At the creation of Algorand, Silvio Micali gave himself ~20% of the supply (2 billion Algorand) as a “founders reward.”
Source: https://www.algorand.com/transparency (first paragraph. See below if you are having trouble finding out where it's said on this page)
Silvio then created Algorand, Inc. a private for profit corporation to control the 2 billion Algorand.
I personally find this to be one of the most egregious things I’ve ever seen in so-called “legitimate” cryptocurrencies. A founder creates a cryptocurrency then gives themselves 20% right off the bat? And immediately takes that 20% and puts it into a private for-profit company?
The transparency page talks about what Algorand Inc will do with the 2 billion Algorand.
Let’s first confirm that they are under NO legal obligation to do any of these. This means that we are required to trust Algorand Inc (even though we actually may not even know who owns it) to follow these rules. In fact, it appears they aren't even following some of these rules now.
Also, it’s extremely vague and high level providing little to no specific details.
In their description you can see that they
To participate in consensus and assist in securing the network, though our tokens will never represent more than 49% of the circulating supply. Tokens are routinely redistributed among nodes to maintain voting at the appropriate level;
Wow what a gesture! They will never hold more than 49% of the supply! What's even worse about this is that they currently DO control voting. See below where I show that Algorand Inc. controls voting in governance and swayed the vote in their favor.
So what do they mean by "voting at the appropriate level"?? It obviously doesn't mean that they will vote in a way that changes the outcome of governance.....because they are doing that. What DOES it mean?
To provide incentives to contributors and application developers through token grants, competitions, and investments;
They will pay for app development.
To assist in the development of the financial ecosystem by encouraging growth and liquidity through support of partner solutions including lending, staking, and market making.
So they will lend, stake, and be market makers on trading sites.
We anticipate selling some Algos from time to time through third party run, structured selling plans to fund development initiatives. Details on any sales will be published in future transparency statements.
So if they sell Algorand...they will let you know in their reports that come out once a year. Great.
So these are pretty vague and at the end of the day they are not beholden to anyone to do these things. What would happen if Algorand Inc. held more than 49% of Algorand? Or if millions of Algorand went missing from their wallets and suddenly Silvio’s got a new yaucht? (Yes I’m sort of joking here, but my point stands....nothing will happen) No one will go to jail.
Maybe people will find out? And Algorand will drop in value. And they can stay rich while investors lose.
Algorand Inc can do whatever it wants with it's billions of Algorand and at the end of the day nothing will happen to them. If they think Algorand will fail, they could sell all their Algorand and then just add it to their transparency report.
I’d like to go back to the ownership question of Algorand Inc.
Who are the owners and what % of ownership do they have?
This is important because these owners are also owners of the massive amount of Algorand. Not only that but these owners are also owners of the governance that Algorand controls.
Algorand Inc has used its Algorand in governance and swayed votes to their favor.
See this post breaking this down: https://np.reddit.com/r/AlgorandOfficial/comments/qtz8lq/breaking_down_algorand_incs_participation_and/
Algorand Inc. owns so many Algorand that they control governance. If the Algorand community votes don’t go their preferred way, they will just outvote them. There is no true voting in Algorand governance....it’s what Algorand Inc. wants.
The governance of Algorand is controlled by a private for profit corporation.
These are all huge issues and show that Alogrand blockchain is centralized around Algorand Inc. Algorand blockchain is centered around a huge amount of trust instilled in Algorand Inc. that they will follow the vague guidelines they said they would. That’s a lot of trust in a corporation in which we don’t even know who owns it. A corporation that controls governance.
I'd like to add one weird thing about all this but much, much less serious.
One bizarre element to this “founders reward” is the way it’s described on Algorand Inc’s website. I provided the link above but will quote the paragraph below.
In an effort to provide transparency to our community, we are pleased to provide the public with insight into how we plan to use our 2B founder’s reward, current token holdings, and actions to date.
Using the phrase “2B founder’s reward” is a clear attempt to obfuscate what happened. Why not write “2 billion Algorand founder’s reward”? Why write it as 2B? It’s a very strange way of describing what happened. So much so that I’ve shown this link to many people here on reddit and the vast majority don’t understand where it talks about the 2 billion Algorand and ask me to point it out even though it’s on the first paragraph.
Could this be a simple grammatical error? Possibly. But to me it appears to be an attempt to obscure the fact that they just were given 2 billion Algorand on this front facing transparency page. (Yes, when you dive deeper into the transparency reports you will see the billions of Algorand discussed, but 99% of people will just read the front page.) Even searching online about the start of Algorand it is hard to decipher that 2 billion were just given to Silvio.
At the creation of Algorand, Silvio Micali gave himself ~20% of the supply (2 billion Alogrand) as a “founders reward.”
EDIT: Who changed the flair to MISLEADING TITLE? Explain yourself.
Mods are telling me they are changing the flair. Why should mods edit flairs like this? Even if you disagree with me, let the comments sort things out. At least respond in the post like I requested.
How much Algo does the mod who changed the flair own?
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