What do you Guys think about the first Dutch Auction of Algos?
I have some concerns in terms of the limited supply (0,25% of total supply) to be distributed from a starting price of 10 USD. Also there is no information at all on future auctions or how much Algo will be sold via auctions at all. The only committment I found is that there will never be more then 10 billion Algos. So we have a lot of uncertainity, which would impact the price.
Here is Mr. Micali mentioning that Algorand Foundation is the one who is organizing the Dutch Auctions and puts the Algos into circullation (at 1:05:50):
My problem is that if you have a very limited supply, then you simply strategically target the highest paying “blind” group who might eventually commit on unrealisticly high prices (like 10 USD) due to FOMO and not being extensively educated in tokenomics & crypto. The other problem we have in this context that we are not going on an auction of Dutch tulips, where participants had a good idea about the market, product and fair prices. All the marketcap for crypto is mainly driven by speculation and not tangible value, which means it´s very hard to determine whether a price is fair, overpriced or underpriced especially in the context of having 99,75% supply not in circulation and having no accurate information when & how it enters the circulation.
To me this auction feels like you have 10 children and 100 adults on the sunny beach and make a Dutch auction on icecream and distribute 5 pieces initially starting from 1000 USD. Guess what will be the clearing price? Is this the fair or realistic market price? It´s not because your supply is strategically limited to tackle those children who would want an icecream whatever it takes.
This also suggests what to expect from future auctions, which will likely be scheduled on momentums, when the sentiment is at highest. IMO if you do a dutch auction with a higher supply (such as 600m Algo) then it´s really applied to achieve fairness & market price, however if you do it with a very limited supply (25m Algo), then it´s used for strategic targetting on the market and not with fairness in mind.