OmiseGo (OMG) Fundamental Analysis

Since the emerging crypto asset class is much like venture capital with liquidity, performing a quick market size analysis can provide insights into potential fundamental asset value.

What is OmiseGo (OMG)?

OmiseGo seeks to be a decentralized exchange for all currencies (fiat and crypto). As such, under banked people all over the world would have a trusted option to obtain and store funds, independent of the banking system (which is predatory in some nations). It would also allow for greater ease in currency exchange for travelers (i.e. no more changing one currency bills for local bills at the airport). Eventually OmiseGo seeks to “Unbank the Banked”, and be an alternative to the established banking sector in developed countries. OmiseGo tokens derive fundamental value from on-platform fee revenue (represent the right to validate transactions, and thus generate fee revenue).

Questions to Consider when Investing

  1. Is there a published whitepaper? 

Yes…positive

  1. Is there a detailed development road map? 

Yes…positive

  1. Does it use an open, public blockchain, and is the code published? 

Yes…positive

  1. Is there clear, logical, and fair pricing? 

Yes…positive

  1. How strong is the reputation of the founding development team (Strong, Mediocre, Weak)? 

Strong…positive

  1. How strong is the technology’s differentiator (Strong, Mediocre, Weak)? 

Strong…positive

  1. How competitive is the industry the asset is entering (Strong, Mediocre, Weak)? 

Strong…negative

Price Target:

Assuming:

  1. The OmiseGo (OMG) team delivers on the technology.
  2. OmiseGo (OMG) is able to gain a 10% share of Global remittances in middle and low-income countries, by cutting prices in the market by 86% (Average fees in the industry are 7.6%, OmiseGo would have to significantly cut these fees to ~1%).
  3. Using total OMG supply.
  4. A 30% discount rate is used to bring future price targets (2 year in this report) to today’s dollar values. Although 30% is significantly higher than the current risk free rate, crypto assets must be discounted significantly to account for risk.

OmiseGo (OMG) is looking to “Unbanked the Banked”, and thus completely disrupt the banking sector. Yet, using the entire market for banking services in an analysis, at this time, would be irresponsible. Using figures for global remittances for middle and low-income countries, is a more responsible starting point when building a valuation. At 10% share, gross transactions on the network would be $44.2 billion by 2020. Charging a 1% fee to users, would provide yearly fees of 3.15 USD per OMG token. We then take the yearly fees collected and multiply by the average Price to Earnings ratio (P/E) of the Consumer Financial Services Industry. That P/E is 26.34 (for Q3 2017).

Given the assumptions (above) the 2-year OmiseGO (OMG) price target is given below:

omisego omg fundamental analysis