More than an exchange, LCX is tapping the RWA market, but does it count?

LCX is a dinosaur in altcoin terms, but they’ve continued developing new products, which you know gets me interested in learning more. In addition to a centralized exchange, they have a RWA play (TDiamonds, or Tokenized Diamond Marketplace), an NFT launchpad and a Beta DEX that has Web3 and AI components.

LCX is fully regulated under Liechtenstein law, which pretty much eliminates regulatory risk for this play. However, I am still curious how you run a fully regulated DEX - there is no mention of KYC requirements in their whitepaper.

While their diversity of products is impressive, a large number of these projects have their own tokens which begs the question, can we really include them in LCX’s market cap?

Age: 6 years

Current Market Cap: $217,000,000

Circulating Supply: 775,000,000 (81%)

Total Supply: 950,000,000

Whale Holdings (> 5%): 7%

What is the project?

• Lichtenstein Cryptoassets Exchange (LCX)

  • Europe’s centralized crypto exchange (i.e. Coinbase, Binance, etc)

• A fully regulated centralized exchange offering advanced trading software and blockchain related services

  • A member of the World Economic Forum (WEF)

• Services both consumer and enterprise markets

From the chart above, LCX’s goal is to provide multiple financial services to retail and enterprise customers. I believe this chart is from the early days of LCX, because LCX has branched out from these alone.

What is the product?

• Centralized Crypto Exchange

  • 50 trading pairs, if website is up to date

• Tokenized Bonds

  • Euro, BTX, ETH & LCX bonds

  • All closed

• Enterprise focused blockchain services

Sister Products (have their own token)

• Tdiamonds (TIA), MC - $13 million

  • RWA diamond marketplace with all the bells and whistles

    • Insured, graded by GIA, etc

• NMKR, MC - $4 million

  • Shopify of the NFT Industry

• MDEX, MC - TBD (on presale until May 15th)

  • A DEX with some potentially useful AI market screening tools

  • Priced at a $66 million market cap for public sale (fully diluted)

• Galileo Protocol (LEOX), MC - $21 million

  • A multichain NFT protocol to create RWAs

Markets

• Europe, specifically the 30 European Economic Area (EEA) countries

  • EEA population is ~511 million

  • Binance and Coinbase both compete for customers in these countries

• Money managers looking for yield in crypto

  • Crypto bond products

Revenue

• The LCX exchange earns 0.3% in fees for each trade, decreasing for larger volume traders

  • Fees are reduced by 50% if they are paid in LCX token, great for utility

• Additional fees for withdrawing BTC, unsure of fees for withdrawing other assets

Tokenomics

• It does appear that tokens have been emitted to the circulating supply over time, over 210,000,000 added since the last bull cycle

Team & Community

• Team is well known and well connected

  • Monty Metzger - Founder, CEO

    • Harvard Business School Graduate

    • Started several internet companies and became a tech angel investor through Metzger Capital

  • Anurag Verma - Director of Technology

• A long history of execution and product development, but still waiting for their big hit

• LCX Advisors

  • Jimmy Wales, Founder of Wikipedia

  • Don Tapscott, Leading Authority in Blockchain

  • Yat Siu, Outblaze and Animoca Brands

Financial partners

• None known

Catalysts

• Well defined customer base with room to grow

• Extensive marketing

• Very well connected, great product executers

• Exchange volume will pick up through bull cycle

Risks & Downsides

• Sister companies with their own tokens cannot be valued to LCX

  • For example, SpaceX does not contribute to Tesla’s MC

• Only trading 36 coins

  • At least 4 of these are LCX’s own coins

• Exchange may be overshadowed by side projects

  • In-house DEX is competing with Central Exchange product

  • Coinbase & Binance they have great CEX traction

• Token holders see no benefit of revenue (as far as the research dug up)

Comparable Projects

There are a lot of exchange projects, and with a lot exchanges facing legal issues recently, so a void has likely been created. The question to me is, who will soak up these customers?

Coinbase (COIN on US stock exchange)

• Large international exchange

• $52 billion market cap

• 400+ trading pairs

Binance (BNB)

• Large Asian and international exchange, well known

• $95 billion market cap

• 1,200+ trading pairs

Scores & Market Cap Predictions

*NOTE MISTAKE IN VIDEO - I incorrectly calculated price targets in the vid. Market caps and market caps were correct though. See corrected Price Targets below.

Summary & Scores Commentary

I have never been rooting so hard for a project but let down after deep diving as I have been with LCX. They have great leadership, phenomenal world connections and a history of executing on new and interesting products, but c’mon man… where are the coins on your exchange!? It feels like their exchange efforts are half-hearted. LCX’s stated goal is to be the Binance of Europe, but who is going to choose to use a platform with a fraction of trading pairs compared to their competitors?

The nail in the coffin for LCX is lack of exchange activity. From the limited information I could scrounge up, trading volume is less than ½ of a percent of Coinbase’s trading volume. What a shame.

All that FUD aside, I do think there are returns to be made on this project this bull cycle. If you’re looking for a lower risk multiple inflation trade, I like this one. I doubt you get any surprises from LCX, good or bad. That said, if you’re looking for some above average multiples, maybe you want to look for some riskier plays with higher potential multiples.

*Information is not intended to be financial advice to the reader.