On June 19th, Algorand, the blockchain star project with the Turing Award winner, started the first ALGO token Dutch auction. The final transaction price of 25 million ALGO tokens was $2.4, which was the private placement price ($0.05). 50 times, successfully raised 60 million US dollars. Together with the privately-held unlocked 12.5 million tokens, ALGO's liquidity reached 37.5 million, and the market capitalization of the market rushed to the top eight in the world. However, the "Ala Dog" since then began a roller coaster-style market.
At the end of the auction, ALGO took the lead in landing OKEx and Firecoin on the 21st. After experiencing a sharp rise, ALGO continued to rise after being put on the shelves. On the 22nd, it rushed to 3.28 US dollars, and the first day rose more than 26%. However, after the official opening of the ALGO trading pair on 22nd, ALGO began to embark on the road of three consecutive days on the daily line. On the 22nd, it fell 26.96%, fell 9.78% on the 23rd, and fell 21.88% on the 24th. On the 25th, it fell to 1.31 US dollars, from the highest point to the lowest point, the decline reached 60%.
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Source: Fire Coin
Algorand investors were “cut” in one fell swoop. The WeChat community is dead, and occasionally new members join, and there will be sporadic speeches in the group: "Welcome to lose money." Investors with poor psychological endurance are already looking for rights groups.
Algorand sets a put option that can be repurchased at a price of 90% of the auction price after one year. Many people will wonder if there is a price at the end, why is it so bad? In fact, the big problem on the plunge is because of this put option. ALGO's first auction price reached 50 times that of private placement, which is actually a high valuation. Many investors who hold $0.05 for private equity ALGO actually participate in the auction. When ALGO prices are high, they sell their tokens and easily earn dozens of returns. After the price has been falling, they have repurchased at a low price, using the put option in their hands to sell the low-priced tokens bought at low prices to the project side, which is another wave of profits. Under the operation of these “sicklers”, ordinary investors are often cut in FOMO and panic. It is no wonder that Algorand will be called a "funding disk."
Of course, Algorand may have used the FOMO (fear of miss) mentality of market investors in the first Dutch auction, which resulted in a price of $2.4. The decline itself may also have the component of returning to expectations. According to people in an industry, Algorand's five-year Dutch auction rules are ostensibly to let the market determine the price. In fact, the price is gradually decreasing from high to low, plus the rule of declining price repurchase ratio. It has caused investors a hint that the auction price of ALGO tokens will not be low. If it is replaced by the free auction rules of EOS, it is very likely that the auction price of the first round of Algo coins will be much lower. At $2.40.
However, after the first few days of slump, ALGO finally ushered in a rebound, rebounding for two consecutive days, currently hovering at 1.77 US dollars. The project party finally couldn’t sit still. Fangfang Chen, director of operations at the Algorand Foundation, said in a letter to the investor community that the Foundation reserves the right to terminate the investor's participation in the Algorand project if it finds that the investor's actions pose a significant risk to the project. The Algorand Foundation has found that recent actions by some early supporters have injected unnecessary risks into the project. Dumping, short selling and other similar actions may undermine network performance and project trust, and remind investors of their obligation not to take any Behavior harmful to the project. However, how do you "terminate"? There are still questions in the community.
There are also investors who have questioned this statement by the Algorand Foundation. People in an industry have clearly expressed their dislike of this behavior. He said:
"Since the rules have been fixed, market participants will participate in this game under the control of their 'invisible hand'. I will not be too disgusted. After all, I am willing to fight the game, but the Algorand Foundation will issue a warning letter at this time. It’s a bit shameless. The translation means that you are only allowed to participate in the auction, and you are not allowed to sell it. It’s a bit of a strong control. Algonand is afraid that it’s hard to pick it up again.”
Algorand conducts two auctions a month, and we will wait and see how many prices will be auctioned in the next auction.