From the perspective of an investor, conduct a subjective "due diligence" on Worldcoin from top to bottom in terms of industry, track, and project, and share it with everyone as easy as possible.
Written by: Ah Kong
In May of this year, worldcoin announced the launch of the ecological wallet world app, which aroused extensive attention inside and outside the circle.
When there is a lot of news, it will inevitably be messy, especially the introduction of iris recognition by worldcoin, many people have sent out discussions such as "Sell your eyeballs for Crypto?", some are fearful, some are excited, and some are criticizing.
Standing in different perspectives, or receiving "second-hand information", you will have different understandings. But for me and readers, our core questions are actually three:
- Can this thing (in the future) make money?
- Can this thing give me a chance to make money?
- How can I seize this opportunity?
Today, from the perspective of an investor, I will do a subjective "due diligence" on worldcoin from top to bottom in terms of industry, track, and projects, and share it with you as easy as possible.
Background and purpose of worldcoin
First of all, let's understand the background and purpose of worldcoin.
worldcoin is an encryption project co-founded by Sam, Alex and Max in early 2020, and Sam is the CEO of OpenAI.
With this background, everyone can understand why Worldcoin has gained such wide market attention. Allowing ChatGPT to accumulate more than 100 million users in one month, farting will attract the attention of the VC circle, let alone set foot in a new field (encryption industry) that most VCs have not touched.
Simply put, worldcoin wants to be the fairest global digital identity and cryptocurrency system. The way is to scan the irises of everyone in the world to upload real identities.
At this point, many people began to study the project itself, such as organizational structure, technical analysis of the project, and so on.
But I think it is necessary to judge whether the project has any loopholes in the investment logic before judging these "sides and ends".
Worldcoin Demand Judgment
So, next we have to judge the authenticity requirements of worldcoin.
According to Sam, the establishment of worldcoin wants to solve two problems. The first is how to distinguish between humans and AI in the face of increasingly complex AI intelligence in the future; the second is to provide a common basic income.
The first question is easy to understand. After the robot passes the Turing test, it is no longer possible to judge whether the object of communication is a human being. Therefore, Sam tried to use the iris as a way to identify humans, and the medium was worldcoin.
The second question is a mouthful. To put it bluntly, it is to provide a new form of income for humans who have been laid off because of AI. Note that this is not "common prosperity", but "common food and clothing".
It is necessary to expand the discussion here. Sam has been keeping an eye on the encryption field. As early as 2015, he set up the "YC Research Institute" with 10 million US dollars. This research institute once launched a very interesting project in the United States called "Basic Income plan".
In this plan, everyone can get a fixed income to solve the problem of food and clothing, and no longer be forced to "write books for rice grains" because of the pressure of life.
Worldcoin is one of Sam's ways of practicing the concept of 'common food and clothing'.
In March 2021, Sam believed that the encrypted token mechanism could be used as a form of ordinary income to provide a fair financial infrastructure for low-income people, and in June after Sam's voice, Worldcoin announced its establishment.
What's the point of such a thing? Or we say whether his business logic is established. Otherwise, if a project has no logic of making money in the end, the employer will not pay the bill, and it is impossible for you and me to find opportunities to make money in it.
The core of worldcoin is to establish a fair digital currency system and digital identity authentication. Let’s not look at the former, but just look at the last “digital identity authentication”, which is of great value to the industry.
The value points are in many places. Due to space limitations, I will simply cite an application in the DeFi field.
Most of the DeFi projects we have seen so far are over-collateralized.
For example, MakerDAO’s minimum mortgage rate is 130%; AAVE ’s is about 133%; Syntheix’s mortgage rate is 350%.
You can only lend 75 ETH by depositing 100 ETH in AAVE , and most people need to borrow because they have no money or need money urgently. In this way, DeFi directly discards the entire credit loan market, and this market is a tens of thousands billion market.
How does the industry solve it at this stage? Can't solve it. Because the cost of doing evil is too low, as long as an encryption project does not use the actual KYC (which may not be useful) to open credit loans to all encryption users, it will definitely have problems.
For users, it’s nothing more than abandoning a wallet address, wouldn’t it be good to create a new one? 0 cost to do evil.
The reason is that the DID identity authentication on the chain is not enough, so there is no way to establish a credit system and an arbitration system. For specific industry research, you can check out my article " I see DID: the most important infrastructure track that drives social and DeFi outbreaks "
Here I will summarize again as briefly as possible.
In reality, credit loans can be implemented, on the one hand, because there is a centralized judicial system that can enforce them; your consumption.
The core of this system is that you have a unique identity certificate and enjoy the rights, responsibilities and rights brought by society.
What about the crypto world? Lack of a credit system, lack of an arbitration system, there is no way to accept sanctions for evildoers, and "one person can face thousands of people", such chaos and darkness, even if you want to arbitrate, there is no one to accept.
Therefore, if the encryption industry wants to truly develop into a global virtual economy like web3, it is a crucial link for everyone to obtain the unique confirmation of the identity on the chain.
This is exactly what Worldcoin is doing: to allow encrypted users to obtain a unique identity through "iris authentication on the chain".
Then, if Worldcoin realizes its vision, it will be the entrance of web3.0, and it will connect with a trillion-dollar market, and obtain returns beyond imagination.
After analyzing this, we concluded that Worldcoin is a target worthy of attention.
The next thing we have to do is to combine the development of the project and other specific situations to judge whether it has the ability to achieve the vision, what difficulties are there in the middle, and whether we continue to propose solutions.
Project Judgment of worldcoin: Product Introduction
Finally, enter the research and judgment of the Wolrdcoin project.
What we have to do is to combine the development of the project and other specific situations to judge whether it has the ability to achieve the vision, what difficulties are there in the middle, and whether we continue to propose solutions.
The first is whether the project has money, that is, financing ability.
From the current financing progress and Sam's box office appeal in the VC circle, worldcoin is not short of money.
Worldcoin has raised $25 million in financing since its first appearance in the public eye, with participation from DCG, Coinbase Ventures, a16Z, Multicoin Capital, and FTX’s SBF and many other top institutions and well-known investors.
At the end of March 2023, worldcoin also announced a financing plan of 120 million US dollars. At this time, the valuation has reached 3 billion US dollars. New investors include a16z and some newly joined institutions.
From a structural point of view, worldcoin includes two structures, one is the worldcoin foundation that manages money, and the other is Tools for Humanity, a technology company responsible for technology development.
According to the official announcement of worldcoin, to realize its vision, it will walk on three legs, namely worldID, Worldcoin and World APP.
- worldID is a unique identity record system for users;
- worldcoin is used to distribute tokens to global users for free;
- The world APP is the digital wallet in the ecosystem.
From the perspective of token distribution, the supply of tokens in the worldcoin network is 10 billion, of which 2 billion are reserved for the worldcoin foundation and investors, and the remaining 80% are distributed free of charge to all users around the world.
So, which users are eligible?
worldcoin research: iris authentication system
Here we have to mention the way worldcoin uses to authenticate users: iris authentication.
In order to ensure that each user can obtain a unique identity on the chain, worldcoin has developed a set of living biometric identification equipment, the scientific name is: ORB, which looks like this:
The operation method is to generate an ID by scanning the iris, and then scan the database. If there is no record, then 25 tokens will be issued for you to register. The whole process does not need to provide any personal information, the specific operation is as follows:
Many people should be keen to find problems. That is, the way worldcoin collects irises will touch the issues of laws, regulations and personal privacy.
Especially legal and regulatory issues. Many countries do not allow commercial companies to transfer human biological information (including other private data) abroad.
The places where worldcoin processes data are the United States, the United Kingdom, Germany, Japan, and India. Except for these countries, the data must obviously go abroad. Therefore, Worldcoin is currently prohibited from registering in the following countries:
Iran, North Korea, China, Myanmar, Palestine, Syria, Somalia, Sudan, Yemen, Iraq, Libya, Afghanistan, Cuba, Seychelles, Lebanon, Bangladesh, Zimbabwe, Putao, Sri Lanka, India, Kuwait, Lesotho, Kazakhstan, Singapore, Ubikes, Saudi Arabia, Armenia, Lithuania, Nepal, Russia, Botswana, Australia, Kenya, Brunei, Porto Police, Madagascar, Canada, Malaysia, Thailand, South Africa, Fiji, France, Taiwan, Japan, the United States.
In addition, there is another problem that is caused by "blank checks".
Worldcoin’s strategy in the early years was to encircle cities from rural areas and use AirDrop to attract registrations from users in impoverished areas.
The initial effect is really good. Many orb operators have been recruited, and each device can absorb 1,000 users every week with strong ground pushing ability. But the good times didn’t last long. Due to regulatory issues, the project skipped tickets for a long time and did not issue coins. Everyone became anxious and criticized worldcoin as a fraudulent project.
In the end, it evolved into an attack on the highest point of morality. For example, someone wrote to the operator to ask "what did you do to my eyes?"
There are many kinds of disputes. But if you look at it from the first principles, you can find the two core problems:
1. How to ensure the privacy of these data?
2. Where is the ownership of these data?
On this issue, Worldcoin disclosed the working principle of WorldID in the recent official progress, and emphasized that throughout the process, unless the user explicitly agrees to data storage, the image will never leave the Orb, and between IrisCode and the wallet belonging to the user Without links, the protocol fully guarantees algorithm-based one-way privacy.
Briefly talk about the technical principle to solve the first problem. After the orb scans the iris, it will locally generate an IrisHash value as a unique identifier through a one-way function.
Subsequent storage in the database is only such a logo, and there is no need to store and upload images about the iris itself, or other personal information. The process is as follows:
I think from a logical level, this approach is feasible and almost the only solution.
If you want to complete the DeSoc (decentralized society) envisioned by Vitalik, you must have a "soul-bound token". In theory, it is to eliminate real identity information and only use biological information to achieve identity authentication on the chain.
For example, worldcoin only uses iris to generate an identifier, and then uses this identifier to authenticate uniqueness.
The real core issue is only done by a centralized company like worldcoin. What worries people is whether they have left a back door, or have they secretly collected other information?
But this question is both important and unimportant. Taking ten thousand steps back, a very sad reality is that most people in this world are willing to sell their privacy in exchange for money, because they cannot create value; only a very small number of people who can create value or have a lot of wealth will care own privacy.
For example, it is feasible to use worldcoin to attract registration by means of AirDrop; for example, the best promotion method in the current Internet age is still to register APP to give you rebates.
The emphasis on privacy and its actual value depend on the quality of the general public, and whether this quality is improved depends on whether he has better material conditions. lust".
Judging from the current data. From 2020 to January 2023, the number of worldcoin participants exceeded 1 million; in March 2023, the number of participating users exceeded 3 million; and now the number of participants has exceeded 6.31 million, and the number of users using worldapp wallet transfers is 690,000; 1 million qualified users.
This is already a very exaggerated growth rate, with a monthly growth rate of more than 100%. At this rate, the registration of one billion users can be completed in 3 to 5 years.
Everyone must remember that one billion users is the most critical breakthrough critical point for an industry, that is, a large-scale explosion from concept to practical application. If worldcoin has attracted 1 billion users, then its valuation will not be 3 billion US dollars, but 300 billion US dollars.
worldcoin Research: Project Operations and Valuation
In order to seek lower handling fees, worldcoin chose Ethereum's side chain Polygon as the startup platform. After the release of the worldAPP wallet, it migrated to the Optmism mainnet.
The official document says that the technology it uses is optimistic Rollup(fraud proof), which inherits the characteristics of anonymous and public transactions, and also has a cross-chain function, which can even be cross-chained to a public chain that is not compatible with Ethereum.
In the process of promoting the entire project, whether it is decision-making or operation, at least what worldcoin shows is the probabilistic finality of decentralization. It means that through the management model of the DAO organization, accepting code submissions from the community, and supporting third-party operation teams, the entire decision-making and operation process is infinitely close to distributed.
At this point, we need to think about an ultimate question, how does it make money?
It's an interesting question because OpenAI will give us the answer.
In the past, OpenAI was a non-profit organization, but it transformed into a for-profit organization in 2019, and prepared a preventive injection for ChatGPT's subscription fees in advance.
The way of worldcoin is exactly the same as that of OpenAI. It disclosed in a statement that the company will transform into a non-profit organization.
Of course, this can prove Sam's "wrong original intention", but employees have to be paid, and investors want to see a return on investment.
More importantly, transactions on the WorldAPP wallet are currently free. Not only is it free, but participating in the background test in the wallet can also get a cryptocurrency reward equivalent to $9.
You must know that all interactions on the chain require gas fees, and the free worldAPP means that they bear the handling fees, and at the same time take the money out as "rebate subsidies".
This money is paid by worldcoin investors. If you want to take it, you must give it first. Don't even think about it, when worldcoin reaches a certain scale, it will inevitably charge fees.
Compare with metamask. At present, metamask has 30 million monthly active users and annual transaction fee income of 200 million U.S. dollars; the parent company’s valuation after the D round of financing last year was as high as 7 billion U.S. dollars. If metamask issues coins, the total currency value can easily exceed tens of billions of dollars.
If the number of monthly active users of worldcoin exceeds 100 million, the annual transaction revenue exceeds 600 million US dollars, and the 10 times PE is 6 billion US dollars. But it is obviously far more than that. After chatgpt reaches 100 million monthly active users, openai will be valued at 30 billion US dollars, and worldcoin will also reach a valuation of tens of billions of dollars at that time.
Note that OpenAI and ConsenSys (the parent company of metamask) are not yet public!
According to the number of worldcoin 10 billion tokens, if the valuation of 3 billion US dollars is used, the price of a single currency is 0.3U, the number of users exceeding 100 million may increase by 10 times, and the number of users exceeding 1 billion will increase by 100 times. If the market FOMO sentiment comes earlier , this rate of return may be more.
worldcoin research: experience of the project & our opportunity?
Where is our opportunity then?
The token of worldcoin is called "WLD". The official said that there will be no ICO (public sale), and the token can only be collected through the secondary market and AirDrop.
So, our chance at the moment is in the AirDrop. There are three ways to receive AirDrop:
- First, register for worldID and receive 25 WLD per week, and now receive 1 per week.
- Second, become the promotion operator of orb, and get wld tokens through promotion
- Third, get wld tokens by contributing code and donating money to the community.
For ordinary people, the best way is to do product interaction. I will omit the specific operation process, and you can add a small assistant (WeChat ID: cucr55) to receive the tutorial.
Note: Registering worldID requires mobile phone authentication and iris authentication. The most troublesome thing is iris authentication. If you are in the area mentioned above, you cannot do iris authentication.
I haven't passed iris authentication either, but as a novice user, the biggest feeling of worldapp is simplicity.
This is very important for user promotion, and the crypto industry itself has a huge operating threshold. The media report has a long story, so I will summarize it as follows:
- The design is as simple as possible, focusing on the function of the wallet and not deriving it;
- You can log in to various websites, programs, and encrypted DAPPS through worldID
- Transfer free
- convenient otc
Of course, the shortcomings are also obvious, that is, there is no Chinese language, and Chinese plug-ins are not supported, which is a bit underestimating the proportion of Chinese people in the encryption industry.
worldcoin research, summary
At this point, the overall research and judgment on the worldcoin project is here.
Our conclusions are:
The track to which worldcoin belongs is the DID track, one of the important tracks that promote the advancement of the encryption industry, and the actual data and operation progress of worldcoin show that it is the most practical and most likely to succeed in the DID track .
And I gave a rough valuation and the growth space of the token based on its growth rate, found the current and future opportunities and made a decision.
I humbly think that it is meaningful to use this top-down thinking to analyze projects, because what we have to do is not to delve into technical principles, we are not project researchers but investors, and what we are looking for is opportunities to make money.
It is even said that if there is no first principle, there is no way to understand the true use of technology. Instead, projects will be missed due to some seemingly important shortcomings that are irrelevant to investment.
In the words of Arthur Hayes:
"If you don't have a deep insight into the 'why' and the 'how', then you can't separate fact from fiction. As digital currencies become more and more familiar, without a macro and comprehensive understanding of their nature, You will not understand the role of search engines and promotional content in promoting fake digital currencies, and you will often end up falling into the trap easily.”
This is why, every time I do project analysis, I repeatedly emphasize the need to have a macroscopic understanding of the industry.
Because this is the only way to avoid being deceived by the so-called "next Ethereum" project, to skip the controversies over the worldcoin project, to discover its value, to keep your money from being cheated, and to be in this industry get satisfactory results.
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