Crypto AMA with Alogrand (6.7.19)

Welcome Silvio and Steve from Algorand!

Silvio/Steve - could you both start off by giving us a brief bio describing your backgrounds as well as how you got started in crypto? And then a short overview of Algorand and how it’s going so far? We can then open it up for questions

Thanks for having us!

I’m a serial entrepreneur and Algorand is the fourth company I’ve been lucky enough to be part of. Prior to Algorand, I was the co-founder of a company called Fuze, which is a video and collaboration platform— about 700 people today. I started to get interested in crypto and blockchain, and really felt that the dynamics were the most similar to anything I’ve seen since the early days of the internet. I was fortunate enough through a mutual friend/investor to be introduced to Silvio. The work that he and the others were doing was fascinating and I feel fortunate to be in a position to help drive the project forward.

I received my PhD in Computer Science from Cal Berkeley. Since 1983, I’ve been on the faculty of the electrical engineering and computer science department at MIT. I’ve been a cryptographer for decades and I succumbed to the temptation of learning about Bitcoin— I came out from this learning curve with two realizations: First, it is a wonderful problem, and second: it is a very inelegant solution. Since criticizing is easy, I decided to say well how would I do it? I locked myself in for a few months and came up with an initial design based on first principles. I was very excited and lucky to bump into Steven, and we brought in the best team we could to bring Algorand to success.

Thanks. @silvio when did you first start learning about Bitcoin?

obviously people know Bitcoin started in the cryptography world, but not necessarily in the academic or university community. were you aware of it for a while or what got you really interested?

I would like to say 5 years ago. Again I found the goal fascinating and was drawn to improve the design

Dear @silvio and @steves firstly thank you for your time in doing this AMA. I understand from my reading and research that Algorand believes there is a massive opportunity to reboot the financial systems of the world. Please could you give us some high level, yet concrete examples on how Algorand plans to execute on its vision w.r.t financial services.

As an academic I have been working in cryptography for decades, I granted my first PhD thesis on Byzantine agreement in 1985 (!), and in the last years I got interested in the mechanics of incentives. So you may say it was a perfect storm for jumping academia from into blockchains!

If we take a step back we believe what a platform like Algorand represents is really a decentralized economy. Within that there are three pillars that we're focused on:

Additionally, if I may top it up with one more question, how would/could/should Algorand partner with and collaborate (in your own vision) with other large protocols .. for example   (1) Telegram (massive user base and targeting financial services) (2) Facebook coin (globecoin), which (from the popular media) seems like will also target the financial services vertical.

1. The core protocol and layer 1 tech in general. This starts with the Algorand Protocol but extends into our roadmap that has been recently publisehed

2. Decentralized economics. As many have seen the auction mechanism being used by the Algorand Foundation as well as the refund policy in the auctions themselves all represent the first steps toward a more sophisticated ecosystem, and

audience - feel free to fire away with questions

3. Both end user and developer experiences need to be dramatically simplified. We spend a lot of time thinking about the 20M developers who are not working on blockchain today and how to bring them into the community

Generally we want to provide the right building blocks that allow both app developers as well as organizations looking to issue decentralized financial products to take advantage of the foundational elements Algorand provides

@steve just to fast forward a little bit to now - this group is mostly crypto investors (either funds or individuals). Most heard about Algorand last year during your initial raise. Can you give an overview of that capital raise, the overall cap table, and these upcoming auctions?

Silvio - which future Algorand improvement (e.g., Atomic(sq) swaps) do you think differentiates Algorand the most from competing protocols?

We believe interoperability is crucial for the community at large. One example is in our technical roadmap, which is a more advanced take on atomic swaps that work both within Algorand and enable interoperability with other chains. We are focused again on creating a diverse economy of decentralized apps, bringing on partners who are issuing decentralized financial products, and new technologies that leverage our platform. As Facebook and others enter the space we think working together to provide diverse services for end users and also enable people to use different digital assets across communities will be increasingly important.

And to extend this, which features today will not be differentiators in the future? Trying to get a sense for the short term versus long term defensibility?

Hi Viktor! Nice to hear from you! Atomic(sq) Swaps are indeed a key differentiator. They are really atomic (single transaction) and will take just a few seconds (no time locks, no hash locks. simplicity is the ultimate sophistication! 😊 But smart(sq) contracts are going to be another key differentiator. We are going to be as innovative in smart contracts as we have been in the consensus protocol.

@steve I would love to understand how the value of what Algorand creates will be captured by and accrete via the Algo token. Additionally (and apart from the 90% refund policy) what steps are going to be most important to increase overall usage and adoption of the protocol. I think the world needs adoption and for people at the grassroots level being able to use crypto. How does Algorand want to make that happen ?

Dear Angie: our  whole approach is different and unique. And we plan to continue to be different and unique. The game has just started!

One of our goals during our capital raise was to ensure that all participants were aligned in helping ensure the Algorand platform is a success over the long term and that everyone was aligned in the same ways. I think it's worth noting that our fundraise was an equity raise. In addition to being geographically diverse our supporters also come from many different settings, from people who run major mining operations to large financial institutions. In addition, many involved in the Algorand community also have agreed to run nodes to ensure we have a diverse, decentralized infrastructure at launch.

@steve what applications need to be decentralized? Feel like the only thing that does is money and gambling. What applications are you looking to have on Algorand

For the upcoming auctions, the Algorand Foundation has spent time thinking about how to launch the protocol and how to both have the market determine value (which led to the auctions), and also how to provide known economics that encourage people to use the tokens to transact (the refund policy). Effectively these elements form the initial basis for a decentralized monetary policy.

@steve how much $ was raised in the equity round last year and what has been/is the use of those funds? Why the additional raise via auctions now?

@J That's a great question. We believe that decentralized economies will become a core part of the financial landscape and there are several inherent characteristics that will drive certain applications in that direction. First, blockchains enable trust between untrusted parties. Any multi-party, cross-border contract or transaction can be dramatically simplified by decentralization. And the lack of options in this regard has led to a high friction, localized capital formation process today. In addition, the tokenization of assets offers a way to change liquidity properties and re-frame existing property. Lastly, we see new concepts like the ability to create digital scarcity as being able to give rise to new applications out in the world.

Real estate is a great example where we're seeing really interesting products, and one of our partners, AssetBlock, is launching a set of products around this in conjunction with Algorand's launch.

Thanks Silvio! One more for you - can you describe how your team moves from research to development and finally release? I've seen other academic-focused chains struggle to get to the 3rd step.

What is the Algorand Inc. business model?

$62M was raised in our equity round last year. Those funds have been used to grow the team across the board and have brought on some amazing people across research, engineering, marketing, legal, and business development.

Dear Viktor: While doing research we work closely with the engineering team to prototype and iterate over the design. We have seasoned engineers from the industry who understand deep tech and how to move it into production and scale. We take pride in our research and engineering team as well as our business execution ability

Awesome to hear. Big fan of early and frequent prototyping. Thanks, Silvio!

From a business model standpoint Algorand, Inc. is focused on research and delivering open source software to the community. We see revenue opportunities in both supporting organizations using Algorand to build new applications, and by being an infrastructure provider in the ecosystem.

@steve what is the timeline for launching the product?

Is there a schedule where prospective buyers can understand the weighted average price from any/all tranches of ALGO that has been sold leading up to the auction?

And what is go to market strategy on this and timing? Thanks!

MH We're really excited to be nearing launch! June 12th is planned pre-launch and also the day when we'll be releasing our open source code. We believe the work represents not only a new protocol but ground breaking computer science and the team is excited to share their work. June 19th is the date the Algorand Foundation will host the first auction, and release initial Algos into circulation

Thank you Viktor! Let me add that Greg Colvin recently joined our theory team: https://medium.com/algorand/greg-colvin-joins-algorands-theory-team-to-work-on-key-roadmap-items-11ab3490c3b  Greg along with the rest of the Theory team will ensure an even better cooperation with our engineering team!

So official mainnet launch is planned for June 19th, and we'd encourage anyone who is interested to watch for developments at http://algorand.foundation as they'll be announcing additional information as launch approaches

@steve what is your view of the legal/regulatory status of the tokens being released into circulation? Our previous AMA guest was the Kik CEO, so this is a hot topic right now re: whether newly created tokens are or are not considered securities

Are the lotteries to select the committees of 1k performed on the participation nodes?

Hey guys; thanks again joining on the podcast; a question I didn’t get to ask with about throughout vs TPS; they mean different things IMO - what would you feel is a proper benchmark for people to evaluate the performance of your chain?

@Wes Algorand, Inc's only fundraising were equity sales. The Algorand Foundation's first token sales will be the auctions. The Algorand Foundation did grant early supporters and university partners the right to earn tokens by supporting the network and running nodes over a period of years.

Dear Jonathan:  every user who chooses to be online runs his/her cryptographic lottery. Every user has the option to mark him/herself offline and thus not participate to the consensus protocol

Thanks! Where is lottery run and what software is used to run it?

This is a great conversation. Thanks for doing it @silvio @steve

Of the 10 BN total ALGOs that will ever be created, how many do early backers own that will vest over the 2 years post network launch?

MH The Algorand Foundation is domiciled in Singapore and will be issuing the Algo's under the regulatory framework present there. There are several excluded jurisdictions which cannot participate at launch, including the United States. As core developers of the Algorand protocol we would obviously like for US users to take advantage of the public network, but certainly appreciate the Algorand Foundation's position that until there is more regulatory certainty it isn't in a position to do so right now.

I'll throw in a pre-submitted question from the audience:

*What does it mean to be able to run an Algorand node on a Rasberry Pi, and why is that important?

Early supporters include a variety of organizations that have the opportunity to earn Algos by running nodes over differing period of time from 2-5 years. Just over 2B Algos will enter circulation as a party of this node running incentive program, and the majority will be over the first two years

Dear David: Certainly right now there is confusion on the proper benchmark. Some people compute tps using also off-chain transactions, and some other using centralized blockchains with a small subset of the users running the consensus protocol.  I believe that the right benchmark for EVERYONE to evaluate performance is tps on chain, and with truly decentralized blockchains. In our new blog on the Success and Momentum of Algorand to date, we mention Ithat, using 10,000 globally distributed participants and a uniform distribution of stake, we consistently reach over 1,000 tps with 5-second latency. Note that the uniform stake distribution is more difficult than what is seen in the real world and is the hardest stake distribution scenario for any proof-of-stake protocol. A high testing standard to build confidence in our scalability when the platform goes live.

Thanks @silvio

In effort to have the best network, we have specs that are geared toward ensuring that transactions are processed quickly and with high availability. However, we also believe in a blockchain that is open to participation - for anyone - and requires minimal computatioal power. It is possible to run a participation node on a raspberry pi and we have done it!

@steve which existing blockchains would you say Algorand is aiming to compete with or displace?

Thanks for the answers guys. Best wishes for launch!! 🚀🚀

As I mentioned earlier we believe that growing the ecosystem overall will help all projects in the space and we welcome collaboration. One example of this is an ongoing effort our researchers are working on to standardize the BLS signature scheme in a way that can be adopted by the whole community. 

Of the >20M developers in the world today, less than 5% are conversent in blockchain, so we're focused on education around decentralized systems and moving the needle by focusing specifically on standardization and simplification of both developer and end user experiences to bring more people into the community.

What is the reasoning for the 4,000 block auction window? Is there some indication that this length may work better than something shorter or longer?

4,000 blocks is expected to be roughly 6 hours and was chosen mainly to give people enough time to understand how the system works and still participate live.

For more information on the auctions we'd encourage anyone to go to the Algorand Foundation website

Thank you, @steve!

What can people do to get more involved with Algorand from this point on?

also, question from the audience:

*Is the refund policy for real?  What are the details?

Thanks for asking!

For people interested in participating in the auction, please go to https://algorand.foundation/auction

For people who are less experienced with crypto but are interested in participation please visit https://tracker.algo.capital

For anyone interested in developing on top of the Algorand platform they should go to http://developer.algorand.org

Hi @silvio thanks for taking questions. Will your company look to develop financial applications itself and try to bring them to market?

*10 Minute Warning*

please submit any additional questions now before we start to wrap up

The Algorand Foundation believes in the underlying value of the Algorand blockchain, the Algo, and the potential of the borderless economy. Our goal is to invest in the growth, sustainability and performance of that economy.  We are committed to the quality and utility of our currency, and we want you to be happy with your purchase of algos at our auctions. As a result, every algo purchased in one of our auctions carries with it a refund policy. Should you be dissatisfied with your purchase for any reason you may return your algo one year post-purchase at up to 90% of the value paid. The details are as follows:

If the foundation sells an algo, then the refund policy allows the purchaser to return the algo back to the foundation during a 7-day window one year later at the following amounts:

If the original auction clearing price is $1 or higher, the refund amount will be 90 percent of the original purchase price.

If the original auction clearing price is below $1, the refund amount will be the original purchase price minus $0.10.

The refund policy comes with a lock-up period of one year, and an expiration of one year and 7 days. This means that a buyer of x algos at an Algorand auction can sell back any number of algos up to x to the foundation after one year. Such buyers need not continually own any algos to take advantage of the refund policy, but must retain their original auction account. The refund offer expires 7 days after the lock-up period ends.

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Note: this content is straight from the Algorand Foundation website

One more from me - how many developers are with Algorand and what are you finding to be the best way to “onboard” the 95% you mentioned who are not conversant in blockchain? Thanks so much for doing this!

Doesnt this refund policy suggest you are raising too much money or have too much money? In the event that one would want to get a refund on having made a VC investment or bought a digital asset, it's weird to think that the risky venture would be there to make one whole and honor that commitment.

Dear Louis: Algorand is an open and common platform on which everyone is welcome to develop (and is indeed better off developing) new applications, including financial ones. We will continue our research on decentralized economics and welcome collaboration in this important area.

The #1 request from developers is simplicity and clear examples and use cases. Developer experience is one of the primary ways we are focusing on encouraging new participants

A key goal of Algorand is that all participants in public network should have confidence in a platform where they are transacting both from a technical, and an economic perspective. 

Funds subject to the refund policy will be held in segregated accounts and the Algorand Foundation will make regular attestations showing the same publicly available.

ok - thanks to everyone for participating

Thank you.

@silvio @steve feel free to leave some closing comments, links etc.

Thanks everyone for joining us today, really enjoyed the conversation and appreciate your support! For anyone interested in more information on Algorand's underlying technology please visit:

https://www.algorand.com

and for anyone interested in information on the public network, auctions, or the Algo, please visit:

https://www.algorand.foundation

thanks so much for coming on!

Thank you all for being here with us today!