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NEX is NEO’s great exchange hope, for powering NEO’s ambition to be THE ICO platform for China. There is a lot of excited chatter on telegram and steemit about this ICO, mainly because the guys behind it are from the Zion Project. There’s no doubt engineering wise it’s got a lot of potential but NEX won’t fulfill that without some clever strategic moves. So have they got them?

1.Is this ICO legal in China?

This is the million dollar question. NEX project states it will be the first project to utilise the new token sale ‘legal framework’? What legal framework is that? We can’t find any formalized framework laid out by the Chinese Authorities. NEO keeps posting hints it’s going to be the Chinese Authorities’ sanctioned ICO platform but there’s no announcement from the Chinese Authorities on that either. There’s a lot of whispers China will reverse it’s ICO decision by mid 2018 but that won’t be in time for NEX ICO.

2.Can NEX operate in China to fulfill its strategic destiny?

This is a important question because NEX is being viewed potentially as the token enabler for ICOs on NEO. The exchange by which anyone will buy tokens to other NEO ICOs and redeem tokens from ICOs.

China has recently announced it’s using it firewall to block all citizens from accessing domestic and foreign trading sites - so where would this leave NEX’s function as NEO’s ICO token exchange?

3.Is storing private keys in a client side browser secure enough?

NEX states they will store a user’s encrypted private key client-side in the browser. The case of the MIST browser problems is well known. Mist claimed vulnerabilities in Chromium.

If you consult Cryptography experts they will tell you, there is no current way to safeguard the private keys in the browser.

To start with you’d need to ensure the code that encrypts is delivered safely. You have to use server-provided code, you have to enforce code validation, you have to ensure the code can't get secrets if your server gets breached and you have to ensure the code can't be tampered with. This means the client side java code certified. This is just the starting point to solving how to store private keys in the browser.

So if Cryptography experts agree there is no current safe solution how are NEX going to tackle this and why isn’t there more detail in the White Paper about their approach?

4.When is using Elixir and thus Erlang a bad idea?

NEX have stated their off chain matching engine will be on Elixir, which is based on Erlang programming language. So when is building on Elixir a bad idea? The experts say:

  • When you need highly detailed control of memory use on Mobile. The experts put this down to bare metal resource consumption and management.
  • When your trying to present a NATIVE user interface. You either have to seriously compromise or write a UI shell communicating with an Erlang/Elixir back end.

Effectively the experts recommend you stay away from Elixir for game development or any highly time compliant components. So in NEX’s case, given their matching engine is back-end only, and the only client interaction is via the API calls, this seems a smart choice of platform.

5.How many others are playing in the decentralized banking space?

NEX White Paper states their long term vision is to create decentralized banking to power smart contracts which will integrate with and manage other NEX services, such as peer-to-peer lending or indexed investment accounts.

We’ve got BABB currently in ICO & LaLa World, where everyone is the bank. We’ve got Wetrust, creating their own ‘credit union’. We’ve got Swissborg, building a decentralized capital management platform. We’ve got Arise Bank, already claiming to the the world’s 1st decentralized bank with Crypto Cards and ATMs. We’ve got PayPro also making the same claim.

The point is if this is NEX long term aim I think by the time they get round to entering this space it will already be too late.

So I think NEX long term strategy looks shaky right now.

6.Where’s the core code?

The White Paper states they posted code on the Github December 2017. The roadmap states that code will be a example of one of their Smart contracts. Their github shows they did actually post an ICO template 2 months ago. So they have fulfilled the bare requirements of providing a example of a Smart contract.

But that’s a bit like showing me the paint colour on an incredible new driverless car you’ve promising to build me. It’s window dressing.

As a investor what I want to see is examples of the off chain base code on the matching engine. I want to be able to assess this team can build the piece that will be the core differentiator.

7.How do a group of engineers with no Startup experience scale this?

It’s a fair question. As a group of engineers you could say ‘’ yes this team has a high probability of being able to build what they’ve spec’d. But when you look at this founding team’s linkedin profiles, you can see there is barely any Startup experience between them.

That means they’ve got no former experience of Startup structures, processes, scaling. So right now I consider this weak in terms of being able to strategically scale NEX. That’s different to being able to scale engineering wise.

My concern is reconfirmed by the fact NEX hasn’t defined any roles within the team. Who’s going to be CEO setting the commercial vision? Who’s going to be COO - handling support, finance, HR and all those other non engineering functions?

Some of the founding team has listed themselves as ‘co founders’ of the zion project. Since when did joining an open source community classify you as a founder? If I join a book reading club am I Founder?

As always, the point of my review is to raise legitimate questions which I hope the team can answer in the interest of all investors.