The Mt Pelerin team is aiming to build an entire bank on chain with all elements of the balance sheet tokenized.
Besides reducing costs, the platform will introduce three unique aspects. Firstly, 100 percent of deposits will be kept in reserve and the bank’s balance sheet will not be leveraged. Secondly, the platform will earn revenue entirely from the sale of financial services on its marketplace. Mt Pelerin will also act as a market maker to provide liquidity. Finally, banking services will be structured as smart contracts, enabling both assets and liabilities to be tokenized. This will allow loans as well as deposits to be tokenized and traded.
How advanced is the project?
The roadmap extends to the third quarter of 2019 when the platform will be launched. To date, the team has developed an MVP for the core platform, order book functionality, and trading robots. It has also initiated partnerships with card issuers, and other partners.
Mt Pelerin has applied for a banking licence and is now awaiting a response from the regulator. Because the project is not following a traditional banking model, the application will probably take over a year to review. A public token sale will only be held when the team is confident they will receive a banking licence, which may only occur in 18 months’ time.
What are the tokens used for and how can the token value appreciate?
Two types of tokens will be sold. During the current private sale, which is currently underway, 5 million MLP tokens will be sold to raise $2.5 million in seed capital. When the public crowd sale takes place, MLPIP tokens will be sold to raise $78 million.
MLPIP tokens will include the intellectual property of the core banking system and will pay a royalty of 20 percent of the net profit generated by the platform. Token holders will also earn licencing fees paid by any other firms that use the core banking system.
It is important to point out that both the MPL and MPLIP tokens are not utility tokens and serve no purpose on the platform. The MPL tokens represent 5 percent of the equity in the bank. They will entitle holders to dividends and give them voting rights, and once a year holder will be able to redeem them for traditional equity.
The MPLIP tokens will entitle their holders to royalties and licensing fees. 78 percent of the MLPIP tokens minted will be sold during the crowd sale. The remaining 22 percent will be used for team rewards, strategic reserves and bounty rewards.
The value of both tokens will ultimately depend on the net profit generated by the platform. The financial projection in the whitepaper has MPLIP token holders earning $3.7 million in 2021.
Team & Advisors
The CEO, Arnaud Salomon, has experience in Fintech and financial markets. The technology lead, Cyril Lapinte, has a background in software development and has been involved in blockchain projects since 2015.
The remainder of the team has backgrounds in banking, asset management, trading, fintech, management consulting and legal. Only three members of the team appear to have backgrounds in software development or engineering.
Overall the team appears to have experience in diverse areas, though it may lack depth in the area of development.
The advisory team includes individuals with backgrounds in banking, forex broking, cyber security, cryptocurrencies and blockchain technology.
Mt Pelerin is building a new banking model which aims to address a number of problems in the world of banking. Essentially the platform will act as a marketplace for financial services. Users will be able to access the platform via a website or app.
Customers will have multi-currency bank accounts and multi-currency debit cards. Customers will be able to deposit and withdraw in all major fiat currencies, Bitcoin and Ether. The will also have access to a tokenised marketplace for foreign exchange services, SME financing, tokenized funds, futures markets, savings products and loans. Third parties will access the platform via an API, in order to offer their products to users.
All assets and liabilities will be issued as ERC-20 tokens as soon as they enter the system, and will be tradable in the marketplace. All fees (gas) for executing transactions on the blockchain will be calculated before a transaction is confirmed and shown to the customer for approval.
The ecosystem will be blockchain agnostic and will use multiple blockchains to address different needs.
Strength and Opportunities
The platform will offer consumers a single platform for multiple currency and crypto accounts with access to a variety of financial services. The fact that it is based in Switzerland adds an extra layer of perceived security and trust.
If Mt Pelerin can obtain a banking license in Switzerland, it will be able to offer users the levels of privacy that the country is famous for. This may be a strong selling point for consumers around the world.
The tokens are essentially equity tokens which differentiates them from most other tokens, and will allow investors to diversify their crypto investments.
If the platform is successful, royalties equal to 20 percent of the platform’s net profit could amount to a significant cashflows for token holders over time.
Weaknesses and Threats
Setting the platform up as a bank carries substantial risk. First there is the risk that the banking license may not be awarded. Secondly, if the license is awarded, operating as a bank requires expensive levels of compliance and capital reserves.
The business plan only provides for limited further fundraising beyond the crowd sale, which may lead to problems if the platform cannot maintain the required levels of capital.
At this point the project is relatively unknown. It has not been widely covered in the media and the Telegram channel only has 1,010 members.
Mt Pelerin is embarking on a bold plan. Whether structuring the platform as a bank, rather than as a fintech platform, is the right decision or not is debatable. Even if the project is awarded a banking license and manages to raise the required capital in a crowd sale, the project will still be an experiment. It could however be a very successful experiment.
The crowd sale of MPLIP tokens is a long way off and a lot could change between now and then. The immediate opportunity is the MPL tokens being sold during the private sale, and this is where there is a problem.
The project carries significant risk on the part of token investors, and this risk is only being rewarded with 24 percent of net profits. The remaining 76 percent of profits will flow to the platform’s current shareholders. (20 percent of net profit is paid to MPLIP token holders as a royalty, leaving 80 percent for shareholders, of which MPL token holders make up 5 percent)
Since the tokens do not actually serve a function on the platform, the required capital could be raised via a traditional equity sale. It therefore appears that this private sale is an attempt to take advantage of investor demand for ICOs more than anything else. If this wasn’t the case, the project would have already been funded by private investors.
While we do like the project, there are significant risks and we don’t think investors are being adequately rewarded for that risk.
Our Overall Rating: B+
Investors and Advisors: B+
Stage of development: A-
Community Strength: B
* The information contained in this article is for education purpose only and not financial advice. Do your own research before making any investment decisions.