A review + interview of the upcoming Modum ICO
The future is the blockchain. Eventually it will be an invisible, ever present system in our lives. One of the biggest revolutions in the future will be the integration of the blockchain with other emerging technologies such as self driving cars, Internet-of-Things (IoT) and AI.
I’m a firm believer the next step for blockchain tech is its application to existing corporate business structures to reduce costs and increase efficiency. One of the areas ripe for its application is the global supply chain, as each step from materials to production to retail must be monitored for safety and regulatory purposes. A transparent, immutable blockchain will ensure that companies working together, regulatory bodies and other auditors have access to
I previously analyzed Ambrosus, a Swiss startup with a mission to record and monitor the food supply chain. I was extremely impressed with their vision and goals. However, their whitepaper alludes that much of what they want to do is conceptual. For bleeding edge technology, integrations with marginal costs and little change to existing business flows are what further development.
A Use Case Solution
With a targeted strategy for use in the Pharma industry, Modum will release their new MOD token to facilitate their expansion and development. The core of Modum’ business model is to be a “blockchain enabler” by implementing their tech with existing supply chain practices using their use-specific devices to ensure the safety and regulatory adherence of “for the last mile” deliveries. CEO Malik El Bay told me in an interview after I had written my inital draft article that “I think that we differ from Ambrosus’ approach, in that we really focus on sensing devices and try to bit add a bit more than provenance to the transactions.” Furthermore, Modum plans to be “blockchain agnostic” to tailor their system to meet the needs of their clients and governments.
The initial problem Modum wants to tackle is the logistical cost burden of “regulatory requirements for the transport of medicinal products for human use in the European Union,” which requires that all “shipped medicinal products have not been exposed to conditions (particularly temperature) that may have compromised their quality.” The strict requirements ensure product safety, but necessitate “expensive, temperature-stabilized trucks and containers from third-party logistics providers.”
“This new regulation states that all shipments need to be monitored. And for a lot of these room temp shipments, they were being shipped with the regular post office. So with this new regulation, there was nothing on the market satisfying this customer need. They either had to cool their room temperature shipments or develop a system for them where they put one of our sensing devices in their parcel, track the temperature variance and then release the product once change of ownership happens,” Malik said.
In our interview, Malik further said that “we looked at different use-cases in the pharma supply chain. In the next two years every single medicine will have its own serialized ID. They also repeat lab tests, which are necessary, because they can’t prove that that during shipments the temperature stayed within a range. Malik said that the team chose this problem “because it was the easiest and fastest way to market.” Having this approach “makes us different from other companies, because we found a use case which needs a solution now.”
Modum’s solution, a blockchain integrated IoT temperature logger , keeps track of temperature during shipment and then wirelessly transmits this data to the blockchain each time change of ownership occurs. The device cannot be tampered with easily and its data, once uploaded to the blockchain, becomes an immutable record able to be audited by regulatory bodies. Additionally, its size, cost, and its ease to mass produce make it a passive solution without expensive monitoring equipment.
Its operation is simple. During packaging, the device is scanned, logging its ID code and shipment tracking info, and the information is stored into the blockchain. As well, the temperature ranges are set for the devices. Once shipped, the NFC device can regularly update the network with its current temperature. After the package arrives at its destination, the device is logged again and then removed. At all times during transport the device records current temperatures and logs this information in a smart contract which cannot be tampered with. It is this simplicity which makes the device advantageous for logistics companies and suppliers to integrate into their existing supply chain.
The product has gone through three pilot phases. “The first pilot was for producer to wholesaler, the second was wholesaler to end-consumer. Then we realized that there are a lot end-consumers where the process for accepting goods is different, that the best solution would be to integrate our device with an existing logistics provider. This is what we did this year with the mail order pharmacy and the leading parcel service in Switzerland. We concluded that the system would be good for mass use and the mail order pharmacy said that they wanted their offering integrated in their parcel logistics service,” Malik said.
Strengths and Weaknesses
Modum has a working temperature logger ready for corporate application once the token sale ends. The device has already gone through several pilot phases, with the company learning from test cases and modifying the device (data throughput speeds, NFC, dashboard) to allow for greater scale. According to their whitepaper, they claim they can reduce costs per shipment by up to 60% and that if their system is introduced in mass across the 200 million shipments a year, it would save up to 3 billion USD.
Additionally, with their “pay per shipment” business model, it will allow logistic companies to test and integrate their blockchain connected devices in a slow, but proven manner.
“It’s very straightforward and the best thing about this is that we are cutting costs. To ship a package using cold shipping costs 35-40 Swiss Francs, using a normal parcel service is 8 Swiss Francs plus our service. The max cost per shipment would be 10 Swiss Francs. If you have more volume it will be less, but if you only have one or two, it will be max 10 Francs.”
The biggest strength for them will be to leverage their project for use with other technologies, namely automated transport solutions. In the future, vehicular transport of goods will be driverless and managed, run, and monitored by AI systems, who will use blockchain systems like Modum’ to keep track of shipments all without any need for human inspection. Modum’ roadmap includes development of other sensors to monitor light, motion, and humidity to provide continuing logistics solutions for other industry sectors. Their roadmap, while less ambitious than Ambrosus’, sets a path for future expansion.
Malik was insistent that I was wrong though, saying:
In the future, the parcel, truck, driver, the house, everything is smart and is generating data and based on this data, they can take decisions. We try to take this one step further and ask, ‘how would it be if the parcels were thinking for themselves’ if there would be the possibility that they could optimize for themselves, that they understand where they are, where they want to go and make decisions.
For this to happen, there needs to be a secure layer and that they have the ability to transfer value. They need to be able to process information. They need to be able to gather information. An easy example in the last mile is that a parcel could choose to go to a parcel distribution center and it would pay the fee per transaction. As well the parcel center could decide to take the order by drone for the last few kilometers to be there 15 because it makes 15% revenue. It could also decide to take a cold chain container for the last ten kilometers based on data it collected over the last hour and see that it could lose value. This is where we see the future heading to and we want to take the first few steps with a simple temperature logging device for pharma. Simplicity is key. There are also a few other companies wanting similar solutions for tracking humidity, so that is a sensor we can add to our IOT platform.
We are also discussing with our partners what to do with a deviation occurs. Right now, we are just notifying the client, the next thing we could do is that we automatically adapt shelf life and price of the product. A small deviation occurred, so now instead of 3 year shelf life, it automatically becomes twelve months and the price is reduced by 60%. All this is happening at the moment the goods change ownership.”
The company is also positioned to react to future changes in preferred blockchain. Right now the system is run on Ethereum, but the company is looking at IOTA as the next blockchain they established, which Malik said was “one of the best decisions they’ve made through this process.” However as they go into the future “We (Modum) also see ourselves as blockchain agnostic, we don’t really care what kind of blockchain we are using, it should be the right one for the use case. A few customers from Big pharma were interested in fabric because they know IBM and trust them, so if it suits our requirements we are happy to use fabric in collaboration with IBM.”
What I worry about the most is whether Modum’ will be able to grow out of their limited current pharma industry application. The “blockchain for the supply chain” space is quickly filling up with competitors all trying to take market share. One reason I was extremely impressed with Ambrosus was because of their grand vision for their blockchain. In their whitepaper, everyone from logistics firms to pizza delivery people would use their token. Modum, however, did not put forward that vision, maybe their team is made up of engineers who focus on existing problems, but if they want to succeed long term they will need to dream up a few conceptually compelling goals. Their hardware though will be pharma grade, meaning it will be easily applicable to other industries.
“We are going to be working with the 2nd largest pharma distributor in Switzerland and will begin working with this solution in fall. This is not official, because we are developing our own temperature logger. Being in pharma, you have to develop pharma compliant products and we started developing the temperature logger with NFC, Bluetooth and the accelerometer in March. Hardware is hard, It takes times. We have the second functioning prototype in our office now and we are programming the firmware and we ordered the components. We are expecting to mass produce the device in Q4 of this year, so the go to market entry point is for Q1 2018.” Malik said, talking about the near future of the company.
On September 1, 2017, Modum will begin their token sale where they will release 18 million (60%) of the 30 million total tokens. The company will keep 9 million (30%) tokens themselves, 900k (3%) will go to marketing and early advisors and 2.1 (7%) million were sold in pre-sale. Token holders will be able to vote on whether milestones were achieved and they will also receive a portion of the company’s profits in dividends, converted to Ether and sent to a wallet.
The first 6 million MOD tokens sold will have a 30% discount, while the next 6 million will only have a 15% discount. Tokens will be issued within 30 days of the finish of the sale.
Furthermore, Malik also told me that Modum will be one of the first companies to accept IOTA during their crowdsale.
Pre-sale has already ended and sold out quickly.
I like Modum, it’s a tailored solution that solves a specifc use case and will lower costs for “last mile” logistics providers. More so, as their components will be pharma grade, they will be easily adaptable for other spheres of business. In my initial writeup of Modum, I was wrong in my approach, their hardware/IoT development path will continue and be adopted for other requirements in other industries. The business has legs in my opinion and I will be extremely interested in how their token sale goes.