N.B: In the spirit of full transparency, the following Coin Report on ALQO is a Sponsored Post.

Welcome to the 52nd Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of ALQO. This will be comprised of an analysis of a number of significant metrics, an evaluation of the project’s community and development and an overview of its price-history. The report will conclude with a grading out of 10. I hope you enjoy the read!

Introduction

As keen readers of the blog will know, ALQO was the project featured in my second-ever Coin Report, all the way back in October 2018. The project went through significant issues subsequently and has undergone an overhaul since and the current team got in touch to see if I’d be interested in publishing an updated report, both clearing up historical incidents and providing details on the current state of ALQO, following their recent changes. I was happy to book something in, as I think there will be plenty to learn from this report, particularly regarding the apparent strengths of projects that can shift suddenly and drastically in this space, but also on how such projects are able to rebuild themselves and survive.

I hope this report will prove objective where it must be and fair on more subjective matters. For those who’d like to learn a little more about ALQO prior to reading this report, here are some primary links:

Fundamental Analysis

General:

Name: ALQO

Ticker: XLQ

Algorithm: N/A (Proof-of-Stake consensus)

Sector: Payments & Financial Services

Exchanges: Graviex



Launch Overview

ALQO was launched in November 2017, beginning its existence with a Proof-of-Work consensus mechanism, no ICO and a small premine of 100,000 XLQ (about 0.16% of the original maximum supply). Since launch, ALQO has migrated to pure Proof-of-Stake consensus. In December 2019, ALQO migrated to a new chain, pending the full release of their FALQON mainnet in 2020.

Regarding emission, XLQ has a static emission curve with 5 XLQ rewarded per block in perpetuity, with 1-minute block times, allowing for a gradually declining inflation rate. ALQO operates with a masternode network alongside its stakeholders, with rewards split 60/40, respectively.

Price-History Overview

As ALQO has been in existence for two and a half years, there is a great deal of price-history available. However, throughout that period, there is only one distinct macro market cycle that has transpired, as I shall discuss in the Technical Analysis section. For now, it will suffice to say that ALQO formed its all-time high in January 2018 at 26k satoshis, which preceded a protracted bear market, culminating in an all-time low at 35 satoshis in July 2019. Against the Dollar, ALQO’s all-time high is $2.94.

Project Overview

ALQO is fairly wide-ranging in its aims, but its core purpose is centred on providing decentralised financial services and payments.

As stated on the ALQO website:

“ALQO, ‘A Liquid Object’, is focused on creat{ing} a liquid digital asset ecosystem powered by its proprietary blockchain, FALQON. With FALQON, ALQO aims to ultimately improve upon the status quo of centralized payment networks through the implementation of a decentralized node network powered by the blockchain. Upcoming releases Bitfineon and PayinX, a crypto-and-fiat exchange, and a crypto-to-fiat merchant gateway, respectively, are the first products scheduled for release to support the ecosystem.“

I look forward to evaluating its progress since inception.

Let’s begin with some Metric Analysis:

Metric Analysis:

Below are listed a number of important metrics, all of which are accurate as of 4th June 2020. For anyone reading this who has yet to read a Coin Report, it might be worth reading this section of the first report, where any potentially unfamiliar terms are explained. For any terms or metrics specific to this post, I will provide explanations besides the figures.

Metrics:

General:

Price: $0.057 (596 satoshis)

Circulating Supply: 67,981,390 XLQ



Total Supply: 67,981,390 XLQ

Exchange Volume: $2,021

Network Value: $3.875mn (405 BTC)

Maximum Supply: N/A (static, perpetual emission curve)

% of Max. Supply Minted: N/A

Network Value at Max. Supply: N/A

Exchange Volume-to-Network Value: 0.05%

Category: Lowcap

Average Price (30-Day): $0.0737

Average Exchange Volume (30-Day): $3,294

Average Network Value (30-Day): $4.772mn

Average Exchange Volume (30-Day)-to-Network Value: 0.07%

Volatility* (30-Day): -0.0539

Average Daily On-Chain Transactions (since migration to new chain in Dec. 2019): 3,009 (129 when default tx are discounted)



Average Daily Transactional Value** (30-Day): N/A



NVT*** (30-Day): N/A

% Price Change USD (30-Day): -20.2%

% Price Change USD (1-Year): +250.7%

USD All-Time High: $2.94

% From USD All-Time High: -98.1%

Premine % of Max. Supply: 0.16% (~100,000 XLQ)



Premine Location: N/A (now burned)

Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 0.188 BTC

Liquidity-to-Network Value %: 0.05%

Supply Available on Exchanges: 571,417 XLQ



% of Circulating Supply Available on Exchanges: 0.84%

*Volatility is calculated by taking the average price over the given time-period, calculating the difference between it and the highest price and it and the lowest price over that same time-period, and multiplying those figures together. The closer to 0, the less volatility during that period, and vice-versa. Read this for more on volatility.

Supply Emission & Inflation:

Block Reward Schedule: 5 XLQ rewarded per block in perpetuity, with 3 XLQ rewarded to masternodes and 2 XLQ to stakers.



Average Block Time: 1 minute

Current Block Height: 252,715

Annual Supply Emission: 2.628mn XLQ (15.66 BTC at current prices)

Annual Inflation Rate: 3,87% (decreasing annually)

Circulating Supply in 365 Days: 70,609,390 XLQ

Staking & Masternodes:

Network Staking Weight: 46,189,973 (maximum possible staking weight, if all XLQ not locked in masternodes and not held on exchanges was staked – actual figure is likely to be significantly less but there is no source available)

Staking ROI (Annual): 2.28% (minimum, based on above maximum staking weight)

Masternode Collateral Size: 10,000 XLQ

Masternode Price: $570

Masternode Count: 2,122

Masternode Count Growth (30-Day): +125

Supply Locked in Masternodes: 21.22mn XLQ

Masternode ROI (Annual): 7.43%

Masternode Network Value: $1.209mn

MNV / Network Value: 31.21%

Distribution:

Address Count: 14,727

Supply Held By Top 10 Addresses: 23.18%*

Supply Held By Top 20 Addresses: 31.49%



Supply Held By Top 100 Addresses: 51.77%

Inactive Address Count in Top 20 (30 Days of No Activity): 1 (excluding addresses #1 and #2)

* Addresses #1 and #2 are the Developer Fund and Liberio Compensation Fund, each containing 5mn XLQ (totalling 12.16% of the supply). The latter will be distributed among those who suffered losses in the Liberio web-wallet hack in 2019.

Analysis:

As there is quite a lot to work through here, given that ALQO has both staking and a masternode network, as well as a transparent rich-list, I will refrain from any preamble and dive in.

Firstly, I’d like to mention that it’s a shame that there is no data available for on-chain transactional value, despite the block explorer for ALQO being one of the most useful I have found thus far in all other respects. Knowing how much value was being transacted off exchanges would be indispensable in determining to what degree ALQO is being used for the financial services and payments it is aiming for. Nonetheless, I was able to find out via the explorer that there have 544k transactions in total since the migration to the new chain in December 2019, equating to Average Daily On-Chain Transactions of 3,009. Now, given that there are 1,440 blocks minted per day and 2 transactions per block by default (masternode and stake payments), we can discount 2,880 transactions and come to a net figure of 129 on-chain transactions on average per day.

Moving on, I’d like to take a look at Volatility, which I calculated to be -0.0539 for the past 30 days, which is in the bottom-third among prior reports, indicating that price may well be in an accumulation range (at least against the Dollar), but I will need to confirm this by looking at the rich-list and the chart later in this report.

Some of the most significant metrics to evaluate for speculators are those related to buy-side and sell-side Liquidity. I found ALQO to have buy-side Liquidity of 0.188 BTC within 10% of spot price across its one listed exchange, equating to 0.05% of its Network Value. This is one of the lowest liquidity ratios found in these reports, but it is not at all surprising given the sole exchange listing. I am sure this would improve dramatically once ALQO begins to gain new exchange listings, but for now it’s not great at all.

With regards to sell-side Liquidity, ALQO was found to have 571,417 XLQ available for purchase in the orderbook, equating to 0.84% of its Circulating Supply; the 7th-lowest figure found relative to other featured projects, suggesting that, despite the lack of speculative interest on the buy-side, there is also a clear lack of willingness to sell among holders, likely due to the financial incentives ALQO has created (we will come to these shortly)

Now, let’s take a look at the volume-related metrics:

ALQO traded $2,021 of Exchange Volume in the past 24 hours, equating to 0.05% of its Network Value; an extremely low figure. Those that read my reports regularly will know that I tend to look for figures higher than 1% to indicate speculative interest.

More importantly, its Average Daily Volume for the past month was $3,294, equating to an equally measly 0.07% of its Average Network Value for the same period. Clearly, there isn’t a huge amount of interest in ALQO on Graviex.

Moving onto Supply Emission, based on the indefinite block rewards of 5 XLQ per block and 1-minute block times, I calculated that 2.628mn XLQ will be minted annually (15.66 BTC-worth at current prices). This gives ALQO an insignificant annual inflation rate of 3.87% (ever-decreasing). As such, there should really be no headwinds for price growth.

However, most significant is the relationship between this Supply Emission and the Volume metrics mentioned above:

Given that 2.628mn XLQ are minted annually, we can work out that the average daily supply emission is 7,200, or 0.042 BTC-worth at current prices. This equates to $401 of daily supply emission. As ALQO traded ~$2k of volume over the past 24 hours, and an average of $3.3k of volume daily for the past month, we find that ALQO’s average daily supply emission is covered 5x by its 24-hour volume and almost 7x by its Average Exchange Volume. Further, Liquidity of 0.188 BTC covers the average daily supply emission by 4.5x.

As such, we find that despite the seeming lack of interest on Graviex, the supply emission and thus inflation is sufficiently low to not warrant greater trade volume in order to sustain prices. So, if ever ALQO does begin to see an influx of volume, I expect prices to move rather swiftly.

Now, let us move on to Staking and Masternodes:

Whilst I could not determine network staking weight, I calculated that the minimum annual ROI for stakers would be 2.28% if all circulating supply minus that locked in masternodes and supply in orderbooks was being staked. Of course, the actual network staking weight will likely be far lower than that, so returns will be higher.

Regarding masternodes, the first thing to mention is that there are 2,122 active nodes, with an increase in the count of 125 over the past month. This is clearly a growing network. With masternode collateral set at 10k XLQ, this equates to 21.22mn XLQ locked in masternodes, giving holders an annual ROI of 7.43%. Whilst not a huge nominal ROI, this is around twice the inflation rate, which is incentive enough to run one.

ALQO’s Masternode Network Value is $1.2mn at current prices, equating to 31.21% of its Network Value. This is indicative of a moderately strong masternode network.

To conclude, let’s take a look at Distribution:

I was glad to find that there are 14,727 holders of XLQ, as this is the 10th-highest address count of all coins previously reported on. With regards to distribution of supply, the top 10 addresses control 23.18% of total supply; the top 20 control 31.49%; and the top 100 control 51.77%. It is important to note that the top 2 addresses are the Development Fund and Liberio Compensation Fund and contain 5mn XLQ each.

Regarding the activity of the top 20 addresses, only 1 was inactive over the past 30 days excluding the top 2. Moreover, only 1 address was in active accumulation via transfers in, adding 461k XLQ during that period. The remaining addresses were all masternode operators and stakers, accumulating via rewards.

And that concludes this section on Metric Analysis. Onto the ALQO Community:

Community:

There are two primary aspects of community analysis: social media presence and Bitcointalk threads. I’ll begin with the former before moving on to the latter.

Social Media:

Concerning social media presence, there are four main platforms to examine: Twitter, Facebook, Telegram and Discord.

ALQO is present on all four platforms. To begin, let’s look at the various social metrics that I calculated from the ALQO Twitter and Facebook accounts:

Twitter Followers: 8,744

Tweets: 616

Average Twitter Engagement: 0.71%



Facebook Likes: 517



Facebook Posts (30-Day): 3



Average Facebook Engagement: 0.52%

As usual, I will be using RivalIQ‘s social benchmark report for evaluation purposes.

Twitter:

The ALQO Twitter account has a modestly-sized audience of 8,744, with equally modest engagement at 0.71%. That said, in RivalIQ’s report, we find that the average Twitter engagement rate across all industries is 0.045%, which means that ALQO’s engagement rate is currently 15.7x greater. Relative to other coins, ALQO’s engagement is 21st-lowest, placing it in the bottom half of prior reports.

Facebook:

Now, with regards to Facebook, ALQO has a much smaller audience of 517, and, as such, one might expect stronger engagement. However, ALQO’s engagement rate is 0.52% on Facebook, derived from only 3 posts in the past 30 days. This is actually better than many engagement rates among prior reports, as Facebook is often extremely weak for most cryptocurrencies, but it is still low given the audience size. Relative the benchmark rate across all industries of 0.09%, ALQO is 5.7x stronger.

Discord:

There are 1,882 members of the ALQO Discord group.

Discord is clearly ALQO’s primary community hub, as I found more activity here than on other platforms (as we shall come to in subsequent sections).

The group itself is organised well, with plenty of relevant channels for users, including a General Info channel that contains links to resources, social platforms and more. There is also a Github Updates channel providing transparency on ongoing developments. We also find a General News channel, in which updates and announcements are posted relatively regularly, with recent posts including the masternode network surpassing 2,000 active nodes; the release of the new website and BitcoinTalk thread; a closed beta period for Bitfineon (more on this later) beginning soon; and a partnership with Crypto Daily, with XLQ accepted as a payment on their advertising platform. Regarding news, the group also has a dedicated channel for Bitfineon News, in which we find regular video updates on the development of ALQO’s flagship exchange, as well as announcements including a partnership with CryptoMood (AI-powered sentiment analysis) and Banxa (a fiat gateway).

Turning to the conversational channels, there is an ALQO Chat channel, as well as a Bitfineon Chat channel.

ALQO Chat tends to have some regular activity, with a dozen or so messages posted each day. This isn’t particularly high for activity levels but its better than the degree of activity found in their Telegram group. Regarding the content of discussions over the past week, much of it is general chat between community members, along with some discussion on recent updates mentioned earlier in this section. However, I did find some suggestions coming in from the community on what to integrate into Bitfineon, plus that PayinX (ALQO’s fiat-to-crypto gateway) is currently in development with a payment processing fulfillment partner being secured.

Turning to Bitfineon Chat, this is actually a more active channel than ALQO Chat, as many within the community are clearly eager to see Bitfineon released. This is important, as it suggests to me that there are genuine users waiting for the product. We also find screenshots in this channel of the UI and it looks great. More importantly, however, I found that there is a third-party security audit expected to be conducted shortly. Jared, the CEO, is also clearly happy to engage with the community and regularly answers questions, as well as taking on board suggestions for the exchange.

Overall, the Discord group is relatively quiet but there is definitely interest here in the longevity of ALQO and, primarily, the success of Bitfineon.

Telegram:

There are 1,073 members of the ALQO Telegram group.

The group does not appear to be in regular use, with only 16 messages posted in the past week. Among the messages posted, I found announcements on the aforementioned Crypto Daily partnership, as well as a message from Jared on the Liberio Compensation Fund, ensuring that the community is aware of it and that it will be distributed following the launch of Bitfineon.

The lack of engagement here is a bit of a shame.

BitcoinTalk:

The (new) ALQO BitcoinTalk thread was created on May 10th, 2020 and has since generated 38 posts spanning 2 pages in 25 days. This equates to 1.52 posts per day, on average.

The announcement itself is simply a screenshot of the website homepage, which I will cover in its own section later in the report.

Regarding the activity on the thread, the vast majority of posts are community members who seem very much excited by the imminent launch of Bitfineon and the overhaul of ALQO. There appears to be genuine interest in the longevity of the project and, more importantly, a degree of trust in those now running the ship. This is in stark contrast to the Telegram group.

And that concludes my evaluation of the ALQO community.

Let’s take a look at some Development:

Development:

For the following Development analysis, I will be evaluating project leadership, the website, the roadmap, the whitepaper, the wallets and finally providing a general overview:

Project Leadership:

There is no team news available on the website. There are 3 employees listed on the website.

Having communicated with the team, I found that there is a core team of 12 individuals working on ALQO and Bitfineon.

Among these are: Jared Grey, CEO of Bitfineon and former IT Consultant at a Fortune 500 company with a background in Computer Engineering; David Wilson, CTO of Bitfineon and experienced full-stack developer; Jose Iruzun, COO of Bitfineon and former VP of Small Business Banking at Bank of America; Ryan Derda, CFO of Bitfineon and former Series 7 Wall Street broker; Felix Huber, CMO of Bitfineon and former Marketing Director for several eSports companies; Cal Evans, Legal at Bitfineon; Tomas Stankevicius, ALQO Community Manager and Bitfineon Support Lead; Dylan Liptov, also ALQO Community Manager and Bitfineon Support Lead; Derek Lee, full-stack developer on ALQO; Blockmechanic, back-end developer for ALQO; Ameer Ashhab, UI designer; and Stanislav Molchanov, Senior UI/UX designer.



Website:

The ALQO website is sleek and modern in its design, with good branding and an informative, visually appealing homepage, within which the entire website is situated. The navigation is smooth but not comprehensive, with plenty of detail lacking, particularly given the fact that everything is located on the one homepage. There are only brief sections on the primary components of the ALQO ecosystem: PayinX; Bitfineon; FALQON; and Sharepool. I am, however, aware that the website release is very recent and the team have also clarified that the website is under active development, with more sections to be added over the coming weeks.

Nonetheless, beginning with the header of the homepage, we are told that ALQO is a Scalable Payment Network, but this isn’t particularly specific and could be applied to hundreds of different projects in this space. It may be wise to be more direct here, as this is the first thing a user sees when they navigate to the website.

Scrolling down, we find a brief About section, that discusses the ALQO ecosystem that is intended to be built out, with FALQON – a proprietary blockchain – powering it. ALQO’s masternode network will provide the decentralisation here, whilst Bitfineon (a crypto-and-fiat exchange) and PayinX (a crypto-to-fiat gateway) will act as the cornerstones for utility.

Moving on, we find a dedicated overview of PayinX, which is intended to solve price volatility issues for merchants that accept crypto, with immediate settlement into fiat or stablecoins. Following this, we find a section on Bitfineon, with a link to the exchange (currently in development), as well as screenshots of the modern UI. There is also a brief overview that states that Bitfineon will be the “centrepiece in the ALQO ecosystem”, allowing for a professional and seamless user experience, with OTC and margin trading available, as well as Auctions (which are said to be an industry first, though no further detail is provided here). There will also be a revenue share scheme dubbed Sharepool. Sharepool will distribute 50% of trading fees collected by the exchange to those that stake their XLQ.

Following this, we find the roadmap, covered in the following section of this report.

Next, there is a section on FALQON, the proprietary blockchain, which will be a highly-scalable network that provides smart contracts, cross-chain atomic swaps, token issuance for security tokens, ThumbID naming for wallet addresses, a light client and DApps.

Coming to the footer of the website, we find the coin specification, along with an introductory video (that may be better suited towards the top of the page) and links to social platforms.

Overall, the website is well-designed but needs filling out in order to be a reliable one-stop resource for potential new users.

Roadmap:

The roadmap is located on the homepage of the website linked above.

It is quite brief and is presented as a chronological timeline, beginning with Q2 2020, in which a new release of the desktop wallet is expected. Following this, in Q2/3, there will be a custom-built UI for the v6.5 of the desktop wallet, which will optimise for future iterations, including Bitfineon API integrations. In Q3/4, the wallet will feature the Bitfineon API integration, allowing for buy/sell orders and more, facilitating seamless in-wallet transacting. Either in Q4 or early 2021, there will be mobile wallet releases.

There are no further reading links provided, nor any details on development plans beyond the core desktop wallet, such as Bitfineon itself, PayinX or FALQON.

Whitepaper:

There is no whitepaper currently available for ALQO, post-relaunch. Having spoken to the team, I can confirm that an updated whitepaper will be released within a few weeks, providing more details on the new blockchain and ALQO’s vision.

Wallets:

XLQ can be stored on desktop wallets on Mac, Windows and Linux. There is no hardware wallet support at present, nor a mobile wallet available.

General:

In this final section, I’d like to just clarify the Liberio incident that occurred in 2019:

For those that are unaware, the ALQO community suffered losses via the ALQO web-wallet, Liberio, in 2019, following the actions of the now-former Lead Developer, Kevin Collmer. Liberio was intended to be a multi-coin wallet with many desirable features, such cold staking and encrypted data sharding, and, with the data structure it had promised, the attacks that actually occurred should have been virtually impossible. Liberio was designed in its entirety by Kevin, who has sole access to the source code. Upon release of the wallet, there were several small issues that were stemmed for a short while, but the ALQO team itself asked Kevin for access to the source code in order to seek a third-party security audit. Kevin declined these requests on multiple occasions.

Fast-forward to February 2019 and users began reporting funds as having been withdrawn following unauthorised access and sent to exchanges, sold to BTC or ETH and then to fiat gateways. One user found evidence to suggest Kevin’s developer fee address had co-mingled transactions with the traced compromised accounts. Given this, further attempts were made to have a third-party security audit but Kevin refused again and opted to implement 2FA as a compromise.

Months went by and more users reported losses, with this pattern making it highly likely that there were either significant code issues or that Kevin was responsible. Kevin finally agreed to provide a series of technical articles detailing the codebase and architecture to the public after being pressed to do so by Jared (the CEO of Bitfineon). However, these articles were never written nor did Kevin assist in any investigation and so the team asked him to step down from his role. The prevailing opinion among the team and community is that Kevin was directly involved in the losses and he has since fully departed and a Liberio Compensation Fund has been created to reimburse affected users following the imminent launch of Bitfineon.

And that concludes this section on the development of ALQO.

Technical

XLQ/BTC

The weekly chart for XLQ/BTC has been provided above and it paints a very much textbook picture.

As we can see, price spent the earliest few weeks of XLQ’s existence rallying hard, eventually peaking in January 2018 at 26,100 satoshis, before – much like the rest of the market – falling off equally hard. The harsh sell-off eventually slowed as price found support at 3,880 satoshis in April 2018, but this floor gave way a few weeks later and the bleeding continued, with price hitting 950 satoshis before it caught a bounce. This bounce was short-lived, as the 3,880-satoshi support became firm resistance, and price bled out slowly for months until the all-time low formed at 35 satoshis in July 2019. This is where a new range has formed, with the all-time low acting as support and range resistance being found at the prior support around 950 satoshis.

Now, it’s quite obvious that this is the most classical altcoin market cycle you find: it begins with a bull cycle that culminates in euphoria and we find our way to depression and anger months (~18 in this case) later. This current range between 35 and 950 satoshis (yep, over 25x from bottom to top) has been in play for over a year and highlights the extremes of price volatility that can occur in microcaps and the bottom tier of lowcaps. More importantly, we can see that there has been negligible volume inside this range for the majority of its duration, and this is likely a symptom of the sole and minor exchange listing that XLQ has. Having dissected the rich-list earlier in this report, you will also recall that only one address among the top twenty has been actively adding to their balance via an exchange over the past month, with the vast majority either running masternodes or staking to accumulate more.

As such (and given the lack of liquidity available at present), despite the classical formation of the cycle, I do not think that there is evidence to suggest that this is an accumulation range. However, I do think that the price itself is relatively attractive when we look at the historical context. Nonetheless, until I see more convincing signs of speculative interest by larger entities, I am not going to be a buyer.

Conclusion

This report is now approaching 5,000 words, and it is time to draw it to a close.

My final grading for ALQO is 5 out of 10.*

*To clarify this grading further, it is not that there is not promise here (nor speculative upside) and that I do not commend the efforts of the team to both rebuild the project following the incidents of 2019 and to reimburse those affected pending the launch of their cornerstone component, Bitfineon. I do, however, think that there is a lack of quality resource material available for potential users or speculators. There are also gaps in basic aspects of the project, which are understandable given the infancy of the relaunch, but that is precisely the point. The community is also rather small and not particularly vocal. XLQ itself is also only currently listed on one exchange with relatively poor liquidity, making it difficult to warrant a higher grading at this stage.

Pending improvements on these fronts, as well as the successful launch of Bitfineon and the FALQON blockchain, I would be happy to update the grading.

Here, you can find my grading framework, for reference.

Lastly, here is a link to a Google Sheets file with any significant data from previous reports compiled for cross-comparative purposes. I will keep this updated as I continue to write these reports.

I hope this report has proved insightful and that you’ve enjoyed the read! Please do feel free to leave any questions in the Comments, and I’ll answer them as best I can.