Algorand Raises $60 Million in Dutch Auction, Market Cap of $24 Billion
The first algo token sale has concluded, and to much ado. The Algorand Foundation hosted its inaugural Dutch auction and processed it through the Algorand blockchain on Wednesday, June 19th. The initial price of an algo token, that proof-of-stake blockchain’s native asset, settled at $2.40 USD upon more than $60 million being raised in the offering.
Due to the nature of its specialized auction, the Algorand Foundation tentatively started the pricing off at $10 per Algo, with 25 million tokens having been put up for the first offering. 4,000 consequent blocks of bidding drove that valuation down to the token’s clearing price of $2.40.
$24 Billion Market Cap
When compared against the smart contract project’s planned 10 billion token supply as of 2024, the introductory algo price projects the cryptocurrency’s market capitalization as approximately $24 billion — though it remains to be seen if the project can maintain that valuation in that span.
Algorand implied market cap is now ~$24B (10B token supply by 2024)
Just shy of Ethereum's ~$28B pic.twitter.com/zuGRp4AI9d
— Tony Sheng (@tonysheng) June 19, 2019
Of course, the algo price will undoubtedly fluctuate up and down — perhaps greatly so in both directions — over the next five years. Where the token will have settled by 2024 is impossible to currently project, so its implied market cap doesn’t tell us much presently. To be sure, things will look differently in short order as the Algorand Foundation auctions off 600 million further tokens per year for the foreseeable future.
Even still, the initially implied mark is eye-popping at first, namely for the company it would put algos in if their cap was transposed to the here and now.
For example, the market cap of ether (ETH), the Ethereum network’s “gas,” was holding ground above $28.6 billion at press time. Ethereum is imminently moving to proof-of-stake consensus itself, so it and Algorand now have to contend with each other in their shared arena.
CoinList platform
Notably, the first algo Dutch auction, which was hosted out of Singapore by the CoinList platform, was restricted to citizens from several nations out of regulatory caution. Blacklisted nations included Canada, China, Iran, South Korea, and the United States. The Algorand Foundation had already raised $66 million in venture funding in recent times via firms like Union Square Ventures.
To participate in the auction, bidders needed to register on CoinList and complete the platform’s compliance verification processes. After getting set up, prospective buyers could fund their wallets with USD ahead of the sale and prepare their algo wallets.
With both Facebook having announced its Libra cryptocurrency this week and the Algorand ecosystem launching, some cryptoverse stakeholders are saying the competition is on like never before for Ethereum in particular. Others are less convinced, arguing that any newcomers still have a long ways to go before they underpin the millions of dollars of DeFi activity that Ethereum does today.
The battle for progress — and users — is definitely on, either way. The algo sale comes just days after Algorand’s Boston-based backing company open-sourced its node repository with a mind toward ushering in a new wave of developers that can help build out the platform’s ecosystem.
“We hope you join us as we enter a new era where you’re no longer constrained by immature technology and can build opportunity in a new borderless economy,” the project’s team said upon the repository’s unfurling.
Zooming in closer, Algorand was designed by zero-knowledge proof innovator and MIT computer science professor Silvio Micali. The network leverages a consensus mechanism that its builders have dubbed Pure PoS. Its structure is designed to make the system highly scalable and secure while maintaining superior decentralization.
As for Algorand blocks, they’re constructed through a lottery process, wherein a randomly selected token holder proposes the ensuing block. That first phase is followed up by a committee vote that entails 1,000 randomly selected token holders to vote on the initially proposed block.
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William M. Peaster, Khareem Sudlow