Posts about Algorand
The Algorand shillers on this sub are bullish about its future. I do not believe it has a future. PART TWO. The opposite of a shill post.
A short while ago, I made a post calling out the problems with Algorand. Despite the post itself gaining some traction, pretty much every comment/reply I made to users incurred a wrath of downvotes.
I outlined several data backed reasons justifying why Algorand has no future. The reasons included:
Significant drop in daily active users
Marketcap rank drop
Departure of disinterested CEO
Plagiarism of other projects
Incessant shill posting
Three months later, here is some different data to consider:
In and Out of the money
It's gone largely unnoticed with the crash of FTX, but the price of ALGO is back to its price from two years ago.
There are now only 0.28% of ALGO wallets in profit. That means more than 99% of people who have bought ALGO, are now down on their investment.
The Breakeven price is at the worst ever value
The number of addresses that could sell their entire load right now and still turn a profit is less than 7%. In the graph below, the red shows how many ALGO holders are at a loss.
Whales and large investors are selling to retail
For the past two years, the largest holders have been slowly offloading all their ALGO. The only people that have increased their allocation of ALGO over this time period is retail investors. Whales previously more than 70% and have since sold off to a point where they now cover approximately 33%. Retail has gone from a fraction of a percent to almost a third of the circulating supply in this time.
Whales - Green
Large investors - Blue
Retail - Yellow
The circulating supply is still increasing too fast.
Too much ALGO just keeps getting minted. They increased the supply by 6x in 2021 (blue line below), and it is still increasing now. This won't stop until 2030.
Pretty much nobody is using the chain
The active address ratio and daily active address charts show negligble growth in two years. In fact, the green line is almost flat.
It is in almost every sense - a ghost chain. From a peak of over a million address processing transactions per day during the bullrun to just a couple thousand today.
Shillers point to this being a bear market, but look at other chains and you'll see utility has not dried up anywhere near this bad.
Put another way,
Of the ALGO wallets created on chain, only 0.3 % are actively doing anything.
Is it all bad? No.
Development is marginally increasing
Github Commits have been increasing all year. Albeit slowly.
Conclusion: My original thesis stands. While there is actually nothing wrong with the chain (despite nobody using it), there are multiple red flags abound for the foundation. Stay away.
EDIT: I have tried to respond to the critiques in the comments, but every reply I make just gets heavily downvoted, so I give up.
EDIT2: People keep tagging me on the post about the Italy agreement. I’m not sure partnering with a country’s banking industry aligns with the philosophy of crypto.
Algorand foundation gambled off ecosystem funds in a degenerate way just to earn extra money. See Hodlnaut.
ALGO had one of the highest inflation rates of any well known coin. Nearly 96% annually from 2021 to 2022, meaning in one year the coin lost nearly half of its value by dilution, all things being equal
Shit tokenomics. 100% premined with almost everything going to the foundation or ecosystem
30% to investors, 25% to founders with the rest being in some ecosystem or participation fuckery
Raised 122 million in funding which means it was going to be a VC dump from day 1.
They are under their ICO price in 2019. LOL.
Additionally, their ICO was sketchy as fuck where people had the option to sell their holdings back to the Algorand foundation. Meaning the coin would just be shorted to shit back in 2019.
ALGO has lost a significant number of its daily active users since the bear market began a year ago, dropping from over 1.3 million to just around 50,000. A staggering 96% drop. In the same time frame, Ethereum dropped just 14% (and that number doesn't include layer 2 protocols)
ALGO was ranked 18th largest crypto by market cap at the beginning of the bear market 1 year ago. It is now 29th.
ALGO's CEO left the company five months ago to move onto other projects. Do you know how fucked it is for a crypto project foundation with the level of power it has over the project to even have a CEO?
ALGO has just 120 active validators which ALGO foundation chooses. Ethereum at 411,000. This is not great for decentralization.
No, I don't care about participation nodes. You still need relay nodes for consensus. You are only as strong as the weakest link.
Currently Algorand TPS is at 7.75. See Algoexplorer for this number.
ALGO "solved" scaling by doing a big no-no. It increased block sizes to solve scalability just as Bitcoin Cash did. From 1mb to 5mb. Tada! 5x performance boost! However this is not practical if ALGO transaction volume were to increase significantly with 100% full blocks. You're going to run into node propagation, scalability, and congestion issues if you're releasing 5MB blocks every 3 seconds. This is well known and seems like a quite amateur fix to the problem of scalability. Also much harder for normal people to run a node.
Most of the transactions being done on Algorand are generated by a selected few "partners" (i.e. sponsored) projects such as planetwatch, chess. There is insufficient adoption on Algorand. Anyone can pay off someone given enough money and claim a partnership and shout "look at the adoption"
"But Silvio Micali created this. It must be legit"
Yes and his partner who he won the Turing award with is now working on zk-rollups for Ethereum. The creator of Bittorent (one of the first P2P services) also made a scam crypto project just to enrich himself. It doesn't mean anything.
These "Alternate Ethereums" are becoming more and more irrelevant as time goes on especially given how Ethereum is upgrading and the inception of L2s. They are all cash grabs to get the insiders rich at the expense of you. They prey upon the inherent greed of people who believe they "missed out" on Ethereum, which is ironic considering you'd have more money just buying ETH than these projects. Sorry you got tricked, but better to learn the lesson now than continue to lose money. Given how centralized a project like Algorand is you are better off not using blockchain at all and just use an already existing solution. Don't invest in Algorand or other insider controlled shitcoins.
Sources in comments
The entire global economy is in a massive bear market. Stop taking Algorand’s price action so seriously when every single asset on earth is down big right now. Read this post for some perspective.
I’m getting sick of all the people freaking out and pointing fingers over who is responsible for Algorand’s negative price action. “It’s Sean Ford! It’s Staci! It’s the Foundation! It’s the VC’s dumping!” Stop.
Every. Single. Asset. Is down big right now. The price going down is not unique to Algorand at all.
Here’s how top assets have been performing this past year:
NASDAQ 100: -29%
Binance Coin: -52%
I could keep going but you get the point. Yes, Algorand is towards the bottom, but it is not alone in losing the vast majority of its price over the past year. In fact considering the circulating supply has almost doubled over the past year, I bet we’ve actually held up better than others from a market cap perspective.
And if you think it can’t recover from this, let me tell you a story as an old man who’s been in this since 2017.
In December 2018, Ethereum had officially fallen 96% from its all time high of $1,400 made in January to just $80. Less than three years later, Ethereum had gone up 5,900% from that low to an all time high of over $4,700.
This is absolutely not the end for crypto or Algorand. If anything this is a once in a lifetime buying opportunity. That’s why I’m learning my lesson from the last bear market and loading up on a quality project I believe in.
Hot take here, but I’m not a fan of: 100M Drone racing league partnership, yacht racing partnership, Times Square blackout, donating to bike clubs
ALGO was sold to fund these and I’d be shocked if all of those advertisements together brought more than 500 people to our ecosystem (not just talking purchasing ALGO on Coinbase)
I think the foundation is going to zero, but we can’t dispute ALGO tech is the best in the game right now