I recently submitted a post about the Algorand sustainability, mostly focused on the Algorand network long-term economics. There have been discussions around this topic and even some reasonable attempts to answer some of the concerns. I hope that we hear more about this topic from the Algorand leads too.
This post is dedicated to a different set of concerns mostly focused on trust, which is necessary if the network is going to be the host of multi-trillion dollars, used by billions users and in various critical infrastructure systems.
The Algorand network has two parts, the protocol/code, with full transparency and very little controversy (could be buggy but even two people with completely different backgrounds and incentives can understand and agree on what it does). The human/org part that only exists to grow, update and improve the network*. This part is a great risk to the overall network trust and the Algorand story (similar to its economics) is incomplete or at least not publicly known.
I don’t want to get into the details of what can go wrong since there are many past examples in crypto and non-crypto worlds. Even in the case of Algorand there are many valid questions about what has happened so far (initial token distributions, unusual price pump/dumps, CEOs leaving, etc.) with no answers. Even if everything that is happening is right (no wrongdoing), there can still be controversies that hurt the trust as the full transparency is not feasible, achievable (two people seeing the same event can understand and interpret it differently) or even desired (imagine everyone in the Algorand community trying to micro-manage the foundation CEO!). Another example, what if a government captures one of Algorand officials and requests changes to the network transactions/rules/etc. I recognize the difficulty of addressing these problems but they are important and one or two years later might be too late.
The only model that I can think of that can address most concerns in these two posts (as also mentioned by some people on the other thread) is to consider the Algorand network as *the public network mainly owned and controlled by Algorand inc. This simplifies everything from “a public network + foundation” to the public network operated by the foundation but mostly controlled by Algorand inc., or basically it is “a specially-designed-and-operated company product”. If this is the model that is pursued, Algorand inc. should naturally stop selling Algos, otherwise this model won’t work. Of course there are downsides to this model particularly about Algos being a pure store of value but at least there is a way to address the above concerns rather than what we’ve got right now with many unanswered questions. I still hope the Algorand leads start formally addressing these concerns considering that current and future Algo investors deserve to know the answer to these questions.
any changes to the rules would have to be accepted by 90% of stake on the network else it’s rejected. Any allocation of algos would i believe decided through governance
Governance is not addressing all concerns and may not even achieve its intended purpose. It will create many controversies and unfortunately doesn’t prevent bad actors. As I mentioned there are plenty of examples.
governance so far have yielded zero results and implementation. governance is only for show to the regulators the decision making process is decentralized when we all know all the decisions are done behind the scenes. even the governors vote do not get implemented.
it is important to implement governance but more importantly the team should really stop the token dump and increase adoption, they wasted 3.5 years and having spent hundreds of millions of dollars and we have 30k govenors to show for it. what didn’t work before in a bull market probably wouldn’t work in a bear market.
if the price of ALGO increase perhaps it will drive mor adoption and the only way to do that is to stop the bleed by limiting supply going forward because the team is too weak to increase demand.
Maybe thats why the CEO stepped down. In the stock market world, a CEO leaving isnt always a bad thing, especially if the stock was underperforming. So a change in CEO might be a good thing. I think Algorand knows the previous team didnt work, thats why so many are being replaced. So, i guess we will see what happens in the next bull run.
I also think Algorand should have figured out there budget for expenses and dumped those coins at or near peak. (Or some time during the bull market.)That way the selling pressure would not have been as bad as dumping them gradually in a bear market. I think the reserve should be more USD than ALGO. That way investors dont feel the selling pressure as much when Algo give out grants, sponsorship or whatnot.
well after 3 years they finally decide to boot out 2 CEOs and 1 head of marketing. i guess it is better than nothing but goes to show the team is so slow to react and only concentrate on tech development and institutional adoption (which is closed to nothing).
if they have the budget to last through this bear market perhaps there is a chance of survival but not holding my breath. the tokenomics is terrible, leadership team has been nothing but sleeping at the helm. treasury has been giving out free Algo like there is no tomorrow. DRL costs $100M and currently the team needs to sell 277M ALGO as oppose to selling 100M ALGO if we were at $1.
currently 95% of the tokenholders are in the red, one look at the losses incurred would deter any potential tokenholders from joining the ecosystem. not sure what the team is thinking dumping tokens they way they have in the name of “decentralization” but we all know from the 30k governors that control majority of the tokens this is just a pipedream.
I see your point, but the tokenomics have gotten better, the only reason they look so bad is because there isn’t strong enough demand to offset the dilution. last bull run we didn’t really have anything going in the ecosystem. the ecosystem has been growing quite a bit during this bear market, so i think Algo might perform better next bull run, especially with more coins in circulation. just need the demand that’s all. which i think FIFA will help.
I think November could be big for Algorand fundamentally and technically. looking at the charts, if sideways action continues 'til November (FIFA World Cup and Decipher will be taking place during this month), the 50, 100 and 200 MA’s could all get tangled up, with 50 crossing up over 100 and 200, which could lead to a possible huge up trend. The longer Algorand consolidates, the bigger the pop.
Algorand is building strong support in the currant range just like it did before it took off in the last bull run.
The reason it couldn’t hold support around the 0.65-0.67 range because the circulating supply pretty much doubled and there wasn’t strong enough demand to eat up the recently added coins. (especially with everything else that was going on in the world.)
All i can say is be patient my friend if Algorand is something you truly believe in.
As far as institutional adoption, it will come once there is more regulatory clarity. Institutions are waiting patiently on the sidelines