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Yesterday, Aleo finally generated a genesis block on the mainnet. The miners, who had been frightened by years of delayed delivery, finally had 50% of the pressure lifted. The remaining 50% will have to wait until the incentive policy and lock-up period are determined.

I read the instructions today and found that this 50% will basically not be realized. Because all airdropped tokens will be locked for a year before being distributed. The miners who were originally very excited suddenly didn't even have the heart to curse. I wanted to try it, but later I talked to a friend who was doing code. In the absence of a mine, according to the production and price of coins, the cost cannot be recovered, so I just gave up.

The market is in a mess right now and there’s not much to say, so let’s take this opportunity to talk about ALEO, the top privacy public chain.

What exactly is the ALEO project?

Regarding due diligence on public chain projects, there are two things that disgust me. One is the industry jargon that VCs bring from the Internet, and the other is technical white papers that only talk about technology but not its usage.

Open all the research reports on Aleo and they all say this:

“Aleo is the first Layer 1 blockchain to use zero-knowledge proof (ZKP) technology to provide fully private applications, providing users with unlimited computing with absolute privacy. Aleo solves the shortcomings of blockchain privacy protection by building a blockchain that is private and open source by default. With Aleo, users can access a truly personalized world of web services, manage their own data while getting privacy protection, and enjoy efficient and secure network services.”

Let's compare it to Bitcoin's white paper. Bitcoin says this:

“What is needed is an electronic payment system based on cryptography rather than trust, which allows any two willing parties to transact directly without the need for a trusted third party. The computational irreversibility of transactions will protect sellers from fraud, and programmatic contract mechanisms to protect buyers should also be easy to implement.”

Theoretically speaking, the more powerful a project is, the more you want to explain it clearly, because you are afraid that others don’t know how powerful it is. The more lousy a project is, the less you want to explain it clearly, because you are afraid that others will know how lousy it is.

Bypassing the complicated terminology, Aleo is a public chain that uses some technologies to focus on providing private transactions.

At this point, many people would say that they should learn about Aleo’s advantages and features and how it provides privacy protection. In fact, this is not the case. The most important thing to understand is what the privacy track is and how big the privacy market will be in the future.

Aleo’s vision and the prospects of the privacy track

At this point, it depends on the Aleo project's awareness of its own prospects. Aleo believes that in the future, web servers will be everywhere, even penetrating into every detail of our lives. But nowadays, the problem of information leakage is particularly serious, and Aleo is committed to solving this problem and ensuring privacy for users.

I agree with this logic, but the core of privacy is to protect data. But what kind of data is worth protecting? The reason why today's O2O platforms can maintain their monopoly competitiveness is indeed data, and big data.

This means that fragmented data is not valuable, only complete data is valuable, because the more complete the data is, the more convenient it can be, and the more malicious it can be.

For example, for individuals, when Didi knows your weekly schedule for the past ten years, combined with urban architecture and traffic data, it is easy to figure out whether the situation is urgent when you take Didi, so as to better arrange a travel vehicle for you, or give you a higher fare...

However, privacy needs are also a very high-level need. When these O2O platforms, such as Pinduoduo, Tencent, and Alibaba, can provide you with a 10-yuan unlimited coupon in exchange for your mobile phone number, ID card information, or other information, most people will definitely be willing to exchange.

Poor people don’t need privacy at all, why not be happy if you can exchange it for money? But if you are rich, your mentality is different. From transactions to identity information to life information, you would rather spend a huge amount of money to protect it.

Here come two problems:

1. If privacy is protected, data will inevitably be fragmented, which will go against history;

2. Only a small number of people with extremely high quality (wealth and power) will pay for privacy.

Of course, in the future society will surely progress to the point where most people will have privacy awareness, but this time may have to wait until 10 years later. So, for all the privacy public chains now, given the premise of burning so much money, how many VCs are willing to pay for the strategic losses of this decade?

I personally believe that to solve these two problems, we need to implement them on smart contracts rather than public chains, and combine them with decentralized storage.

That is, everyone's privacy is completed through big data collection using smart contracts, and this big data cannot be controlled by a centralized platform, but should be handed over to a third party for trusted storage, isolated from personal identity, and establish a destruction mechanism.

The most important thing is that there are no bugs in the practical logic and program code.

The iris collection system of Worldcoin is quite good. What is uploaded is not your iris, but the iris code. We only need to check the code, not the iris itself. However, since Worldcoin is still a centralized company, it is a black box if it does not upload or collect.

What does the future hold for Aleo?

After understanding the privacy track, it will be easy for Aleo to dispel those professional terms and eliminate the completely unimportant parts.

According to the official statement, the advantage of Aleo is that it can achieve privacy protection while also having on-chain scalability. It says:

“It not only solves the current dilemma of Internet data leakage, but also improves the shortcomings of the current blockchain data information openness and transparency, while also achieving real-time processing of massive data and rich scalability comparable to the current Internet platform.”

Aleo has three core components: Leo language, snarkVM & snarkOS, and zkCloud.

The leo language is a programming language designed specifically for privacy protection; snarkVM is used to allow off-chain computations and on-chain verification of results to improve efficiency; snarkOS ensures data security and allows permissionless functional computation; and zkClou is used to provide a secure and private off-chain computing environment to support programming interactions between users, organizations, and DAOs.

It doesn’t matter if you don’t understand it, it means that it is scalable, secure, and private. But the problem is that this is unrealistic. Ethereum, which has the deepest technical reserves in the crypto industry, has abandoned the old 2.0 roadmap and turned to a new expansion plan. I find it hard to believe that other public chains don’t have to pay extra costs for scalability.

If privacy cannot practice absolute decentralization, it will eventually be eliminated in the future. From this perspective, Aleo is just an ordinary product based on the VC game of passing the parcel.

At this point, for me ALEO is not a target worthy of investment, but this does not mean that there is no way to participate. I will talk about this at the end.

Another point is the original intention of the founders. Regardless of the delays in the roadmap, we assume that technical problems will often occur. But their status on token distribution is questionable.

After the launch of layerZero, Starkneth, and zksync, Aleo’s executive director criticized Starknet’s token economics. But the reality is that Starknet issued a $1.5 billion airdrop, while Aleo initially locked up the airdrop for US users and now is locking up all airdrop users’ tokens for one year.

Why? It is nothing more than to reduce the selling pressure when listing the coin, to manage the market value and raise the price, to facilitate the first round of selling, or to protect the rights and interests of VCs and prevent the coin price from collapsing too quickly.

Token economics is the most useless thing in the entire crypto space. If a project only focuses on the token model, it is enough to prove that its essence is useless...

Secondly, Aleo's two rounds of financing were in 2022 and 2021, but the Aleo Foundation was not established until the end of 2023. From 2021 to 2023, who was managing the money, how much money was left in the foundation, and how much money was spent on the project each year? We don't know anything. A big shot on X made a simple estimate that Aleo's annual cost expenditure was about 20 million, but where did the money go? Is the continuous delay of the mainnet really due to technical difficulties, or is it due to internal strife, contradictions, or uneven distribution of spoils? It is unknown.

It can be said that the current situation of Aleo is extremely opaque and there is no expectation of application landing. The only conceivable support for the price comes from the miners' expenditure on computing power costs.

A previous similar project, called Filcoin...

Is there any chance that Aleo could be involved?

For public chains like Aleo, there are two types of opportunities for retail investors to participate. One is an extremely low-cost airdrop, because its financing is high enough, the initial token circulation is not large, and there is a price floor; the other is the price that is hit when the industry plummets.

From now on, the Aleo airdrop is basically locked, and it is unknown what the price will be next year. Mining is not suitable for retail investors to participate, and the mining cost for retail investors without mining farms will be higher.

Another point is that Aleo is one of the few projects that does not have spot but futures first. Now its futures price has reached 42.4, and its total market value has reached 63.9 billion US dollars. If it increases by 4 times, it will surpass Ethereum, and if it increases by 15%, it will surpass BNB.

There is no room even for speculation.

To sum up, my opinion on ALeo is that it has proposed a vision that has not been the main demand and business model for a long time, and even so it is difficult to achieve, and will eventually be infinitely close to Fil.

There may be ups and downs in the middle, but that will only happen after experiencing a round of super crash.