Shouting transparent, but no one knows how much Libra Facebook will buy.
Facebook launched Libra, the cryptocurrency, and formed the Libra Association, but each company or organization that wants to join is required to pay a $10 million "admission fee."
However, perhaps you don't know, this $10 million – just the minimum threshold for membership.
If you become a Libra member, in addition to having the power to verify online transactions, you can also choose to invest more money in exchange for more Libra Investment Tokens. What are the benefits of doing this? Libra members can earn dividends from the interest earned on Libra reserves after using these tokens to pay for infrastructure and operating costs.
Facebook is encouraging the use of Libra for payments and cross-border remittance transactions, but in fact they are more willing to let people hold Libra forever.
Let's make a bold assumption, let the regulator ask Libra to suspend development work aside. If Libra is released in the market today, and this cryptocurrency becomes more and more popular, then it is likely that such a situation will occur. :
More and more people are beginning to convert their local currency into Libra, and the “reserve” value of Libra's crypto assets can grow tremendously, which in turn generates a lot of interest, and those who hold Libra tokens early ( For example, the 20-member Libra Association's initial members who invested heavily in large amounts of money can get huge returns.
So, do Libra members have these benefits? Obviously not, they have many other potential incentives for "welfare."
Each Libra Association member can only get one vote on the board, including Facebook. However, if Facebook invests $500 million and other members like eBay only invest a minimum of $10 million, then Facebook will have more incentives for people to cash in Libra and encourage more people to hold the cryptocurrency. More interest can be earned in the US dollar or other legal tender in the Libra reserve.
From this perspective, although Facebook appears to be encouraging Libra for payment and cross-border remittance transactions, they are more willing to let people hold Libra permanently, because only then can Facebook (and its Calibra sons on their behalf) The company) gains more voice in the board of directors that has a vote for all parties, and better promotes some governance decisions that can benefit them.
transparency? Facebook refuses to publicly invest in the amount of data for Libra projects
Two weeks before the official release of the Libra white paper, David Marcus, head of the Facebook blockchain business, said in an informal setting:
“The Libra Reserve will earn interest on some Treasury bonds, which are only a small part of the Libra Reserve and the amount is variable. If the Libra Reserve is growing, these interest incomes are likely to be funded by the Libra Association. The important way, of course, will also return the proceeds to investors."
But the most "interesting" part here is that Facebook has been talking about Libra's high level of transparency, but declined to say how much money was invested in the entire Libra project and Libra Investment Tokens. In fact, this may be the most concerned issue for US Congressmen at the Senate Banking Committee on July 16 and the House Financial Services Committee's hearing on July 17.
In addition, since the applications built on the Libra Developer Platform are not subject to review, the US Congress will certainly ask Facebook how to ensure that Libra does not experience data breaches like the Cambridge Analysis Scandal.
The proportion of Libra's total investment tokens owned by Facebook determines the degree of decentralization of Libra. If Facebook owns a majority or a majority of shares, even if they only vote on the board, it may promote some bias towards themselves. The rules, and then get huge benefits from it.
Libra is essentially a project that belongs entirely to Facebook – at least for now.
So far, Facebook has led the entire Libra project development, and the Libra Association has not yet developed and approved any charters, nor has it officially recognized its members. So from a technical point of view, Libra is still a project that is completely Facebook.
In an interview with The Information reporter Alex Heath, David Marcus acknowledged this and said:
“So far, we have been funding everything, including writing code, organizing projects, communicating, and everything.”
This means that Libra can't survive without Facebook and leave Facebook, Libra may not last long. Scary? Let's make another bold assumption. If Facebook has a conflict with the Libra Association sometime in the future and threatens to quit, it will jeopardize the investment of all other members. In this case, other members may be forced to vote for Facebook's governance policy recommendations, so Facebook can easily take more votes and decide what direction the project is based on.
Facebook has provided loans to Libra
At the same time, David Marcus also said:
“We have basically provided loans to the Libra Association, and Libra needs to repay the loan sometime in the future.”
This raises another question, how much loan does Facebook provide to the Libra project? How much does Libra need to pay? And when will the money be repaid? Not to mention that Facebook has expressed its freedom to use Libra to make money, David Marcus said:
“If Libra succeeds, Facebook will first get more business opportunities from its app ecosystem. More business means that advertising will be more effective, and advertisers will buy more ads to grow their business. Over time, we have earned people's trust with the Calibra wallet, and we will begin to provide more financial services and bring other sources of income to the company."
If Libra Association members find that their $10 million in funds are being used to pay back the money, will they still be willing to join? Perhaps it is too late for regulators to get involved and other Libra association members to be aware of the seriousness of the problem.
Facebook has a huge opportunity to oversee development and build Libra wallets that will be used by its Messenger and WhatsApp products with more than one billion users to continue its vision of entering the financial services arena.
However, if Facebook receives excess returns directly or indirectly from Libra, it also allows other Libra Association members to “pay” for their R&D expenses through “black-box operations” and does not disclose the entire Libra project and Libra Investment Tokens. How much money is invested, so it is very reasonable to question the decentralization and self-interest of the project.
This article from Techcrunch , the original author: Josh Constine
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