Hero Token Analysis

Disclaimer: I am not a financial advisor, due diligence and talk to a financial before investing. Invest at your own risk and only invest as much as you willing to lose.

This is my very first ICO review. In this review, I am going to share some of the genuine facts that I have gathered and my own opinion about Hero Token. After dissecting the company white paper, read ann thread, active in Hero Token Slack channel, and researching about Pawn Hero, parent company of Hero Token, I am enthusiastic to see where Hero Token will be in the next few years. I will divide this article into three sections: Hero Token past (Pawn Hero), present, and future.

Pawn Hero was established in Feb. 2015, in the Philippines, as the first online pawnshop. Why Philippines? Because there is a huge market for it. Also stated in the white paper, just about 2/10 people have banks and less than 5 percent of the populations have credit cards. Plus, there are about twice as many pawnshops in the Philippines as there are banks, estimated about 18,000 pawnshops and 8000 banks. However, most of the populations own smartphones, and Pawn Hero leverages this pretty well, offering pawning services, ranging from jewelry, luxury goods, electronics, bikes, home equipment,etc.. as collateral loan, 50 percent lower interest than traditional pawnshop, to almost everyone in the nation as long as they have a smart phone, as they called it, "a pawnshop in everyone pocket". In March 2015, PawnHero won top 100 Startups Philippine Qualifiers for Echelon Asia Summit 2015. Three months later, it won the most Promising Startup in Asia at Echelon Asia Summit 2015 in Singapore, along with many more rewards as you will find in the white paper. Pawn Hero successfully received seed funding from Sulficio Tagud, CEO of 2GO, the biggest premier logistics company in the Philippines, and other big names like Softbank and Alibaba.

(clarification: these investment made toward Pawn Hero, not Hero Token. "Hero token represents the right to receive a reward, which is part of the interest income earned. It does not represent equity in the company nor have any intrinsic value, white paper page 12".)

Mission and Vision
Hero's mission is to revolutionize the banking industry to make credit more readily available and affordable for the unbanked or
underbanked starting in Southeast Asia. Since 2015, we’ve helped thousands of Filipinos access short-term credit and that number is growing fast. As a pioneer in online lending in Southeast Asia, we have become one of the most distinguished Fintech startups to disrupt the highly entrenched, multi-billion dollar lending industry. Through our platform, we are already providing a revolutionary solution to a significant problem among the unbanked and underbanked across emerging markets (Hero White Paper, 4).

Pawn Hero was founded by David Margendorff, Nix Nolledo, and Manny Ayala. I will provide a brief description of these three financially disruptive individuals below. Together, their persistent of hard work and discipline, team work, talents, and having the right business minds set helped them established a strong track of solid record for Pawn Hero in the first two years since Pawn Hero operation. After doing further research about Pawn Hero, I found that they did live up to their name and walked the talk. The reason why the company called "PawnHero" because they want to be the "Hero" or the "good guy" to those in need of hard times, especially those do not have access to banks/credit cards/ and are force to turn to high interests loan at pawnshop that often accompany additional fees. Pawn Hero seized the business opportunity and able to offer many advantages over traditional pawn shop such as convenience, 50% significantly lower interest loan, and great customer service and care.

As stated in their white paper, currently, PawnHero entered crypto world, going to raise additional fund through offering Token Hero sale and using blockchain technology to further expand Pawn Hero and provide blockchain based individual without collateralized loan. Here are some of the benefits of using blockchain technology (Hero White Paper, 8):

1. Reputation : HERO will record the transaction on the blockchain, a repayment from a
   user will improve their reputation. The risk of negative reviews will hurt the user creating an incentive to repay loans. The user will be able to use the same persona across multiple DApps and benefit from continuity as a good person.
2. Identity Verification: Know-your-customer (KYC) and anti-money-laundering (AML) regulations require us to know who we are doing business with and ensures that we are not participating in money laundering and terrorism. HERO is using a centralized system that checks ID (KYC / AMLA) to verify real-world identity.
3. Privacy Protection: Users are motivated to contribute information to build their credit identity, because it will allow them to get better interest rates and loan terms.

The funding milestones are divided into 4 stages, depending on the success of the crowd sale( Hero White Paper, 15)
Stage 1: Expand collateralized loan lending business in the Philippines (Q4 2017)
Stage 2: Blockchain based loans without collateral (Q1 2018)
Stage 3: Regional Expansion (Q3 2018)
Stage 4: Blockchain based loan for SME and communities (2019)

My thoughts about funding:
Blockchain tech might provide excellent platform for clients building reputation, such as building creditability and identity, but non-collateral loans are quite risky. If a majority of the borrowers default their loans, necessary steps must be taken to deal with to prevent and safeguard this. As stated in white paper, Hero Token going to prepare for this by testing themselves and their long term customers on the platform. In addition, presale is delay to edit the core code, possibly to address the risks of non-collateral loan and how to best go about it?

Here are a few perks of owning Hero Tokens: (Hero White Paper, 13)
• Reward bearing tokens - like a interest
• Social impact of helping underserved access affordable credit
• Buy back: The company may use a percentage of profits to repurchase Hero tokens from the open market at the
prevailing market price, therefore the value of the token should be further positively correlated to the success of the
project.

Hero Token sale detail (White paper, 10)
1ETH=200 Hero Token (symbol HERO)
Max: 250,000 ETH

• Day 1 (first 3h) +30% token bonus;
• Day 1 (3:01h-24h) +20% token bonus;
• Day 2 and day 3 +10% token bonus;
• Day 4 to day 7 +5% token bonus;
• Day 8 to 14 2.5% token bonus;
• After day 14 0% token bonus.

The Hero Token percentages are as follows.
• 80% of available token are for sale open to the public
• 3% of available token are for early believers and advisors
• 2% of available token are for bounties
• 15% of available token are allocated to the founders for
long-term alignment of interests

Accepted crytocurrencies
• Ethereum (ETH)
• ETH Classic
• Bitcoin (BTC)
• Ripple
• LiteCoin
• Waves

Presale is delayed at the moment.

No one can predict a future consistently accurately, given a strong track of record of past two years since the start up of Pawn Hero and an awesome team devoting to make a difference in the unbank and underbank, translates to better chance of success. Growing up in an underserved area in Asia, I like and support this project. As with every business that explore new technology in its infancy stage, such as blockchain, a new frontier with lots of uncertainties still need to be learned, risks are always involved. Moreover, taking on block-chain based non collateral loan is a different beast, lots more riskier than collateral loans with a greater chance that clients might default their loans, intentionally or unintentionally, or due to unforeseen circumstances. Will Pawn Hero and Hero Token lead the way to disruptively using blockchain-based to further expand Pawn Hero regionally and to provide non-collateral loans to individuals, SME, and communities? Time will tell. In the mean time, I believe in Hero Token and their team.

Team members info: (more on page 22, white paper)
Board of Directors
PawnHero’s Board of Directors share a common vision and are actively involved in key strategic decisions and development.
David Margendorff, Chairman of the Board
• Founder, German e-commerce company
• Founding Member, CompareAsiaGroup (Nova Founders)
• Studied in London, Buenos Aires and Barcelona

Manny Ayala, Director
• Managing Director, Endeavor Philippines
• Former President, EO

Nix Nolledo, Director
• Chairman and CEO, Xurpas Inc.
• Founding member, IMMAP
• #1 entrepreneur in the Philippines (Ernst & Young)

Risk analysis:
When the majority of non-collateral loans default, this could put Hero Token @ risk n could make a huge impact on Hero Token financially.

Is Blockchain tech really necessary for this project? credit cards companies exists for years without blockchain. How much more efficiency and financially better using blockchain vs traditional ways of lending that the Pawn Hero have been using?

Since Hero Token is based on ethereum blockchain, we assume that ethereum ecosystem and platforms continue growing. If for some reasons, Ethereum experience difficulty that prevent the ecosystem from expanding n maybe one day become obsolete, how would this affect Hero Token?

I am not affiliated with Pawn Hero in anyway, but I believe and support the project mainly because the founders have a strong interests in serving the unbanked and underbanked in Southeast Asia: where I grew up. Moreover, the founders found ways scale up Pawn Hero quite well in the past two years, suggesting that they have a solid back ground n foundation to expand Pawn Hero and Hero Token.

This article is intended for information only, not financial/investment advice! Always conduct your own research prior to investing and only invest as much as you willing to lose.

I am following Hero Token and will keep the community updated on my 2nd article about Pawn Hero and Hero Token.

Reference: Wiki, Hero Token White Paper

https://www.herotoken.io/
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