Smartphones have quickly become an integral part of everyday life, for communication to remotely managing our finances and consuming online media. Statista estimates that more than two billion people, a quarter of the world’s population, are smartphone users, and predicts that number will rise to 2.8b by 2020.
Alongside the adoption of smartphones is an increase in application (app) adoption around the globe. The mobile app industry is estimated to have generated over US$88b in 2016, and is predicted to be worth as much as US$188b by 2020. Revenue is typically generated through in-app purchases, ads and big data accumulation.
“In existence less than a decade, the app industry has experienced explosive growth alongside the rise of smartphones. As the most rapidly adopted technology in human history, these devices revolutionized the software industry.”
- The App Association
Despite the size of the industry, the app market is hard to crack. In the first quarter of 2016 over 94 percent of the U.S. App Store’s revenue was generated by the top 1 percent of monetizing publishers.
“Approximately $1.34 billion of the estimated $1.43 billion in net revenue generated by the store during Q1 went to 623 publishers,” states Sensor Tower, a mobile app store intelligence company. “The remaining 6 percent—approximately $85.8 million—was divided among the other 61,677 publishers whose apps are paid or feature in-app purchases.”
According to a Vserv.mobi survey, 82 percent of game and app development companies cited monetization as a key challenge. 100 percent of developers with a single application said that they make less than US$1000 per month.
Daniel Pineda is one of many to launch an app and experience the frustrations of app distribution. “It was an obsession to answer the question of ‘what makes an app go viral?’,” Pineda says.
The Founder of Apptrade then stumbled across a Business to Business digital goods market, where developers were “flipping apps” like investors flip homes. “We realized that sometimes small app publishers don't have the resource to push a game forward. Developers would sell off portfolios, not as licenses, but the total rights to new buyers with better resources.”
“Some of my colleagues and I have learned that mobile app marketing and fundraising can be brutally Darwinian.”
- Daniel Pineda, Apptrade Founder
Apptrade is a profit sharing marketplace, described as “Kickstarter on the blockchain.” Except, instead of supporting one project, users can support a group. In turn the group pools a portion of their earnings into a shared digital reserve. In place of a perk, supporters are given a supply of dividend backed tokens, tradable on the OpenLedger DEX.
OpenLedger, run by Ronny Boesing, is a peer-to-peer platform launched in October 2015, built on Graphene technology developed by Cryptonomex Inc., an independent blockchain development company founded by the developers of the Bitshares blockchain.
Also known as The Decentralized Exchange (DEX), the platform acts as the foundation for a Decentralized Conglomerate; an ecosystem of interlinked and mutually-supporting companies. By using the Graphene toolkit, crypto companies can develop applications or services on top of the framework.
Apptrade helps publishers and developers share risk, with cross-marketing and collaborative funding via app portfolios. Developers can raise capital as a group through a shared digital reserve, a blockchain reserve of digital tokens that are backed by the revenue of the apps. “App portfolios give speculators the ability to diversify their risk across a collection of digital goods without the need for ownership,” Pineda explains.
An app portfolio is represented by digital tokens, which are created on the OpenLedger DEX. Royalty streams are secured as cryptoassets on the bitshares blockchain. “Without the need of a middleman, users can trade these tokens on the OpenLedger with other market participants directly,” explained Boesing. “They can withdraw token value via fiat gateways, or they can be traded along with market pegged assets which are also hallmarks of OpenLedger's trading platform.”
“Apptrade addresses both marketing and funding. To obtain funding, portfolios pool their royalty streams to create a shared promotional budget. The innovation is the shared pool acts as collateral to attract funding on a decentralized exchange.”
As Apptrade operates on a public blockchain, the trading histories can be verified by anyone. All market activities will be public. “The same cannot be said with participants in the stock markets,” Boesing states.
Portfolios are managed by the app creators, they can vote on which apps they want to team up with. Sponsors looking for cash flow from app portfolios are also entitled to a vote, and may be interested in acquiring the intellectual property of a proven app that stands out from the rest of the portfolio.
“Apptrade’s mobile app professionals will work with portfolio sponsors and publishers to screen apps for quality, value, and potential,” Boesing explains. “If a developer feels they have an inventory of digital goods that can justify their own portfolio launch, we would welcome it.”
Boesing sees the portfolios as a better way to "test drive" a collection of apps, before committing to an acquisition. “Having tokens and a transparent ledger where the flow of value can be seen, it improves trust between otherwise competing interests. Everyone can see who is ‘playing by the portfolio rules’ of making their payment towards the pool.”
“Our app portfolio tokens will have the potential to explode in value without requiring large numbers of user adoption. If any app under our 2 year agreement goes viral and increases their monthly contributions, the entire portfolio may buzz with activity. Suddenly an unknown portfolio token's reserve may become a small fortune for an obscure group of participants.”
Apptrade will be raising funds through the sale of a master token on the 28th February 2017, for those who are after a slice of the whole pie. Each portfolio is setting aside 10% of their liquidity reserves to back the Apptrade master token (APPX). Each portfolio will manage their own token reserve.
While AppTrade is not selling securities or ownership stakes on the blockchain, leveraging blockchain technology in a securities or stock market environment has been a growing trend. The Korea Exchange (KRX) launched KSM last year, a blockchain-based marketplace where equity in startup companies can be traded.
More recently, the Equibit Development Corporation, launched a platform designed to provide blockchain applications and solve the problem of issuing, clearing and settling securities. Within the first day of the funding round the Canadian based company raised US $250,000 Equibits, the token that powers the platform.