DESCRIPTION OF BUSINESS
DeFiPie is developing a Decentralised Finance application that includes lending and borrowing pools, liquidity pools and peer-to-peer loans. All of these services are built on Ethereum, while the team revealed plans to switch to building on Polkadot to take advantage of its interoperability with other blockchains. DeFi, or Decentralised Finance, has seen tremendous growth as the value locked in DeFi apps the last year (October 2019 -October 2020) increased by almost 2200% (from $500 million to $11 billion), but the market is still largely fragmented. DeFiPie’s key value proposition for DeFi is to provide a solution that encompasses several tools available across different DeFi platforms.
DeFiPie rolled out a beta version of their Decentralised Loans app. Users can use it to create custom ‘lend’ or ‘borrow’ offers. Currently, DeFiPie offers three staking pools in partnership with the Ferrum Network, all of which are filled. Lending and borrowing pools are not available as of now, but according to DeFiPie’s announcement on Telegram, this is to be expected within October 2020, along with the project’s MainNet.
The three Senior members of the DeFiPie team, Aleksei Kopievskii (CEO), Makshim Malikov (CTO), and Alymbek Sariev (CMO) are entrepreneurs with hands-on experience creating software. Both the CEO and the CTO ran another ICO in the summer of 2019, called ASKBRAINS. The project did not move forward and was eventually abandoned. However, we couldn’t find any evidence of fraudulent behaviour within ASKBRAINS, as the crowdfunding phase never took off.
There is a complete lack of compliance provisions or consideration of any potential legal or regulatory issues by the DeFiPie team. The whitepaper does not use any legal language, demonstrating disregard of Law considerations. Therefore, it is safe to assume that the project is undertaking multiple risks. The main areas where we identify these risks are listed in the Legal and Compliance chapter of this report.
DeFiPie sold 47.5 million PIE tokens in three separate rounds for a total raise of $1,275,000. No details regarding the use of these funds were released by the team.
Our researchers gave DeFiPie a final rating of 46.4%. The breakdown of this rating is available at the end of this report.
PRODUCT & COMPANY DESCRIPTION
DeFiPie combines Lending-as-a-Service (LaaS), Liquidity-Pool-as-a-Service (LPaaS) and Staking-as-a-Service (SaaS) models to provide permissionless and decentralised services to the market. The company offers innovative financial products that rival traditional financial service providers but are available to everyone, regardless of their credit score. Centralised systems do not control approval to use these platforms.
Following the XaaS nomenclature popularised by trends in Cloud computing, DeFiPie is a company that positions itself to be the first all-in-one DeFi platform in the crypto market. DeFiPie will use the blockchain technology and ecosystem to create a trading market that connects consumers and suppliers in a decentralised manner. DeFiPie also intends to leverage three types of instruments: lending, liquidity, and staking, aiming to generate revenue through fees and rates.
As defined by the project’s official materials:
‘DeFiPie will be a super app for the DeFi space. It will combine access to lending, liquidity pools, and staking into one application. The user interface will be designed to maximise navigational efficiency leading to a seamless user experience. Whatever a user wants to execute in the DeFi space will be only a few clicks away.’
- The booming DeFi industry will provide a distinct platform for DeFiPie, that could be aided by the expansive wave of this new technology.
- Integrating different elements of DeFi with a Yield Farming system that leverages PIE tokens to incentive participation can be an attractive value proposition for some users.
MARKET CONDITIONS AND COMPETITION
At the time of writing, the total value locked in Decentralised Finance applications like decentralised exchanges (DEXs) and lending protocols, liquidity pools, yield farming, staking, liquidity providers, and interoperability protocols is over $11 billion. What’s remarkable is not the amount of value that DeFi holds, but the growth that it had for the past year. Specifically, the value locked in DeFi apps the last year (October 2019 – October 2020) increased by almost 2200% from $500 million to $11 billion, according to DeFiPulse.
The level of growth of the DeFi ecosystem sparked a plethora of new projects trying to raise money to develop new solutions. Most of the DeFi projects (204 out of 252) are built on the Ethereum network. Still, it seems like DeFi started to escape Ethereum’s velocity into other blockchains, due to the network’s notably high transaction fees. Ethereum has reached its top limits many times in the third quarter of 2020, which is the reason why the total value locked in DeFi has seen ups and downs from the beginning of September. Ethereum is transitioning to a PoS (proof-of-stake) consensus mechanism (ETH 2.0), including Layer 2 technical scaling solutions like channels, roll-ups and sidechains. The successful implementation of these features is expected to be a catalyst to the development of Decentralised Finance in the coming years.
DeFiPie is competing in 3 areas: lending and borrowing, staking, and decentralised loans. Because of this, DeFiPie directly competes with all of the DeFi protocols and dApps.
The competition in staking as a service includes:
- Certus One
- Chorus One
- Dokia Capital
The competition in lending and borrowing includes:
The competition in Decentralised Loans includes:
How is DeFiPie different from its competition?
DeFiPie’s fundamental value proposition for DeFi is to build an all-in-one solution. It aims to build a ‘super application’, that is, a solution that encompasses features from the totality of the industry. Some see the emergence of these solutions as a mark for the maturity of the cryptocurrency industry.
DeFiPie rolled out a beta version of their Decentralised Loans app that users can connect with using Metamask, a popular wallet that integrates with Internet browsers. At the time of writing, this beta version is only accessible through the Ropsten Testnet. Users can create custom ‘lend’ or ‘borrow’ offers of four types: Offered Asset, Offered Amount, Interest Amount and Return Rate.
Currently, DeFiPie offers three staking pools in partnership with the Ferrum Network. “Gold Staking” is a pool that provides at least 15% annualized returns for 90 days. Platinum Staking is a pool that offers at least 35% returns for 180 days. Diamond Staking is a pool that offers at least 85% returns for 365 days. All three pools are currently 100% filled.
Lending and Borrowing
Lending and borrowing pools are not available as of now, but according to DeFiPie’s announcement on Telegram, they are expected to launch within October 2020, along with the project’s MainNet.
DeFiPie (PIE) tokens are ERC-20 compliant, issued on the Ethereum platform, which uses the consensus mechanism of proof-of-work (PoW). The projects’ scalability is in direct correlation with the Ethereum’s (Layer 1) transaction limitations (i.e. 15-20 transactions per second) but a partnership with Aleph aims to make the limitations of Layer 1 less transcendental. Aleph.im is a Layer 2 network that provides technology which makes blockchain applications scalable. According to the partnership announcement, this is supposed to help the scaling of the platform in the following way:
‘By storing the data from extended user profiles in the distributed storage system of Aleph.im, the overall performance of DeFiPie will improve as bandwidth is freed up. Any data stored in the Aleph.im network will be hashed and stored on-chain allowing users to request the data when needed.’
There is no mention of a 3rd party audit of the code on the official website or whitepaper. Nonetheless, on Aug 27th, DeFiPie’s CEO Aleksei Kopievskii wrote on Medium that they intend to perform a third-party security audit of the smart contracts. Auditing these contracts will help DeFiPie purchase insurance for the funds deposited on its platform, as well as gain investors’ and users’ trust.
DeFiPie announced that they will be building on Polkadot to take advantage of this network’s interoperability with other protocols. Polkadot is an interoperability solution that allows for the transfer and interaction of data between different blockchains.
The project’s roadmap is announced as follows. It is segmented by areas of development, rather than by phases.
The company published its roadmap on the 23rd of September 2020 in a post in their Telegram announcement channel. It is in the form of a picture, and it is not posted on the website. Its encompassed activities span until the end of 2021.
The 3 senior members of the team, Aleksei Kopievskii (CEO), Makshim Malikov (CTO), and Alymbek Sariev (CMO) are entrepreneurs with hands-on experience writing software.
- Alekesei Kopievskii, CEO: Before founding DeFiPie two years ago, he also founded ASKBRAINS, as mentioned in the Summary. He was at CoderClan, Rubrain, and other companies in the roles of Business Partner and Front-end developer
- Makshim Malikov, CTO: Also Co-founded SmartProgress, SmartSkills, and ASKBRAINS. He has a total of 12 years of software and Blockchain development experience under his belt. As CTO and Lead Blockchain developer for DeFiPie, this experience can certainly be positive.
- Alymbek Sariev, CMO: A UI/UX designer since 2009 at various companies. He has a combined 11 years of experience in roles related to his current position with DeFiPie.
The project lists no advisors on its website or whitepaper.
General Comments on the Team & Advisors
As mentioned before, the CEO and CTO ran the ASKBRAINS ICO in the summer of 2019. The project did not move forward and was eventually abandoned. We couldn’t find evidence of fraudulent behaviour within this project. Its crowdfunding phase never took off.
All three members of the Senior team are experienced coders. The full or extended team is not available on the website or white paper. It appears that there is a need to enhance the team with:
- Marketing: As evidenced by a 12-page white paper which has good on-topic content but lacks polish, research data, and key information for a public sale.
- Legal: Evidenced by a lack of Disclaimers and related legal vocabulary in the whitepaper or website. There is a preoccupying lack of mentions of KYC/AML policies, legal jurisdiction, etc.
- Project Management: There seems to be a lack of professionals with skills to manage the development of a complicated software project within the team.
LEGAL AND COMPLIANCE SPECIFICS
DeFiPie is not registered as a company in any jurisdiction. It is merely a project built by three developers in three different countries. Aleksei, Maksim, Alymbek are based in Singapore, Russia, and Kyrgyzstan, respectively.
Additionally, DeFiPie could not be characterised as a Decentralised Autonomous Organisation, as the token involved does not grant users with any voting rights. The full control of the project lies in the hands of the team.
It seems like there is a complete disregard by the team towards anything that has to do with compliance. Nothing on its website or whitepaper mentions the classification of the token. The token is used for:
- Starting and participating in custom lending and liquidity pools.
- Participating in P2P lending. PIE is needed to create and accept loan offers manually.
- Starting staking pools.
DeFiPie has announced partnerships with various companies or projects, including Ferum Network, Aleph and AgynData.
Ferum Network has enabled DeFiPies’ three staking pools. as mentioned above.
Announcement of the project’s partnership with Ferrum Network.
Technical support and a partnership are in collaboration with AgynData, to ‘help with the cross-chain part of the project’. We could not find more details on this partnership.
DefiPie also partnered with Aleph, a Layer 2 network that provides technology to make blockchain applications scalable.
There is a complete lack of compliance provisions or consideration of any potential legal or regulatory issues by the DeFiPie team. The whitepaper does not use any legal language, demonstrating disregard of legal concerns, which presents numerous legal risks. The main areas where we identify legal risks are the following:
- The project is not carried by a company registered in any jurisdiction.
- There is no consideration of the jurisdiction which will host the project.
- There are no KYC & AML provisions.
- There is no privacy and data protection policy.
- There is no risk disclaimer.
- There are no legal advisors or compliance consultants to the project.
- There is uncertainty as to token classification and potential regulatory impact on tokens.
- There is uncertainty as to the potential regulation of DeFi, P2P loan-based platforms, which could impact the operation and compliance obligations of the platform. This is inherent and inevitable for such projects.
DeFiPie sold 47.5 million PIE tokens in three separate rounds, for a total of $1,275,000. This sale was performed in a series of stages:
Seed sale: 20 million PIE for $250,000. Vesting period not clear.
Private sale 1: 15 million PIE for $525,000. 50% of the tokens were distributed before listing, 25% 30 days after listing, and 25% 60 days after listing.
Private sale 2: 12.5 million PIE for $500,000. 25% of the tokens were distributed before listing, 25% 30 days after listing, 25% 60 days after listing, 25% after 90 days.
There is no indication that there will be a vesting or lock-up period for team tokens.
The project website states that 2.27% of the total tokens will be allocated to the community. It is not clear if this is for purposes of promotions, referrals, or bounty.
Use of Funds
No details of the use of the raised funds were released by the team.
SOCIAL MEDIA AND VIRALITY
The project’s Twitter account over 6,000 followers. This is a good number to help make the project’s content go viral. The account is active and has good engagement.
The project’s LinkedIn has only 35 followers. This is very low in comparison with its other social media accounts.
DeFiPie’s Telegram chat consists of an active community of over 3,542 members with frequent interactions and responses between users and team members.
The project does not seem to have its own YouTube channel. There are, however, videos about it on a number of channels;
Young and Investing – 65.3k subscribers
4C Trading TV – 2.05k subscribers
Rey Santos Crypto – 6.84k subscribers
Bounty Campaign and Referral Scheme
DeFiPie does not provide a detailed referral or Bounty scheme. The project’s whitepaper only indicates that a total of 5 million PIE tokens (2.27%) have been dedicated to the community, which would be shared equally between Bug finders and online campaign workers.
Everything you see in this report is the aggregate result of an extensive research process carried out by a distributed team of researchers and crypto enthusiasts around the world. The process consists of 60 questions divided into three phases. Researchers are called to answer these questions about a project, while providing links or screenshots as evidence to support their answers. For every answer, they also provide a rating from zero to five. The average of their ratings is detailed below.
Our researchers gave DeFiPie a final rating of 46.4%.
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