The Rouge Network is trying to revolutionize one of the largest and fastest growing retail subsectors in the world – the coupon industry.
It’s a big task but one that, for the company that can achieve it, has a potential billion-dollar bounty waiting at the finish line.
Right now, the company is conducting a Token Generation Event (TGE) presale, aiming to raise capital while offering early investors the opportunity to pick up an exposure to this longer-term bounty as Rouge progresses towards its commercial milestones.
We decided to take a look at the company’s white paper in an attempt to answer two questions:
- How does Rouge plan to go about achieving its mission?
- What are the company’s chances of doing so?
And, in turn, to provide investors with some insight into whether there is any value in picking up some degree of exposure to the company at its current capital acquisition stage.
Here is what we found.
Introduction and Market
The company’s white paper kicks off with an introduction to the industry that it’s trying to update, which, as mentioned, is the coupon space. Right now, the majority of coupons (and when we say coupons, we mean the vouchers that shoppers use to pick up a discount or other benefit at the point of sale on an item) are in paper form.
Naturally, and as is the case with pretty much every transaction involving paper, this is shifting towards an increasingly digital system, with many coupons now scanned using smartphones or other devices, or, alternatively, being part of a purely digital transaction using an online retail platform.
It’s this shift that Rouge is really trying to take advantage of and as far as this element of the company’s white paper is concerned, there is no doubt that there is a real market and almost certainly a large degree of growing demand for the product that Rouge has created.
In the US alone, for example, mobile coupon users rose from 61 million to 104 million between 2013 and 2016. In line with this trend, estimates suggest that 44.5% of all retailers in the US will use mobile coupons in 2016, as compared to 40.5% in 2015.
So, that’s the market, let’s get specific.
Here is the company’s vision:
“The Rouge Project aims to implement a protocol – named Rouge Network – as a global, trustless, permission-less and decentralized coupon platform.”
And this vision is designed to accommodate three different actors and use cases within the coupon infrastructure :
- Brands, merchants or other entities, which want to be able to define and distribute coupons to their existing or potential customers that offer a marketing privilege or voucher.
- Content creators or publishers, which have digital real estates (blogs, online magazine, etc.) and audiences to monetize. Advertisements for marketing coupon is a seductive option, among others, as a strategy of monetization.
- The general public, which is very receptive to marketing coupon as an opportunity to discover and test with a discount for new a product they don’t know, or just buy, at a reduced fare, ones they already fan with.
The idea here is that there currently exists a large problem with the distribution, issuance, ownership, and redemption of coupons globally. With the Rouge Platform, Rouge thinks that it can pretty much completely solve these issues through the centralized method.
Our opinion on this?
It’s a big ask but it’s one that is perfectly achievable with the right team (more on this shortly). Decentralization has the potential to not just revolutionize a whole range of industries but also to simplify them to a point whereby human interaction and third-party input is unnecessary. In other words, smart contracts don’t make mistakes and it’s this fact that Rouge is trying to leverage to create its platform.
As a final note on this section, the Rouge white paper goes on to outline key value propositions for each of the above-mentioned actors.
For the brands and merchants, the value is rooted easier accounting, simplified tracking and fraud prevention. For the content creators, it’s rooted in the ability to guarantee marketing terms and to implement more effective monetization of their content. For the general public, again, the advantage is rooted in guaranteed marketing terms and the potential to resell coupons through the platform.
Just as with above, we feel that each of these value propositions is valid for each of the actors it addresses, again reinforcing the fact that there is a real demand for this sort of product right now.
For an investor, of course, who is thinking of taking part in the presale or the primary ICO, an existing but as yet unfilled demand is an incredible value driver and could play a large part in a decision as to get involved or not.
Cost per acquisition and Cost per redemption
Now the value has been established and the concept in place, the white paper discusses on a more technical level how the actual coupon element of the platform fits into the transaction as a whole. Specifically, the process is rooted in two elements – cost per acquisition (CPA) and cost per redemption (CPR).
The idea behind these concepts is that the issuer of a coupon will only pay for the advertisement method through which they are promoting the coupon when the coupon is either acquired (so, claimed, by a potential customer) or redeemed at point-of-sale.
In line with this, a coupon successively passes through the following three states:
- Free: the coupon has been issued but has not been acquired yet by any User.
- Acquired: the coupon is associated with a User identity.
- Redeemed: after the consumption of the promotion or voucher by the User.
This three-phase process is key to the decentralization technology that underpins the platform and is central to overcoming pretty much every problem associated with the current reporting system, be that manual or digital.
Essentially, this is rooted in the complete removal of fraudulent activity from the equation, while also allowing accurate tracking of exactly how effective a campaign is from retailer’s perspective and, at the same time, exactly what sort of conditions a user is eligible for on acquisition and redemption.
Again, this is a real strong point of this white paper.
That Rouge has identified a simple three-state structure as being optimal for its process is indicative of the company’s understanding of this space and, at the same time, how to apply this understanding to the technological limitations of the distributed ledger system.
In its white paper, Rouge then goes on to outline an example use case.
We will cover this use case briefly here as it allows for a pretty neat understanding of where everything fits in.
- A publisher wants to rent space to retailers through which the latter can advertise coupons.
- A retailer creates and issues a coupon through the publisher’s platform, which is advertised next to some content (for example).
- A reader of the platform acquires the coupon (and remember, this is one very specific instance of, perhaps, 100 versions of this coupon) using his or her smartphone.
- The reader can redeem the coupon for a pre-specified discount on the retailer’s goods or services or, alternatively, he or she can resell the coupon through the Rouge platform marketplace.
At a glance, the above seems incredibly simple and that’s because it is. For us, that’s one of the key attraction points for this white paper – the company has identified a problem with a current marketplace and created a conceptually simple solution. Sure, the technology that underpins the solution is complicated, but that’s why Rouge has brought on board some of the industry’s top blockchain developers to drive this company forward.
Rouge will create a token to facilitate the smart contract implementation and the marketplace element of its platform/network. The fundamental utilities of the RGE token are as follows:
- Tare (i.e. negative incentive) against spam, abusive behavior and malevolent use of the Rouge Network
- Escrow price discovery for the issuance and usage of coupons on the Rouge Network
- Price discovery for the CPA or CPR payouts on the Rouge Network
The white paper goes into some detail section is to how the token interacts with various elements of the platform and, in turn, how this interaction is calculated and implemented on the Ethereum blockchain.
We don’t need to go into this in too much detail for the purposes of the review, but we recommend readers that are looking for the intricacies of the tech take a look at this section. It’s on page 14, here.
Suffice to say, our interpretation of the technical side of the paper is that it is sound and well thought out.
The Road Map
Finally, let’s look at the Road Map.
Phase one, which already completed in 2017, included the following stages:
- The project is seeking feedback from the Ethereum community, touring Fintech, blockchain and Ethereum conferences, to enrich the white paper and project documentation.
- The project has started the development and has released to the public a proof-of-concept CouponDemo ÐApp.
- The project is funding itself with the pre-sale of RGX discount tokens.
This is completed and on time, which bodes well for the company’s prospects as far as meeting on its own milestones is concerned.
Phase 2 is ongoing and the goals associated with this phase, which ends at the end of March 2018, are as follows:
- To showcase a minimally viable version of the Rouge Network platform as described in this white paper.
- The token sale period should be achieved at the end of Phase II to be able to use RGE tokens in phase III.
Again, it’s looking highly likely that the company will meet these milestones, pointing towards no immediate concerns as far as fundraising and initial execution are concerned.
Phase 3, for us, is the important stage and is where we will really get an idea of the company’s ability to deliver on its strategy. This stage involves the full implementation of the Rouge Network platform, while additionally, the project will also start using real RGE tokens.
Phase 4, the last phase, will aim to bootstrap the ecosystem and help all stakeholders build application layers that use the Rouge Network platform.
So what’s our interpretation of the roadmap?
It’s aggressive, sure, but that doesn’t necessarily mean there are any red flags. Basically, if a company has a strong enough team, we want to see some aggression on the strategy side of things as it implies a strong competitive positioning in the target industry – and we see that here.
This is a technical whitepaper that may be difficult, at first glance, for a non-technical investor to fully understand. However, with a full understanding of the platform and the technology that Rouge is trying to implement, it becomes clear that this company is taking the right approach to its target market.
And not only that, but that said target market could be incredibly lucrative for Rouge and its backers when it’s reached.
We’re looking to smooth strategic execution on phase 3 of the Road Map to validate a bullish long-term thesis on this one.
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency and read our full disclaimer.
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