Transparency in algo blockchain / algo foundation

Hi, is there any way how transparency can be improved?

According to current stats there is 449 algo millionaires … Most of them most probably received funds from algo foundation, and some of them really bought it for million usd…

I do not have anything against those who invest into algo, but the foundation should be much more transparent in my opinion… There is a lot of people who gets millions of algo for free because they are in the circle of trust and they get money from running the relay nodes…

Also note, that I dont have anything against smart people who gets funded by the grants, but this may be clearly much more transparent on who gets the free money…

Steve from AlgorandFdn has written on discort that there is no plan to improve the transparency in this matter… Is there anyone besides me who would like the algo to be more transparent?

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I’ve seen this brought up multiple times and the foundation hasn’t answered it directly so I would assume they have no plans to make the early backers relay node runners list public. It probably is bad optics for them to come out and say that directly so I think this is a case where we have to read between the lines.

They’ve acknowledged that the 3B Algo allocated for relay nodes seems high, so maybe they are hesitant to invite more scrutiny by revealing who that 3B is going to. Seems like a good decision for marketing/PR purposes.

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@scholtz 100% agree with everything you just said.

If the Foundation is not transparent about the initial, current, and future distribution of Algo, it puts the legitimacy of the Foundation in question. (And while I’m certainly not saying that the Foundation is corrupt by any means, not being transparent is what enables corruption.)

It also puts the competence of the Foundation in question, because transparency should not be an issue that is argued years after the initial Algos have been distributed, but should have been a founding principle from the beginning.

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I think there’s a lot of difference between knowing where the money is allocated, and knowing the full name of who is running those resources. The full name is a personal data that has no relevance. Transparency is achieved when you know that 2500M Algo have been reserved for Early Backers Relay Nodes. Do you think that’s too much money? If you think that, then it would be regardless of people’s names or their numbers. But Algorand is not a public company, it is a private enterprise, and the investors’ names must stay private, if they wish.

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I see your point, and that’s actually a great opportunity to explain why I think differently.

If I viewed algorand as a private enterprise with an intent to maximize the returns for their investors, it would certainly make sense how it is managed. All investors could stay private, and governing via “1 algo = 1 vote” also guarantees that these investors can continue maximizing their own profits.

But I haven’t viewed algorand as a private enterprise. I have thought about it as a future crypto market leader and a public utility that I hope it some day will be, even if we are nowhere close to that point yet.

The problem with viewing it as a private enterprise maximizing shareholder or investor value is, that I would not even want a cryptocurrency that is managed that way to become the winning crypto. Instead, I would want for some other, more democratically governed cryptocurrency, to become the market leader even if their technology was not as sophisticated as Algorand’s Pure Proof of Stake. This is because I believe that a more democratic cryptocurrency will be much more useful to all the citizens of the world, and the danger in adopting anonymous “1 algo = 1 vote” governance now, is that it locks in a system that is unlikely to change later (at least from within), even if most of the algo users wanted something else.

So, if the governance of algorand was democratic enough, I would agree that everyone could stay anonymous, similar to all modern democracies that use secret ballots for voting. However, if the governance is in the hands of the few as it probably will be with “1 algo = 1 vote” due the how the algos have been distributed by the foundation, then it should be transparent. Again, it is not that different from all modern representative democracies where voters know who their representatives are, and it is also public information how these representative vote in the congress/parliament sessions.

If we ignored the governance part of algo-ownership (and the fact the money equals political power even without formal mechanisms to enforce it), then of course I would agree that it is nobody’s business how much algo one person has or how they want to use it. Though even then the Foundation itself should still be held to a higher standard than a random unaffiliated individual who just happens to own lots of algo.

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Thanks for voicing your concerns, they are constructive. There is certainly always room for growth. However, Algorand is a transparent organization and doing a great job in developing an open system. Moreover, it is important to remember Algorand is still a very young blockchain network, operating in a completely new economic market. You can find the current distribution for Algo on the AlgoExplorer, including information for the top accounts. Additionally, you can learn more about Algorand’s transparency initiative on the Algorand Website. Thanks again!

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It is nice to get aggregated data, however…

During the reporting period, 549.1M Algos have entered circulation through the following channels:

1. Rewards, Staking and Vesting: 416.1M Algos

  • Participation Rewards: 124.7M* Algos were distributed to all Algo holders as participation rewards per the schedule outlined on the Algo Dynamics page.
  • 200M Staking Program : A total of 100.0M Algos were distributed to participants of the 200M Staking Program the Foundation launched in August 2019. See distribution details Period 1 and Period 2.
  • Relay Node Runner Vesting: A total of 191.4M** Algos were vested to the Relay Node Runners during the reporting period.

This means that 191M algos ~ 200 M USD were given up to relay node runners… From february to september … It is 35% of all algos sold/granted from funds etc…

Do they have 200M USD costs for running the relay nodes? Imaging investing 1 000 000 USD to infrastructure… You could create brand new datacenter with this… Does every period 200 brand new datacenters appear? Or it the reward system for people in circle of trust who gets free money?

What will happen when the people from the circle of trust decide to put those algos to the market?

How do you persuade people now to buy 1 algo for 1 usd if those people gets free algos and can push the market to 0.1 usd whenever any of them want?

Why there is no mention in the transparency report about this? Is it by intention to hide them? Who creates transparency report? Is it by the algo foundation backed by the node runners? Is there any audit or independent oversight?

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Maybe Prof. Silvio though Algo would grow much faster, with Peta-Bytes of blockchain data. In that case it makes sense… Maybe.

Maybe there is even a Second Foundation :slight_smile:

I think we should ask the Forum’s Algorand participants to forward our humble prayers to Prof. Silvio: we would like to have an AMA with him. We could post the questions here previously, and filter out the nonsesical ones, so the AMA could be really effecive, without much noise and small talk… SO, @fabrice , please be so kind, to ask Prof. Micali for an AMA session here. If you can’t reach him, please reach your boss – you probably have one --, with a similar request. Maybe the “Tower of Djinns” will reach GOD (God Over Djinns) [the image is taken from Douglas Hoftadter].

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Great commentary again @scholtz - I just forgot to reply earlier…

I had been wondering the same, and think that the (estimated) cost of running the relay nodes certainly should be part of the transparency report, along with (anonymized) distribution of the amounts that have been paid for each relay node runner.

If indeed the total cost of running the relay nodes is less than 1M USD while the Foundation pays 200M USD worth of Algo for it, an explanation for that is urgently needed or it’s just not transparent enough (as 0.2B is an enormous percentage of the total 10B supply to give away, and to keep giving again and again to the same people). I don’t believe that nobody in the foundation thought about capping the node rewards to a more reasonable level based on the Algo market value, but without transparency to such decisions, we’re just left guessing, which is not helpful for anyone.

I’m probably repeating myself, but my biggest concern with Algorand is how extreme the wealth inequality within the Algo-economy seems to be, and how I believe that the exact opposite is needed in order to succeed in disrupting national fiat currencies and banking systems.

Of course not everyone agrees with my views on the effects of algo-concentration and algo-inequality, but if such extreme wealth inequality is accepted, then at the very least it warrants an equally extreme transparency too, and that we have not seen from the Foundation yet.

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Algorand management does not want to communicate with us, so perhaps we should start Algorand2 blockchain and mint new 10B algos and distribute them in community fair way… Is there any lawyer in here to check the legal consequences?

There are two ways: easy way - use binaries of algo with new genesis block; the hard way (they can patent the source code, but not the algorithm) rewrite it in compatible way

Is there anyone who would like to cooperate on this?

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You haven’t read Prof. Micali’s papers, have you? E.g. Algorand

He and his team patented a lot of his discoveries. So yes, we can start an Algo Blockchain2,
and in this way Prof. Micali WILL speak with us – to get the patent fees. But it is more probable,
that we will only meet his lawyers.

So, first the legal consequences should be checked, I agree with you.

And yes, it is an VERY interesting idea. Somehow to get VRF from here, Solidity from Ethereum, etc.

But back to the chain: please take a sheet of A4 paper, and try to compile the costs.
E.g.

…If indeed the total cost of running the relay nodes is less than 1M USD…

what would be the cost of the relay nodes?

P.S. It is a little ironical, that your proposal is published on forum.algorand.org

From my understanding of patents you can patent the device or code, but not the algorithm…

From the paper we can read that there are patents

Algorand’s technologies are the object of the following
patent applications: US62/117,138 US62/120,916 US62/142,318 US62/218,817 US62/314,601 PCT/US2016/018300 US62/326,865 62/331,654 US62/333,340 US62/343,369 US62/344,667 US62/346,775 US62/351,011 US62/653,482 US62/352,195 US62/363,970 US62/369,447 US62/378,753 US62/383,299 US62/394,091 US62/400,361 US62/403,403 US62/410,721 US62/416,959 US62/422,883 US62/455,444 US62/458,746 US62/459,652 US62/460,928 US62/465,931

Anybody knows how to get to the patents?
I have tried searching at with no luck https://patentcenter.uspto.gov

And btw, the source code of algorand is in AGPL licence, so it should be free to copy/clone and use for commercial purposes… no?

It really has nothing to do with the costs of running the relay nodes. The early backers are simply being paid back for their investments. Like vesting stock. They made significant up-front investments and as part of that were allocated a certain amount of ALGO, vesting daily, over 5 years (now shorter because of acceleration).

hi, are you Patrick, the admin from the discord? What is your official role in algo foundation or algo inc?

If what you are trying to tell is true, it is even more non transparent… How much real money they invested? What did they do? Why do you have to cover it by saying they are the node runners? What else do you owe them?

Is it ok to run the concurrency network to mainnet such as testnet using your source code but in production environment for purposes of fair distribution of tokens?

Perhaps you should read their ‘non-transparent’ FAQ:

The problem is that without comparing the cost of running the relay nodes to the dollar value of the rewards, giving 25% of all the money that will ever exist to some “early backers” makes no sense whatsoever.

Currencies and companies are quite different in terms of ownership, as no-one should own a large percentage of all currency in circulation, or you won’t get a healthy ecosystem. Even without considering any of the moral arguments, it will have a negative impact on the growth of the economy, and even the most hardcore capitalists should care about that.

I don’t want you to take my word for it though, since I can be wrong just like anyone else. As usual, I’ll share some related Wikipedia links for starters:

  1. Effects of economic inequality - Wikipedia
  2. Economic inequality - Wikipedia

Anyways, someone has made that very decision to give 25% of all algo that will ever exist to these “early backers”, without full transparency to the reasons for such decision (and I did read the FAQ). Even if the answer was just that “we made a mistake, sorry”, it would be much better than nothing, as it might open up the discussion to perhaps having different people making similar decisions going forward, or better yet, allow fixing the damage that is already done (for example by minting more algo than the current 10B maximum, with a different plan for distribution and future rewards).

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The Algorand Forum might not be an appropriate place to discuss this, so I won’t comment on it beyond what I think are generally useful ideas regardless of who may apply them - and ideally that would be Algorand itself.

My recommendation, however, would be to not cap the number of algos minted (at least to any less than what the uint64 variable can hold).

(My very first post on this forum was asking why there is a 10B maximum supply in the first place, and why the 10 year period to dump it all to the market. I didn’t get any official answer though.)

IMHO a much better plan than a fixed supply dumped to the market is to have an (effectively) infinite supply, and simply release some fixed amount per time period (or perhaps a combination of fixed and proportional amounts, such as 1% annual increase + the fixed amount, if wanting to establish a long term inflation target of 1%).

(Of course even with this approach there is the difficulty of choosing proper rates years and decades ahead, so the chosen growth rates might want to be revisited at some point, but that’s a whole another level of complexity to think about in terms of governance etc.)

The reason why I think this approach is superior to a fixed total supply, is that the fixed supply approach is inherently deflationary, and deflation is not desirable for a currency because it serves as an incentive to hoard the currency rather than to spend it, contributing to speculative valuation bubbles (and subsequent bursts), and general price instability and reduced utility as an actual currency.

Inflation on the other hand serves as an incentive to spend rather than to hoard, contributing to a more viable economy, more stable currency valuation supported by actual economic activity rather than speculation, and generally better utility as an actual currency.

I will note though, that a very small level of deflation wouldn’t be much worse than a very small level of inflation, but a fixed 10B supply distributed in 10 years is not an ideal design in my opinion.

the wallet addresses are available. You can look at the key stake holders as well as other partners and stake holders to get an idea of who the runners are. They are transparent. There are other reports that name them and their allocation. you just have to search for them

It is important that you are heard within the Algorand community. You are a valued member of the Network and I appreciate your posts, discourse, and commentary, particularly on Governance. One of the great things about Algorand and blockchain technology more generally is that it is open. If you want to develop the software infrastructures and architectures according to your liking, you can complete a pull request on the Algorand GitHub.

Inequality is also an important point. With that said, consideration should be given to the fact that some investors may not wish to own as many ALGO as others. So, inequality within the Network is not inherently a bad thing. Rather, it is a reflection of the different levels of commitment made by the global and diverse population participating in the Algorand Network. If you can imagine and implement a system better than AlgoExplorer for transparency, by all means it would be a fantastic contribution.

On patents, one of Algorand’s main competitive advantages includes a robust and growing patent portfolio. Perhaps two of the most pivotal pieces of intellectual property are two patents currently pending with the United States Patent and Trademark Office, U.S. Patent Application 20200304314A1 and U.S. Patent Application US20190147438A1. Most blockchains do not have intellectual property portfolios and this is an important differentiator for Algorand. More generally, if you are searching for patents, the best bet is Google Patents.

In sum, across blockchain networks, code is law. A great thing about decentralized technologies is that they empower developers with the freedom and autonomy to innovate. However, the process by which great developers evolve the skillsets necessary to obtain such freedom is no easy task, but is instead the product of hard work, persistence, and perseverance. The underlying motivation is that if you want to change it and make it better, you can. Thanks for your time in reading.

I’d have to add that getting new features implemented in the official Algorand is not be quite as simple as sending pull requests.

For example, if I sent a pull request that would expand the 10B algo supply, or change how the remaining supply gets distributed, it would not be accepted.

If I thought it was, I wouldn’t mind looking into it - but knowing it gets rejected anyways, I wouldn’t waste my time. (I am glad though that Algorand is implemented in the same language that I write every day too as part of my day job, in case I ever did want to dig in.)

I am also a big believer in the open source ideology and the general freedom to fork open source projects in order to push for better ideas (as @scholtz was suggesting with Algorand2). Whether such forks survive because they are superior to the original project, die because they are inferior, or have their best ideas adopted back into the original project, these would all be good outcomes.

The patent questions are way over my head though, and I have no idea how that changes things. (I personally wish all patents were abolished from the face of the earth, but since they are not, we have to live with them.)

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