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Diary of a made man

Resistance Project Review - Decentralized Exchange w/Atomic Swaps

by Ian Balina

4 weeks ago


resistance ico review inside

December 5th, 2018

Table of Contents

Project Overview

Executive Summary

Idea - (3 points out of 3)

What we're excited about

Type of Project – (2 points out of 2)

Good Technology – (6 points out of 6)

Technological Advantages

Technological Disadvantages

Technological Progress

Team – (4 points out of 4)

Advisors – (2 points out of 2)

Token Information

Problems with Centralized Exchanges

Compliance and Know Your Customer (KYC)

Interesting Data Points

Comparable Projects

Areas of Concern

Conclusions

Works Cited

Disclaimer

Project Overview

  • Project name: #Resistance
  • Token symbol: RES
  • Public ICO start date: January 28th, 2019
  • ICO end date: February 28th, 2019
  • Hard cap: $18,000,000
  • Total number of tokens: 60,000,000
  • Total number of ICO tokens: 39,000,000
  • Price per token: $0.462 (Average)
  • Token price: Public - $0.55046 (23% of tokens)/ Private - $0.41284 (42% of tokens)
  • Percent of total supply: 65%
  • ERC20 token: No
  • White Paper: 1-2 weeks
  • Yellow Paper: December 6th, 2018

Executive Summary

Resistance is a decentralized exchange that uses atomic swaps and benefits from its own privacy-oriented blockchain to facilitate private trading. This project scored 81.53% for its token metrics; therefore it is being considered an all-star ICO. The testnet got released in Q3 2018, the mainnet is ready within the month following the ICO (Q1/2019). The core team has three all-stars on it from Cisco, Microsoft, and Eniro in addition to two all-star advisors from IBM and Carbon Black.

There are plenty of cryptocurrency exchanges out there. Almost all of them are centralized. Decentralizing the trade of assets reduces fees, removes intermediaries, helps ensure the privacy of your data, and guarantees the security of your funds. The objective is to remove the third party from the exchange.

Many projects are trying to penetrate the demanding market of exchanges. It is not easy to compete with larger exchanges with vast amounts of resources. On the other hand, all cryptocurrency traders want a working, reliable, privacy-focused, decentralized exchange. We believe Resistance could be the first for many reasons. It is 100% decentralized, trades are made peer to peer, there is no way for Resistance to Halt trades or freeze funds. It has a competitive advantage over other exchanges because of its unique atomic swap technology. The RES coin has a similar utility to exchange coins like Binance (BNB). The user interface is easy to use. There is a lot of hype built up in the cryptocurrency community about the project. RES coins use their own unique blockchain with the possibility of network effects. These are some of the high-level reasons why we love the project and decided to invest and advise the company.

For all of these reasons, we have decided to invest in Resistance. As advisors, we get compensated for services rendered. This is not financial advice. Please do your research and consult a financial advisor before investing in any cryptocurrency. Regarding the Resistance report, if anyone has any questions regarding our recent investment in Resistance, a project we're also advising, please email us using our contact page. Accredited investors only.

Idea – (3 points out of 3)

The idea of the project is to become the most widely-used decentralized exchange while giving traders the option to trade privately and securely. It is a democratic platform that provides users with the opportunity to mine, trade, invest, and innovate regardless of experience or computer processing power.

Resistance allows traders to use its privacy coin, RES, as an intermediary to facilitate private trading. RES is mined on the platform’s private blockchain using CPU optimized Proof of Work mining which prevents ASIC mining from taking over. This means users can mine RES using a regular desktop or laptop computer, giving even novice users the chance to transact and mine with ease and privacy.

Resistance block rewards are split, meaning users don’t have to mine on the Resistance blockchain to earn RES. Rewards are split four ways, Proof of Work, Proof of Research, masternodes, and project development.

  • Proof of Work: 30% of the block reward goes to Proof of Work miners for securing the Resistance blockchain.
  • Proof of Research: 30% of the block reward goes to Proof of Research, which provides an alternative way for users to receive block rewards for contributing computing power to whitelisted projects, advancing scientific research to help humanity. This differentiates them from the competition.
  • Masternodes : 30% of the block reward goes to masternodes for the role they play in facilitating the smooth running of the network. A masternode is a server on a decentralized network with additional functionality. Masternodes need to meet the minimum resource requirements (CPU cores, storage, uptime). They are used to complete unique functions like instant or private transactions, governance, voting (new coins to be listed), etc. You will need to stake minimum 10,000 RES coins to run a masternode.
  • Project Development : Masternodes funnel the final 10% of the block reward back into the open-source Resistance platform to fund its ongoing development. The community will be able to create proposals for improvements to the platform, and then the masternodes will vote on which proposals to accept. Then those proposals will be funded by that 10%.

A unique aspect of this project is the ability to trade up to 90% of cryptocurrencies using cross blockchain atomic swaps (e.g., between Bitcoin and Ethereum.) Atomic swaps rely on cryptographically powered smart contract technology to ensure that each party delivers the agreed upon currency within the allotted period of time. If one party fails to fulfill their end of the swap, the transaction gets canceled. At every stage of the swap there are incentives in place that encourage both parties to continue. If these criteria aren’t met, the trade is canceled. (Resistance Whitepaper)

Atomic swaps allow fast (assuming you do not want to keep assets on a centralized exchange), direct, and risk-free peer to peer trading. Resistance is also implementing instant swaps; these will allow people to trade instantly (via time locked collateral) without having to wait on block confirmations. Additionally, users retain full control of their data, IDs, wallets, and assets at all times.

What we are excited about

  • The Resistance exchange is 100% decentralized. There is no way for Resistance to halt trades or freeze users funds. The Resistance DEX has a peer to peer network that they use to propagate their order book. The order book is distributed over all full nodes. Masternodes are used to help facilitate trades, and they also make the network faster and more secure. You download the application then user funds are exchanged peer to peer, there is no middle man, third party, escrow, or any similar service required. Users don’t even have to download the full blockchain of the currency they are trading.
  • You can add privacy elements to any coin traded with the click of a button using RES as an intermediary.
  • Resistance is one of two exchanges implementing atomic swaps. The other exchange is Komodo, and they have a steep requirement of 212.5% collateral deposit for any transaction. Atomic swaps make trades directly on the underlying blockchains and not with a proxy token that can be attacked.
  • Tor integration gives users the option to use the Tor network to add anonymity to trades.
  • The Resistance wallet is secured by one of the most secure encryption algorithms available today that is used by the NSA.
  • All of the code will be open sourced.
  • They are going to use their own blockchain with no single point of centralization. The blockchain will run on an application you download to your computer, unlike IDEX which has a very crucial aspect of centralization in its domain name.
    • Resistance, however, can host multiple domains and other ways to distribute the application. Even if the primary domain is shut down, Resistance applications will continue working.
    • The application source code will be made public. Anyone can trade directly without any interference from Resistance. They have apps for macOS, Windows, and Linux.
  • They support both private and transparent transactions. Private transactions use zero-knowledge proofs to shield the transactions and ensure nothing is made public on the blockchain. The transactions per second TPS is around four times faster than Zcash.
    • An overwhelming majority of Zcash users use Zcash with transparency because it is not obvious how to make private transactions. With Resistance’s blockchain, privacy is determined by the click of a button
  • The DEX uses atomic swaps, and their technology supports over 90% of cryptocurrencies without compromising security. They will purposely leave non-reputable coins off the exchange and only provide liquidity to popular pairs.
  • A decentralized exchange like IDEX makes you place your cryptocurrency in a smart contract, forcing you to relinquish control of your assets. Using Resistance, you are always in control of your assets.
  • Users can trade as much as they want with no withdrawal limits.

Type of Project – (2 points out of 2)

  • Resistance is a decentralized exchange that uses atomic swaps.
  • It has its own public blockchain that uses RES privacy coin

Good Technology – (6 points out of 6)

Resistance passed our technology review. We were excited by the many innovations that it has. Resistance is the first dex offering working atomic swap currency exchange. Their closest competitor Komodo requires a high deposit to perform an atomic swap. Very few traders can afford this requirement.

Technological Advantages

  • To prevent deal canceling, Resistance uses a deposit system. This deposit system is used to stop bad actors from gaming the system by canceling trades.
  • They are going to create a reputation system. The more honest trades that you have made, the better reputation you have. As users scale in the reputation system, they require a smaller deposit.
  • Block rewards are split over Proof of Research, Proof of Work, masternodes, and platform development.
  • They allow traders to use Tor to hide their IP to make completely shielded trades. Even with a hidden IP, you can still verify through Shyft Network that the trade was compliant.
  • It has a simple user interface that makes it friendly for non technical users.
  • The DEX uses atomic swaps.

Technological Disadvantages

    • There is a risk of futures trading, for example when a trader cancels a trade that is out of the money before it has been confirmed.
      • They are eliminating this by:
        • Increasing deposits to 1% or 2%.
        • Creating an instant swap technology.
        • We do not like how you have to download Resistance as software to your laptop because of the risk of potential viruses. It needs to be like this or else they would need a domain like IDEX making it not centralized.
          • This concern is being addressed by:
            • Checksums to make sure you are downloading the correct software.
            • Open source code so you can compile and review it yourself
            • A third party will do code analysis before it is released.
        • The advanced order book is not ready yet. We would like to see this before writing more about it.

            Technological Progress

            2018 Q2

            1. Resistance Prototype: Reward Splitting v1.0 including Proof of Work (CPU-optimized Miner) and Proof of Research (BOINC/Pool)

            2018 Q3

            1. Testnet Alpha
            2. Resistance wallet with integrated CPU Miner: Alpha version of the Desktop Application released for macOS and Windows
            3. Tor Integration for Stealth Transfers

            2018 Q4

            1. Testnet Beta: Second version of the testnet for the RES CPU-optimized coin released
            2. Masternode Development
            3. REST API for ResDEX
            4. Fiat Gateways- They have a third party integration

            2019 Q1

            1. Mainnet Released
            2. Hardware Wallet Integrations
            3. Resistance Anonymous Decentralized Exchange – Alpha: Integrated with the Resistance Wallet Integration of Resistance Wallet into Whonix, a desktop operating system designed for advanced security and privacy

            Team – (4 points out of 4)

            The team includes three all-stars.

              • Anthony Khamsei https://www.linkedin.com/in/anthony-khamsei
                • Role – CEO and Founder
                • Prior Company – Eniro
                  • Market-cap – $124M
                  • Employees – 1,600
                  • Role – Key Account Manager
                    • Managed some of the company’s most significant client accounts and provided digital marketing services to businesses in the Nordic region.
                  • Years – 2 years
                  • Konstantin Alexandrov https://www.linkedin.com/in/iwuvjhdva/
                    • Role – Core Developer
                    • Prior Company – Microsoft
                      • Market-cap – $813B
                      • Employees –10,000+
                      • Role – Software Development Engineer II for Skype
                        • Filled a critical role as a software engineer, and designed specialized software to test the platform’s capabilities across different devices and operating systems globally.
                      • Years – 4 years five months
                      • Luke Wegryn https://www.linkedin.com/in/lukewegryn/
                          • Role – CTO
                            • Prior Company – Cisco
                              • Market-cap – $207.9B
                              • Employees – 10,000+
                              • Role – Penetration Tester and Security Research Engineer
                                • Provided penetration testing and ethical hacking to identify vulnerabilities in a vast portfolio of hardware, software, networks, and switches.
                              • Years – 2 years five months

                            Advisors – (2 points out of 2)

                            There are two all-star advisors.

                              • David Kravitz https://www.linkedin.com/in/dkravitz/
                                  • Role – Research Staff Member
                                    • Prior Company – IBM
                                      • Market Cap- $111.43B
                                      • Employees- 10,000+
                                      • Architect of the Digital Signature Algorithm (DSA), an identity management system for blockchain platforms and compatible services suitable for meeting the requirements of B2B transactions. Design and evaluation of cryptographic constructs for next-generation security systems for applications including media and entertainment
                                      • Years- 2 years four months
                                        • Matthew Cummings https://www.linkedin.com/in/matthew-cummings-8a685a1/
                                          • Role – Advisor
                                            • Prior Company– Carbon Black
                                            • Market Cap- $1.07B
                                            • Employees- 10,000+
                                            • Role – Senior Site Reliability Engineer at cybersecurity giant Carbon Black, accomplished Backend Developer, and fluent in multiple programming languages and tools.
                                            • Years- 3 years

                                          Token Information

                                          Token Amounts

                                          • There will be 60 million ERC 20 tokens that will be converted to RES with a 1:1 swap when the genesis block of the Resistance blockchain is created. The maximum supply is 126 million tokens.
                                          • 39 million tokens for sale
                                          • 21 million tokens other purposes
                                          • 66 million received through block rewards

                                          Token For Sale - 39 million

                                          • Private Sale- Ongoing
                                          • Percentage of tokens: 42%
                                          • Number of tokens: 25.2 million
                                          • Price per token: $0.41284
                                          • Hard cap: $10.4M
                                          • Discount: 25%
                                          • Public Sale ICO- January 28th, 2019
                                          • Percentage of tokens: 23%
                                          • Number of tokens: 13.8 million
                                          • Price per token: $0.55046
                                          • Hard cap: 7.6 million
                                          • Discount: 0%

                                          Other Tokens - 21 million

                                          • Airdrop: 1.5 million
                                          • Strategic Partners: 5.4 million
                                          • Team/Founders: 4.2 million
                                          • Advisors/ Contributors: 6 million
                                          • Trade Mining Reward: 3.9 million

                                          Token lockups

                                          • Strategic partnerships: 40% directly 20/20/20 every 30 days.
                                          • Public sale - 40% directly then 20/20/20 every 30 days.
                                          • Private sale - 40% directly then 20/20/20 every 60 days.
                                          • Advisors - 40% directly then 20/20/20 every 120 days.
                                          • Team - Locked up in Masternode for 24 months. They are going to publish the wallet address.

                                          Maximum Supply

                                          • After the token sale, there will be an ability to earn more RES coins through block rewards. Similar to Bitcoin, it will take around 25 years for 99% of the coins to get minted, and 125 years to reach the max supply of 126 million coins .
                                            • You can obtain these coins through Proof of Work (mining), Proof of Research, or by running a masternode.

                                          Problems with Centralized Exchanges

                                          • Most exchanges rely on a central authority.
                                            • Bitcoin was formed with the hopes of decentralizing the peer to peer payment system.
                                            • Centralized exchanges control users’ funds, and sacrifice security for convenience.
                                            • Many exchanges hold your crypto on their hot wallets. If the exchange disappears or gets hacked you lose your funds.
                                              • One single security breach or malicious insider could result in users losing everything, as happened in 2014 during the Mt. Gox hack.
                                              • It is necessary for users’ assets to remain secure for the long-term success of the cryptocurrency market. (Page 10 Resistance whitepaper.)
                                              • The problem is users do not have an extra layer of privacy.
                                                • People want the option to trade privately so they can avoid being the target of hackers and many other reasons.

                                                Compliance and Know Your Customer (KYC)

                                                • The Resistance team is in conversations with a securities lawyer in regards to complying with all the demands the SEC has for decentralized exchanges. The simple solution is that they are not going to allow U.S. investors and users.
                                                • With decentralized KYC, each trader on the exchange will only trade with those who have passed KYC with Shyft Network. They will not learn the identity of the other party.
                                                  • Each trade will be linked to a KYC, but no one will know who is trading, just that they have passed KYC. Decentralized KYC uses blind attestation. This means Resistance gets either a yes or no response when they validate if users have completed KYC.
                                                  • If a regulator demands to see KYC for a specific user, they will be directed to the KYC provider that approved the specific KYC. That provider will handle the regulator.
                                                  • In that way, you remain private from everyone, except from a regulator that is court ordered to see a KYC.

                                                Interesting Data Points

                                                • Alexander Peslyak is one of the core developers. He was the creator of yespower a CPU-friendly hashing algorithm that Resistance uses. He was a former Zcash advisor, and he is more commonly known as Solar Designer.
                                                • Patrick Schleizer developed a security Linux distribution called Whonix.

                                                Token Utility

                                                Resistance coins, RES, are used to interact on the platform and have several use cases.

                                                • Transactions – Fast and reliable transactions of assets.
                                                • Intermediary - Add privacy to a non-private coin.
                                                • Instant swap- Put RES coins up as collateral when performing an instant swap.
                                                • Masternode- As an incentive for masternode staking. Masternodes make the network faster and stronger.

                                                Functionality

                                                • Resistance has features built into the exchange to provide privacy to those who enable it.
                                                • When you perform an atomic swap, you are executing the trades on the underlying blockchains.
                                                • To trade between BTC and ETH, you will see a transaction on both the BTC blockchain and the ETH blockchain.
                                                • With Resistance if you want to add privacy to a trade, you click the “enable privacy” button.
                                                  • Now you can trade from blockchain A to blockchain C via a trade to and from RES as an intermediary. Resistance utilizes it's privacy elements to privatize the RES coins and break the link between blockchain A and blockchain C. Now nobody can connect the transaction of blockchain A to blockchain C; it will appear to be two separate traders making individual trades to and from RES. This can even be done from blockchain A back to blockchain A with RES as an intermediary to add privacy elements to any coin. This is all automated via the Resistance Desktop Application, so users can add privacy with ease.
                                                • They also have anonymity features in the form of Tor support on the exchange.
                                                  • When you are interacting with the exchange's peer to peer network, the full relay nodes can't see your real IP.

                                                  Comparable Projects

                                                  comparable projects to resistance

                                                  *They will not provide liquidity to all of the coins they list. They will just have them listed on the DEX.

                                                  Areas of Concern

                                                  • When you create an exchange, volume is crucial to adoption. There is a chicken and egg dilemma here. To challenge the competition, you need liquidity. The problem is, to attract traders, liquidity must be present.
                                                    • They will use the money they raise to get market makers on board. They are in conversation with five liquidity providers.
                                                      • CZ the CEO of Binance stated it is tough to build an exchange.
                                                        • He admits he was lucky and the benchmark was much lower when Binance started to gain traction.
                                                        • Now it is more difficult to penetrate the market with big players already having working products, large teams and vast amounts of resources.
                                                          • You need many things for a working exchange
                                                            • Security right
                                                            • Customer service
                                                            • Ease of use for everyone around the world
                                                            • Fast access.
                                                        • Binance is creating a DEX. This DEX will be competition to Resistance.
                                                          • Binance DEX will focus on speed, not privacy, so we doubt they will implement atomic swaps on the DEX.
                                                          • By the look of the design, the DEX is for advanced users.
                                                        • Our technical team mentions the other areas of concern we have in technological disadvantages.

                                                        Conclusions

                                                        We believe Resistance will perform well in the short and long term. It scores 81.53% for its token metrics making it an all-star ICO. The objective is to create the first anonymous, decentralized exchange with the hopes of competing against other decentralized exchanges like Komodo, IDEX, etc. The all-star team and advisors have the credible experience for us to join forces and commit to this project. The innovative, industry-pioneering, decentralized exchange technology is what got our team excited and led to us investing in and advising Resistance.

                                                        The market has been waiting a long time for a reliable, anonymous, fast, decentralized exchange and we believe that Resistance achieves these goals. Existing DEXs have failed to capture a greater market share because they do not have liquidity to support a wide range of cryptocurrencies. To obtain this liquidity Resistance is going after the Korean market. Korea has some of the most significant trading volumes in the world in its exchanges such as Bithumb, Upbit, and Coinbit. Additionally, they plan on working with Factblock, one of the leading accelerators and media companies in Korea.

                                                        Short-Term – It is an anonymous, decentralized exchange with a team dedicated to creating a project that will be useful in the cryptocurrency space for the decentralized exchange of assets. The projects that it is up against have large market caps currently. The most similar exchange is Komodo which uses atomic swap technology with a 212.5% deposit. Komodo has a market cap.

                                                        of $64M right now if Resistance gets to this market cap that is around a 3.5x return on investment. This gives it strong upside potential.

                                                        Long Term – This idea is an innovative, unique, and exciting one. If Resistance follows through, we believe it will become the most well-known, heavily used decentralized exchange out there. To begin gaining network effects and getting more users on the platform, they have many plans. They plan on investing in developing the blockchain, exchange, and desktop application. Most of the platform has already been built so that they can direct the majority of funds to other areas. These include exchange listings, market making with liquidity providers, community management, security auditing, PR and marketing, maintenance, operations, legal, business development/partnerships, events, and advertising. By focusing time and money on these areas, Resistance will gain a broader reach and make many more potential users aware of the platform. Additionally, some considerable funds are interested in investing.

                                                        For all of these reasons, we have decided to invest in Resistance. As advisors, we get compensated for services rendered. This is not financial advice. Please do your research and consult a financial advisor before investing in any cryptocurrency. Regarding the Resistance report, if anyone has any questions regarding our recent investment in Resistance, a project we're also advising, please email us using our contact page. Accredited investors only.

                                                        Works Cited

                                                        Resistance whitepaper

                                                        https://coinmarketcap.com/

                                                        https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3146191

                                                        Disclaimer

                                                         

                                                        NOTE: Ian Balina's transparency disclosures regarding his cryptocurrency portfolio and advisory fee compensation.

                                                        Diary of a Made Man Limited is not providing individually tailored investment advice and is not taking subscribers personal circumstances into consideration when discussing investments in ICOs.

                                                        Diary of a Made Man Limited is not registered to provide investment advice and are simply providing an opinion, giving their particular experience, when discussing ICOs.

                                                        Information contained herein is not an offer or solicitation to buy, hold, or sell any security. Diary of a Made Man Limited is not a broker-dealer or financial adviser and is not affiliated with an investment advisory firm. Diary of a Made Man Limited does not engage in activities that would require such registration.

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                                                        The ICOs discussed herein have not been reviewed by the securities and exchange commission or any state securities regulatory authority. Furthermore, the foregoing authorities have not confirmed the accuracy or determined the adequacy of the ICO offering documents. Any representation to the contrary is a criminal offense.

                                                        The ICOs identified herein may constitute securities pursuant to federal and state securities laws and may not be appropriate for, or offered to, investors residing in the united states. In making an investment decision, investors must rely on their own examination of the person or entity issuing the ICO and the terms of the offering, including the merits and risks involved.

                                                        Investment in ICOs involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors in ICOS should consult their financial adviser before investing in ICOS. The securities and exchange commission has warned investors residing in the united states that ICOS may constitute securities, and by investing in ICOS, investors may be purchasing unregistered securities offerings. Us investors who invest in may be unable to recover any losses sustained in the event of fraud or theft.

                                                         

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