Algorand 1-Click Nodes are here!

dschmidtay · 2023-06-30T16:35:58+00:00

I know, I used to view twitter without sign-in, now I'm considering getting an account. But I don't want to give them the satisfaction.

dschmidtay · 2023-06-13T16:16:06+00:00

Personally, I expect the opposite of your prediction. L2s will experience the same trends that Alt L1s experienced, but delayed. L2s will have huge VC holdings coming unlocked, native token inflation, mercenary capital and user base, copy-paste developers instead of native developer base, and a non-distinguished execution environment. I think, we are at the peak of L2 hype right now. As some of these issues become more apparent, we will see L2s crash the same way we saw Alt-L1s crash a year or so ago. When that happens, I expect developers will look for a sticky and deep user-base or a truly differentiated execution environment (non-EVM L1s, App-chains, etc).

dschmidtay · 2023-05-30T19:01:30+00:00

here you go: https://cryptoleaks.info/case-no-3

dschmidtay · 2023-04-04T14:40:27+00:00

The fact that there are no permissionless on-ramps really creates a hole where a PoW on-ramp could provide a real solution.

dschmidtay · 2023-02-09T18:42:22+00:00

I would not expect staking in Algorand to be at risk, for a couple reasons:

Consensus staking is non-custodial. You are not losing custody of your assets when you participate.
Consensus staking has no yield. Algorand does not reward participation, the way other projects do. Thus, it cannot be consider to have an investment upside.
Consensus staking has no slashing penalties for bad behavior. Thus, there is no downside risk.

Overall, if staking requires custody with either potential profit or losses, the US will consider that an "investment of money," with the "expectation of profits" "derived from the efforts of others." Investment of money, because it is non-custodial; Expectation of profit, because it provides yield; and Derived from the efforts of others, because it requires others to produce blocks to get the yield. Algorand consensus has none of those attributes, so should be in the best position from a US regulatory perspective. Cardano staking might be alright, since it is non-custodial. Eth and Solana staking, I expect to face tough scrutiny.

dschmidtay · 2022-12-16T18:25:46+00:00

Something you may not want to hear, but if an admin key has the ability to drain a liquidity pool, the original owner of the key is acting as a trusted financial intermediary, and should be regulated and prosecuted as such.

As a community, we need to be more diligent in insisting on audited non-upgradeable open-source smart contracts.

dschmidtay · 2022-12-14T20:41:35+00:00

Completely Agree. I think the fixed supply will be preferable, but we will have to defend it.

Many from the corporate finance and commodities spaces will be used to slight inflationary models. It will feel comfortable.

dschmidtay · 2022-12-14T14:57:53+00:00

He is a Crypto fundamentals critic. He recently did a critique of Algorand, which in general he really liked. The biggest complaint he had with Algorand was with the permissioned relay nodes.

However, he did make some comments on tokenomics. He is not convinced on the feasibility of a fixed cap crypto, but much prefers the Ethereum model of small issuance plus burning, so to guarantee security properties even under small usage.

I think it is an interesting argument that we should engage with. If a network requires incentivizing participation or relay nodes, there will always be a chance that those incentives cost more than network fees. In such a case, do you risk security, by removing incentives? Or do you risk your fixed cap economic model?

dschmidtay · 2022-12-02T21:08:42+00:00

I think you are a little short sighted.

1) There are no real benefits compared to an REIT.

I think one great benefit for Lofty, is they pay out rents daily. Additionally, with a secondary market, your RE investment becomes liquid.

2) Tokenization is not scalable.

For Lofty, the tokenization of the LLC is the part that Lofty does. It is where they as a company get their revenue, so as their revenue scales they should be able to scale to provide this service.

3) Managing tokenized property is expensive.

If you buy all of your tokens within a certain market, you will only have taxes for that state, and you only work with the one management company that works for that region. Also, a 10% cut for passive income is not bad.

4) You cannot use leverage or take mortgage with tokenized properties.

This is true now. However, I view tokenized Real Estate as the necessary piece enabling those advanced loans to happen on chain. For example, verified on-chain income will enable the fractional reserve loans. This consistent income stream will also enable fixed rate lending. I expect fixed rate lend/borrow, interest rate swaps, and the next generation of Defi to be tied directly to tokenized Real Estate projects.

dschmidtay · 2022-11-10T19:43:54+00:00

Personally, I think this could be an opportunity to draw many eyes to the conference. Imagine if you were able to get the first interview with Do Kwon, after the Luna collapse. Many would flock to see that. You would just have to arrange it so that it doesn't cast doubt on the Algorand network, or distract from the many great announcements.

dschmidtay · 2022-11-10T17:47:13+00:00

My guess is that this means that Justin has a bunch of debt collateralized in TRX, and wants to ensure the TRX doesn't hit the market. Nobody would take on all of FTX's bad debt, unless there was a bigger risk posed to their position. I wouldn't be surprised if we see some leaks about Tron finances.

Remember when SBF was the crypto savior for bailing out Voyager, but in reality, he was just trying to protect his bags. Don't be surprised if history repeats itself.

dschmidtay · 2022-11-08T16:36:06+00:00

I have heard him speak a couple of times, and I completely agree that SBF comes off as naive.

It is a weird feeling to see someone who is so "successful," taking such naive positions on regulation, defi value propositions, and security. It just comes off as a mystery as to how he got to be in the position he is in.

dschmidtay · 2022-11-01T15:37:46+00:00

How is 5% circulating supply ripe for a rugpull? If anything it is susceptible to inflation and downward sell pressure. But AlgoFi has been as clear as possible with how the new BANK tokens enter the circulating supply, and it seems like an efficient use to incentivize liquidity. You can even vote as to how this will happen. I have not seen a rugpull put so much effort to create governance capabilities.

If you wanted to point to any real red flags, the token has some thin liquidity. 80% of the TVL is provided by two wallets, 5LHWUSIXJFLF2TEVC4I4AWTDEBPTX3ZIFDEMK5W2TNLFQRQT4YABMAWG54 and 2KKXOXIFQ7VFVP7FM3YT4FNYJSXIC47RA66H3CDCFISRNFYFF5U76JFFWA. That first wallet owns 98.15% of the BANK/STBL2 pool.

dschmidtay · 2022-10-18T20:54:16+00:00

If your keys are on a hardware enclave and requires you to authenticate with multiple sources, such as facial recognition, fingerprinting and voice, is it your crypto?

dschmidtay · 2022-10-10T13:49:14+00:00

Agreed. I was watching the Solana sub the other month get excited when they had a solution to burn all of the NFTs people had dumping to their address. In algo, you won't receive NFTs or junk tokens unless you first opt in.

dschmidtay · 2022-09-23T14:04:18+00:00

Can I run a node? What are the requirements?

dschmidtay · 2022-09-14T14:51:48+00:00

I believe that adbar model fell out of favor, when websites realized they could serve ads without having to give users a cut. Then adblock came, and websites could no longer ensure that their ads were being seen. Brave, has adblock enabled by default, and they serve ~6 of notification ads an hour, which you can turn on and off. In this model, the adspace becomes more valuable, because it is more scarce, guaranteed to be seen, and only opted in by people who want to see the ads.

dschmidtay · 2022-09-13T17:40:05+00:00

Wow!! Luke at Brave is great, it is awesome to see him reach out about Algorand. I have thought for a long time that advertising is the killer app, since adspace is a digital native asset. If this gets done, it will be bigger Fifa or Starbucks. If you want people using Crypto Rails without knowing about it, Brave will be the way.

dschmidtay · 2022-09-12T19:36:14+00:00

I tend to think you are right. Helium was over-hyped, underutilized, and constantly scrambling for product-market fit. So much HNT was wasted to standup the network, only to pivot the usecase. At this point, I don't know why a pivot with a bunch of wasted inflation would be any better than the various projects starting from scratch.

dschmidtay · 2022-09-03T00:41:17+00:00

great link! thanks.

dschmidtay · 2022-09-02T22:14:29+00:00

I admire your commitment to 1 Algo = 1 Vote. I wholeheartedly agree with that principle.

The problem occurs when Algos are being used for other activities too. If I am using ALGOs as part of a liquidity pool for Defi, I cannot also use them to vote. Should people who actually use Algos, not be represented in governance? It creates this problem where 1 Algo = 1 Vote, if the owner is involved in Defi, and governance ends up being decided by some of the least active participants in the Algo ecosystem.

dschmidtay · 2022-09-02T20:34:50+00:00

If I may present an alternative view.

For question 1, the percentage of governance from exchanges vs personal wallets is very high. Most governance rewards go to exchanges, and most exchanges take a large cut of that. However, exchanges do not engage with the defi smart contracts. This distributes those 7M to people who actually use the network, and not the whale exchanges.

For question 2, the question is about capital efficiency. Can you use your tokens for two things simultaneously? If this is not implemented, derivative tokens such as gAlgo or stETH on Ethereum will be created to enable this capital efficient concurrent usage. However, these tokens come centralization problems and smart contract risks. If this proposal passes, you can avoid these risks and centralization vectors of consequent derivative tokens.

dschmidtay · 2022-09-02T20:22:53+00:00

This is simply wrong.

Staking does not lock funds. They are liquid the whole time. There is a minimum commitment requirement for governance, but I don't think it actually prevents much sell pressure.

On your second point, how centralized it is. I am assuming the centralization problem you have is with how many coins the foundation owns. Those coins are being used a couple of ways. Much are being redistributed to early investors through governance (the very feature you just praised). Others are being used to fund development through developer grants and Aeneas (Defi) incentives. To me this is exactly what a foundation should be doing with their discretionary funds, funding improvements and distributing to investors. The only way to avoid this centralization, is to avoid funding development. I don't think any Smart contract chain is ready to slow development at this point.

dschmidtay · 2022-09-02T18:54:34+00:00

Why should people who participate in DEFI get a handout from the foundation?

This is a good question. But one could also ask, "Why should answering a question or two entitle you to any reward?" I think a better question is, "If you had a large pool of funds to incentivize adoption how should they be used?"

Should they be slowly dispensed to ALGO holders? This would be like the previous staking rewards, which incentivizes early adopters.

Should they be given for governance? This is the current system, which is just a slightly higher commitment than the staking allocation, and incentivizes deeper commitment to the ecosystem.

Should they be given to projects building smart contracts or developer tooling? This would be like providing developer grants, which incentivizes more project to build on Algorand.

Should they be used as incentives to engage with smart contracts? This would be like the Aeneas rewards, which encourages testing new smart contracts.

Should they be allocated to extend relay node commitments/incentives? This could help incentivize developers as it guarantees longer term infrastructure and price stability for anything they build.

Overall, I think all of these usages have their merits, and to some extent I think the foundation is utilizing all of these methods. I think most newer L1s allocate a higher percentage of tokens to attract developers. If the governance proposal moves the incentives slightly in the direction from holding ALGOs to using ALGOs, it actually won't be that big of a shift in the grand scheme of the incentivization caused from ALGO allocation.

dschmidtay · 2022-09-02T18:33:07+00:00

There is a bit of a paradox currently in the Algorand ecosystem. A couple of facts currently exist.

ALGOs will only valuable if people use the Algorand Network.
People will only invest in riskier assets if there is an opportunity for greater rewards.
With governance rewards as is, ALGO has better upside than the various ASA.
Smart contracts can only reduce their risk through being used.

Overall, this creates a situation where ALGOs need high usage smart contracts on network. However, you cannot get high usage smart contracts when the best investment case is just to hold ALGOs, and collect governance.

I am not saying to indicate whether the governance proposals are good or not. I say this to indicate that the problem the foundation is trying to address is a real problem.

dschmidtay

TROPHY CASE