Algorand Inc. 2022 transparency report is out but there is a big red flag about the inc. role in the network development!

Thanks inc. for publishing the latest report after it was requested by this post.

The part that very much concerns me:

Algorand continues to decentralize control of the 2 billion Algos received as part of the Founders’ reward. As other parties become responsible for these tokens through distributions and grants, Algorand, Inc.’s stake will decrease over time.

This is probably not news and there is some rationale behind it given the decentralization demand (unfortunately in its vague form) and regulatory concerns. However, this makes the whole long-term Algorand story, as the public network, in jeopardy as explained in these posts: 1, 2, 3.

Algorand inc. has received 330M algos from the foundation when it already owns 2B (30+% of in-circulation + participation/gov rewards, or in other words as wsford said in a recent interview it is definitely less than 50% as the upper limit). Algorand inc. has a large stake (30-50%) and still receives a large fund for working on the protocol development until 2030. Given that inc. is the only entity capable of development and supporting the network (please do not use any of existing L1 blockchains as a successful example because they aren’t) and the idea that the code is open source and anyone can do it is extremely naive. You cannot claim a public network, as sophisticated as Algroand, can be trusted for critical global use-case without having a dedicated highly-skilled top development and research team.

The foundation doesn’t have the capability and not even the right structure to support the network. The idea that some open source developers or a group of companies with large stakes will somehow fulfill the role is unrealistic. The only way that it can work, with a large global impact as most of us expect, is that Algorand inc. continues to develop and improve the protocol/software and network as a product, essential to its business model. But what are the incentives if inc. sells all its algos? Inc. asked for 330M algos when it was the largest Algo holder. It wouldn’t be surprising if inc. asks for all network profit after 2030. What prevents inc. from starting another public blockchain as all algo tokens have already been sold and a new public blockchain with a better tech and fresh tokens can be a very profitable strategy. What if the governors disagree with inc. and ends the network support by inc.?!

Please do not say that these “what-if” arguments are for the future. They will happen sooner than what you think and it will be harder or almost impossible to address them at that point.

Please do not assume that everything remains the same in a few years. Most people who work in inc. will be replaced by others and a new CEO is only responsible for maximizing the inc. profit.

A word with Silvio and other Algorand leads: Algo-holders, including me, have a lot of respect for you, the team and what you have achieved and that’s why we want to be part of this journey, however the truth is that I find the lack of transparency about the network future extremely irresponsible to Algo-holders (mostly retail) who bought Algos with the hope that they are buying a piece of THE UNIQUE Algorand public network . As much as there are regulatory concerns and uncertainty about the business direction, you can provide much more clarity about the Algorand network future. Algo tokens without a guarantee of long-term inc. commitment as part of its business model has little to no value. I’m very optimistic that any clarification here would attract many more long-term investors to Algorand.

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