve agreed to store are available to users.
To ensure network security and token availability for potential users. An endpoint inflation rate of 2.3% is targeted.
Network effects are generated by hosts. The more hosts there are the cheaper it is to store data, attracting more users as the price for using the service declines. A secondary effect is contract options for providing storage are flexible. Hosts offering a variety of ways to store data attracts users by giving them more options.
Investability (2.5 out of 5)
Capital allocation appears disciplined. Driven by Nebulous Inc., cannot be independently verified. Network storage capacity, volume of storage providers, and storage users have all increased in the last 90 days.
Value is captured from users of the networks storage services. With payment in Siacoin being required for access. Somewhat diminished by the fact a portion of the fees earned for storage services rendered is paid to holders of the Siafunds token.
Siacoin’s brand has not benefited as much as would be expected given its status as the first launched and longest operating decentralized storage provider. Filecoin sucked up most of the available attention and credit for the concept of decentralized storage during the PR blitz surrounding its fundraising process.
Providing storage is a brutally competitive space with numerous centralized (Dropbox, AWS, Google, etc…) and decentralized (Storj, Filecoin, MaidSafeCoin) alternatives to Sia. Making defensibility on factors other than being a low cost provider challenging.
Distribution (4 out of 5)
Siacoin’s distribution model is proof of work with no pre-mine. Optimizing for long term usage with a continuous emission of new tokens.
No token sale occurred for Siacoin. A developer’s reward equal to 3.9% of contract storage value is payable to holders of the Siafund token. Allocated exclusively to Nebulous and other insiders as a reward for creating Sia.
Siacoins are broadly distributed via mining. Siafunds are only available for purchase by institutional investors as a liquidity vehicle for Nebulous.
Endpoint inflation of 2.3% annually limits the supply. With supply potentially further constrained from burning the tokens staked by storage hosts who do not live up to the terms of the contracts committed to with users of their services.
Team (2.5 out of 5)
The Nebulous Inc. team that launched Siacoin have distinguished backgrounds with overlapping predominantly technical skillsets. These backgrounds do not appear to include experience in the storage industry or building distributed computing systems.
Instead they decided to fork Bitcoin and build on it. Confident it would be a robust foundation for a decentralized storage solution. They communicate their intentions transparently and frequently on their Youtube channel.
Project (4.5 out of 5)
The team’s frequent and public communication indicate a robust understanding of the competitiveness of the file storage ecosystem. Developing a unique value proposition of Crypto Hulu to stand out from the crowd. Optimizing their service to host professional quality video content for streaming platforms like Netflix and Hulu.
Scalability (4.5 out of 5)
Nebulous Inc. has 15+ well-credentialed employees. Who have put together a detailed roadmap with breakdowns of the projects long, medium, and short term objectives.
The team focuses on improving developer tooling. Frequently updating Sia’s Software Development Kit. Nebulous has what appears to be a sustainable burn rate. Cannot be independently confirmed since they are a private organization.
Users access the network across the globe.
Securability (4 out of 5)
Siacoin has over 300 storage hosts. Ongoing bounties are employed to identify and resolve bugs.
The Sia team has focused on making mining widely distributed. Going as far as starting a company, Obelisk, to build mining rigs for the network to try and maintain fairness. Despite these efforts mining has still coalesced into 4 pools. There appear to be enough participants in the pools to make a relatively distributed network of miners.
Rewards are tiered with 3.9% of storage contract values going to Siafunds holders with no direct rewards provided to Siacoin holders. Easily stored securely via a variety of wallet options.
Decentralization (3 out of 5)
The Sia network is the primary source of income for Nebulous Inc. Which has no plans to decentralize governance and is unlikely to do so in the future given its importance to their operations. Making Nebulous’s role in Sia’s functioning critical, with minimal chance the network could survive absent their involvement.
Engagement (4 out of 5)
Developer adoption of the protocol has been strong with a wide variety of projects integrating it as a storage solution. There is a large, active Reddit community welcoming to new users and a Discord with similarly high engagement.
Twitter sentiment is positive and includes frequent mentions. The project has been in persistent downtrend on Google Trends during the outbreak of crypto winter.
Risk Management (2.5 out of 5)
No code audit occurred. Presumed strong as a Bitcoin fork. Demonstrates some anti-fragility since Bitcoin has proven anti-fragile since its release. Independent confirmation of anti-fragility required to feel fully confident in its robustness.
Funding risk is low as Nebulous has raised funds in USD to support the project. 5 years of decentralized operations makes regulatory risk low.
While not a traditional attack risk. Nebulous has mentioned in past communications potentially swapping out Siacoin for another asset to operate the network because they do not view it as vital to the project’s success.
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