Deep Onion - A Brief Analysis

Deep Onion - A Brief Analysis

Here are my notes on DeepOnion (ONION) coin. Please feel free to raise questions and give a feedback.

ONION overview:

• is a coin that did not market itself towards mainstream until now, but allowed the product to speak for itself;

• has a team committed to anonymity, proved by:
  a) the fact that is a niched coin for the multi-layered web platform Tor browser (it is said to have an 'onion' structure)
  b) is created by an anonymous team (which according to the investing/trading textbooks, is not necessarily a positive, but personally I appreciate this aspect);

• it is a fairly new coin compared to the Tor browser existence; it started on July 06, 2017 according to their Bitcoin Talk;

• few highlights out of their roadmap are:
  Q1 - more marketing towards mainstream adoption, mobile wallet (iOS & Android);
  Q2 - smart contracts, airdrops, extending towards exchanges and games industry.

Fundamentals

• small market cap coin;

• niche product, aimed at Tor network;

• Woocommerce plugin (popular plugin for Wordpress) will be implemented soon but it will start out on smaller e-commerce sites first. (1)

• the coin did not start as an ICO because they wanted to start the project as a community and they continue to be committed to the community by offering consistent airdrops to active BitcoinTalk members;

• it claims to be more effective and scalable than Ethereum network according to their whitepaper dated December 2017 (10x the throughput of Ethereum);

• in terms of speed, it has plans to implement lighting network technology in order to bring the transaction speed close to VISA's;

• it has a PoS majority, therefore it is resistant to the 51% attack (which is a vulnerability of Bitcoin for example);

• it benefits from a very active community:
  - https://deeponion.org/community/
  Forum Statistics
  Threads:22,092
  Posts:349,270
  Members:11,481
  Threads Last 24 Hours:166
  Posts Last 24 Hours:2,749

   - Telegram - 1 469 members
   - 2000+ pages on Bitcoin talk & 20+ on the new, rebranded Bitcoin Talk sub.
  

• presents a consistent activity on Github with proactive feedback to the issues raised;

• it is already listed on Kucoin and Cryptopia, two popular exchanges and plans to expand in Q1/Q2 2018 to more exchanges;

• airdrop going on for 40 weeks with 62.5% of ONIONs reserved for airdrops that have already been distributed freely (19 Jan 2018) (2)

Competitors
Being a privacy coin, among the ONION’s competitors, we call Dash, Zcash, Monero, Zen, PIVX, Hush, Xspec, and Verge.

Methodology
Due to high circulating supply (14,516,828,968), I eliminated Verge as it is an outlier.

I highlighted in red the prices (USD) above average and in yellow prices below average and applied the same for Market Cap and Circulating Supply and calculated the correlation indicator between Price (USD) and Market Cap, which proved to be quite high (0.856), compared to a neutral correlation between Market Cap and Circulating Supply (-0.27).

Interpretation
As there is a high correlation between Market Cap and Price (USD), we can observe that the coins with the highest Market Cap also are the ones with the highest prices in USD.

However, the Market Cap is calculated as Price (USD) and Circulating Supply.

Because we are trying to assess whether ONION is an undervalued coin compared to its competitors, we can look now at the coins with a similar Circulating Supply with Onion then Zcash, Zen and Hush would be the perfect candidate. In this case, the differences between prices are quite high, with Zcash leading at a price of 486 USD and Zen at 38.77 USD, which indicates roughly that ONION (8.92 USD) is undervalued compared to other privacy coins.

Of course an analysis of the rest of the numbers can be performed and would provide a more in-depth answer on why Zcash and Zen coins are better performers, but I believe they aare closely linkedto the fact that both have been on the market for longer than ONION and have been more vocal about their achievements so far. With the upcoming marketing plans, ONION has the opportunity to catch up in market cap and mainstream adoption.

TA

As of 25/01 on the 8h chart, ONION shows few signs of trend reversal. It had lower highs and lower lows up until 22nd/ 23rd being in a bearish trend, but it closed above previous lows since then and it seems to be trying to consolidate at current levels. However, it is still lacking the volume to support itself over the EMA to confirm the trend reversal.

apologies for not drawing on it but I am unable to load it in Trading View

Challenges:

One of their targets for Q1/2 is to extend on more exchanges but some exchanges require the disclosure of the team members. I am wondering how such an anonymous team, dedicated to the idea of anonymity, will deal with this?

Also being a coin associated with the TOR network, I feel that in the mainstream collective mind there is a belief that sends back to the Silk Road. Therefore, another challenge that ONION team will face will be to convince the average Joe that it is not associated with money laundering or any criminal activities. But isn’t this one of the challenges of crypto coins in general?

As a matter of fact, Tor can be installed on any phone and can be used by anyone as a method of protecting their data about the searches and online activity. Accessing less legal files on Tor requires a lot more skill than average Joe has, and it sometimes comes with the related consequences. But unless purposely trying to find illegal activity and having the skills to do so, if you would like to stop being a product for the websites that you are visiting as they sell your data (if you are not paying for something then you are the product), Tor can be used just as any other browser (Mozilla, Chrome, Safari, Opera) and paying with ONION coins for products or services will be soon available for the small e-commerce websites that use the Wordpress platform.

In conclusion, I believe ONION is a coin worth keeping an eye on as it seems to be dedicated to decentralization and anonymity, it has an active community, low circulating and total supply and still a low price compared to other privacy coins. In addition, it has promising plans to start to market itself more in order to expand more towards mainstream adoption.

Thanks for your time reading this and hope to see your opinions in the comments section!

References:

https://deeponion.org/community/threads/when-will-i-be-able-to-buy-stuff-directly-with-deeponion.24578/
https://deeponion.org/community/threads/article-deeponion-airdrop-statistics-january-19.26399/ and https://blockstats.pw/deeponion/

Disclaimer: This is not investment advice, just personal opinions. Please do your own research before investing in anything.

Later Edit - I missed mentioning Deep Vault (file verification) and Vote Central (Community input platform).