Crypto Fundamental Value Analysis 9-Step Blueprint With 2022 Helium Token Case Study

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Crypto Fundamental Analysis

“What value does cryptocurrency add? No one’s been able to answer that question to me.”    – Steve Eisman

Introduction

There is no single or certain method of understanding the current intrinsic value of cryptocurrency coins, tokens, NFTs or other digital assets.

The most widespread models for predicting crypto price movements are fundamental, technical and sentiment analyses.

Technical analysis (TA) is generally the approach of choice for most serious traders. TA doesn’t care about underlying value. It focuses exclusively on price movements of cryptocurrencies based on past performance, that tend to follow certain predictable patterns.

Fundamental analysis (FA), the subject of this article, is concerned with the aspects of a crypto project that solve a problem or otherwise add value to a business, project or societal need.

One of the biggest shortfalls of fundamental analysis, however, is that FA value estimates are mostly not in sync with market value. 

Market value, like with real estate, is the amount a buyer is willing to pay in an arm’s length transaction, optimistically assuming a fair and open market.

“In the short run supply and demand alone determine market prices.”   – Seth Klarman, Margin of Safety

Technical analysis tends to be more accurate in short-term timeframes, because current supply and demand don’t care about how they got there, only that they’re there now, and open to predictable cycles of market sentiment.

Conversely, fundamental analysis tends to be more accurate in the long-term, in as much as it is able to understand the factors that will produce value over time and eventually lead to demand. These factors are not always simple to pin down, however.

Strictly speaking, the bottom line intrinsic value of a cryptoasset is the current value of expected future cash flows. The biggest problem with that definition is that it’s impossible to know what future cash flows will be.

In the absence of securities market metrics such as earnings per share or price-to-book ratio, crypto fundamental analysis needs a different set of metrics or a set of more subjective criteria to become a meaningful analysis approach.

A Crypto Fundamental Analysis Blueprint

The following FA Blueprint provides the framework for a subjective evaluation of probable utility value, supply and demand, project vision and execution, potential effects of legislative constraints, stakeholder involvement, competitiveness and whether the tokenomics of a project will help or hinder its value.

These factors will vary in applicability for different cryptoassets, but they are the primary indicators of the value of a crypto project. Their general applicability to cryptocurrencies will be captured in nine steps, as shown below, and then applied to the Helium project as an example case study.

Please note: The content of this article does not contain investment advice. The following information is intended only to provide educational background information to those who are interested in cryptoassets and approaches to valuation techniques.

CryptoAsset Fundamental Analysis Key Value Evaluation Factors:

  • Crypto Project White Paper
  • Roadmap
  • Development Team
  • Utility
  • Following the Money
  • Stakeholder Adoption
  • Modifications and Governance (Consensus)
  • Competitive Environment
  • Tokenomics

Crypto Project White Paper

Most crypto projects start with a White Paper, and it’s also a good place to start a Fundamental Analysis of a project’s value.

Bitcoin and Ethereum marked their blockchain emergence with white papers that described their technologies and purposes.

Cryptocurrency white papers can tell you what problems project developers are trying to solve, and how they plan to go about it. If you understand a project’s white paper it helps you ask questions that are relevant to understanding the value of the cryptoasset.

Typically white papers explain the expected use cases for a cryptoasset. This is also where the technology behind the project is described. Also important, is the white paper’s definition of how the project will make decisions and accomplish tasks.

For a decentralized peer-to-peer network that means there has to be a mechanism for gaining consensus within a  project’s blockchain network.

For example, that mechanism may be “proof of work” as with Bitcoin, “proof of stake” as with Cardano, or “proof of coverage” as with Helium. Other types of consensus mechanisms are proof of capacity, proof of elapsed time, proof of identity, proof of authority and proof of activity.

But not all white papers follow the same content format. White papers may also describe marketing approaches or they may primarily be used to establish technical credibility, with hopes of increasing the brand profile or attracting startup investors.

A crypto white paper is a good starting point in understanding what a project does and the rationale for why it needs and uses blockchain technology in a way that sets it apart from competitors and adds value.

If a white paper does not describe a marketing approach that complements a technical solution then it begs the question: no matter how interesting a problem is or how elegant a proposed solution is, will the project address a market need?

If people or businesses are not interested, or if there are other crypto projects that are already catering to that market demand, then a new coin project may not provide much value.

If a project does not have a novel use of blockchain technology then you may just be looking at a calculated marketing approach. Token generation or smart contract management are common rationales for a new coin project, but that’s not enough to differentiate it from hundreds or even thousands of competitors, or to add substantial value.

Finding cryptocurrency white papers

These are public documents and not hard to locate. Usually a simple Google search, identifying the project of interest will lead you straight to the white paper. If you want to browse or compare different projects you can also go to allcryptowhitepapers.com.

Helium Case Study: The White Paper

Excerpt from Helium’s White Paper

Helium’s White Paper is published on the internet and can be found at whitepaper.helium.com. This White Paper is updated from time to time, with the current Release identified by number and date: 0.4.2 (2018-11-14).

In the introduction the authors express their intent to keep the White Paper current, but acknowledge the difficulty in doing that with dynamic ongoing open source contributions. For the most current project progress they refer readers to their GitHub Repository at https://github.com/helium.

Although the Helium White Paper describes the problem it proposes to solve, almost all of the paper is about the how. It provides a description of the technical roadmap, but only very briefly discusses marketing goals. In this respect it provides insights into the developers’ intentions, but does not provide enough context to understand the value of the technology.

Reading the Helium White Paper answers the following questions.

  • What problem does the project try to solve?
  • Why this is an improvement over existing solutions?
  • Why there is a market need for Helium’s solution?
  • How the Helium project uses and benefits from blockchain technology?
  • How Helium achieves consensus on its network?
  • How to stay up to date on the Helium project?

Reading the White Paper also raises the following questions and concerns.

  • How will Helium attract IoT platform customers? 
  • How will Helium achieve and maintain project level decentralization?
  • How will Helium handle project governance?
  • How will Helium reward capital investors?
  • How will Helium avoid being classified as a security by the SEC?

White Paper Abstract

The abstract provides a very brief overview of the project, describes the problem this project will solve, and why this solution is better than other available choices.

Billions of Internet-of-Things devices need to connect to the internet in order to transmit their data, but cellular, WiFi and Bluetooth solutions are too expensive, power hungry and limited in range.

The Abstract then gives a 30,000 foot view of Helium’s solution to the problem, which is to build a decentralized, low-power network that commoditizes IoT connectivity, with dramatically lower costs. To do that, Helium uses a unique blockchain protocol that lets it incentivize “a two-sided marketplace” between IoT device coverage providers and consumers, using Helium native cryptocurrency tokens.

Introduction

The introduction describes the crux of the Helium project and what makes it unique. The Helium Proof of Coverage Consensus protocol is described, as well other key technical components and a system overview.

White Paper Key Content:

  • Description of the Helium Blockchain
  • Helium network long-range, low-power wireless protocol – WHIP 
  • Description of IoT devices with WHIP-compatible radio transceivers 
  • Use of Hotspot devices to provide wireless network coverage
  • Use of routers in the network moving data to third party cloud services
  • Proof-of-coverage and proof-of-locations protocols to verify Hotspot locations and data transmissions
  • Description of on-chain “micro-transactions” for data transmissions 
  • Description of Helium fee structure
  • Helium Consensus Protocols and improvements over competing Proof-of-Work
  • Potential future directions the Helium project could go
White Paper Helium System Overview

Roadmap

Publishing a business roadmap for a crypto project is a concise way to communicate with stakeholders about a project’s priorities and goals, typically for a calendar year.

Roadmaps are not intended to provide granular detail, but rather a higher level visualization of project goals that is easy for stakeholders, including potential investors, to understand.

A roadmap will not provide a way to quantify crypto intrinsic value, but it may point the way to identifying the most important value-added aspects of a project.

Examples of crypto roadmaps can be found at BUX Crypto, ETN-Network, and Cardano.

The tricky part about publishing a roadmap is that it may imply top-down management of the project, and that the project is not fully decentralized.

The presence of “essential managerial efforts that affect the success of the enterprise” means the project risks being classified by the SEC as a securities token, which would make it subject to much stricter, more comprehensive regulations, with higher compliance costs.

Helium Case Study: Roadmap

Helium’s latest Roadmap was published for 2021. A 2022 Roadmap is conspicuous by its absence, perhaps attempting to avoid the appearance of central management, which could lead to HNT being classified as a securities token.

Excerpt from Helium 2021 Roadmap

Helium’s 2021 Roadmap can be viewed as a public document at https://helium.com/roadmap. This publication highlights the project’s goals for Q1, Q2 and H2, organized by Core Technologies, Network Coverage, and Business Use.

The origins and technical details of these goals may be found, with a little more effort, in a less glossy presentation style within the project’s GitHub Helium Improvement Proposal Repository.

Development Team

Cryptocurrency values begin with ideas, which may see the light of day if the development teams behind them are innovative, competent and effective.

Investigating the experience and reputation of a crypto’s development team probably will not give you enough information to determine whether a project will be a winner.

But you might be able to tell if the development team doesn’t have enough horsepower to make their vision a reality. It might also help you uncover potential trust concerns or potential scams.

Helium Case Study: Development Team

The Helium project development team started in 2013 with the founders: Shawn Fanning, Amir Haleem and Sean Carey.

Sean Fanning is famous for developing Napster, the peer-to-peer music sharing platform.

CEO Amir Haleem’s background is in the videogame industry. He was CTO of gaming startup Diversion.

Sean Carey has served as CTO at Helium, Director of Development Operations at Basho Technologies and as a system engineer at Brightcove.

In 2013 Helium was not a crypto company. The founders first tried to set up an IoT wireless network, but without cryptocurrency incentives. Since 2017 the company has developed and implemented the current blockchain crypto-incentivized version of Helium.

Helium’s current CTO is Marc Nijdam. His background is as a technology leader in the development of various Qualcomm products and services, and as a researcher at Hewlett-Packard.

Abhay Kumar is the chief product officer, responsible for blockchain and economic incentives. Before Helium he was VP of product engineering at Marqeta, Inc.

Andrew Allen, VP of engineering, authored the first draft of the Helium White Paper, and continues to lead the web and mobile engineering teams at Helium. Before his promotion to VP Andrew was the lead software engineer at Helium.

Crypto Project Utility

According to Investopedia less than half of the top hundred cryptocurrencies by market cap provide any intrinsic value or usefulness to users.

Investopedia cites the idea of a “working product” as the criteria for crypto utility. The lowest bar for a working product should be its current use for payments, decentralized applications, smart contracts and “other.” Since “other” is pretty subjective, let’s look at a few examples.

Bitcoin’s utility is for peer-to-peer payments across borders, worldwide. However, that utility has become degraded by slow transaction speeds and being treated like a highly speculative commodity, comparable to digital gold.

Ethereum originated smart contracts.

“If the cryptocurrency market overall or a digital asset is solving a problem, it’s going to drive some value.”  – Brad Garlinghouse, CEO Ripple

Ripple provides quick and inexpensive international transactions, as in 4 second transaction times at a fraction of wire transfer costs. Critics have pointed out, however, that this functionality could have just as easily been accomplished without creating a new cryptocurrency token (XRP).

Stellar provides a blockchain connection service for fiat currency transactions between people, banks and payment platforms, essentially with no fees for end-users.

ByteCoin uses blockchain technology to provide untraceable, un-linkable, instantaneous transactions, providing a very high level of privacy to its users.

Steem is the crypto engine that powers Steemit, a popular, decentralized social media platform that rewards content creators.

Stablecoins, including Tether, Dai, Binance USD and TerraUSD are designed to be equivalent in value to fiat currency, typically $USD. In order to maintain this value stablecoins may be backed by reserves in the fiat currency they are tied to.

Uses of stablecoins include acting as functional currencies within crypto exchanges. Stablecoins are also available for transactions 24/7, which distinguishes them from bank held fiat currencies. Stablecoins are also useful as a medium of exchange with smart contracts.

Helium Case Study: Utility

Helium use cases, as described in the white paper, start with providing cheap connectivity, available globally, between Internet of Things smart devices and their upstream platforms.

Some IoT use cases with room for market growth using the Helium network include:

  • Smart city infrastructure (San Jose, Miami . . .)
  • Pet tracking or vehicle tracking IoT devices are costly on cellular networks and limited by battery life. Helium compatible LongFi chips require much less power, meaning batteries and tracking capability will last years. 
  • Track locations and physical data (temperature) of high value shipments
  • Supplementary roaming on Helium’s network for other LoRaWAN operators
  • 5G cellular network connectivity using Citizens Band Radio Service unlicensed zero-cost spectrum

Helium’s founders saw a gap in the marketplace in 2013 in providing networks for the growing Internet of Things device market. Legacy wireless telecom solutions were proving to be too expensive and too difficult to build out. That model include the following elements:

  • Operators compete at auction for very expensive radio-wave spectrum bandwidth licenses
  • These operators purchase expensive dedicated network equipment
  • They build expensive cell towers and lease or buy the land to put them on
  • They build and maintain infrastructure for customer support and billing
  • They spend massive budgets in the public marketplace to win customers

This cellular network connectivity model works well for devices that need lots of bandwidth, such as cell phones. Consumers are used to paying the going rates.

This model doesn’t work so well for IoT devices that use very little bandwidth. Consumers might not mind paying $1/month to connect an IoT device to the internet, but what if they have a dozen devices, or a hundred?

One solution is to build a wireless network designed for IoT devices, but doing that using the telco legacy model is just too expensive.

Helium’s utility is in implementing an IoT connectivity network that turns the legacy model cost structure on its head:

  • Consumers buy their own Helium commoditized Hotspots for a few hundred dollars. These Hotspot devices are built by third-party manufacturers. Helium’s business model doesn’t require it to invest in or make any money from the Hotspot device business.
  • After buying and setting up a Hotspot device consumers have no recurring costs, except for a few cents per month for electricity.
  • No work is required from Hotspot hosts. The Hotspot devices automatically perform IoT data transfers and Proof of Coverage verifications. Hosts are automatically rewarded for their device activity from Helium’s blockchain ledger protocol.
  • Similarly, Helium’s blockchain manages the accounts of IoT platform customers, receiving micropayments for every data transaction, with no hands-on management or labor costs required.

Costs on the Helium network are expected to be 90-99% lower for the vast majority of IoT use cases, dramatically reducing the barrier to connectivity and unlocking many new IoT use cases that depend on global, inexpensive internet access.

– Tuchar Jain, managing partner, Multicoin Capital

As a result of this utility HNT continues to grow in value as the size and coverage of its IoT connectivity node network has expanded.

Even so, Haleem thinks that Helium has barely scratched the surface of a growing vast market demand for IoT network connectivity. 

I know everyone’s excited about CBRS and 5G and LTE, but my view is still that IoT is just this sleeping beast that just is waiting there and needs to be unlocked.

– Amir Haleem, CEO Helium

Following the Money

It may be difficult to understand a crypto project in detail, or even whether or not it’s a scam with only publicly available information. Investors may not have enough technical expertise to understand how a project works or what makes it viable or competitive.

Or, key information may be withheld by the developers.

Looking at startup capital investor activity in a project, however, may provide credibility that goes beyond a crypto white paper, or developers’ marketing hype.

That does not mean there aren’t clueless capital investors or investors out for a quick buck. So, it’s important to not just look at the rounds and volumes of startup funding.

It’s also important to understand the track records of any capital investors and their degrees of involvement in a project. If this information is not available it becomes a potential warning flag.  

Helium Case Study: Following the Money

With Helium, there’s a lot of investment money to follow. Through seven funding rounds, including seed funding, and an initial coin offering (ICO), investment totals more than $364M, resulting in a Market Cap of $2.4B, as of 3/9/22, and a Fully Diluted Market Cap of $4.8B.

That makes Helium a Global Unicorn, defined as a privately held startup with a current valuation of more than $1B.

Bullish sentiment by Helium investors is evidenced by repeat investments by SV Angel, Slow Ventures, First Mark Capital, Digital Garage, Khosla Ventures, Shawn Fanning, Marc Benioff and Multicoin Capital.

Among the savvier cryptocurrency investors are Multicoin Capital, environmentally picky Khosla Ventures, Union Square Ventures, Andreessen Horowitz and FTX.

Union Square Ventures has a reputation as a value investor.

Multicoin Capital specializes in crypto investments. Their hedge fund assets have increased 20,287% since Oct 2017, and their first venture capital fund has multiplied by more than 25 times.

Their biggest crypto win so far has been an investment in Solana, but they have also done very well with Helium, participating in both Series C funding and ICO funding.

Multicoin takes a hands-on approach with their crypto project investment, getting involved in improvement proposals, use cases and community forums. 

We’re proud to double down on our investment in the Helium network in this round, and remain bullish with the launch of Helium 5G expected this fall.

– Tushar Jain, managing partner, Multicoin Capital

Andreessen Horowitz is also one of the top crypto investors, not just in Helium but in decentralized publishing, social media networks, digital asset marketplaces, gaming, and NFT e-commerce.

In August 2021 Andreessen Horowitz led a $111M ICO funding round, receiving HNT for the funding participation.

By the time a startup makes it to Series C Funding it has generally achieved some success. Helium’s Series D Funding, occurring in Feb 2022 after the 2021 ICO, is a little unusual, especially considering the $200M size of the investment. It does underscore the perception of Helium’s value amongst capital investors.

Tiger Global Management has a reputation of shooting from the hip. Their investment in Helium, while impressive in size, may just be piggy-backing on Andreessen Horowitz’ due diligence, even coming in the late-to-the-party funding round.

Helium Investors:

Seed funding, Nov 2013 ($2.8M):

  • Dmitry Dakhnovsky
  • Shawn Fanning
  • Marc Benioff
  • Jeffrey Schox
  • SV Angel
  • Slow Ventures
  • FirstMark Capital
  • Digital Garage

Series A funding, Dec 2014 ($16M):

  • Khosla Ventures
  • Digital Garage
  • Marc Benioff
  • SV Angel
  • Slow Ventures
  • FirstMark Capital

Series B funding, Apr 2016 ($20M):

  • Khosla Ventures
  • Munich Re
  • GV
  • FirstMark Capital

Series C funding, Jun 2019 ($15M):

  • Khosla Ventures
  • Digital Garage
  • Shawn Fanning
  • Marc Benioff
  • Multicoin Capital
  • Union Square Ventures
  • SV Angel
  • GV
  • Slow Ventures
  • FirstMark Capital

ICO funding, Aug 2021 ($111M):

  • Multicoin Capital
  • Alameda Research
  • 10T Holdings
  • Andreessen Horowitz
  • Ribbit Capital

Series D funding, Feb 2022 ($200M):

  • FTX
  • Tiger Global Management

Note. Helium’s initial coin offering (ICO) in 2021 provided utility tokens to investors Anderson and others. Under consumptive use doctrine developed by the SEC as one of the Howey test criteria, Helium’s tokens may not be considered an investment contract that comes with securities coins.

Stakeholder Adoption

Stakeholder Theory says that for a business to be successful it needs to create value, not just for the shareholders, but for everyone who has a stake in the business.

Beyond investors, that includes customers, employees, suppliers, and even the communities that benefit from or are affected by the business.

For cryptoassets, stakeholders include project developers, startup investors, crypto miners and validators, business customers, other end-users of crypto utilities, payment and exchange services, crypto exchanges, cryptocurrency traders and investors, would-be regulators, and those sensitive to environmental impacts in the cases of energy-intensive crypto-mining projects.

The interests of any of these stakeholder classes can influence the intrinsic value of a cryptoasset.

It’s not necessary to find and micro-analyze the interests of every single stakeholder. It is, however, important to understand who the stakeholders are and identify relevant weak or risky aspects associated with stakeholder interests in a cryptoasset project.

Government Regulators

The U.S. government has at least four stakes in the cryptoasset universe: the Securities and Exchange Commission (SEC) concerns about investments in crypto as securities, IRS concerns about income and capital gains, Commodity Futures Trading Commission (CFTC) concerns about investor protections and the U.S. Financial Crimes Enforcement Network (FinCEN) concerns about money laundering, cyber crimes and other financial crimes.

The SEC looks at many cryptocurrencies as investment securities, in particular those that issued an initial coin offering (ICO). To the extent that  cryptoassets are recognized as securities they become subject to strict and costly securities regulations. The SEC is gradually ramping up enforcement and is also getting involved in decentralized lending (DeFi), nonfungible tokens (NFTs) and even stablecoins.

Consider the SEC lawsuit against Ripple for allegedly selling illegal securities. The result of this case may affect the viability of the project as well as many other crypto projects, and will certainly affect Ripple’s “current value of expected future cash flows,” by definition its intrinsic value.

There is evidence that regulatory events in themselves may not necessarily be sufficient to turn investor sentiment against crypto trading. In 2020 researchers at the Wharton School of Business looked at market responses to dozens of government cryptocurrency regulatory actions in the U.S., U.K., South Korea, Russia, China and Japan.

Crypto Trading Volume vs. Regulation  – Wharton School of Business

As the chart above shows, the researchers were not able to find any statistically significant trading volume decreases associated with multiple government regulatory events. 

Assuming no significant changes in supply or demand, value should remain fairly constant, however this study did not look at prices of cryptocurrencies traded before and after the regulatory events. It is by no means the last word on the complex relationship between government regulatory events, investor sentiment and crypto value.

Crypto Exchanges

Crypto exchanges have historically operated as commodities markets, treating cryptocurrencies as stores of value, comparable to precious metals. Crypto commodities are only subject to CFTC regulations, which are less restrictive than those required for securities.

As the SEC has its way crypto exchanges may be required to register as securities markets, record trades and be subject to audits and rules designed to prevent market manipulation. Coinbase, the largest crypto exchange in the U.S. has already registered as a broker-dealer.

It’s not clear how increasing government regulations will affect the values of crypto projects. Crypto exchanges will find it more costly to operate under stricter regulations.

But, better investor protection may create an environment that attracts greater crypto investment.

Crypto utility value is based in large part on the ability to innovate and find blockchain based solutions to real world problems. Regulations that discourage innovation will also limit crypto value, and vice versa. 

Cryptoasset Traders

Beyond intrinsic value to stakeholders it’s obvious that meeting or failing project expectations, or even the perception of doing so, can strongly affect market sentiment.

Again, consider the SEC vs. Ripple case. Positive sentiment over a simple favorable motion in the trial resulted in a Ripple (XRP) price gain of nearly 30% within the space of a week. 

An example of how cryptocurrency trader adoption rates can be influenced is Ethereum’s ongoing transition from a Proof of Work consensus mechanism to a Proof of Stake model. This change will not only improve the project’s environmental friendliness, but also its cost effectiveness, adoption rates and intrinsic value.

Helium Case Study: Stakeholder Adoption

Hotspot Hosts

Hotspot hosts are the people and businesses that are building and maintaining the Helium IoT Connectivity Network infrastructure.

Hotspots are small, low power devices that receive and send low power radio signals within the Helium network. They serve as the LoRaWAN gateway nodes, enabling millions of smart IoT devices to send data.

Helium rewards Hotspot hosts with Helium Native Tokens (HNT) for relaying IoT data and talking to other Hotspots. These rewards can be worth anywhere from a few dollars per month to as high as two or three thousand dollars per month per Hotspot location.

This easy, passive method of receiving rewards has attracted hundreds of thousands of people and businesses wanting to place a Hotspot device in their homes or workplaces.

Feeling part of a project that builds something good in the world becomes an internally-reinforcing incentive. Hosts who participate in the Helium project and also get paid for their participation tend to develop loyalty towards Helium and identify with “the People’s Network.”

In fact the biggest buyers of HNT to date have not been crypto traders on the open market but Helium Hotspot owners and Helium validators.

The downside is that Helium has become a victim of its success, unable to support millions of would-be Hotspot hosts because of pandemic exacerbated supply chain issues.

That shortfall represents a related concern. Although the Helium Network Hotspot coverage is fairly global, the number of Hotspots that are actually connected to the Network so far does not achieve anywhere near the ideal density needed to provide seamless global IoT coverage. That means Helium needs more Hotspots to be onboarded and more IoT network providers to use the Helium network if its intrinsic value is to keep growing.

Some good news is coming for prospective Hotspot hosts that is likely to increase host adoption. Light Hotspots and Data-Only Hotspots are on the way, and will be a less expensive way to earn rewards from Helium. Light Hotspots are expected to cost less than $100, compared to current Hotspot costs between $400 and $1000.

Helium Suppliers

Helium supplier adoption can be compared with that of Hotspot hosts, at least for those suppliers who manufacture and distribute the Hotspot devices and Hotspot external antennas.

Demand for suppliers and their products continues to outstrip supply, due primarily to semiconductor chip shortages. Helium governance changes have also affected suppliers. With HIP 19 and HIP 25 Helium has provided for additional Hotspot device manufacturers and also for Light Hotspots, which will be cheaper, with higher demand for prospective hosts.

In response COO Frank Mong also expects to approve 40-50 additional Hotspot manufacturers within the next few months.

A continuing risk in the device supply chain is reliance on semiconductor chips from a single Taiwanese manufacturer. Helium suppliers do not have preferred delivery priority for backlogged inventory shortages. Geopolitical uncertainty may threaten this supply. The U.S. is on track to add domestic manufacturing capacity, but that won’t happen right away.

Helium Capital Investors

A more detailed discussion of Helium Startup Investors is provided above, under “Follow the Money.” Even though they’re vested stakeholders in the success of Helium, some startup investors like Tiger Global Management are pretty hands off.

More commonly, however, Angel, Venture Capital and ICO investors don’t just participate with their money. They work with the Helium community, and even contribute ideas and comments on Helium Improvement Proposals (HIPs).

Tuchar Jain, Managing Partner, Multicoin Capital

A good example is Tuchar Jain, a managing partner of Multicoin Capital, participating in Helium Series C and ICO Funding.

He has researched and authored three Helium Improvement Proposals, each with potential to advance Helium’s economic and technical development.

He makes himself available to the Helium community to discuss these HIPs and related topics on Discord and also at online Helium community meetings.

With this participation he may help Helium to scale its business beyond IoT connectivity into 5G, LTE and other networks.

Government Regulators

Helium put itself squarely in the SEC’s sights when it issued 10,000 security tokens to early investors.

Crypto exchanges try to stay under the SEC’s radar by only listing commodity-like cryptocurrencies. Nearly all of these exchanges have not listed HNT.

That makes it more inconvenient for traders to buy, sell and trade HNT, makes HNT less liquid, slows its adoption and slows its price growth.

The Howey Test establishes the criteria for cryptos to be considered securities. Currently the SEC distinguishes crypto securities, based on the third criteria of the test. As blockchain networks become more decentralized “the less likely the Howey test is met,” according to the SEC.

Cryptocurrency Exchanges

Crypto exchanges have been slow to offer HNT trades in spite of its market cap consistently showing in the top 60 listed cryptocurrencies on CoinMarketCap.

One reason for this is insufficient trading volume. Another possible reason is concern about Helium being considered a security by the SEC.

The effect of fewer crypto exchanges offering fewer trading pairs with HNT is to limit investor access to HNT and to HNT trading choices.

According to CoinMarketCap, Binance.US is the only exchange offering HNT/USD trades. Gate.io and KuCoin offer HNT/USDT trades.

HNT adoptions by more crypto exchanges, offering more trading pairs, will increase if HNT trading volume increases.

In the shorter term, adoption may also increase if Helium convinces the SEC that it is sufficiently decentralized to pass the Howey test and be classified as a commodity and not a security.

Modifications and Governance (Consensus)

What happens when there is a problem with a crypto project, or an opportunity for improvement or a strategic shift in marketing?

With traditional projects a project manager or lead developer takes on the role of evaluating and implementing prospective changes.

With decentralized cryptoassets project managers do not exert top-down control. Direction and technical decisions are decided by consensus of all involved stakeholders.

Consider Bitcoin, a consensus-based, open-source project. Any changes to the project come through consensus-reviewed and approved Bitcoin Improvement Proposals (BIPs).

The BIP framework provides several benefits. It acts as a planning mechanism for Bitcoin’s development process. It provides transparency to Bitcoin stakeholders and it enables the community to make decisions affecting the direction and execution of the Bitcoin project.

Consensus approval of a BIP can take months or even years. Proposals may undergo substantial modifications before being approved, or they may end up being rejected.

Nevertheless, being aware of and considering the potential impacts of proposed changes should be part of a comprehensive fundamental analysis.

Consensus plans are windows into potential intrinsic value enhancements of cryptoasset projects.

Other cryptocurrency projects that use consensus based improvement proposals include Ethereum (EIPs), Ripple (RIPs), Solana (Design Proposals), Cardano (CIPs), and Polkadot (PSPs).

Bitcoin BIP proposals are published and can be reviewed on the Bitcoin Core GitHub BIP repository. There are also improvement proposal repositories for Ethereum, Ripple, Cardano and Polkadot, as well as for many other cryptoassets.

Not every cryptocurrency publishes their improvement proposals to GitHub. For example, Solana provides statuses of accepted and implemented design proposals on the Solana documentation website.

A Google search will reveal the location of design proposals for most cryptoassets, though some memecoins and others may be conspicuously missing.

Helium Case Study: Governance

The concept of Helium Improvement Proposals (HIPs) was modeled after Bitcoin’s BIPs.

Like BIPs, HIPs go through an idea formulation stage, debate amongst Helium team members and stakeholders, and ultimately either adoption or rejection.

In keeping with Helium’s decentralized management, HIPs can be proposed, discussed and voted on by any interested party. HIP topics include Hotspot functions, the Helium blockchain HNT tokenomics and Helium network governance.

The HIP process is accessed and managed in the GitHub Helium HIP Repository. Discussions are also encouraged on the Helium Discord channel.

There are also monthly Helium Community Calls moderated by the Decentralized Wireless Alliance, with participation by the Helium team, Helium capital investors, Hotspot manufacturers and other subject matter experts. These monthly calls provide opportunities for all Helium stakeholders to be heard and to ask questions.

Some example HIPs are as follows:

HIP 41: Governance by Token Lock V2

This HIP is designed to improve governance voting by requiring stakeholders who want to vote on a proposal to choose their voting power by staking HNTs for a given period of time, thus giving up liquidity for enhanced representation.

Consider it like “anteing up” in poker – it’s paying to play, and a tangible sign of commitment to the discussion.

HIP 48: IP Support

HIP 48 may make it easier to add current 3G IoT devices to the Helium blockchain. That may increase Helium’s competitive advantage with IoT device consumers stranded by the sunset of 3G networks.

HIPs 51,52,53: Helium DAO, LoRaWAN subDAO, 5G subDAO

HIPs 51,52, 53 seek to form decentralized autonomous organizations for Helium it’s LoRaWAN and 5G networks.

HIPs 51-53 are motivated by the need to make scaling of the Helium network less cumbersome and able to more easily accommodate different types of node and validator devices and different types of network protocols.

The current direction of the proposals is for each subDAO to have its own token and separately governed consensus mechanisms, proof-of-coverage rules and data credits rewards.

So, for example 5G specific issues will be handled at the 5G subDAO level. That means they won’t have to unnecessarily compete for governance bandwidth with LoRaWAN, LTE or any other specific subDAO network protocol issues.

If these HIPs are approved, it won’t be because CEO Amir Haleem or COO Frank Mong thinks that’s the best thing for Helium.

It will be because the majority of interested stakeholders have hashed out the benefits and risks and revised it until they think it’s the best direction for Helium.

Streamlining Helium scalability to encompass new business opportunities has the potential to add significant intrinsic value to the project.

Competitive Environment

Every cryptocurrency project lives in a Bitcoin/Ethereum world.

Bitcoin and Ethereum are by far the dominant cryptoassets, and their intrinsic values influence the intrinsic values of every other crypto. But, it’s a big world, and there’s room for a multitude of innovations and use cases.

If you’re Shibu Inu or Dogecoin it may be better to be lucky than good, at least in the short term.

But being lucky is not a business plan.

For the thousands of other crypto projects, longer-term success correlates highly with competitive advantages that bring value to stakeholders and value to the project.

Porter’s Generic Competitive Strategies

Michael Porter’s famous Competitive Advantage model says companies’ competitive advantages come either from abilities to compete on cost or by differentiation. These distinctions are applicable to cryptocurrency projects as well.

The efficiencies of blockchain projects often allow them to compete on cost with legacy counterparts. More often, however, competitive advantages are gained by a combination of new use cases and cost advantages.

Two examples of cryptocurrencies with strong competitive advantages, as observed by Motley Fool, are Avalanche and Nano.

Avalanche uses smart contracts to manage two-party contract negotiations, with much greater speed and lower costs than would be possible with Ethereum.

Nano processes financial transactions on its network with better scalability, speed and cost than its competitors. It offers fee-less transactions by using an innovative consensus mechanism it calls “Open Representative Voting.”

Helium Case Study: Competitive Environment

Helium does have competitors in the IoT connectivity market, the highest profile rivals being Amazon Sidewalk and Elon Musk’s Starlink/Swarm.

Amazon Sidewalk

Amazon Sidewalk System

Amazon announced its Sidewalk program just a few months after Helium went live, clearly signaling competitive intent, using the same unlicensed EM spectrum bandwidth Helium uses, but to provide IoT connectivity for their Alexa and Ring Security devices.

Sidewalk uses low energy Bluetooth for short-range in-home communication via its Alexa Echo and Ring devices, but has added longer range capability in the 900 MHz LoRa frequency band.

Sidewalk devices act as bridges that connect with other Sidewalk devices to extend their ranges without dropping out.

If a Sidewalk device range intersects with the ranges of neighbors’ Sidewalk-enabled devices then they will create a neighborhood mesh network that extends device range throughout the neighborhood, wherever there are Sidewalk-enabled devices.

To do this Amazon piggybacks Sidewalk-enabled device traffic on consumers’ home internet bandwidth.

Amazon’s IoT network is centralized with AWS infrastructure in contrast with Helium’s model. Amazon is in full control of the Sidewalk network. With Helium users own their own networks and with trustless data privacy.

Amazon Sidewalk’s range has been limited to neighborhoods, as just described.  But now Amazon is introducing a commercial strength Sidewalk hub designed for larger area coverage, such as industrial parks or college campuses. Named “the Amazon Sidewalk Bridge Pro by Ring,” it can provide coverage for hundreds of devices as far away as five miles.

Helium doesn’t have a next-level device similar to the Bridge Pro. It achieves equivalent or better coverage with its incentivized Hotspot network model. A single Helium Hotspot has greater range than the Bridge Pro and becomes a passive income generator after the initial capital outlay of a few hundred dollars is amortized.

So it’s not clear that Amazon will gain any competitive advantage with this device.

Amazon has also marketed their Sidewalk service to IoT business customers, partnering with

  • Tile (trackers) 
  • Level Lock (home smart locks)
  • Life 360 (real-time location updates for pets, young children or elderly people) 
  • Careband (wearable security devices for people with dementia).

Amazon has also partnered with IoT device innovator Thingy for environmental monitoring, specializing in air quality and wildfire monitoring.

The use cases of each of the above partner companies could have been handled on the Helium network, so this is evidence of direct competition from Amazon Sidewalk.

But, Helium has taken advantage of their head start, with more business partnerships and a competitive advantage with its blockchain based incentivized peer-to-peer network.

Also, according to TechCrunch, Amazon’s sales rate for Alexa type devices may have maxed out, with year-over-year sales growth declining. At present, Amazon Sidewalk’s growth depends on the number of people who own Amazon devices and have not opted-out of Sidewalk.

Sidewalk’s potential threat to Helium’s market share cannot be disregarded. Amazon has a huge base of customers with Alexa and Ring based devices in their homes, and vast business resources.

Starlink Orbital Deployment: Public Domain Image

Starlink/Swarm

Starlink is Elon Musk’s broadband internet service company, which is provided via transmissions from a constellation of low-earth orbit satellites.

To date it has launched over a thousand satellites, but will need at least 10,000 to achieve global coverage.

Starlink’s current focus is on providing internet connectivity in rural and remote, underserved areas, but it also has the capacity to serve the IoT connectivity market.

Since fast data speeds and large packet transmissions are not required for IoT devices this looks like a feasible use case for a fleet of low-earth satellites.

In the remote-access market niche, Starlink is a good technical solution, but the infrastructure is not cheap.

Starlink must build, launch and maintain thousands of satellites in orbit, and also build and maintain a system of ground stations to talk to the satellites.

Subscribers also need their own antennas, with a setup cost of $499 plus $99/mo. Premium service is $2500 plus $500/mo.

This is not competitive with Helium’s service.

Starlink’s recent acquisition of nano-satellite IoT startup Swarm should enhance its competitiveness technically in the global IoT connectivity market. But, the biggest competitive issue still appears to be cost.

Some typical Swarm use cases include collecting data from remote water sensors and weather stations and monitoring honey content in beehives.

Swarm seems ideally positioned to attract customers with devices in remote locations, where connectivity options are limited and a $119 modem cost and $5/mo per device can be justified.

By comparison Helium connectivity costs are pennies per month per device.

Starlink’s 340 mile high orbital positioning does not allow it to offer 5G speeds, so this may also become an area of competitive advantage for Helium as it develops its decentralized 5G network infrastructure.

Helium Network Competitive Advantages

Helium low frequency IoT network Hotspots operate at 915 MHz in the U.S., currently an unlicensed radio frequency spectrum band. 

This means they haven’t had to secure licenses from the FCC, and this is a competitive cost and spectrum real estate advantage.

Electromagnetic spectrum bandwidth is a limited natural resource that provides value to the Helium project at no cost.

For context the 645.5 MHz portion of the spectrum, used for wireless mobile service has an estimated value of nearly $500 billion. In the most recent government auction Verizon’s winning bids for spectrum allocation totaled $45.45 billion.

According to Coin Bureau, Helium’s innovative use of blockchain and cryptocurrency gives it a flexibility that is a competitive advantage over larger telecoms like Verizon, T-Mobile and AT&T, perhaps even big IoT companies like Amazon Sidewalk and Starlink/Swarm.

Although Helium does not compete with Apple in service offerings it does compete with its supply chain leverage.

The global semiconductor chip shortage that has caused the backlog of 2.4 million Hotspot device fulfillments and lagging overall network adoption is entering a recovery mode, but Apple’s market power has it at the front of the line to receive those chips.

Helium’s Hotspot suppliers could also get out-competed by IoT competitors Amazon Sidewalk and Elon Musk’s Starlink/Swarm for chip deliveries.

Continuing chip shortages could also affect the planned rollout of Helium 5G Hotspots in 2022.

Helium Competitive Partnerships

Helium’s IoT network connectivity solution lends itself well to providing roaming supplementary coverage for other IoT network platforms.

Roaming service customers to date include Senet, Actility, X-TELIA and Techtenna.

There are no competitive or technical reasons that this model will not continue with similar partnerships.

Tracking Platforms that partner with Helium include Abeeway, package-tracker Barnacle, Digital Matter, Hoopo, pet-tracker InvisiLeash, Invoxia, scooter-tracker Lime, Lonestar.

Agriculture smart device users include Agulus, Smarter Agriculture, NOWi, and Victor.

Environmental monitoring customers using the Helium network include AIRICA, Airly, Awair, and Biotos Global.

Other users include Art Collection Monitoring (Art21, Conserv), elderly care and monitoring (Careband, Norada), food safety (ConnectedFresh), drone delivery (Dronedek), smart car washing (Equilibrium), data management (InfiSense), IoT project support and building (KS Technologies, myDevices, NexMachina, Stofl), sensor and development hardware (MCCI), personal safety (Mimiq), smart parking (Nobel), and education (One Planet, Southern Connecticut State University).

Helium’s first smart city partnership, providing full coverage across the city, is with San Jose, California. DataGovs works to monitor environmental and infrastructure data with Helium compatible IoT devices. Starting in Miami it expects to expand to other cities.

Dish ​​is the first major carrier to hire Helium’s peer-to-peer blockchain incentivized model. Their customers will host their own 5G hotspots using the unlicensed Citizens Band Radio Service portion of the spectrum.

Competitive Opportunities

3G Sunset

Operators of over two billion 3G dependent IoT devices will either have to upgrade to 4G or build or find another network such as Helium’s cost competitive alternative.

The ability to capture a portion of this market will add significant value to Helium.

5G

Helium has also entered the 5G network space. 

5G operates in three bands of the electromagnetic spectrum: low, mid and high bands.These bands are licensed by the FCC, except for the 3.5 GHz Citizens Broadband Radio Service (CBRS) portion of the mid spectrum band.

This is where Helium’s hybrid 5G/IoT Hotspots will operate, with no licensing overhead costs. Helium expects to have 260,000 5G compatible Hotspots in 2022, as well as 40,000 new FreedomFi 5G/LoRaWAN hybrid Hotspots.

That doesn’t mean Helium is competing head to head yet with the big telcos.

Helium’s model works well to provide supplementary network coverage for Mobile Virtual Network Operators (MVNOs) which make up the majority of U.S. phone carriers (not Verizon, AT&T and T-Mobile).

MVNOs are resellers of wireless services piggybacked on physical infrastructure built by bigger telecom companies. A few of the biggest MVNOs are Mint Mobile, Consumer Cellular, Google Fi, TracFone and Xfinity Mobile.

So far, Helium has partnered with DISH and GigSky in the 5G network market, but demand for 5G services is high. This is a huge market, with lots of room for growth.

Helium’s competitive advantage over 5G network connectivity rivals is that it doesn’t need to build out expensive infrastructure.

Helium only needs to leverage its decentralized incentivized peer-to-peer network building machine. Which is compensating Hotspot hosts with passively earned HNT rewards, who simply buy and set up their own approved network gateway devices.

As with the IoT connectivity model, Helium’s 5G connections will be paid for with Data Credits, which means burning more HNTs, decreasing HNT supply, and increasing demand.

Helium currently has no competition for its decentralized peer-to-peer model in the 5G CBRS band. Helium small Hotspot nodes would also work for the highest frequency band of 5G, since those signals degrade much faster and require expensive more densely populated 5G tower infrastructure to be built.

Even though Helium could do that very cheaply it would either have to be subsidized by the big telcos, or it would have to compete with them at auction for expensive FCC Spectrum licensing rights.

According to Haleem, Helium may expand into more wireless networks, which could put it in direct competition with the likes of AT&T, T-Mobile and Verizon. It’s not clear yet which competitive advantages Helium has that would enable it to succeed at the highest level.

Tokenomics

Tokenomics is about the supply and demand attributes of cryptocurrency tokens.

Important factors are how tokens are allocated and distributed, circulating supply, total supply and maximum supply, market capitalization, whether the token is designed to be inflationary or deflationary, and any lock-up or restricted legal status.

The values of cryptoassets increase as their networks are adopted by stakeholders. That’s often reflected by a growing market cap, which is defined as the current crypto price times the circulating supply. But market cap doesn’t tell the whole story.

Trends in the Network-Value-to-Transactions (NVT) Ratio of a cryptoasset are sometimes used as an indirect indication of value by analysts.

A bullish trend in the value of a crypto is defined as the number of transactions growing faster than the crypto’s market cap, where the number of transactions is a reflection of investor sentiment.

This [NVT] ratio is typically called the “P/E Ratio for crypto” because it’s one of the most basic metrics to determine fundamental value.

Jake Ryan, Tradecraft Capital

According to Ryan, if the market cap of a crypto is less than 15 times the daily volume of on-chain transactions market sentiment is bullish. If the market cap is greater than 25 times daily volume then it’s bearish.

Looking at BTC on 3/8/22 its NVT ratio is $730B/$27B = 27

ETH NVT ratio is $306B/$15B = 20.4

Cardano (ADA) ratio is $26B/$1B = 26

Helium (HNT) ratio is $2.3B/$33M = 70

To look at 30-day trending NVT we can look at the average ratio for the last 30 days of transaction volume and compare that to the current NVT.

BTC 30 day avg = 29.6

ETH = 21.1

ADA = 27

HNT = 75.5

Comparing the 30 day averages to the NVT ratio on 3/8/22 we can see that each of the NVT ratios are trending down, or becoming more bullish. The average NVT reduction for these four cryptos is 3.8%. HNT’s NVT average on 3/8/22 is 7.3% lower than the average for the previous 30 days, indicating a positive trend compared to the greater market (with BTC and ETH dominating the market with overall market cap and trading volume).

Crypto projects vary significantly in how and when their coin supplies are distributed. For this reason a fundamental analysis also needs to consider the project’s fully diluted valuation (FDV), which is the calculated market cap assuming the maximum coin supply is in circulation.

This is important, especially with projects with inflationary tokenomics. If FDV is much higher than the current Market Cap, then it’s likely the project will experience growing sell-side pressure, diminishing the intrinsic value of the crypto.

FDV allows a more accurate valuation of a crypto project, but cannot be used with some inflationary crypto projects that have no limit on the number of coins to be issued, such as Dogecoin and ETH.

Bitcoin is a deflationary token. It has a maximum supply of 21 million BTC and it’s rate of production is halved every four years. Accidental losses of BTC also reduce the circulating supply.

Putting a cap on the maximum supply tends to drive up demand over time. In response, investors tend to hold onto BTC tokens in hopes of continuing appreciation. One result is that BTC’s store of value has overtaken its use as a medium of exchange.

Looking at current market cap and potential expansion can be helpful in estimating the long term value of a token.

A token’s circulating supply can also be reduced by token burning, with a commensurate effect on demand.

Some crypto projects gain flexibility by using a dual token model, in which each token provides a distinct use.

An example is NFT gaming project Axie Infinity. Their SLP token is a utility token, with unlimited supply, that Axie Infinity players use to perform tasks with the game.

The other token, AXS, is a governance token that has a maximum supply of 270 million. AXS tokens are available for purchase, selling, trading or staking within crypto exchanges, and has a market cap of $3.1B.

Helium Case Study: Tokenomics

The Helium Token provides two functions within the Helium blockchain ecosystem. The first function is to reward Hotspot hosts for building out the Helium IoT connectivity network and for providing internet gateways for IoT device communication.

The second function is to convert to Data Credits which are used to pay the transaction fees for transmitting IoT data on the Helium LoRaWAN network.

10,000 Security Tokens were distributed to initial project investors and founders. Holders of the security tokens means they get to receive HNT rewards as they are mined, on a sliding token allocation scale.

Allocation was planned for the first 50 years of the project to incentivize Helium Hotspot hosts and Validators, as well as capital investors.

The allocation scale is sliding to provide HNT rewards for proof of coverage tasks during the first twenty years when the network is being built out, but is phased out as that function is no longer needed as much as IoT device data transfer. 

There was no pre-mining of HNT before the network went live. All HNT is mined by Helium Hotspots, starting from project launch, starting at a rate of 5 million HNT/mo, with the rate halving every two years.

The maximum HNT supply is set at 223 million, to be achieved 50 years from project start. That makes Helium an inflationary token during the first few years of the project, then more or less steady-state as Data Credits for network transactions are balanced by HNT rewards and Net Emissions.

Helium uses a burn and mint equilibrium token model. HNT tokens are burned to create Data Credits to pay transaction fees on the Helium blockchain. Data Credits are not transferable and cannot be converted back to HNTs.

Burning HNTs to create Data Credit reduces the supply of HNTs, creating deflationary pressure, by design. Over time, as the Helium network grows in size and utility, more and more HNT will be burned to create Data Credits to satisfy the IoT device data transmission demand.

Eventually, burning HNT to create Data Credits will reach the point where there is no more available HNT to burn.Running out of HNT to reward Hotspot hosts would also be a problem. Without Hotspots, Helium breaks.

Helium’s solution was to implement an improvement proposal, HIP 20: HNT Max Supply. An excerpt from the proposal says

With the introduction of a hard cap on HNT supply, Helium’s token-economics would become more understandable to the broader crypto community at large. It would also create future scarcity and a new incentive to hold HNT. If there is more demand for HNT, miners will have additional incentive to deploy Hotspots. If miners deploy more Hotspots, the network will continue to grow its coverage, which will ultimately help meet the demands of end users and customers who use the network.

– Helium Improvement Proposal 20

To solve the problem of burning too much HNT for data credits, HIP 20 implemented “net emissions.” For every HNT that’s burned, net emissions allows creation of a new HNT. The one-for-one trade ensures that the lifetime maximum number of 223 million HNTs in circulation will never be exceeded.

But the equilibrium removes some of the deflationary pressure from HNT. Helium community members want that deflationary pressure to create scarcity and drive up demand and HNT price. The solution is to cap the amount of net emissions to achieve a less than 1:1 replacement, with an exact cap that floats according to a supply and demand curve.

Helium’s initial inflationary trajectory is pretty aggressive, going from zero to 150 million HNT within the first four years. The HNT circulating supply has increased a lot, just in the last half year. Assuming an HNT price of $30, Coin Bureau estimates “$420M of potential sell pressure.”

35% of newly minted HNT goes to the holders of Helium’s 10,000 security tokens, according to Helium’s allocation plan. But, who holds the security tokens, and how many do they hold?

According to COO Frank Mong most of Helium’s security tokens are held by capital investors.

The cost of adding a Helium Hotspot to the blockchain costs $40 in data credits, a cost usually paid by the Hotspot manufacturer. There are over 600,000 hotspots so that means $2.4M in HNT has been burned.

About 2.4M Hotspot devices are waiting to connect to the blockchain as soon as the Hotspot manufacturer supply chain catches up. So Helium is virtually guaranteed to see $100M of buying pressure as those Hotspots are connected to the blockchain.

Considering Helium’s $2.2B market cap, that’s a fair amount of buying pressure. This could drive the price of HNT to align more with the value of its use cases and competitive advantages.

Fundamental Analysis Blueprint Conclusions

The 9-Step Blueprint is not intended to be the definitive way to analyze intrinsic values of cryptoassets. It’s a productive and organized approach for starting an analysis, however.

Starting with the White Paper and Roadmap, if there is one, is a direct way to understand the intent of the developers.

Utility and Stakeholder reviews help to find and understand use cases and where the crypto project derives its value.

Looking at the development team, the startup investors, project governance, competitive environment and tokenomics all help to gauge the likelihood of project success.

The conclusion of this FA approach will not provide an objective intrinsic value score, but it will identify areas of value as well as areas of potential concern, and it will allow meaningful comparison between similar projects.

Helium Case Study FA Blueprint Conclusions

In the course of analyzing the Helium project, using this 9-Step approach, it’s clear that Helium has a lot going for it.

Its innovative use of blockchain technology to create a decentralized peer-to-peer IoT device network at a fraction of the cost of legacy networks provides significant value and a strong competitive advantage.

Customer adoption seems healthy and likely to grow, even given the less than optimal hotspot rollout resulting from global semiconductor chip supply issues.

Capital investment has been robust, and some of the investors are also contributing even more value to the project with their intellectual capital.

Recent Helium Improvement Proposals may help Helium to become flexible enough to create value and compete in the 5G cellular market and other network markets beyond IoT connectivity.

There are, however, serious concerns about the Helium project.

Chip shortages could slow Helium’s progress before it’s able to establish IoT market dominance. This could give a competitor like Amazon Sidewalk a chance to catch up, especially if Amazon’s market clout allows it to step in front of Helium for chip deliveries.

Chip shortages could also slow Helium’s entry into 5G and other networks.

SEC classification of HNT as a security token could make it harder for Helium to get listed on crypto exchanges, constraining liquidity and slowing investor/trader adoption.

Finally, it’s not clear whether Helium’s approach to net emissions is going to be sufficient to simultaneously

  1. incentivize Hotspot hosts to keep the IoT and 5G networks running,
  2. not constrain the creation of Data Credits to pay for transactions on the networks,
  3. still enable deflationary pressure to drive HNT demand.
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