It appears the wheels have fallen off another crypto project as the current bear market wages on. According to recent news, the once-mighty RChain project has fallen apart.
At the top of the last altcoin bull market in January 2018, RChain’s RHOC token appeared to be a serious contender among other top projects. According to coinmarketcap.com, RHOC was once priced at more than $3 per token.
Last week, The Block reported on RChain’s recent demise. RChain was a blockchain platform project that once contended with other powerhouse platforms like EOS, Tezos, and NEO. RHOC even ranked in the top thirty projects on CoinMarketCap at one point. RHOC is now ranked at 199th, sitting at $0.03 at the time of this writing.
— Guava Airlines (@GuavaAirlines) October 1, 2017
Fall from grace
The current bear market has taken its toll on many projects and tested them to their core. One recent LinkedIn article from November detailed the common sentiment that 99% of projects would fail, but the 1% that survived would be revolutionary.
Many crypto funds and ICO projects are about to race to shut down or declare bankruptcy.
They don’t even realize what is happening. I’m elaborating on this and more in tomorrow morning’s installment of Off The Chain email.
Sign up here for the HEAT 🔥https://t.co/FWGNNJu0ry
— Pomp 🌪 (@APompliano) November 18, 2018
According to The Block’s research, RChain conducted several questionable business moves, which could lead to the project’s demise.
$23.5 million wasted?
RChain invested $23.5 million into developing a music app (RSong) built on the RChain blockchain, based on Immersion Networks’ technology. This move did not make sense regarding RChain’s goal to become a scalable blockchain. $23.5 million was also an extreme amount to allocate to such an endeavor considering RChain raised only $31 million total.
The Block reported on one RChain investor who stated a great analogy.
I’m not saying it’s not a good piece of tech. But it was a crazy amount for what we had. Let’s say you’re building a house for yourself and it’s $1m. But then you find a nice piece of furniture and you blow half a million on it. And now you don’t have enough to finish the house and you’ve completely destroyed the main project you’re working on.
RChain also invited a venture capital fund called Pithia on board to supposedly aid in RChain ecosystem construction. “Pithia was loaned 105 million RHOC tokens in 2017 to ‘find and fund’ 12 start-ups, in exchange for keeping 20% of any profits they returned,” The Block explained.
Although if RChain did not launch its mainnet by the end of March 2019, Pithia apparently had the right to end the agreement and keep any leftover RHOC tokens, according to contract revisions from August 2018.
After the August contract revisions, RChain had to move its mainnet start to April 1st, missing the deadline by one day. Pithia then proceeded to end the agreement with RChain.
The Block additionally reported on RChain CEO Greg Meredith’s poor management of the project. The whole project was said to be vastly centralized. Meredith conducted business in a tyrannical fashion and rejected comments from investors. He even bought “a $1.5 million house in Seattle for cooperative members to stay in,” which was a questionable business decision.
One of RChain’s investor’s stated Meredith as intelligent, but that he lacked business ability. Meredith has allegedly not given up on the project yet.
In a blog post last week, RChain published an article in response to The Block’s article.
RChain Cooperative is not bankrupt nor even close to bankruptcy […] We have restructured our deployment of capital assets to focus almost entirely on development [and] [t]he characterization of both our liabilities and tax estimation is incorrect and grossly overstated.
The blog post mentioned RChain did not have investors, but only “members”, according to their co-op model, and that RChain never actually had an initial coin offering (ICO).
RChain also went on to describe confusion regarding Immersion technology and the music app RSong (associated with the $23.5 million investment mentioned).
RSong does not “rent songs,” nor is the Immersion technology ‘helping build’ the DApp. We feel that Immersion’s technology offers an important component to RSong that subsequently brings great value to what we are creating throughout our ecosystem, yet the coding behind RSong stands on its own. (See here and here.)
RChain mentioned several other rebuttals to The Block’s article, ending their post with a positive note.
This is not to say that the road hasn’t been rocky as we have worked hard to build a new decentralized world compute platform from the ground up. Thanks to the robust community we have made great strides in 2018 and will continue to be the in the forefront of technical innovations in this new blockchain industry.
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