The star project ALGO is a retail harvester: 60% in 5 days, and 48 times in private equity.

At a time when Bitcoin continues to rise, there is a project that kills like a black horse, causing a lot of attention in the currency circle.

The Turing Award winner himself, the star investment lineup, is expected to solve the "impossible triangle", the Dutch auction and 90% price repurchase… all kinds of aura and "innovation model", which has attracted much attention and attracted investors crazy grab.

However, shortly after the trading of the currency, it quickly began to plummet, and the retail investors who took the high position in the secondary market suffered heavy losses.

Investors who participate in the auction are expected to "fall more and earn more."

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When the star project becomes a mutual cut game between investors, where will the future of the currency circle go?

01 Big ups and downs

Recently, because of a special "auction", a blockchain project called ALGO has been completely ruined.

According to the white paper, this project was initiated by Turing Award winner and MIT professor Silvio Micali. In November 2018, ALGO completed a $62 million financing. In the bear market, this number is already astronomical.

On June 19, 2019, ALGO held the first auction.

The auction used a sales model similar to the Dutch auction. The Algorand Project Foundation sets an initial price for the auction, and investors can freely report their expected price and volume below the initial price. Once the auction share is completed, the system automatically completes the delivery at the lowest price.

The starting price is $10. After three and a half hours of auction, ALGO finally completed the auction of the first batch of 25 million ALGO at a price of US$2.4.

The 25 million ALGOs have enabled ALGO to reach a market capitalization of $60 million. CoinMarketCap data shows that the market value of this circulation has reached 100 in the digital asset market.

Some investors have reached a new conclusion based on the total circulation of ALGO 10 billion – its total market value is as high as 24 billion US dollars. This figure exceeds Ripple, second only to Bitcoin and Ethereum, ranking third in the market for digital money.

“In a few days, ALGO’s total market capitalization will exceed Bitcoin.” Some investors shouted in the ALGO community.

ALGO has also won the favor of the exchange. After the first auction ended, the first-tier exchanges such as Firecoin, OKEx and Coinan announced that they would launch ALGO in the first time.

In order to get ahead of the line ALGO, the fire coin even does not hesitate to modify the rules.

According to the plan, OKEx and Firecoin will be traded on ALGO at 12 o'clock and 15:00 respectively on June 21. But then, Firecoin announced that it would advance ALGO's open trading time to 10:30, and take the first step in OKEx.

As of now, at least 14 exchanges have launched ALGO transactions. In the long-awaited currency circle where no star project appeared, ALGO can be described as "the hope of the public."

In the fiery atmosphere created by investors and exchanges, ALGO quickly ushered in a surge soon after the opening of the deal.

According to the data of the fire currency, ALGO on the day of the launch, from the opening price of 2.3726 US dollars, quickly rose to a maximum of 3.3 US dollars, an increase of up to 38.88%.

It seems that the situation is very good. However, the nightmare of the amaranth of the coin suddenly reappeared – ALGO also failed to escape the fate of the opening.

The next day, ALGO prices began to go down. As of June 25, the lowest price of ALGO was $1.312, which was 60.24% lower than the highest point.

Is this still the "quality star project"? Some people began to exclaim, ALGO is "the Turing Award-level pyramid money." Some netizens called the "Turing Award" a "To Zero Prize" to show their self-deprecation.

After ALGO plunged, netizens made the "To Zero Award" expression pack.

After experiencing a big ups and downs, the talents in the currency circle began to think about what kind of blockchain project ALGO is.

02 Past and present

ALGO, dubbed "Algorand", is a blockchain protocol dedicated to providing high performance solutions. This name comes from a combination of two words, algorithm and random. The "algorithm + random" also reflects its core idea.

Its biggest technical highlight comes from its underlying consensus scheme – Algorand will randomly select several outbound nodes and more verification nodes in the whole network node according to the algorithm. Before the node is selected by the network, no one knows who will become the next block node or verification node.

In contrast, bitcoin using the PoW mechanism, the block node is from the power competition; the EOS using the DPoS mechanism, the block node is selected by voting. Algorand replaces the quiz and voting with a random generation method to ensure safety.

Obviously, such a consensus mechanism can enable Algorand to achieve higher TPS performance on the basis of security and decentralization. Therefore, in many people's eyes, Algorand is expected to solve the "impossible triangle" problem that plagues the blockchain.

Chen Hao, chief scientist of Algorand, said in an interview with the media that Algorand's TPS performance is comparable to VISA.

In fact, the prototype of Algorand has already appeared in 2017. At that time, it was not a blockchain project, but a consensus solution to solve the problem of blockchain efficiency.

In 2017, Algorand founder Professor Silvio Micali published a paper on the ALGO algorithm. To this day, this paper is still ranked first in the Google search for the word "Algorand".

Algorand's academic atmosphere is very strong compared to other public chain projects. Five white papers were presented on Algorand's official website, which explained the theoretical basis, consensus mechanism and digital signature principle of Algorand.

Unlike other projects, these white papers are academic papers and have been peer reviewed by the International Association of Cryptography Research (IACR).

In the operation of the project, Algorand established a foundation and has its own independent domain name. Perhaps Algorand officially intended to cut, all information related to ALGO Token was posted on the Algorand Foundation's official website.

In the currency circle, ALGO's unique initial distribution mechanism has drawn much attention. ALGO does not set up the ICO link, and 30% of Tokens will be released in a five-year period through auction.

And its first auction was the one on June 19.

03 Suspect cloud

The auction gave ALGO an unprecedented attention and attracted numerous controversies. The biggest controversy is that the auction buyer owns the return rights of ALGO.

The Algorand Foundation promises that all investors participating in the ALGO auction can sell ALGO to the Algorand Foundation at a price of more than US$1 after one year, at 90% of the auction price.

Even if the ALGO auction price falls below $1, the Algorand Foundation can buy back ALGO at a price lower than the auction price of $0.1.

This means that investors who participated in the ALGO auction also received a put option while acquiring ALGO.

"In essence, ALGO is a fund game, private investors and auction investors, can jointly harvest investors in the secondary market." ALGO investor Tang Ping believes.

The price of the first ALGO auction ended at $2.40, while the private placement price was $0.05. This means that private equity investors have already achieved a 48-fold return on the opening, earning a lot of money.

Investors who participate in the ALGO auction can also achieve a high probability of “stable profits and no compensation” through certain means, and harvest the retail investors in the secondary market.

Specifically, in the first auction, ALGO will be bought for US$2.4, and then sold at the opening price of US$2.4 shortly after the opening. During the one-year period, investors can buy at any time. ALGO was resold to the Algorand Foundation for another $2.16 a year later.

“ALGO’s right to withdraw currency is tied to the user’s account. Even if the investor sells the ALGO from the auction, he still has the right to withdraw the currency.” Tang Ping said, “In this way, the worse the ALGO falls, the more profitable the auction user is because They can get chips at a lower price."

In his view, ALGO first skyrocketed and then plummeted, rooted in the irrationality of the market. "In fact, ALGO issued a non-transferable debt, not a currency. The secondary market only cleared its minds after a few days and began to plunge." Tang Ping said.

Blockchain researcher Sun Yuan said that according to the Algorand Foundation, auction users must initiate a repurchase within the first week after the auction ends. "This is the most paradox of this model."

"Because of artificial restrictions on the repurchase window period, as long as the ALGO currency price is lower than the repurchase price, there will be some people buying in the secondary market in the short term, and it is not difficult for the project party to pull the disc itself." He said, " In addition, repurchasing at a price of 90%, for the project side, is also a steady profit."

In this zero-sum game, the project will not make a profit, and the early private placement and auction investors can also take advantage of the profits, and the only targets that are harvested are only the retailers in the secondary market.

But retail investors are still eager to try. In some ALGO investor groups, it has been pointed out that every round of ALGO auctions, and every repurchase after one year, is “suitable for buying”.

However, the main premise of this logical self-consistency is that the project party keeps its promise and will not run after one year.

For ALGO, which just started the first round of auctions, it is still too early to talk about whether it is running. But there are already investors who are beginning to worry about it.

According to the chain report, Chen Fangfang, the head of the operation of the Algorand Foundation, recently sent a letter to the investor community, saying that the Foundation has discovered dumping and short selling of some early investors and will reserve the right to terminate such investors' participation in the ALGO project.

Once the statement was released, it caused a lot of dissatisfaction from investors. Some investors bluntly said: "The currency is bought by myself. Now that the price of the currency has fallen, is it necessary to blame the investors for selling?"

"At least for now, investors don't have to demonize ALGO's initial heart." In the face of rising and falling currency prices, Sun Yuan is still optimistic about ALGO.

In his view, the controversy faced by ALGO comes from the “tangledness” of the project team's ALGO incentive mechanism.

As early as 2017, ALGO founder Professor Micali said that incentives are the hardest part of the blockchain project.

A year later, Chen Hao also said in an interview with the Planet Daily that ALGO had been shunning the incentive mechanism because of “too cautious”: “Like bitcoin, once you have incentives, you don’t know how users will try their best. Make a lot of money to make money."

In her view, ALGO's auction mechanism is part of its incentive mechanism. However, this mechanism may become a double-edged sword in the future, bringing unprecedented heat and countering it.

“As a team with a strong academic background, ALGO may lack experience in business operations.” Sun Yuan said, “This young team has to face more challenges.”

Note, note, note, note, note

From the eyes of the public to the snoring, ALGO fell into the altar in just five days.

The previous ALGO exchange group was also dubbed by some investors as “losing money group”. “There are losses of 500,000 in the group and tens of thousands in the loss,” one investor said.

ALGO's second auction will begin soon. This time, how many people will be willing to enter?

Text | Pizza Ratchet

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