Author: Brother Future
We call all the rewarded 3.2 billion Algos the Algorand Ecological Resource Pool (AERP).
The new governance system will be deployed in two phases.
Initial Phase: Starting in Q4 2021, some aspects of this will be implemented off-chain.
Complete system: It is expected to be ready in early 2022, and all aspects will be fully chained and controlled by smart contracts.
Once the plan is approved by the community, the 2 billion Algo in AERP will be locked immediately, and the foundation cannot use this fund. When the initial stage is over, the smart contract takes over, and the governance system on the chain is established, and the control of these 2 billion Algos will be migrated to the system.
governance proposal
governance proposal
Each term of the governor is one quarter (three months), and he invests in the Algos he holds and receives rewards. The voting will use the governance shares of the participants as the weight (such as the number of Algos invested).
The foundation will establish votes, but will not participate in the governance program. Other Algo holders can choose to announce in advance the number of Algos they want to invest in this plan. The governance plan will place decision-making power over the use of AERP in the hands of the community.
AERP consists of 5 independent funds, and according to the plan, these funds will be put into circulation one after another between now and 2030.
Participation rewards: rewards can be obtained by holding Algo tokens, which will be replaced by governance rewards in 2022.
Innovation Fund: Support Algorand's high-quality projects.
Algo ecological reward: support the development of Algorand ecological infrastructure and conceptual application cases, and demonstrate performance.
Research and Social Good Program: Aims to support initial research in key areas of blockchain development and generalized cryptography. It also supports partnerships that enable inclusive and transformative ecological visions for the global community.
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Governor function
Governance will increasingly assume responsibility for major economic and strategic decisions.
Through regular voting to complete the decision-making, the foundation will strictly implement the decision-making results based on the decisions of the governors, and protect the interests of the entire ecology.
The Foundation is committed to simplifying the voting process as much as possible and providing a simple interface;
Only one vote will be scheduled per governance cycle;
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Governor Rewards
The amount of governance rewards is based on participation shares. There is a quarterly participation entrance, and participants can join the plan and invest in Algos throughout the governance period.
Governors participate in quarterly voting to determine the distribution of AERP. As long as they cast valid votes and maintain the amount of Algo invested in the governance wallet, they can receive rewards at the end of the governance period.
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Participation Rewards → Governance Rewards Transition
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Reward Distribution & Early Exit
Rewards will be distributed at the end of each quarter to governance wallets that participate in voting and maintain the amount of Algo they voted for. If the governor misses the vote, or fails to maintain the amount of Algo he voted, he will lose his reward for this quarter. If you keep the invested Algo balance unchanged throughout the governance period and participate in all voting, you can receive governance rewards at the end of the period.
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governance rate of return
The rate of return to the governance in a given period will be determined by the participants, i.e. it will be based on the total number of tokens invested against the total prize pool for that period. As an example, about 300 million Algos will be allocated for governance rewards in 2022: that is, approximately 75 million Algos will be distributed every quarter. Therefore, for a quarter in 2022:
If 4 billion Algos are invested in governance accounts this quarter, then the rate of return for each Algo invested in this quarter is 75 million/4 billion = 1.875%, corresponding to an annualized rate of return of 7.7%.
If 2 billion Algos are invested in governance accounts this quarter, then the rate of return for each Algo invested in this quarter is 75 million/2 billion = 3.75%, corresponding to an annualized rate of return of 15.9%.
governance mechanism
governance mechanism
Governance needs to regularly vote on more and more tasks, including ecological reward plan distribution, ecological partnerships and related fund transfers, node operators and governance incentives, etc. The Foundation will announce new tasks to be voted on before each vote. Participation in the governance system requires:
An Algorand address that registers governance and promises to always maintain a certain Algo balance in the address during this period (3 months). This address can be an existing address or a new address opened exclusively for governance purposes.
Participate in polls called by the Foundation during this period.
The vote weight of the governor will be equal to the share of Algos invested at the beginning of the period: one Algo, one vote.
Key conclusions:
Governance program will start in October, and there will be 2 rewards in parallel (participation + governance) by early 2022
Governance can be participated by all members, 1 Algo 1 vote, and the weight is determined according to the participating positions. You need to vote or follow-up to complete the governance responsibilities to get rewards. Early withdrawal only deducts current rewards and no additional penalties.
Initially, various parts of the governance system will go through off-chain mechanisms. In 2022, the entire system will be implemented on the chain.
If the governance starts normally in October, it is conservatively estimated that at least 1 billion Algos will participate in the governance stake, and the income of more than 33% is enough to make the big holders participate. thus causing the DS line to shift
In 2022, the Algo circulation rate is estimated to reach more than 50% of the secondary market circulation rate, and the tokens of early private equity investors may complete more than 70% or even all unlocked. Subsequent selling pressure on the secondary market will be further reduced
Algo’s current liquidity market value is 4.4 billion, FCap is 15.8 billion, and the circulation rate is about 30%. Out of the 10 billion total (tens of millions have been destroyed), there are basically 2-4 billion (20%-40%) tokens. It can be considered extremely slow to participate in circulation.
Judging from this, once the governance officially begins, it will be a very good pace of growth for Algorand's ecology. For the secondary market, based on the currency price at that time, it should be a relatively favorable situation.
But at the same time, investors cannot ignore the volatility risk of the overall market and invest blindly. They must have their own judgment criteria and holding logic to stabilize their mentality.
Reference: "Algorand Decentralized Governance" https://mp.weixin.qq.com/s/ulPKS2fV9q9Q6ZfoJmEMDQ
