ICOrating

Goldmint Rating Review (www.goldmint.io)

ICO dates (03.05.2018 - 03.08.2018)

Web: icorating.com

Email: info@icorating.com

Twitter: @IcoRating

1. Rating 3

2. ICO Information 4

3. Product and project analysis 7

3.1 Roadmap and product 7

3.2 Business and finance 9

5. Analysis of token behavior in the secondary market 15

1. Rating

We assign Goldmint a “Risky” rating.

Since the end of its ICO, the Goldmint team has only partially fulfilled the goals set for

the project. GOLD tokens have been launched on the Ethereum blockchain, but direct

purchase from the company is not possible. According to information provided on the

website, the company has the necessary underlying assets to secure the issued coins

and undertakes to buy them back at the request of any client who has undergone their

KYC procedure. Unfortunately, due to legislative immaturity in the field of

cryptocurrency, this option will not be available to citizens of the United States, Canada,

Singapore and China. The timing of the launch of the project’s own blockchain has been

postponed by six months, and no reference has been made to any progress in its

development.

Despite the results achieved, we are forced to lower the attractiveness rating of the

project tokens, for the most part due to an unfair method of distribution of MNTP tokens

in relation to ICO participants. Currently, only one-fifth of all tokens issued are in free

circulation, and the team intends to sell the remaining stake on the free market.

Whatever buying conditions for frozen MNTP tokens the project offers to original buyers,

such buyers even in a best-case scenario will receive a smaller profit, or in the worst

case the price of MNTP will drop even more.

The opaque aspects of project development and the disposal of tokens belonging to the

team also exert a negative influence on the rating.

2. ICO Information

Goldmint is a project for the creation of a cryptocurrency, GOLD, which is 100% guaranteed

by physical gold or another derivative financial instrument with a basic asset in the form of

gold. The provision of cryptocurrency in gold is expressed by the stated obligation of

CyberBridge OU, registered in Estonia, to buy out any number of GOLD coins presented at

the current LBMA1 price at the time of transaction, with a commission of 1 to 5%. Thus, the

price of 1 GOLD token will have to be 100% correlated with the price of 1 ounce of 999 gold

(31.1035 grams) traded on the London bullion market.

According to the original white paper, the GOLD cryptocurrency was planned for release on

the project’s own blockchain with a Proof of Stake consensus algorithm based on Graphene

technology. MNT coins released on the project's own blockchain will be used to confirm

transactions. The more MNT tokens a miner has, the more blocks he can add to the chain. In

this case, commission will be charged for transactions with GOLD coins, 75% of which will be

sent to the miners who confirm the transactions.

Initially, MNT crypto coins were released on the Ethereum blockchain, named MNTP and sold

during the project's token sale. After the completion of the development of the project’s own

blockchain system and its public launch, MNTPs will be exchanged for MNT tokens in a 1:1

ratio.

In addition to creating the GOLD cryptocurrency, the founders planned to launch a network of

devices called Custody Bots, with the ability to automatically determine the chemical

composition of gold products and their subsequent storage. These devices will look like ATMs

and they will each feature a spectrometer, a set of scales and a Linux-based computer

connected to the GOLD blockchain platform. The founders expect that Custody Bots will be

located in small banks, pawnshops and other relevant institutions. Thus, in their opinion,

Custody Bots could become full-fledged automatic analogs of pawn shops in the future, where

people would take their gold products and receive GOLD cryptocurrency in exchange almost

immediately.

The ICO for the Goldmint project started on September 20, 2017 and lasted until November

11, 2017 during which 4950 ETH and 830 MTC were attracted according to the founders,

taking into account the pre-sale stage. This amount was approximately $4.3 million at the

exchange rate at the time of the transactions, but the founders have publicly announced about

$7.3 million of raised funds multiplying these values by the market rate at the end of the ICO.

Taking into account the fact that during the period from the end of the pre-ICO held in May

2017 until the end of the main sale stage the rate of cryptocurrency increased approximately

threefold, and a portion of the funds raised was spent on the main stage, the logic of such

calculations is unclear.

Unfortunately, information about funds raised can be checked only by revenues in ETH - all

data is at the address of the smart contract at the following link. Having analyzed the

transactions of this smart contract, we can draw the following conclusion:

1 http://www.lbma.org.uk/lbma-gold-price

For the period from 20/09/2017 to 11/11/2017, Goldmint has raised 4955 ETH which value

was $1,425,753 at the time of the transaction. Thus, the project attracted the majority of funds

(about 66.7%, counting from $4.3 million) in the form of military technical cooperation and

about 33.3% in ETH.

During the token sale, more than 1800 non-zero transactions were made to the above-

mentioned smart contract with 1,400 unique ETH addresses. The minimum transaction

amount was 0.0025 ETH ($0.7), the maximum amount was 395 ETH ($112,006); the average

value was 3.53 ETH ($1017). The overwhelming majority of participants (95%) purchased

MNTP tokens for an amount not exceeding 10 ETH and only 64 people made purchases larger

than this. Indeed, there were only 16 large investors who bought MNTP tokens worth over 50

ETH.

The greatest number of ETH transactions (875) were made in the first two days of the

token sale after which their number was evenly low:

At the same time, the dynamics for purchases of MNTP tokens in the ETH equivalent

had bursts of different strength throughout the entire period:

As a result, the Goldmint project was unable to reach its hard cap, having raised just

over 10% of its value.

3. Product and project analysis

3.1 Roadmap and product

According to the website2 and the original white paper, the team planned to undertake

the following work by the end of the first quarter of 2018:

- Launch its own blockchain3.

- Create the necessary legal entities for conducting legal activities in Europe, Asia, the

USA and Russia.

- Choose partners for work with ETF and conclude partnerships with A+ banks.

- Choose partners for KYC procedures in Europe and Russia.

- Open representative offices in Europe and Asia.

- Develop a Custody Bot prototype and apply for the relevant patents.

- Test the purchase of GOLD for fiat.

- Develop a Goldmint mobile app interface for AppStore and Google Play.

- Develop a computer system for the purchase of GOLD for fiat and other currencies.

According to the team representatives, most of these objectives have been completed

but some plans and intentions had to be changed. Thus, the founders have published

the following results of their activities for the past period:

1. "We have created the team. A Financial Director, Marketing Director, PR Manager and

Customer Support and Office Manager have joined us. The staff have increased almost

twofold.

2. The Board of Directors was formed and established; 2 meetings have already been

held.

3. We determined a method to provide the GOLD token with gold and opened an account

for our Singapore company with a broker that enables us to purchase and sell physical

gold to CME (Chicago) with a deferred payment and store it in US Federal banks.

4. We have a registered company (exchange office) in Estonia and applied for a license

allowing us to perform crypto exchange operations.

5. The Ethereum smart contract enabling the turnover of GOLD has been audited.

6. We have prepared a personal cabinet for GOLD buyers integrated with the blockchain.

7. We have formulated the terms of reference for our PoS blockchain system and created

its working prototype.

8. We have formulated terms of reference for the Custody Bot and assembled the R & D

team (a decision was made to limit the development to R & D with further partner

search).

9. We prepared three development strategies (industrial superstructures) for our project

and have tested them with major market players (Rusal, Polymetal, Arlan).

2 https://web.archive.org/web/20170914033224/https://goldmint.io/ 3 Video on https://www.goldmint.io/team

10. We have carried out legal due diligence of our activity and identified the majority of

project risks.

11. We have listed MNTPs token on 3 exchanges and created a sufficient turnover to be

listed on coinmarketcap.

12. We carried out a validation of demand for GOLD tokens (6 crypto funds, more than 25

crypto traders, more than 50 investors).

13. We formulated a marketing strategy, redesigned the website and prepared an action

plan for 2018.

It is obvious that the team was not able to launch its own blockchain; currently, the

approximate terms for its launch are shifted to the 2nd-3rd quarter of 2018. However, in

early April 2017, the project issued gold-backed GOLD tokens operating on the

Ethereum blockchain. After the completion of the development of its own blockchain, all

issued tokens will be moved there.

We also found out that the team declined to open regional offices and decided to work

through regional representatives. No partnership with any A+ bank has yet been

concluded.

As for progress towards the creation of the Custody Bot, the team presented a video of

a working prototype4. The video shows how the device performs a spectral analysis of

a gold chain and its automatic weighing. It also becomes clear from answers provided

by project representatives that the company does not plan to carry out a full-fledged

development of Custody Bot, but will stop at conducting research and development

work, after which it will look for a partner interested in further development of the

technology.

In our opinion, the team is quite active in developing the product but the project obviously

does not provide public coverage of these processes. Despite the fact that

representatives answer almost all community questions in the Goldmint chat room on

Telegram and on the BitcoinTalk forum, the number and content of reports on work done

via the blog5 has dramatically decreased since the end of the token sale. The team has

published 6 posts since the end of the sale, the vast majority of which pertain to the

team’s participation in various conferences and meetings. In the process of writing our

review, the team released a quarterly report with a detailed description of the work done

and the results achieved. However, in our opinion, informing the community only every

3 months is not enough.

The process of developing the project’s own blockchain, with a launch originally planned

for the first quarter of 2018 and now for the second or third quarter, is also rather opaque.

The team's activity in its GitHub repository is not high compared with leaders in this

sphere6 and no progress reports have been published either. It is completely unclear to

an average user how the development of Goldmint's own blockchain is progressing or

4 https://yadi.sk/d/g_JEZKap3U26Qi 5 https://blog.goldmint.io/ 6 https://medium.com/@Darpalrating/darpalrating-we-went-through-133-blockchain-projects-github-heres-our-code-audit-report-for-5c060df3af44

what stage it is at compared to, for example, the weekly releases of Cardano7 or an

interactive Cosmos8 launch card. It became clear from the published quarterly report

that the team declined to develop a blockchain system based on Graphene, replacing it

with a solution using Sumus.

3.2 Business and finance

According to the Goldmint team, all funds raised were converted to fiat but they don’t

provide any confirmation to this, neither have they disclosed any financial report on the

company's activities. In this regard, it is impossible to verify the veracity of any relevant

statements or to analyze the effectiveness of the distribution of funds raised with respect

to the plans initially announced.

Nevertheless, we can analyze public information such as the distribution of MNTP

tokens, the smart contract of which is available at the following address.

According to the official blog9, on September 19, 2017 (before the start of the main stage

of the ICO) the team announced the next distribution of issued MNTP tokens:

At the same time, the white paper provided additional information on the team’s tokens:

«The amount of MNTP option pool tokens issued will be calculated by the following

formula:

If LEP < CEP: (1 – LEP / CEP) x Token Option Pool size, where:

LEP = The price of the token during the latest issuance

7 https://www.cardano.org/en/weekly-technical-report/ 8 https://cosmos.network/roadmap 9 https://blog.goldmint.io/goldmint-announces-ico-starting-september-20th-5f1710cff668

CEP = Current MNTP price on cryptocurrency exchanges. (This is calculated by

checking the volume of MNTP trading during the last two weeks on the three largest

exchanges and computing its median price)

Token Option Pool size = The number of tokens left in the “Token Option Pool”

If LEP >= CEP: Issuance does not occur.»

Thus, the team announced the following conditions:

1. 7 million MNTP tokens from 10 million will be available to customers.

2. 2 million tokens will be reserved for the team. At the same time, the team will be able

to spend tokens at its own discretion once every 3 months to an amount not exceeding

100,000 tokens per round, provided only that the current price of tokens exceeds the

price at the time of the previous issue.

3. 1 million tokens were planned to be used to pay bounties to campaign participants.

We must point out that different sources publish contradictory information. The English

version of the white paper stated that the team has the right to issue up to 500,000

tokens every quarter. According to the team, the Russian version of the white paper did

not mention any conditions for the team’s tokens, but we cannot verify this information,

since we do not have a copy of the white paper publicly presented at that time.

At the time of writing, the three largest holders of MNTP tokens own a total of 8,298,406

tokens, representing almost 83% of the total emission:

The first wallet containing 64.85% of tokens consists of coins unsold during the token

sale which are frozen by the smart contract for 1 year. According to the team, after the

end of the freeze period they intend to distribute this share of tokens among ICO

participants at a reduced rate, but we regard this decision as unfair to the original

buyers. Most likely, the original buyers will not want and will not be able to buy back

such a large volume of tokens, not least because it is more than 10 times larger than

the amount of coins sold during the ICO. In this case, the team will have to sell these

tokens in the secondary market, which will exert strong pressure on the price of MNTP,

as a result of which Goldmint's ICO investors will receive less profit, or the price of

MNTP will drop even more in the worst case.

The team may not sell but decide to keep these tokens. This scenario would not be

profitable for token sale participants either. Firstly, most of the commission from

operations with GOLD cryptocurrency will be received by the project team in this case.

Secondly, since the project's own blockchain will work on the basis of a PoS consensus,

the network of participants will be highly centralized and not safe from the point of view

of the other participants.

It turns out that the team has driven itself into a corner, and the only fair solution in the

current situation is the burning of unsold tokens. Ideally, the project also needs to reduce

the proportion of tokens intended for the team in proportion to the quantity sold to

minimize the risks of price reduction for initial investors. The project team does not state

any such intention.

According to the information provided to us, the second and third wallets containing

18.134% of MNTP tokens belong to the team. Clearly the team has already transferred

a portion of tokens from their original wallet - two transactions of 200,000 were made

on December 29, 2017 and March 2, 2018.

This step directly contradicts promises made by the team for at least two reasons.

Firstly, since the placement of tokens in the secondary market their price has never

risen above the price at which they were sold during the ICO. Secondly, the team has

violated the frequency and volumes of the available transfer of MNTP recorded in the

company's blog. Despite the fact that the total amount transferred does not exceed the

conditions fixed in the English version of the white paper, in this situation we take the

side of MNTP buyers – it is not their fault that the team has changed the ICO conditions

on the fly and does not have time to amend all documents.

Goldmint executives refuse to recognize these actions as a breach of their obligations,

as they "did not violate the conditions described in the Russian version of the white

paper." Their comment regarding this situation is the following: “Of course, the mistake

is that the versions do not match. We have edited these documents a lot before the ICO.

But the essence of this does not change - we did not violate any Russian or English

rules. We just issued 400,000 team tokens in 5 months. This is not more than 500,000

per month, and not more than once every 3 months. 55,000 of these were sent to the

Bancor smart token10. About 132,000 more were sent to different team members and

paid for services in the process of working on the project within 5 months after the ICO.

Many our team members work for tokens instead of a salary.”

It remains unclear to us why services rendered to the company are paid for in MNTP

tokens and some members of the team also receive their wages in tokens, since the

ICO fundraising was for this very purpose and the indicated conditions for token

distribution do not imply such spending. From the point of view of ICO participants, these

are factors that have a negative impact on the market value of MNTP tokens.

Apparently, the team will continue to spend tokens issued for themselves, as according

to them, the current smart contract allows withdrawal of 200,000 tokens every month.

10 https://etherscan.io/address/0x25D4AeF414Ea092FBCbD83fd30e89E15cF820D0a#tokentxns

4. Market dynamics and regulation

To date there are already more than a dozen11 projects for the creation cryptocurrencies

backed by gold. Some of them are preparing for their ICOs; others have already

completed theirs and are working on launching their product. In general, given the

creation of the necessary legal framework, competition in this area will seriously

increase within 2-3 years. The most successful and well-known competitors for

Goldmint are HelloGold and Digix, the development stages of which we will consider

further.

Digix (DGX) are cryptocurrency tokens issued on the Ethereum network. Each is

backed by 1 gram of gold from a store belonging to the partner company, Digixglobal

PTE Ltd of Singapore. The project launched its Marketplace on April 8, 2018; on April

14, 2018 it issued 10,000 tokens backed by 10 kg of gold. More than half of those

tokens have already been sold to their customers12:

The project has built a KYC verification mechanism for customers but the purchase of

DGX tokens is seemingly not yet available to US, Chinese and Japanese residents13.

Information provided on DGX token gold provision is absolutely transparent14:

11 http://www.goldscape.net/gold-blog/gold-backed-cryptocurrency/ 12 https://digix.global/app/#/marketplace/dgx 13 https://medium.com/@Digix/impt-announcing-the-launch-process-of-dgx-2-0-26-march-2018-9014619ff491 14 https://digix.global/app/#/provenance/assets-explorer/assets-list

HelloGold also shows significant progress in this direction and it has already issued

more than 3,000 GOLDX15 tokens backed by gold. Like the Digix project, they also

function on the basis of the Ethereum blockchain. The website provides detailed

documentation that makes it easy to verify availability of the required gold reserve from

the company – as at April 14, 2018 this is 10 kg and, as a consequence, covers the

issued GOLDX tokens three times over16. A verification function is available in a special

section of the website, successful completion of which enables a user to purchase

GOLDX tokens for BTC or ETH17.

Thus we can conclude that Goldmint lags behind its main competitors slightly in

providing key functions. Despite the fact that the project has already issued 100 gold-

backed tokens just before the writing of this review18, their direct purchase from the

company is not yet available. At this link, Goldmint provides evidence that the company

has the necessary underlying assets to secure their issued coins and a special section

of the website provides a package of legal documents proving the company's obligations

to buy GOLD tokens back at the request of any client who has undergone the KYC

procedure.

Nevertheless, if effective development of the service is to continue, Goldmint will still be

able to claim a significant market share, since this sphere is at the earliest stage of

development and companies can take advantage of the "low base" effect.

In our opinion, the Goldmint team took the right step deciding to issue gold-backed

tokens based on Ethereum blockchain, since any delay in developing its own solution

could be very expensive in this situation. There is no critical need for high-capacity

blockchain equipment at the current stage of the development of the crypto market, so

15 https://etherscan.io/token/0xeAb43193CF0623073Ca89DB9B712796356FA7414 16 https://www.hellogold.org/faq.html#about2 17 https://www.hellogold.org/buygoldx.html 18 https://etherscan.io/token/0x61d40b844ea5b68c9c504fccdb05b68c2d7ae965

the company can work in parallel both on creating its own architecture and attracting

new customers.

As for the market situation affecting Goldmint's work, there have not been any major

changes since the end of the ICO. The situation is specific to each country but generally,

regulators have not yet developed a clear position in relation to crypto assets.

While some countries are against cryptocurrencies and their banks are blocking

customers operating with digital assets19, others are making serious efforts to develop

this industry and create a legal framework around it20.

In any case, outright prohibition on the ownership of and transactions using

cryptocurrencies has taken place only in a few small states that do not play a significant

role in the world economy21. Leading countries are optimistic about the potential of

digital assets, but for the time being they simply do not understand how to regulate them

properly. In this regard, the prospects for the development of Goldmint will largely

depend on the speed and nature of the creation of a regulatory legal framework for

crypto by the world community.

19 https://www.investopedia.com/news/canada-banks-ban-users-buying-cryptocurrency/ 20 https://cointelegraph.com/news/france-and-germany-how-regulatory-traditions-in-two-countries-could-affect-eu-legislation 21 https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country_or_territory

5. Analysis of token behavior in the secondary market

As of March 14, 2018, MNTP tokens, according to Coinmarketcap22, are available for

exchange on 5 websites:

With a price of $3.55, the capitalization of MNTP tokens is $6,807,546. The

volume of trading for this asset is low - from March 15 to April 13, 2018, the daily average

was $159,314. The peak of trade turnover fell on February 27, 2018 - the value

exceeded $1 million and even news of the launch of gold-backed GOLD tokens could

not provoke higher volumes, although the asset price showed a sharp increase with a

subsequent correction:

22 https://coinmarketcap.com/currencies/goldmint/#markets

Having examined the MNTP price chart for the period from February 9 to April 14, 2018,

it can be concluded that the asset is not volatile and its correlation with bitcoin is low,

but this is most likely a consequence of the low liquidity of MNTP.

According to Etherscan statistics, MNTP tokens are stored at 5125 addresses23. A little

more than 19% of the total emission is in free float which is, in our opinion, the main risk

for the owners of this asset.

Since the appearance of MNTP statistics on Coinmarketcap, its price in dollar terms has

exceeded the price at the time of the ICO only once, calculated with the 20% bonus all

tokens were sold with during the main stage. Thus, the MNTP token reached its peak

value of $6.35 on April 11, 2018 after news of the launch of gold-backed GOLD tokens;

the full price at the ICO was $7, which with a 20% bonus was $5.83. This price lasted

only a few hours and soon fell to $4.8.

In BTC, the price of 1 MNTP token was about 0.001111 BTC at the end of the main

stage of the ICO ($6.300), which is 0.000926 BTC with a 20% discount. MNTP tokens

reached this value on April 11 only. The market value of MNTP tokens has since

decreased by 2 times.

In our opinion, this token performance may be due to high bonuses for pre-ICO

participants, as well as disproportionate distribution of tokens among various

participants after the end of the token sale. As a result, a large number of bounty and

other low-cost tokens became available in the secondary market, exerting strong

pressure on the price of MNTP.

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, email

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.

23 https://etherscan.io/token/0x83cee9e086a77e492ee0bb93c2b0437ad6fdeccc#balances