Effect ICO Review – EFX Investment Analysis


ICO Details

Symbol – EFX


When – March 2018

Soft Cap – 4.2 Million EUR

Hard Cap – 14.8 Million EUR

Fully Diluted Market Cap At ICO – ~37 Million EUR

Exchange Rate: ~16 EFX per EUR


Effect is a NEO based decentralized AI platform, built to service the needs of individuals looking to tap into the power of artificial intelligence while also making a name for themselves as a competitor for Amazon’s mechanical turk. Effect’s offering is definitely one of the more complex ones we’ve seen thus far, splitting their release into different phases, which all have separate goals and intentions within the overarching model for Effect.


Their first phase is mechanical turk – this is a pretty simple idea, in which users come onto the platform to create microtasks that can then be filled out by other individuals in exchange for crypto. Some of the blockchain based competitors for this project include Gems and STORM token, and with so many teams tackling this problem we can see that there is definitely a solution hiding in doing this in a decentralized manner. That being said, Effect has several advantages over the centralized competitors, with the main one (at least for users) being a higher return for services rendered. It’s outlined in their lightpaper that returns for Mturk currently run at around $2.50 per hour while Effect could pay up to $9.50 per hour – indeed, it is the single thing that will make many Mturk users swap over to Effect should it deliver on this promise.

Effect then moves to phase two and three of their rollout plans, which include synthetic data labelling for AI and learning. To best think of Effect, you can consider each of these phases as individual projects – phase one is like Gems, phase two is like Neuromation, and phase three is like Golem in terms of what Effect hopes to achieve. I’ve recently written about synthetic data labelling in my Neuromation review, so here’s a basic snippet:

However, data is expensive, and gathering high quality data moreso. Traditionally speaking, the incumbent solution to this problem has been to hire out many human workers to “label” the datasets that are fed into a learning AI. Of course, this manual method is very time inefficient and costly, as well as introducing human bias and error into the system.

Neuromation looks to change all of that with their new platform – with their new technology, combined with distributed computing power on the blockchain and an incentivized market structure, Neuromation hopes to create a machine that can do this data set labelling synthetically, in an automatic computerized process

This is essentially the basic gestalt of what Effect will also achieve with phase two. With phase three, users will be able to push their algorithms and datasets onto the blockchain itself by taking advantage of decentralized computing.



Team Highlights

Most projects I’ve looked at as of late have had some really killer lineups, with extremely experienced individuals tackling problems that they have a good insight on. However, the Effect team is severely lacking in almost all aspects when it comes to team highlights. There are no real power players here, and most of the team appears to have low or (in most cases) no blockchain or AI experience. The one exception is the CEO, Chris, who has had over a decade of entrepreneurial experience, though that’s simply not enough when compared to the field.




A positive for Effect are their token terms – While only 40% are being sold to the public (not out of the ordinary), they are leaving a 20% allocation for future funding of tokens. That means that they won’t actually have sold those tokens on the market, and keeps them locked up – essentially lowering the effective cap and shares, giving crowdsale purchasers a 50% stake in Effect. I also like the low cap of this project – being priced in at around 30 Million USD in total with only half of that being tokens in circulations certainly appeals to a low cap style of investing.

A second positive for Effect is the sheer scope of their project – just each of these phases alone are essentially entire projects, and Effect is certainly taking on a lot of competitors in each of these phases. This kind of scope is rarely seen in a blockchain project, and people who bet on this kind of investment are definitely bigger risk takers than most. It will be hard to win, but if you win, you win big. I also was initially taken aback by the choice to go with NEO for this project, but provided Effect actually gains adoption, it will need a faster blockchain than Ethereum to carry out their mturk tasks.


I could write a lot about what I see wrong with Effect, but I’ll keep it relatively short here – they don’t have an MVP. One of the biggest things you need, especially in this evolving market (where competitors are gearing up and improving their own efforts) is a proof of concept that your idea actually works. Effect? Naught but a few technical documents (with relatively sparse details) and no product demo. There’s not even a YouTube video that we can look at for what this thing would look like. There’s not even concept art – this is a major faux pas, and increases the risk of investing into this project tenfold. Caveat emptor.

Secondly, this won’t be a team that will be having first mover advantage, even on the mechanical turk portion of their idea. There are many other groups and projects with much more experience, working products, and backing that will be able to provide the kind of service Effect is looking to do, but in a faster time period or with more investor confidence. Effect is starting off their sale on the wrong foot, and they need to make up with it somehow – I have yet to see exactly how that will be.


Effect looks like they’ve built out this great vision of the future with their decentralized AI platform, while basically having no experience whatsoever in the space. Their product would make more sense if they would just stick to an Mturk competitor and leaving the AI stuff to more experienced teams, and the lack of an MVP or some kind of technical alpha is simply shocking. Vagueness regarding advisors for the project and a barebones team, while also being behind other platforms such as Neuromation mean this is a pass in almost all respects.

Investment Grade: 50%

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