Quant Network Investment Thesis
Quant Network has built a distributed ledger technology (DLT) solution known as Overledger.
Overledger is a DLT operating system that enables developers to create ‘mDapps’ that enable decentralized applications to operate on multiple blockchains at once.
The $QNT token is used to pay for access to Overledger.
At this point, if you are not familiar with many of the terms above, you’re likely confused.
Let’s break it down.
Quant Network: Company led by CEO Gilbert Verdian.
Overledger: Quant Network’s SaaS product that companies & organizations can use to access and transact on any blockchain.
$QNT: An ERC-20 token (token on Ethereum) that is used to pay for subscription access to Overledger as well as for transaction fees on Overledger.
In essence, Quant Network is simply building an interoperable conduit from which companies can operate on any blockchain.
As blockchain technology moves from an experimental technology to a necessity, we may expect solutions like Overledger to see high demand.
Quant Network is building a blockchain interoperability and access point SaaS solution for enterprises, institutions, and developers that will be deemed as “mission-critical” in the future.
As enterprise blockchain adoption increases, Overledger should experience fast growth which will be reflected in the QNT token price as a result of higher demand.
- ELI5: What is Quant Network and what problem does it solve?
Quant Network has a SaaS product called Overledger.
There are a lot of blockchains out there. Overledger enables users to access all of them at once from one place. It’s that simple.
Why is this important?
Blockchain technology is being adopted at a rapid pace. But like most emerging markets, it’s incredibly fractured. Our expectation is that the blockchain space will follow a similar pattern to most disruptive technologies where eventually 3-5 major winners emerge through a process of mergers, acquisitions, and failures, each with their own merits.
For example, of the thousands of social media startups, the market has condensed to roughly 5-6 social media giants: Facebook, Instagram, Twitter, TikTok, YouTube, Snapchat
Each have their own advantages, and many people/businesses use multiple social media platforms.
Currently, there are a lot of blockchains out there. As a business, how do you decide which ones to integrate?
At some point in the future, it is likely that most enterprises, governments, companies, etc will need to access various blockchains for different reasons.
For example, imagine you’re a bank 5 - 10 years from now.
Your bank’s accounting is done on a private blockchain.
One of your enterprise clients, Starbucks, has their loyalty program on Polygon.
Meanwhile some of your retail clients get paid primarily through stablecoins on Arbitrum and want to deposit into your bank directly from Arbitrum.
You also service retail clients in Europe, where digital identification is now done on (insert blockchain here).
You have a number of customers who use Stellar for cross-border remittances, and they want to initiate txs directly from their bank account.
You need to send $250M USD for operations in the US, so you send it via Ripple or some CBDC solution we haven’t heard of yet.
Do you want to build integrations with each of these blockchains a la carte? That could get expensive.
Or would you rather get a license for Overledger where all of this can be done in one place?
Quant Network is the gateway to all blockchains & networks, which solves two problems for businesses:
- Eliminates the need for multiple expensive integrations across many blockchains.
- Removes risk by making it so enterprises do not have to ‘pick’ which blockchains will succeed long term.
- Quant Network’s Positioning
Quant Network is building solutions that make the blockchain more accessible to users.
As new technology percolates into society, its adoption becomes a necessity.
At some point, it became a necessity to have a car.
Then it, it became a necessity to have a telephone.
Then it became a necessity to have a computer.
Then it became a necessity to use email.
Then it became a necessity to have a cell phone.
Then it became a necessity to have a smartphone.
As the internet grew, businesses could no longer operate without an online social media presence.
Now most businesses cannot operate without a CRM solution like Salesforce or HubSpot, data solution like Snowflake, or communications solutions like Slack & Zoom.
It will eventually become a necessity to access ‘the blockchain’.
Quant Network is building the solution (Overledger) for mainstream institutions, enterprises, and developers to access all blockchains in one place.
Quant is positioning themselves as a regulatory friendly blockchain solution that makes blockchain adoption easy and cost-effective (one integration vs many integrations).
This outtake from an article by [seek alpha] sums up Quant’s positioning pretty well:
Quant Network’s target market includes highly regulated enterprises like banks and government entities and as a result of this, they have emphasized regulatory compliance in their developement. In a harsh anti-crypto regulatory climate (particularly in the United States), this places Quant Network in a favorable lens.
QNT has a 99.5% circulating supply, meaning sell pressure from things like token vesting, staking rewards, or mining rewards is virtually non-existent.
Users pay a yearly licensing fee (fixed dollar amount paid in QNT tokens) to access the platform. Additionally, QNT is used to pay for the use of network resources (think transaction fees).
The QNT used to pay annual licensing fees is locked in the Quant Network treasury for 12 months before being sold. This creates increasing constriction of the circulating supply of QNT so long as demand is growing.
So if inflows into the treasury from new users and new demand are greater than the outflows (churn), assuming a perfectly efficient market, $QNT price should go up.
- We do not have a perfectly efficient market. The market for $QNT is volatile & speculative like most crypto assets.
- There are plenty of other variables that can affect $QNT price.
However, in this simplified model, we see that by buying $QNT tokens today, you are betting that there will be more product demand (inflows) one year from now than there is today.
- $QNT Valuation
$QNT is currently valued at $1.8B.
While it’s admittedly a loose and speculative approach (especially since the valuation models are so different), comparing Quant Network to other mission-critical SaaS solutions is an interesting exercise, particularly on the revenue side.
Here’s a list of revenue and market cap from some successful “mission critical” SaaS solutions:
Salesforce has annual revenues of $7.72B and a $194B market cap.
HubSpot has annual revenues of $883M and a $20B market cap.
Zoom has annual revenues of $1.1B and a $21B market cap.
Slack was acquired by Salesforce in 2021 for $27.7B.
Snowflake has annual revenues of $1.22B and a $48B market cap.
Zoho has annual revenues of $1B.
MailChimp has annual revenues of $800M and an estimated $12B valuation.
If you believe interoperable blockchain access will become a mission critical operation for enterprises in the future, $QNT should provide the appropriate exposure to this thesis.