DESCRIPTION OF BUSINESS

EXECUTIVE SUMMARY

2local B.V., registered in the Netherlands, is developing 2local, a loyalty program application including a cryptocurrency, L2L tokens. 2local has built a mobile wallet that facilitates transactions between users within the blockchain. The app distributes monthly cashback of 1% to customers for every purchase made with L2L, and includes a marketplace that aims to connect consumers with neighbouring companies that produce sustainable goods and services. There are a few instances of inconsistencies between the information that the team presents on their website and whitepaper. 

2local features a team of 20 team members, eight developers and four ICO advisors. This is considered a large group for a blockchain startup project. The majority of the team members have decades of experience in fields related to the project, i.e. I.T., Blockchain, sustainability, entrepreneurship, and others. There is no evidence of any of them participating in any illegitimate, controversial or legally troubled projects in the past. There is a clear skill gap within the team when it comes to working with organisations such as government agencies, international agencies, and social programs that may add value due to the nature of the project. Some team members are listed on the projects’ website but not in the whitepaper and vice versa. 

In terms of technology, presents more conflicting information regarding its blockchain platform of choice. These conflicting mentions quote their token to be on the Stellar network, an ERC 721 token (Ethereum token), or using Trons’ blockchain. None of our researchers has been able to create an account on the mobile application for the project or log into it. 2local aims to raise $8.5 billion through token sales. The total supply of L2L tokens is 20.000.000.000 (20 Billion), and the Initial Circulating Supply is 54% of the Total Supply, which amounts to 10.800.000.000 (10,8 Billion). 

Our researchers gave 2local a final rating of 54%. The breakdown of this rating is available at the end of our report.

PRODUCT & COMPANY DESCRIPTION

2local is a blockchain-powered loyalty platform. It utilises L2L coins through a mobile payment application to connect businesses with their customers, while providing cashback for using its cryptocurrency for payments. 2Local attempts to solve a socio-economic issue and change social behaviour in favour of local commerce by encouraging purchases from local businesses with a sustainability mindset. In the context of recent trends towards corporate social responsibility (CSR) and the mantra of “doing well by doing good”, 2Local brings to the forefront an attractive and aspirational value proposition for societies around the world.

Mision and Vision

As quoted on their website, 2local’s vision is: 

“The unity of happy bright people and a sustainable world with prosperity for all.” 

The company’s mission is quoted to be: 

“Supporting sustainability and bringing prosperity with the 2local® platform, by rewarding local-2-local and sustainable purchases. The 2local® platform is equipped with a payment app including a marketplace with local and sustainable companies, with a monthly cashback for payments with L2L-coins which are designed to rise in value.”

Success Factors

  • The egalitarian nature of the project’s mission can attract highly-motivated and enthusiastic people, partners and companies. 
  • The team is considerably large, with two core team members, four advisors, eight developers and 26 other contributors.

MARKET CONDITIONS AND COMPETITION

Market Conditions

There is a strong trend across markets, emphasising the importance of “buying local”, “eating local”, etc. – as well as a strong stream of companies advertising this mindset’s health, sustainability and environmental benefits. As such, the 2Local connected local marketplace concept is a good fit for the ongoing times on a global scale. Popular movements in the US, Europe, and Asia try to stir for economic, political, and social change sharing common ideas which include promoting local production and consumption. 

According to Beroe, a procurement intelligence company, the global market size for loyalty programs is expected to reach $216 billion by 2022. This figure represents a CAGR of 5-6% from 2017 to 2022. This is a relatively slow growth rate as the market of loyalty programs market in North America, Western Europe and some parts of the Asia Pacific is expected to reach maturity in just a few years. 

The outbreak of COVID-19 has had a medium impact on the growth of the global loyalty management market. The pandemic has had a significant effect on the transportation, logistics, manufacturing, tourism and hospitality industries. The shutdown of banks and financial institutions along with the severely impacted airline operations across the globe will severely harm the Loyalty Management Market. On the other hand, due to strict lockdown regulations, there is a surge in the number of online media and entertainment users. This increases the demand for better loyalty programs, although in a different context.

Competition

2local faces fierce competition on the crypto cashback stage. Some of its competitors are:

  • Wirex – A UK-based payment app that has also issued physical cards to allow users to pay online or in-store. For every in-store purchase, customers can get up to 1.5% crypto back, which means that the equivalent amount is returned to customers in Bitcoin. 
  • BitcoinRewards – An Australian-based company with over 1500 retailers on its cashback program. Subscribers earn satoshis (1 satoshi = 1/100,000,000 BTC) every time they transact. 
  • CoinRebates – Users earn Bitcoin back when they shop on AliExpress, Booking.com, Groupon, Macy’s, Microso, and Walmart. 
  • Fold – Helps users earn Bitcoin through the purchase of gi cards. 
  • Lolli – Helps users earn Bitcoin transacting with Expedia, GAP, Hilton, Sephora, Postmates, and others.

How is 2local different from its competition? 

The main difference that 2local has from its competitors is that it concentrates on supporting businesses focused on social responsibility and environmentalism. This differentiator could be considered to be a setback on the growth and scaling of the company, however.

TECHNOLOGY REVIEW

Product

2local has developed a mobile application that is available on GooglePlay and the AppStore. In addition, they have developed a desktop version as well. None of our researchers have been able to create an account and login in any of the apps mentioned above. When trying to log in on the desktop version, the following message pops up:

Blockchain

There is conflicting information coming from 2local in regards its choice of blockchain platform to facilitate the projects’ token system, and this can be shown in the projects’ whitepaper, as well. The whitepaper clearly states that the project uses the Tron blockchain, only to contradict itself later stating to use the Stellar blockchain. 

Both Blockchains have high performance in terms of transactions per second (tps). The lack of clarity from the project, however, creates a sense of confusion and distrust. 

ROADMAP

The project presents a uniquely designed roadmap with great detail of the projects’ development in quarters, but it stops at the 4th quarter of 2020. There are more details as to what we should expect from the company in the coming years.

TEAM

2local features a team of 20 team members, eight developers and four ICO advisors, a vast team for a blockchain startup project. Below are the first eight team members, as shown on the website.

  • Member by member, some key details about the members of the organisation are:
  • Anthony Chang, CEO – Over two decades of experience in enterprise leadership. His experience encompasses the real estate, construction and blockchain industries.
  • Henk de Leeuw, CFO – He comes on board with 15 years of experience in the logistics and finance industries.
  • Harry Donkers, CSO – A PhD-holding scientist with interests in food technology and sustainability.
  • Rutger-Jan Bosch, CTO – More than 20 years of experience in the IT industry, having been an entrepreneur for about 15 of these years.
  • Robert Hehakaya, COO – 30 years of experience with notable IT forms and also in the blockchain technology industry.
  • Aldrius Low, CIO – 20 years of experience in the investment, finance and capital sectors. 
  • Stratos Kokkinakias, CLO – In law practice for almost a decade in the Netherlands. 
  • Christof Waton, CCO – Extensive experience in sales and business development for many companies, mostly in Asia.

Advisors

General Comments on the Team & Advisors

The majority of the team members have decades of experience in fields related to the project, (i.e. IT, blockchain, sustainability, entrepreneurship). They have also pioneered ideas and worked with notable brands, such as IBM (in the case of Robert Hehakaya). The team members have a diverse background and come from various countries and continents primarily. 

As a result of our researchers’ background check for the management team members and advisors, we obtained no evidence of any of them participating in any illegitimate, controversial or legally troubled projects in the past. 

Christof Waton is listed as a team member and CCO on the website, but appears on the whitepaper as an advisor. On his LinkedIn profile, he states that he is an advisor to 2local. This is another example of the inconsistency of information that 2local presents to the world.

What skills does the team lack? 

Skills such as working with government agencies, international agencies, and social programs.

LEGAL AND COMPLIANCE SPECIFICS

Jurisdiction

2local B.V. is a private company, “Besloten Vennootschap” registered in the Netherlands. It is headquartered and registered at Beelaerts v Bloklandstr 3, Driebergen-Rijsenburg, 3971VT.

The government of the Netherlands is friendly towards cryptocurrencies as most of the European nations are. Along with other supportive initiatives, they have announced the formation of a unique and dedicated blockchain unit that will research blockchain reliability, sustainability, and how to manage and govern blockchain endeavours.

Even though the government is pro-crypto, we cannot say the same about the Dutch Central Bank (DNB). Although the DNB does not ban or support a ban on cryptocurrencies, they do warn people and businesses about/against engaging in this area without prior checks and sufficient research. Additionally, the Dutch Financial Markets Authority (AFM) warns people not to invest in ICOs due to misrepresentation, fraud and manipulation fears. The AFM assesses on a case by case basis whether the ICO tokens classify as a security or otherwise. More on this here: 

https://perma.cc/6C3N-GF4B  

Legal Risks

As mentioned earlier, the token classification may harbour some legal risks in case regulators classify it as an unregistered security. 2local claims that the token is designed to increase in value and that they will help this happen through”a smart trading algorithm”, which might bring the company into legal trouble in the future.

Legal Advisors

Stratos Kokkinakias is 2local’s Law specialist (CLO). He is a Representative at the Public Prosecution Service in the Netherlands and has a Masters in Criminal Law from the University of Utrecht. He helps 2local with legal questions and problems. Alongside his Law career, he owns a Greek restaurant in Utrecht. He is fluent in Dutch, English and Greek. Stratos is the only legal advisor of the project. 2local does not report having anyone else in charge of the legal team. 

Partnerships and Legal Agreements

According to the projects’ website, 2local works in partnership with the following companies: 

Legal Risks As mentioned earlier, the token classification may harbour some legal risks in case regulators classify it as an unregistered security. 2local claims that the token is designed to increase in value and that they will help this happen through”a smart trading algorithm”, which might bring the company into legal trouble in the future. Besides the fact that the Initial Exchange Offering (IEO) takes place on crypto exchanges like LAToken, p2pb2b and LiveCoin, there are no publicly available agreements or press releases showing partnerships between the 2Local project and the companies mentioned on the project’s website. 

None of these companies deny or confirm a partnership or any other form of agreement with 2local. 

KYC & AML

KYC and AML checks are done as mandated by the Netherlands Act and the AMLD5 directive. KYC/AML check is carried out by PESCHECK, an intl. background screening company based in the Netherlands. 

Only purchases of L2L tokens above € 1,000 per calendar month automatically trigger a KYC test by PESCHECK. 

Regarding the cooperation with PESCHECK as found in the privacy policy document: 

“For the KYC/AML screening they use PESCHECK. PESCHECK’s Privacy statement can be found at www.pescheck.nl/privacy-policy/and may be considered as repeated and inserted here. […] We Exchange data with the KYC-screener, namely PESCHECK from Enchede (The Netherlands). The PESCHECK Privacy statement is available at www.pescheck.nl/privacy-policy/ and can be considered as repeated and inserted here. PESCHECK is taking care of the legal screening of customers who purchase more than €1,000,-per month of L2L tokens. Data exchange always takes place in accordance with Global Data Protection Policy (GDPR) the Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016.”

Token Classifications

2local considers the L2L token a utility token, as it is mainly used for cashback and loyalty rewards. It is not asset-backed, nor does it promise dividends for token holders. 

Despite this, the token’s classification comes into question, since the company promises that the token will rise in value. This is stated many times on the website and whitepaper, and it may come in contrast with the ‘Howey test’ used by the United States’ SEC to determine if a financial instrument may or may not be classified under securities. Specifically, the Howey Test provides that a transaction represents an investment contract if “a person invests their money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”

In this case, the company guarantees investors that L2L tokens will rise in value due to a ‘smart trading algorithm’ intrinsic to their system.

TOKEN OFFERING

According to the whitepaper, (p. 12) the total supply of L2L tokens is of 20.000.000.000 (20 billion) and the Initial Circulating Supply is of 54% of total supply, which amounts to 10.800.000.000 (10,8 billion), or $8.5 million. 

2local is selling 54% of its total supply of L2L tokens during the Initial Token Sale, with 33% reserved for development of their ecosystem, 9% for promotions, and 4% to contributors. According to this, the team will not get any extra tokens. 

Even though the total supply of the tokens is capped at 20 billion, and the initial circulating supply is 54% of the total, the token may struggle to increase in value. The inflationary role that the 33% ecosystem reserve will play (as the team will be periodically releasing tokens as they think fit) might prevent said increase.

There are no mentions of token lock/burn mechanisms in the company’s whitepaper.

Use of Funds

2local aims to use its collected funds in the following way: 

  • 40% – 2local Ecosystem (cashback system development). 
  • 38% – Operational costs. 
  • 12% – Marketing. 
  • 5% – Research. 
  • 5% – Development.

SOCIAL MEDIA AND VIRALITY

The project’s followers on Twitter are 6143, while the following count is 3376. This makes for a follower ratio of 1:2, which is acceptable. The twitter feed is also very active and engaging, along with many reactions and replies.

A. 2locals’ LinkedIn page has 5276 followers with much less reactions and replies than Twitter, and an uneven calendar for posts. 

B. The Project has an active Facebook page with good engagement and 7468 page followers. 

C. There are 18200 members in the project’s Telegram chat, and it is an active room with active member participation. 

D. The project has its own YouTube channel, where it promotes its token sale. The channel currently has 1340 subscribers. There are also other channels like Desi Airdrops, Modern Investors Channel and Official Airdrops that have done reviews of 2local. 

Bounty Campaign

The project has dedicated tokens for its airdrop and bounty campaigns. 13% of its total 20 billion L2L token supply has been put aside for both of these. The program gives an incentive for people to follow the project’s social media, be engaged with the project’s content and also invite friends to join. It also encourages users to create content for the project and refer potential token buyers.

ICO Reviews

2local has received reviews on a number of websites dedicated to compile ICO evaluations. The most notable are: 

  • All ICO Lister – 5/5 
  • ICO Marks – 9.7
  • ICO Bench – 4.8
  • Desi Air drops – 5.0 
  • Cryptototem – 9.7 
  • Coinicodex – 4.7 
  • FoundICO – 10
  • CoinCheckup – 91.50

RATINGS

DISCLAIMER

This Report is for informational purposes only and/or all or any of its content thereof, should not, may not and will not be taken to constitute, either as a whole or in part, any investment advice or recommendation or similar, regulated, or authorized advice, and D-Core by producing, disseminating, giving away, or making available this Report does not, should not, may not and will not be taken to advise on investments, or carry out any similar activity, or any regulated activity or any other authorized activity. D-Core is not authorized by the Financial Conduct Authority or by any other competent EU or elsewhere or otherwise competent authority to carry out any regulated activities and/or any activities within the scope of these authorities’ competence.

D-Core excludes and disclaims all liability and/or responsibility whatsoever and/or howsoever caused, arising out of any actions, or omissions taken, or made by any authorized and/or other recipient of this Report in reliance on, or arising out of, or in connection with any or all content of this Report. Any authorized and/or other recipient of this Report acknowledges, accepts and agrees that they carry out their own independent research and act in their own sole risk in reading or using any or all information contained in this Report. In any event, recipients of this Report are urged to seek professional advice before making any potential investment decision in relation to the project described herein. Any authorized and/or other recipient of this Report accepts this Disclaimer in full. For the avoidance of doubt, this Disclaimer is binding against any recipient of this Report whatsoever.