Substratum is not in a good place right now, and investors of the SUB token are arguably in an even worse place. The SubstratumNode V1 is slated to be released in ~8 weeks – at least according to the projection from the company's most recent “show and tell”. The community sentiment is that the release of V1 will somehow usher in a new era of prosperity for both the Substratum team and investors’ -99.9% ROI bags of SUB tokens. This unreasonably optimistic thought process is flawed, and outright dumb. Let's look at the facts.
- Substratum raised $13.8 million (154.6736 BTC, 17,778.25 ETH, 232,105.45 XRP, 602.1433 BCH, 865.9953 LTC) through an ICO in late 2017. Following the conclusion of the ICO, the funds were reportedly hedged into BTC, ETH, USD, and USDT in 25% portions.
- Historically, Substratum has been transparent with its ETH wallet address. Meanwhile, BTC and USDT addresses have never been disclosed.
- Substratum has 3,199.985447 ETH left in its wallet address, and the company has maintained a consistent liquidation pattern.
- The SUB token has been delisted from Binance, and can only be traded on low-volume second and third-tier exchanges like COSS and HitBTC.
Substratum has run out of two of its most precious resources – trust and time. Trust in the Substratum team was breached a long time ago – basically ever since Justin Tabb started appearing in videos on the company's official YouTube channel. Time was on Substratum's side until the delisting of the SUB token, and the reasoning behind this is simple. Substratum's original whitepaper, which was recently removed from the project's website (not sketchy at all), states that “founders receive no shares [of SUB] until the first version of Substratum is released in 2018”. By the way, it's 2019 now.
If all goes as planned, SubstratumNode V1 will be released in 8 weeks, which means Justin Tabb, Abram Cookson, and B.J. Allmon may gain access to their SUB tokens in two months. At the same time, Substratum is rapidly burning through its ETH at a rate of ~1,200 ETH/month. This is not a number I just made up. It can be verified with the transaction data from Substratum's wallet address. If the current burn rate continues without a parabolic increase in the price of ETH, Substratum will be out of capital in less than three months. This would be much less of a problem if SUB still had liquid markets. If that were the case, Substratum's founders could presumably sell off a portion of SUB tokens every month to continue funding the company.
Unfortunately, since being delisted from Binance, SUB's daily trading volume has been reduced to ~$25,000. COSS, which is the only legitimate exchange with SUB/BTC and SUB/ETH markets is responsible for ~30% ($7500) of the trading volume. Long story short, the order books are extremely thin, and there is almost no buy-side demand minus certain members of the Substratum community looking to “buy the dip” since $3.00. In this situation, Substratum's founders wouldn't be able to support the project with their soon-to-be-released SUB holdings even if they wanted to, and the release of SubstratumNode V1 won't change this reality for a few reasons.
- The Substratum team and community's “build it, and they will come” philosophy is completely flawed. Commercial VPNs have dominated the Internet privacy industry for over a decade, and that's not going to change just because a few guys in Ohio created something “better”. If “build it, and they will come” applied to the internet privacy industry, more people would be using Tor – a product that is superior to VPNs in terms of privacy.
- People in China, Russia, and Iran (Substratum's target markets) aren't just going to wake up one day and know about SubstratumNode. The team has less than three months of funding left and zero marketing exposure in target markets. In fact, the recently released “technical paper” isn't even available in the target markets’ local languages. It was too late to start marketing six months ago. Now, it's impossibly late.
- The network's incentive model is broken now that the general consensus around SUB is that it's a total and utter shitcoin. The network requires SUB to use, and also pays node operators in SUB. The lack of liquid markets for SUB incentives potential users NOT to put in the effort to set up SubstratumNode, and yes, there will be a lot of effort needed if we've learned anything from Substratum's level of competency in UX design thus far. I don't see this reality changing after the launch of Justin Tabb's Amplify Exchange either. There are plenty of exchanges to buy and sell SUB, but the problem is no one wants to touch this shitcoin. Adding another exchange to the list is not going to change that.
So, what's going to happen to Substratum in the next 365 days?
- Unless the company has undisclosed funds, Substratum will run out of money in the next few months.
- After SubstratumNode V1 is released, the team will open source everything and essentially donate the project to the community. It will be marketed as the founders’ “gift to the world” to fight Internet censorship.
- SubstratumNode will receive no meaningful adoption, and the SUB token will resume its slow crawl to zero with occasional spikes from Mr. Wolfe's monthly $50 market buys.