Quantstamp Review – The smart contract auditing platform designed to fix many of the flaws seen with Ethereum smart contracts.
Smart contracts are a potentially revolutionary advancement in technology. However, one simple flaw can cause the contract to fail, leading to disastrous consequences for users.
As a result, the demand for smart contracts is growing exponentially. With Quantstamp’s ability to audit smart contracts in a scalable manner, the potential of this project could be huge.
In this extensive review, we’ll be analysing the project to see whether it is a worthy investment, we’ll discuss which Quantstamp wallet is best to safely store your coins and we’ll touch on a company concept known as proof-of-caring.
YOU WILL LEARN:
What Is The Quantstamp Project?
Will The Quantstamp Token Increase In Price?
How To Buy And Store Your Quantstamp Tokens
Why Do We Believe Quantstamp Is An Excellent Investment?
1. WHAT IS QUANTSTAMP?
In Their Own Words:
“A security verification protocol for smart contracts that improves the security of Ethereum. The advantages of the security protocol include automation, trust, governance and ability to compute hard problems over a distributed network.”
In Our Words:
The Quantstamp project is aiming to improve the security of Ethereum smart contracts by fixing fatal flaws in their code such as those which led the the DAO failure in 2016 or recent parity wallet hacks.
Quantstamp have already demonstrated the demand for their platform with their recent smart contract audit of the Request Network ICO.
2. HOW DOES QUANTSTAMP WORK?
The Quantstamp protocol will consist of two parts;
- Automated Software – The automated software checks the smart contract contract code for flaw
- Manual Checks – In the long-term, Quantstamp aims to allow for fully automated smart contract checks via their software. However, until this becomes a reality, Quantstamp will be semi-automated i.e. they will use a combination of automated software combined with human participants that manually check the contracts and receive tokens as a reward.
In this section we will focus on the auditing process; as it is the main focus of the Quantstamp project. We will cover a few other processes later as we discuss the uses of the Quantstamp token (QSP).
The Auditing Process
If a developer wants to deploy a smart contract, they can submit their code to the Quantstamp project.
Depending on the security needs of the programme, the developer can choose how much bounty to send i.e. how much financial reward they will pay for the auditing. The more that they offer, the more likely it is that many developers will manually study the code.
A report is then produced which classifies the smart contract issues based on their severity, ranging from 1 for a minor warning, up to 10 for major vulnerability.
Private Or Public
When requesting an audit, the developer can choose to have a private report which is encrypted and only accessible by the developer, or the developer could choose to have a public report meaning anyone would be able to view it.
While Quantstamp cannot 100% guarantee flawless source code, it does provide a much higher degree of assurance that the code is secure by using both automated and crowdsourced methods.
In order to understand exactly how the automated and manual checks of smart contracts will occur, let’s look at the different categories of individuals that will help the network to improve over time:
Software Contributors (Automated) – In order to move towards a fully automated system, Quantstamp will need to upgrade their software. Not only will Quantstamp hire developers with the use of their ICO funds, they will also encourage the community to contribute by offering financial rewards in the form of QSP tokens to software developers who provide software. This software will be open-source, meaning that other members of the community will also be able to verify its validity
Validators (Automated) – These individuals simply run a node on the network. In other words, they contribute computer processing power but no technical expertise. In return, they receive QSP Tokens.
Bug Finders (Manual) – As mentioned before, the initial stages of Quantstamp will involve manual smart contract checks which will be carried out by bug finders. As a result, they are paid in QSP Tokens
3. ARE QUANTSTAMP SOLVING REAL MARKET PROBLEMS?
Problem – Smart Contracts Can Have Flaws
To quote Quantstamp’s whitepaper: “Blockchain networks are secure but smart contracts are not”; there have been a number of events over the last few years that have proved this to be the case; For example, a hacker famously stole $55 million in Ether from the DAO in June 2016, leading to its collapse.
Technically though, he didn’t steal anything because he actually followed the rules outlined by the smart contract. In other words, due to an avoidable mistake in the smart contract, a huge amount was taken from investors. This contentious time in Ethereum’s history is what ultimately split the community and led to the creation of Ethereum Classic.
Issues like this raise serious trust issues around Ethereum smart contracts and will most likely result in distrust from the public, leading to slower adoption.
We’ve pretty much covered this in the previous section but we’ll recap also – Quantstamp will provide a scalable method to audit smart contracts. To begin with, this will be carried out manually but, in the long term, the process will be completed automatically with the use of software developed by Quantstamp themselves and the community.
The result of this should be to avoid smart contract bugs, allowing them to function correctly. In turn, this should increase public adoption by avoiding PR disasters such as those seen in the past with the famous collapse of the DAO.
With the rapid increase in the number of platforms being hosted on the Ethereum network, it would be an understatement to say that there could be a huge demand for this project.
4. WILL THE QUANTSTAMP TOKEN PRICE INCREASE?
This is another incredibly important point that people often overlook when investing in Cryptocurrencies – is the token price truly linked to the platform usage?
Investing in Cryptos is not the same as traditional investing – when you buy shares in a company, you’re buying ownership. As the company makes increased profits, the share price will increase and your investment value will rise also.
With the majority of Cryptocurrencies, the tokens don’t represent shares.
Therefore, it’s possible for the company to be successful (i.e the CEO and employees get rich) and yet the token prices may actually fall if they aren’t correctly linked to platform usage.
The ONLY factor determining token price is supply and demand on exchanges.
Obviously, supply and demand are affected by many factors but the price all comes down to the combination of these two. Because of this, it is essential to ask yourself the following two questions:
- Demand – Will there be token demand on the exchanges?
- Supply – Will there be excessive inflation hindering prices?
Let’s first look at demand:
What Are The Sources of Demand?
The demand for the Quantstamp platform stems from projects requiring their smart contracts to not contain fatal flaws. The demand for this is growing at a rapid rate as more and more projects are being hosted on Ethereum. However, this doesn’t automatically create demand for the token.
In the case of Quantstamp, projects can only make use of Quantstamp’s services through the purchase of tokens via the exchange. As more projects wish to use Quantstamp’s services, the demand for the token will rise and the price should also.
The price of the Quantstamp token is sufficiently linked to the demand for the platform. Quantstamp has passed this test.
What Is The Likely Inflation Rate?
Quantstamp created a fixed supply of tokens meaning a zero inflation rate but this doesn’t mean that new tokens won’t enter the market though. A total of 65% of the tokens were sold during the ICO, meaning 35% of the tokens will enter the market at some point so how will they be distributed?
- 20% Team and Advisors – Quantstamp state that these tokens are locked in for a minimum holding period but no time-scale is given, this should still mean that no inflationary pressure is felt.
- 10% Core Activities Reserve – This pool will be sold over time in order to assist with operating costs. This is less than 1/6 of the quantity sold in the token sale, meaning inflation won’t be excessive.
- 5% Community Development – These will also most likely be released over a long period of time but, even if they were all listed at once, the small percentage means little effect would be had.
Overall, the inflation rate should be relatively low and token demand will be based entirely on the success of the Quantstamp project. As such, we can simply analyse whether we believe this project will be a success – while factoring in price – in order to determine if this is a worthy investment.
5. THE QUANTSTAMP TEAM & ROADMAP
As our regular readers will know, one of our mantras here at Crypto Gurus is to “invest in people, not ideas”. It’s based off the principle that an idea is only as good as the people who execute it. As investors, we strongly believe in this principle.
Above is a small subsection of the Quantstamp team; a team consisting of eleven members (soon to be thirteen with the arrival of two new Senior Engineers) and eight additional advisors. The first names to look at are the Co-founders: Richard Ma and Steven Stewart.
Ma has experience as an algorithmic trading fund manager but it is Stewart that really stands out. Hired by the Canadian Department of National Defence as a computer systems analyst, before he had even completed his undergraduate degree, he is clearly a stand out individual. Another member with stand out credentials is Vajih Montaghami; a man with experience as a software engineer at both Amazon and Google.
Moving on to their advisors, the first name on their list, Evan Cheng, has spent seven years as a senior manager at Apple before moving on to his current position as a director of engineering at Facebook. He is also becoming somewhat well know in the Cryptoverse; having served as an advisor for both Cindicator and Chainlink recently.
Other impressive advisors include Chris Miess; the former CFO of TenX, Min Kim; who has worked with Tim Draper, a man we have previously profiled in our Datawallet review and Dr Vijay Ganesh; a professor at the University of Waterloo who is very highly regarded by his peers.
Quantstamp were founded in June 2017 and have achieved significant progress in a short amount of time; just four months later they completed their first successful, semi-automated audit of Request Network.
Notable milestones for the company’s future include:
- February 2018 – Complete an audit using version 1 of the analysis software
- April 2018 – Deployment of the test network
- August 2018 – Release mainnet version 1
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6. SELLING POINTS
First Mover Advantage
Despite the vast need for smart contract auditing, Quantstamp are the only project we are aware of that are offering it at this time
Recently, Quantstamp pitched to Coinbase, one of the largest projects in the Crypto-space. While the report about the pitch was rather vague, it’s certainly a positive sign that the team are networking with such a huge name.
It seems like there is a new ICO launched on the Ethereum network virtually ever day. With the rapid growth of the prevalence of smart contracts, and particularly those hosted on Ethereum, we would expect huge demand for Quantstamp’s services over the next few years.
7. BARRIERS TO SUCCESS
Overall, we are huge fans of Quantstamp and believe they are potentially one of the most undervalued projects in the market (currently positioned at 120th).
However, as investors, we always aim to be as critical as possible and search for barriers to success which is why we’ve highlighted a few potential hurdles below:
Quantstamp say that current smart contract security efforts rely on users trusting that no bad actors exist within in a company. However, their project involves trusting a system that has gone through limited testing. However, they have completed a successful audit of the Request ICO so they soon should witness an increased demand for the project.
While Quantstamp should not face any direct competition, a number of companies are focusing on smart contract creation and the lowering of costs involve, including Etherparty and Blockcat. If as mentioned before, people are slow to trust the Quantstamp system then these competitors will begin to come into play.
8. EXTRA POINTS TO CONSIDER
Many people argue that smart contract audits could never be fully automated; human judgement is required to understand the logic and intent of a smart contract. For example, software can spot bugs which may cause the contract to malfunction but they may not be able to detect errors that cause coins to be sent to the wrong person, or detect that the wrong formula is being used to calculate the payoff of a smart contract.
Tier 1 Investors
A final positive point that jumped out to us here at CryptoGurus was that a number of their tier 1 investors agreed to a lock in period for their investments. While the time period was unspecified, the investment totalled more than $1 million and we view that kind of long term commitment to a project as a huge positive.
Quantstamp also announced plans for version 2 of their proof-of-caring concept. This is a way of rewarding loyal members of their community and was originally established before the presale offering incentives such as early access. It has not yet been announced what will be involved with version 2 but will run along the same lines.
For us, this is little more than a nice marketing scheme but it does show a commitment from Quantstamp and that they recognize the importance of their community.
9. WHERE TO BUY & STORE QUANTSTAMP
Where To Buy Quantstamp Tokens
Quantstamp tokens are available for purchase on the following exchanges:
Where To Store Quantstamp Tokens
Quantstamp is an Ethereum-based token which means it can be safely stored on any ERC-20 compatible wallets. Our favourite option is MyEtherWallet which you can download via the link below:
10. THE CRYPTOGURUS CONCLUSION
To close out this review, we will finish with our conclusion; it is clear there is a need for securing smart contracts and Quantstamp are providing a very reasonable solution. The success of this project will depend on the level of adoption witnessed and the fact that Quantstamp have already successfully completed a semi-automated audit offers a lot of hope.
Not only do the team seem in this for the long haul but the fact that a number of big investors agreed to a lock in period for their investments, shows how many important players see the long term potential of this project.
Considering that Quantstamp is currently placed at 120th (not even in the top 100!) in the market at the time of writing, we believe that this project could be undervalued and we are personally considering an investment.
That’s the end of the article! Thanks for stopping by and don’t forget to check out our other articles for regular Crypto/ICO reviews and market updates.
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Disclaimer: None of the above is financial advice. Always do your own research.
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This article has been provided by the CEO; Tom Heavey and Business Analyst; Aaron Laver.