Codex ICO Review: A comprehensive review and analysis on Codex ICO, which aims to disrupt the lucrative Arts and Collectibles industry.
The Codex protocol is a decentralized, blockchain-based registry for the highly-lucrative niche Arts & Collectibles (A&C) market. Codex aims to provide a standardized infrastructure for high-valued, unique assets that includes art collectibles, jewelry, antiques, vintage goods and fine wine. The Codex protocol allows for the digitization – recording, authenticating and securely storing important data called ‘Provenance’ – of unique assets on the blockchain, thereby opening a variety of use cases and applications that can accelerate ancillary services throughout the A&C industry.
A fundamental component of a unique assets’ value is called ‘Provenance’, which is an official trail of historical records and associated documents relating to the asset that includes identity data, the chain of ownership, authenticity and other relevant data.
The blockchain-based, open-source solution provided by Codex’s protocol aims to solve the following issues:
- Highly Fragmented: The Arts and Collectibles industry consists of a highly fragmented network of stakeholders with little to no forms standardization.
- Absence of Centralized Registry: Currently, the absence of a centralized or standardized title registry makes it hard to verify the provenance of unique assets, which gives rise to various instances of friction within the industry.
- Low Digitization Growth: Only 15% of A&C sales were transacted via online, signifying a strong resistance towards online commerce. This is expected due to the nature of high-valued assets that require strong verification and authentication processes that necessitates physical presence.
Since the core of Codex’s solution is digitizing Provenance data into the blockchain, all information and data pertaining to a unique asset are verifiable and immutable. The registry will record the following information:
- Historical records detailing the ownership and transmission chain of the asset since the record is instantiated on Codex’s registry
- Metadata hashes that include past appraisals, restoration records, photographs, receipts and opinions of validators
The use cases for different stakeholders within the auction industry include:
- Auction Houses / Galleries / Dealers: Codex simplifies the vetting and inventory consigning process to enable greater efficiencies for intermediaries. It makes it much easier to protect vendors from dealing with inauthentic works or assets tainted with money laundering elements.
- Collectors / Investors: The process of accessing, verifying and purchasing unique assets would be much more streamlined and efficient, enhancing the user experience whilst retaining the authenticity of high-valued, authenticated assets. Alternative models such as fractional ownership could also be offered.
- Artists / Estates / Foundations: The work of artists can be efficiently cataloged and archived on the Codex protocol to prevent fakes or copied versions. Additionally, a payment system can also be integrated to track royalty payments due to artists.
- Insurers: Insurance for the A&C market plays an integral role in protecting unique assets. Codex can streamline and automate the entire process to provide customizable insurance and payment plans for the assets. Essentially, the complete range of insurance services can be offered at a much more cost-efficient and effective avenue using Codex.
- Appraisers: There can be a dynamic market that matched asset owners with appraisers, who possess a vital role in verifying the authenticity and value of a unique asset.
- Logistics: The logistics component in the A&C still relies traditionally on paper records and legacy systems. Codex’s digital platform allows for the efficient management of assets for storage and logistics.
The components of the Codex protocol include:
- Codex Registry: ERC-721 smart contract
- CODX Tokens: ERC-20 utility token used as fees for ‘write’ operations in the registry
- Staking Contract: Smart contracts where token holders can stake their coins to receive discounts on their token fees
- Proxy Contracts: Secondary contracts from which the core contracts are accessed through
Codex is headed by a relatively young team with expertise from the fields of investment and computer engineering. Founder & CEO – Mark Lurie is a Harvard graduate with a venture capitalist background. He founded Lofty.com, an expert-reviewed A&C marketplace that has been acquired. Co-Founder & COO – Jess Houlgrave stems from an investment banking background. Her affiliation with the A&G market includes writing a master-level thesis on the applications of blockchain technology in the art ecosystem and some experience working in Sotheby’s Institute of Art. The CTO & Co-Founder – John Forrest – possess an illustrious academic profile and had experience as a Senior Software Engineer for Microsoft for 6 years.
Codex boasts a strong list of advisors in both the A&G world and blockchain market. ON the A&G side, Codex has secured the backing of Brook Haxelton – President of the Americas for Christie’s, one of the two largest auction houses in the world – and Sarah Shinn Pratt, an experienced auctioneer, and appraiser. On the blockchain side of things, Joey Krug – Co-Chief Investment Officer at Pantera Capital, Cofounder of Augur and advisor to multiple high-profile projects – and Dr. Abe Othman – advisor to Augur and Stox – brings the depth of knowledge in the decentralized prediction marketplace.
Codex boasts some impressive growth statistics despite being relatively young in the game. After successfully bringing together a consortium of players within the A&G industry, Codex will be integrated to the systems of over 5,000 auction houses that sell over 10 million items annually worth over $6 Billion in value, spread among 50 different countries.
The growth rates specified in the previous section is made possible with the network of A&G platforms that Codex has partnered with, including major players such as LiveAuctioneers – the leading online marketplace for auctions of art, antiques and collectibles – and AuctionMobility, the leading provider of white-label, mobile-first bidding software to elite auctioneers.
Codex has an active Github repository, which can be found here. There are a total of 14 repositories, with the 3 highly active registries:
1. ERC-721 Smart Contracts for Codex Protocol
2. dApp to View & Manage Assets with Codex Protocol
3. Node API for Codex Registry
It seems that Codex’s developers are actively developing their protocol codebase and dApp, as substantiated by the relatively high commits and branches. The development is generally managed by 3 contributors; John Forrest (CTO), Shawn Price (Senior Product Engineer) and Colin Wood (Senior Software Engineer). This is a positive indicator of Codex’s development progress
Codex Viewer Beta
Codex has launched a native decentralized application (dApp) in beta mode that provides an easy web interface for end-users that don’t have the technical knowledge to create, manage and modify their asset records with no technical knowledge. The mainnet release of Codex Viewer will be delivered before the start of the token sale. Here is a look at the user interface of Codex viewer:
First Functional dApp: Biddable
The first decentralized application (dApp) to be built on Codex’s protocol is called Biddable, a title-escrow and payment application for online auctions that enables bidders to instantly register, bid and buy at auctions using cryptocurrencies. In other words, it allows users to purchase unique items online in an instant, private and seamless manner. Biddable solves a critical issue plaguing the current A&C market; non-performing bidders who won the bid but does not pay, leading to a loss in resources and revenue. Using escrow smart contracts, Biddable solves this problem by requiring bidders to stake their funds to participate in the auction process.
A great aspect of this dApp is that it is a business-to-business (B2B) application rather than a retail-facing app; Biddable will be integrated into the software of existing auction houses. Currently, Biddable has already been integrated with LiveAuctioners and AuctionMobility, which are 2 major players in the A&C online sphere. There a recurrently $6 billion worth of unique assets’ value that’s available for purchase through Biddable.
Here is Codex’s rudimentary roadmap:
Codex’s roadmap doesn’t tell us a lot about its deliverables after the token generation event. This ambiguity makes it hard for the community to hold Codex into account regarding their deliverables down the road.
Token Economics & Utility
The token allocation for the token sale seems to be on the lower percentile relative to the other ICO since only 40% of its token will be freely open for ownership or trade. It is important to understand the difference between cryptocurrency coins and tokens.
Codex’s community pool is a great way to facilitate development and participation in the Codex protocol. Validators will be rewarded for their efforts while discretionary grants will be geared towards other stakeholders that will engage in application development, consortium members, and marketing contributors. The whitepaper states that:
The Community Fund will be subject to an anticipated lock-up that unlocks monthly at an annualized rate of ~25% per year
We opine that this may be a short-term solution towards the development of the ecosystem since this essentially means that an average of 2% would be unlocked monthly until the end of 4 years, after which the fund will be exhausted. However, it has been established that the Codex protocol is managed by a for-profit company that will generate revenues from consultancy services and tool development, which would – in a way – ensure that continuous development will be funded with a stable cash flow.
A positive mechanism of Codex’s token economics is that there is a minimum lock-up period of 3 months for presale investors that accumulated an average bonus of between 0% – 50%. This ensures price stability since presale investors would not dump their tokens immediately once CODX is listed in exchanges.
Codex will issue its native tokens called CODX, which is an ERC20 utility token built on the Ethereum blockchain. CODX is required to create, update, modify or transfer records on the Codex protocol. This is analogous to the concept of gas on Ethereum. Codex has stated that the fees will not be burdensome to the average user, whilst being relevant to stakeholders who use the protocol in volume for commercial use, like app developers and auction houses.
Given the fixed supply of CODX tokens, we expect to see great usage especially on the companies that are already in Codex’s consortium – such as AuctionMobility and LiveAuctioneers – given the vast amounts of unique assets featured on their platform. These assets would periodically require modification to the records, which will induce constant buying pressure of CODX tokens.
- Active Development: Codex’s development team – headed by their CTO, John Forrest – is actively engaged in developing their codebase and protocol, as can be seen through their Github.
- Functioning dApp & Beta: Codex’s first dApp -Biddable – is already functioning and live after integration with 2 large players in the online A&C market. The Codex viewer has also been released in beta version.
- Impressive Partnerships: Codex’s consortium is fast gaining traction in the A&C industry, with major players on board that include 2 major players, AuctionMobile and LiveAuctioneers.
- Strong Growth: Through the consortium network, Codex has successfully integrated – or are in the process of doing so – with many players and more importantly, has amassed strong growth metrics. Over 5,000 auction houses that sell over 10 million items annually worth over $6 Billion in value, spread among 50 different countries.
- Lock-Up Period for Presale Investors: This ensures that the token price will not get dumped by presale or private sale investors that have amassed relatively large holdings, that can easily impair the market.
- Barriers to Digitization: The assets under the A&C industry is unique, distinctive and expensive, usually requiring physical verification and assessment before purchase. It’s not surprising that online transactions make up only 15%. Therefore, it can be hard to penetrate this ‘traditionally-oriented’ market through digitization. However, the inroads that Codex has created within the industry via strong partnerships is impressive
- Lack of Hype: There is relatively low hype for Codex as the first disruptor in the A&C industry.
- Ambiguous Roadmap: There are no detailed deliverables set for after the token generating event, which makes it hard to form an expectation on their progress thereafter
Codex is moving ahead to not only provide a much-needed solution to verification and standardization in the A&C industry but more importantly, it’s digitizing this traditionally private market. We opine that Codex’s impressive partnership list, institutional backing, and solid developmental progress will not only provide the much-needed digitization lacking in the industry but more importantly facilitate a much more efficient and secure standard for the unique assets ecosystem.
Verdict: Good Long-Term Hold
(Read also: Evolution of Cryptocurrency: Replacing Modern Cash)
Beneficial Resources To Get You Started
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- Crypto Guide 101: Choosing The Best Cryptocurrency Exchange
- Guide to Bittrex Exchange: How to Trade on Bittrex
- Guide to Binance Exchange: How to Open Binance Account and What You Should Know
- Guide to Etherdelta Exchange: How to Trade on Etherdelta
- Guide To Cryptocurrency Trading Basics: Introduction to Crypto Technical Analysis
- Cryptocurrency Trading: Understanding Cryptocurrency Trading Pairs & How it Works
- Crypto Trading Guide: 4 Common Pitfalls Every Crypto Trader Will Experience
- Guide to Cryptocurrency Wallets: Why Do You Need Wallets?
- Guide to Cryptocurrency Wallets: Opening a Bitcoin Wallet
- Guide to Cryptocurrency Wallets: Opening a MyEtherWallet (MEW)
This represents the writer’s personal opinions and does not – in any way- constitute a recommendation of an investment or financial advice. Please assume caution when investing in cryptocurrencies and do so at your own risk, as it is extremely volatile and you can lose your money.
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