I read the @AlgoFoundation 2022 Part 2 report so you didn't have to! The reports covers the 6 month period between April 2022 - September 2022.
Thoughts, analysis, and some questions below π
1/
algorand.foundation/transparency-rβ¦
Thoughts, analysis, and some questions below π
1/
algorand.foundation/transparency-rβ¦
2/ The report starts off noting a $50M contractual claim against 3AC, in which the hedge fund violated its OTC deal by selling its $algo early.
This is a nothingburger, but does imply a substantial amount of $algo sell pressure came from 3AC in May/June.
This is a nothingburger, but does imply a substantial amount of $algo sell pressure came from 3AC in May/June.
3/ Next is the $35M loss of funds in @hodlnautdotcom, as initially disclosed via Twitter on Sept 10, 2022.
On its website, the Foundation claimed that this 3% of total assets. At $algo $0.32 on that date, it would imply total assets of $1.16B.
On its website, the Foundation claimed that this 3% of total assets. At $algo $0.32 on that date, it would imply total assets of $1.16B.
https://twitter.com/StaciW_DC/status/1568607639717957634
4/ The following sections summarize this period's distribution of $algo.
Community & Governance
β’ Participation Rewards (500K)
β’ Governance Rewards (141M)
β’ Early Backer Vesting (14M Algo)
Community & Governance
β’ Participation Rewards (500K)
β’ Governance Rewards (141M)
β’ Early Backer Vesting (14M Algo)
5/Ecosystem Support
β’ Grants (18M)
β’ Loans (120M)
β’ Algorand ETP (15M)
β’ Relay Node Pilot (2.3M Algo)
Included @Cointelegraph article on the ETP launch. cointelegraph.com/news/coinshareβ¦
β’ Grants (18M)
β’ Loans (120M)
β’ Algorand ETP (15M)
β’ Relay Node Pilot (2.3M Algo)
Included @Cointelegraph article on the ETP launch. cointelegraph.com/news/coinshareβ¦
6/ Other Distribution Channels
β’ Structured Selling (16.5M)
β’ University Program Consensus Participation (27.3M Algo)
β’ Board and Advisor Compensation (1.072M)
For additional reference, I will include Structured Selling and Compensation numbers from the previous 3 reports.
β’ Structured Selling (16.5M)
β’ University Program Consensus Participation (27.3M Algo)
β’ Board and Advisor Compensation (1.072M)
For additional reference, I will include Structured Selling and Compensation numbers from the previous 3 reports.
7/ Please recall that the Foundation reports on an October - May / April - September 6 month schedule.
So I will use the following abbrievations to reference these reports:
21R1 - 2021 Report 1 of Oct 2020 - May 2021
21R2 - 2021 Report 2 of Apr 2021 - Sept 2021
and so on..
So I will use the following abbrievations to reference these reports:
21R1 - 2021 Report 1 of Oct 2020 - May 2021
21R2 - 2021 Report 2 of Apr 2021 - Sept 2021
and so on..
8/ Structured Selling (2021-2022)
21R1: 45.7M
21R2: 47.0M
22R1: 42.2M
22R2: 16.5M
The Foundation has indeed heavily reduced the amount of structured selling this past half year.
21R1: 45.7M
21R2: 47.0M
22R1: 42.2M
22R2: 16.5M
The Foundation has indeed heavily reduced the amount of structured selling this past half year.
9/ Using data from Yahoo Finance, I calculated the average price of $algo over each 6m period. Using this as an approximation, we can infer "revenue" during each period.
REVENUE (algo price)
21R1: $32.4M ($0.71)
21R2: $53.6M ($1.14)
22R1: $54.4M ($1.29)
22R2: $5.9M ($0.36)
REVENUE (algo price)
21R1: $32.4M ($0.71)
21R2: $53.6M ($1.14)
22R1: $54.4M ($1.29)
22R2: $5.9M ($0.36)
10/ Now let's have a look at Board & Advisor Compensation using the same average $algo prices over the past 4 reports.
21R1: 395K ($280K)
21R2: 960K ($1.1M)
22R1: 1.227M ($1.6M)
22R2: 1.027M ($369k)
The Foundation Board consists of three members. algorand.foundation/boards
21R1: 395K ($280K)
21R2: 960K ($1.1M)
22R1: 1.227M ($1.6M)
22R2: 1.027M ($369k)
The Foundation Board consists of three members. algorand.foundation/boards
11/ There are 8 advisors listed on the Foundation's website.
algorand.com/about/our-team
We can see that board/advisor compensation increased by almost 4x after April 2021.
algorand.com/about/our-team
We can see that board/advisor compensation increased by almost 4x after April 2021.
12/ A three year study by the research group Foundation Center of over 10 thousand non-profit foundations finds that:
β’ most foundations do not compensate board members
β’ the median compensation for individual board members is roughly $8000
β’ most foundations do not compensate board members
β’ the median compensation for individual board members is roughly $8000
13/
β’ the highest outlier was $235K
Here is a chart depicting median compensation by general annual giving/grants.
Link to the report: ncfp.org/wp-content/uplβ¦
β’ the highest outlier was $235K
Here is a chart depicting median compensation by general annual giving/grants.
Link to the report: ncfp.org/wp-content/uplβ¦
14/ Given that in 2021-2022 the annual USD value of Board/Advisor compensation reached $2M (average of $200K per person), it would appear quite generous.
Also worth nothing that while hours may vary, a rule of thumb of 1 hour per week would imply an hourly rate of $4k/hour.
Also worth nothing that while hours may vary, a rule of thumb of 1 hour per week would imply an hourly rate of $4k/hour.
15/ Please note that these are simple approximations, and that it is far more likely that Board/Advisor comp quantity is much more heavily concentrated in only a couple of the 11 people.
16/ These advisors are also listed on the Algorand website and not on the Foundation's, so how payments work between Inc/Foundation is not immediately clear.
Now let's move on to the report's breakdown of sale proceed use from structured selling.
Now let's move on to the report's breakdown of sale proceed use from structured selling.
17/ Sale Proceed Use (USD)
β’ Grants and awards ($30.9M)
β’ Marketing/Other forms of ecosystem promotion ($22.2M)
β’ Daily operations, staff costs, other programs/expenses ($17.9M)
The report notes that $5M of the above was allocated to Algorand Centers of Excellence (ACE).
β’ Grants and awards ($30.9M)
β’ Marketing/Other forms of ecosystem promotion ($22.2M)
β’ Daily operations, staff costs, other programs/expenses ($17.9M)
The report notes that $5M of the above was allocated to Algorand Centers of Excellence (ACE).
18/ We can assume that payments from popular Foundation partnership initiatives such as the $15M 3Y program with @ClimateRide and the $100M 5Y program with @DroneRaceLeague are included in the marketing budget.
For reference, I will also include historical marketing spend:
For reference, I will also include historical marketing spend:
19/ Foundation marketing & other forms of eco promotion (historical)
21R1: $0.4M
21R2: $0.6M
22R1: $9.2M
22R2: $22.2M
Included in these figures are likely the 3Y partnership with Canada @SailGP ($ undisclosed) , @FIDE_chess World Chess ($?), and @GothamFC 3Y program (mid-7 fig)
21R1: $0.4M
21R2: $0.6M
22R1: $9.2M
22R2: $22.2M
Included in these figures are likely the 3Y partnership with Canada @SailGP ($ undisclosed) , @FIDE_chess World Chess ($?), and @GothamFC 3Y program (mid-7 fig)
20/ Algo Foundation Staffing Costs & Other (historical)
21R1: $14.3M
21R2: $20.8M
22R1: $27.9M
22R2: $17.9M
Assuming the Foundation website is current, it appears to be a
team of 67 people.
21R1: $14.3M
21R2: $20.8M
22R1: $27.9M
22R2: $17.9M
Assuming the Foundation website is current, it appears to be a
team of 67 people.
21/ If we reasonably assume that the significant majority of these costs are for staffing (~$40M annually), it would imply an average spend of $597K / employee at the Algorand Foundation.
SIGN ME UP π
It is possible this spend could include Algo Inc employees, but...
SIGN ME UP π
It is possible this spend could include Algo Inc employees, but...
22/ ...I find it unlikely given that the 21R1 report specifically lays out a 30M algo payment to Inc for R&D activities.
Overall it is unclear how these funds are distributed across staffing, and it is certainly a possibility that the Foundation has greatly increased headcount.
Overall it is unclear how these funds are distributed across staffing, and it is certainly a possibility that the Foundation has greatly increased headcount.
23/ The report concludes by indicating a balance of~3B Algo in the Foundation treasury for further Community & Gov Rewards (1.6B), Ecosystem Support (989M), and Endowment (375M).
This more or less squares with Staci's assertion in September that $35M comprises 3% total assets.
This more or less squares with Staci's assertion in September that $35M comprises 3% total assets.
24/ Some closing thoughts:
I think it is certainly a huge positive that the @AlgoFoundation puts forward an attempt to provide transparency over their activities.
However, I think the format is not conducive to this purpose.
I think it is certainly a huge positive that the @AlgoFoundation puts forward an attempt to provide transparency over their activities.
However, I think the format is not conducive to this purpose.
25/ When reported figures are denominated in Algo and other times in USD, in my opinion it does not provide a clear picture of what is being spent, particularly since the $ value of $algo is so volatile.
26/ I would be much more interested in learning about the treasury's USDC/cash position. The humongous number of $algo in the treasury is definitely illiquid and is not useful in providing clear insight on the current state of Foundation finances.
27/ Viewed in that lense, the $35M loss in Hodlnaut, or the $20-30M or so in yearly commitments to partnerships, could be very material in terms of the Foundation's ability to operate.
The Foundation brought in only $5M over the past 6 months in structured selling. β¬οΈ
The Foundation brought in only $5M over the past 6 months in structured selling. β¬οΈ
28/ It is clear that if the bear market were to continue for many more quarters, the current spending will greatly outpace intake.
As the latest report states that "the majority of the funds are held in Algos" with the rest in illiquid investments and cash,
As the latest report states that "the majority of the funds are held in Algos" with the rest in illiquid investments and cash,
29/ knowledge of the cash position grows ever more important.
The reports themselves could definitely be overhauled to include graphs, drill deeper on spend, and provide much more context.
The reports themselves could definitely be overhauled to include graphs, drill deeper on spend, and provide much more context.
30/ Better chain analysis tools and interest in on-chain movements in Algorand must grow to keep our largest stakeholders and projects accountable.
Publishing a page with hundreds of ASA addresses without context is surface level transparency, but in practice, obfuscation.
Publishing a page with hundreds of ASA addresses without context is surface level transparency, but in practice, obfuscation.
31/ While talking about #algorand marketing is pretty much a meme at this point, let's not forget that >$30M of marketing annual spend is a tremendous number.
As a community is our responsibility to question its efficacy...
As a community is our responsibility to question its efficacy...
32/ Especially when it is funded by inflating the $algo in your wallet.
Thanks for taking the time to read my thoughts! TL;DR, the latest Algorand Foundation transparency report brings many more questions than answers. π€
Thanks for taking the time to read my thoughts! TL;DR, the latest Algorand Foundation transparency report brings many more questions than answers. π€
33/ If you liked this thread, feel free to like and RT the top of the thread. Also huge shout out to @zeus_algo who has really put the sizzle on the Foundation the past couple weeks π‘οΈ
https://twitter.com/kyleTwang/status/1601293847794839552?s=20&t=vuMu668G46DM3UzmFXqe-A
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