AirToken ICO Summary
If you’ve ever been to a developing country, you will find that most people have 2-3 SIM cards they regularly change out due to pricing and special offers. More so, even with data plans being much cheaper than in Europe and especially in the US, the cost of a multi-GB data plan is not affordable. As per the whitepaper, 500MB of data can cost more than a child’s education in Nigeria and in Mexico and Brazil the average consumer will spend 8-40 hours for the same amount. Compounding the issue is that ads, trackers and other parts of the mobile platform eat up around half of this data alone.
Two billion people around the world lack access to proper banking services and twice that number do not have access to affordable internet. Furthermore, they are not able to leverage their own capital to acquire loans and increase their financial power. Airfox plans to combat these issues with the release of the Airtoken, creating a “freemium” payment model for cell data.
Users will earn Airtokens by watching advertisements, downloading apps, and completing surveys provided by Airfox’s existing free Android apps Airfox Recharge and Airfox Browser. Earned tokens will then be redeemable with more than 500 major wireless carriers around the world. As the tokens will be blockchain based, they will be transferable to other users around the world without cost, allowing for remittances to pay for cell data. Eventually, Airfox will provide micro-loans based the “credit” score of their mobile data history.
The AirFox Ecosystem
The AirToken will initially be a payment method for wireless data. AirFox purchases data from major carriers and then repackages and sells it to their customers for AirTokens. The wholesale market for data is existing and developed, what Airfox brings to the table is the blockchain based AirToken acquired through their two already released production Android apps.
The Airfox Browser, a fork of the open-source Brave browser, blocks external advertising, scripts and trackers that consume a user’s data plan. Users of the Airfox browser will be able to opt-in to advertising that appears from time to time. They are paid tokens for their impressions. The browser is currently available in the Google Play store and issues tokens for use. These tokens will be converted to Airtokens after the ICO.
After opting into the Airfox Recharge app, users will periodically be shown apps after events such as unlocking their phones or finishing a call. The ads are dynamic and targeted to the user based on their browsing history. Additionally, users will have the option to take part in surveys, installing apps, watching videos and purchasing goods to receive AirTokens. Each action will have a specified worth depending on the country. The app will also allow users to purchase AirTokens directly with fiat and then redeem their AirTokens for “mobile data, digital services, and physical goods inside the AirFox Rewards app.”
Tokens are fractional and transferrable without restriction to any other AirFox user, allowing users living in, for example, America, where token rewards are higher, to send AirTokens to family members or relatives across the world. Remittances are a massive part of the value the blockchain provides and what’s interesting about Airfox is that it’s tied to cell data, a commodity that billions depend on in developing countries already.
In essence, their model is a lot like the freemium game industry. Users can either purchase tokens for fiat or engage with advertising to receive a reward. This is what’s novel about the ICO. In games it’s the leaderboard and competition that drives users to spend fiat and allocate coins, but for Airfox users it will be necessity, a much more powerful driving factor. I can see their freemium payment model being adapted by other services in the future. Advertisers are constantly trying to find better ways to engage consumers and Airfox’s service is the next step in this process.
Banking and Micro-Loan Services
For lower income individuals, creating and operating a bank account is expensive. There are a multitude of fees which eat up their small amount of capital and some services such as loans and other credit solutions may not be provided to them. Even if a credit card is available, the APR rates could be as high as 450% a year, preventing them from acquiring means to open a business or taking a loan.
Thus long-term, the Airfox team want to become a micro-lender to the unbanked and underbanked. Adoption rates for mobile are incredibly high, almost everyone in developing countries has a phone, even if they may not have a bank account. Airfox will offer micro-loans to users who consistently use Airtokens, building “loyalty” and increasing their “credit” score. Using data collected by the app and from the blockchain Airfox will “determine if a user qualifies for a loan, the length of time of the loan, the monthly interest rate and total amount of the loan.” Furthermore, a user will have to meet the following requirements stipulated in the whitepaper:
“For a user to qualify for a micro-loan they must be an active user with AirFox for a total of 90 consecutive days and earn or purchase at least 175,000 AirTokens and have at least 175,000 AirTokens in balance while receiving a loan. AirFox will then collateralize a percentage of the user’s AirTokens and offer a few different micro-loan options to the user based on our proprietary data sources and user scoring. The more balance a user has, the more he or she can claim in micro-loans. Users that pay the loans on time will also “level-up” within our system earning loyalty status while increasing their internal “credit score” enabling better interest options, longer lengths of time, and more access to capital.“
Airtoken holders will be able to choose whom they want to lend their tokens to. Airfox will charge 40% APR instead of the higher rates previous listed. This fee will then be distributed back to the lenders as the loan is paid off. Thus, Airfox wants to become in long-term the primary micro loan lender.
Three Phase Rollout
After the ICO, the Airtoken platform will be upgraded during three phases. In the first phase, the current apps will be switched from their existing tokens to the blockchain Airtoken. User tokens will be switched free of charge and automatically. In the second phase, set for Spring 2018, the company will deploy their proprietary user-scoring algorithm for issuing micro-loans. The third phase will be released in Summer 2018 and will open their system API and SDK to third party applications who want to reward their users with Airtokens.
Airfox will earn fiat from “ads, offers, and direct AirToken purchases.” They will take 10% of this as profit and then reserve the other 90% to convert into Ether to replenish their Ether balance. When a user spends Airtokens, they are credited to the Airfox Internal Ledger. Some services and products cost fiat, which the Airfox Reserve balance pays for.
It is always an advantage when business have an established income model and are simply expanding services they have already tested. AirFox already has income being generated from their Wireless B2B unit and has already formed relationships with 20 programmatic ad networks. In their whitepaper they say they have already “generated $600k of revenue in the first 10 months, delivered over 1B impressions and raised $1.1M of venture funds from TechStars, Project 11, LaunchCapital, NXTVentures and other prominent angels.” The company already has their server architecture set and “currently handles over 2 million users and over 150 million unique events per day.”
Currently, Airfox is cloud hosted by Amazon Web Services and Digital Ocean, meaning their system architecture can be scaled easily and meet any growth demands. In the future though, Airfox plans to release their own blockchain to handle AirToken transactions on a decentralized distributed ledger designed by their team.
Strengths & Weaknesses
There is nothing like AirToken on the market yet that provides B2C cell data in return for advertising engagement. The novelty of their freemium system is a proven model in the mobile gaming industry. Users will readily watch ads for marginal returns. More so, there is a whole marketplace ecosystem that could be built using the token. As smartphone use continues to grow, Airfox’s first-to-market product could provide them the head-start necessary to become the defacto leader for mobile payments in the developing world.
Additionally, when the deploy their banking and microloan system, they will be positioning themselves for long-term growth. Their platform will then be able to fund businesses, provide loans for the underbanked and utilize what they call “dead capital” in their whitepaper. With significantly lower rates than existing banks and credit providers, the AirToken could be a major improvement for lower income people.
There are a few issues though, namely, that Airfox is dependent on major carriers to purchase their data in bulk from. In their infancy, they will have no competition from other services or carriers, but as the space develops, they could be frozen out by major carriers who develop their own system or sign exclusive partnership agreements with similar services. However, being first-to-market allows them to sign these types of contracts first.
This is not to say that Airtoken will not have any competitors. Existing companies LotusFlare, Jana, and Tala all provide parts of what Airfox will, however, their scope is limited. LotusFlare, a a data saving application, does not provide any advertising rewards or tokens. Jana provides rewards for advertising engagement, but they are not blockchain based, nor do they provide micro-loans. They are strictly limited to impression advertising, and cannot offer any other offers such as purchases, loans or rewards.
The biggest issue will be adoption rates. Their problem is how do you advertise an internet package to people who have no internet. Victor told me that their company will be working with outreach groups to connect with the poor and unbanked. It will be a word of mouth campaign run on affiliate rewards. There have been similar systems in the past, but they will need huge support in this effort to be successful.
I would expect that the AirToken will need to be used for more than just cell data for it to be successful. If users start to transact for physical goods and services with the currency, it could be extremely popular and have long-lasting value. The market share of even just one Sub-Saharan country would spur the company onwards to be worth hundreds, if not billions, of dollars.
Another big opportunity for AirFox once their user base is large enough will be to sell their customer data to advertisers and other big data companies.
The ICO for AirTokens (AIR) will take place on September 19th, 2017. The hard cap for the crowdsale will be 21 million USD, while the soft cap is only 5 million. The ICO will last for a maximum of 31 days and there will be no follow on crowdsale.
There will be a total of 150 billion AIR tokens created and 105 billion will be available for sale during the ICO. 30% will be withheld for the AirFox Reserve pool. From the Reserve pool, 10% will be dedicated to user growth and another 10% to micro-loans.
Below is a picture of their ICO budget allocation.
AirToken will be focused on releasing their services first in Brazil, where co-founder Victor Santos has roots. The biggest issue for them will be whether they can get their adoption rates high enough to be profitable. The idea is novel though. I see the utility in this project and after speaking with Victor I believe that this business model is one which could have a huge impact on the developing world in the future.
Airtoken gets a GOOD rating. See more ratings here.