A few conclusions from my conversation with @HugoPhilion at the Telegram Flare Proposal Group (please correct if necessary):

1. The initial 15% distribution is set in stone (I won't be further addressing this topic hereon).

2. The Spark selling pressure caused by the

Staggered distribution model is supposed to be absorbed by network stake-like incentives (FTSO rewards and F-Asset yields), though I have my doubts.

3. The Staggered distribution model was designed to last 3 years as a way to provide exchanges and wallets with

sustained incentives to remain engaged with the Flare ecosystem, maybe even pushing them to build Flare services or infrastructure, which in my opinion, is somewhat inorganic. Players should join the ecosystem because it has value added offerings, not because they are

forced to continuously distribute tokens over an elongated period of time.

4. The Staggered distribution model can be curtailed by the community (via governance proposals) once the initial 15% distribution occurs. At that point it will be too late, as the distribution of

the remaining 85% of the token supply, regardless of whether it is curtailed or not, will already have a reference fair market value for tax purposes.

5. It's not guaranteed that the stake-like incentives will be strong enough to offset the "inflationary effects" caused

by the staggered distribution, it's an assumption made by the developers.

6. There's a strong resistance from the community to take positions that are in conflict with those of the Flare Networks Ltd (FNL) team. I expect governance will largely depend on FNL opinions.

My personal takes:

1. In the hope of being proven wrong, I think the initial 15% distribution coupled with the 3-year staggered distribution model, is a severe mistake. It will hamper network effects as it frustrates early adopters and holders.

2. Network incentives will not sufficiently prevent de-riskers and weak hands from causing stagnant selling pressure, which will be met with a, per year, compoundable 10% protocol inflation.

3. Curtailing the staggered distribution after launch would remove

incentives from exchanges/wallets to remain engaged with the Flare ecosystem, anyways. The positive part is that it wouldn't be FNL's team fault.

4. Although it would temporarily cause significant token depreciation, making the whole distribution upfront was a good

opportunity to build a solid holder base very early on, as tokens would have been quickly reallocated from de-riskers and weak hands to long term holders and project believers. In other words, it would have been painful in the short term, but much better in the mid and

long terms as compared to the staggered distribution model, which is compelling in the short term, but somewhat agonizing for early adopters in the mid and long terms.

Upfront distribution would also have provided small holders with the opportunity to accumulate at low

prices, hence, bringing some sort of redistributive policy to the protocol.

Having said the above, I do have to say I'm extremely grateful with @HugoPhilion for taking the time to engage with me and thoroughly answer my questions. Flare is in good hands.

Last but not least, I would encourage the team at FNL to both promote and have open discussions at Twitter, as it is not only the place where the largest part of the community resides, but it also provides a much easier platform to keep track of the conversations.


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More from @Arturo_P_A

20 Jun
Brief 🧵 on why I think @FlareNetworks' notion of inflation falls short and fails to appropriately communicate the [negative] effects that the planned 34 month Spark "staggered distribution" will produce on the markets.

This is an attempt to open a constructive debate.

First of all, I want to make it clear that I do not feel entitled to demand anything from Flare Networks Ltd ("FNL"); they are free to do whatever they deem appropriate in order to secure the future development of the network.

It is true though, as I've mentioned before,

that FNL is not a non-profit organization, and has the clear intention to make money on the back of Flare Network's ("FN") success. FN's success is considerably dependant on network effects provided by users, which means that FNL should be paying attention to user

Read 23 tweets
14 Jun
This Crunchbase report reveals 3 increasingly relevant trends in the VC industry.

1. The amount of $ invested in startups is picking up.

2. The $ is being invested in fewer deals/Cos.

3. Acquisitions of venture-backed Cos. are skyrocketing.


Conclusion: VC firms are raising barriers to entry for new competitors and are also promoting the concentration of markets with their aggresive, profit-seeking exit strategies.
If the SEC continues to gratuitously discriminate between accredited and non-accredited investors, these trends will continue to grow, leading to increasingly concentrated markets, i.e., worse products/services, less innovation, fewer alternatives, etc.

Read 4 tweets
9 Jun
Your back down to earth reading of the news coming from El Salvador 🇸🇻:

1. Bitcoin Law makes it mandatory for merchants to accept BTC, *IF* customers offer it as means of payment.

2. No incentives are created to use Bitcoin as legal tender; most Salvadorans with access

to bitcoin will most likely be die hard HODLers.

3. The Bitcoin Law doesn't actually address how the country will use Bitcoin to promote financial inclusion. It doesn't even make it clear where the country stands in terms of digital inclusion.

4. There are no rules and/or regulations around Bitcoin infrastructure providers (exchanges, custodians, market participants, btc payment service providers, payment dispute mechanisms, derivatives, etc). The whole landscape looks like the perfect honeypot for cyber gangs.

Read 6 tweets
24 May
I'm not a huge supporter of how finance is regulated, but paradoxically, I tend to believe that we won't enjoy the full benefits of blockchain/crypto until the tech is innovatively employed by regulated entities (e.g. open finance, account portability, self-sovereign ID, etc.).
There's another angle in this paradox, which is: blockchain/crypto founders usually want to avoid all the hurdles and costs associated with regulated services (e.g. finance), which is why there's so much stuff happening in DeFi, as it's perceived as a regulation-free safe harbor.
What most blockchain/crypto founders seem to be failing to properly address, though, is that they're favouring short-term opportunities with limited growth potential over mid/long term opportunities with much juicier prospective growth rates.
Read 16 tweets
29 Mar
After reading 6 or 7 articles about this announcement, I think I finally got to weed out the unsubstantiated noise and actually understand how the USDC/USD settlement and payment process on Visa's treasury will work.

1. Crypto. com users who hold USDC and have a Visa card attached to their Crypto. com account, make USDC payments to Visa merchants.

2. USDC payments are cleared, but funds not immediately transferred by Crypto. com to Visa (i.e. settled).

3. At the end of the day, Crypto. com sends a USDC batch transfer over Ethereum to Visa's Eth address held on Anchorage, hence settling its intra-day payment obligations. Visa is, then, taking some credit risk (which will translate into costs for Visa partners and merchants).

Read 12 tweets
26 Mar
I don't know if it's possible under US law, but in case intervention is allowed for #XRPHolders in SEC v Ripple, SEC commissioner @HesterPeirce should file an amicus brief, as it'd be THE opportunity to stand for her vision and push for new regulatory policy within the SEC. Image
Imagine the impact that having an SEC commissioner opining against the SEC's own actions, would provoke on the judge.

Hester Pierce has published a variety of communications with the clear intention to show her dissension with the crypto enforcement actions launched by the SEC.
It's time for her to take the next step and follow a path that will actually make the SEC's high-level decision makers to understand her views and act accordingly. The innovation momentum will not last forever, or at least, not in the US.
Read 4 tweets

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