Author: Frank, PANews

As a star project with more than 200 million US dollars in financing, the progress of Aleo has always attracted much attention. On September 18, 2024, Aleo's mainnet was officially launched, and the token economics was finally disclosed. However, after the mainnet was launched, Aleo failed to gain community recognition. Instead, it was full of doubts on social media, especially from miners. Many users said on social media that this was a failed case of a king turning into a "failure".

Star projects with full buffs

Founded in 2019, Aleo has proposed to build a privacy-protecting, permissionless and programmable platform since its inception. Official introduction of its main technologies includes Simple Proof of Work (PoSW), Leo language, AleoBFT, Varuna and other contents. These technologies mainly build an L1 blockchain network with privacy protection as the core, combining POW, POS, and AleoBFT consensus mechanisms through zero-knowledge proof technology. From the perspective of comprehensive technical characteristics, Aleo is more like an L1 blockchain network that integrates the consensus mechanisms of Ethereum and Solana, and is also supported by zero-knowledge technology.

The founding team members of Aleo also have standard academic backgrounds. The main members graduated from the University of California, Berkeley, and have worked for well-known Silicon Valley companies such as a16z, Coinbase or Amazon. The star team and innovative concepts have made Aleo's financing smooth. In 2021, it received $28 million in Series A financing, and completed $200 million in Series B financing in 2022, with a valuation of $1.45 billion. The lineup of investors is also well-known institutions such as a16z, SoftBank, Kora, and Coinbase.

However, the development progress of the Aleo team seems to be a bit delayed. The final version of the test network will not be launched until May 2024. The main network was announced as early as 2023, and the main network planned to be launched in January 2024 was delayed to September. In this process, Aleo missed the bonus period of the project rise in the early stage of this bull market, and also made the early miners who participated in the waiting for rewards suffer.

It can be said that whether in terms of team background, technical concepts or investor lineup, Aleo has all the buffs stacked up. If it were not for its slow launch speed, it might have already become one of the first-tier new public chains.

Since the official Aleo data platform does not display the specific number of wallet addresses and daily transactions, the specific activity of Aleo’s ecosystem cannot be verified through direct data. The development of Aleo’s ecosystem can only be speculated through some other data.

Puzzle wallet is the most frequently called program on Aleo. On September 19, Puzzle was called more than 10,000 times, achieving explosive growth. Judging from the timing, this may be due to Aleo’s announcement on September 18 that airdropped tokens can be claimed through Puzzle wallet. Prior to this, the number of calls to programs on Aleo in a single day did not exceed 100. According to Puzzle’s official propaganda, the wallet currently has more than 30,000 users.

According to Aleo founder Alex Pruden, who celebrated the launch of the mainnet on social media, "This achievement would not have been possible without the efforts of dozens of employees, hundreds of ambassadors, and thousands of community members." Judging from the above data, Aleo's ecological activity is not high. However, the number of Aleo's ecological projects is still considerable. So far, there are more than 50 projects in the Aleo ecosystem.

Airdrop lock-up and price plunge deal a double blow to miners

Although the mainnet has not been launched yet, Aleo's financing of more than 200 million US dollars is still regarded as a potential stock by various mining studios and mining groups. Well-known mining pools including Bitmain and F2Pool have also launched mining services for Aleo test coins early. Therefore, many miners have also invested their computing power in pre-mining.

According to the official Aleo browser, the Aleo mainnet was launched on September 5, but the official did not announce the news. Some miners who smelled business opportunities also began to deploy mining. The initial output of the tokens was priced close to $9, but the official did not announce the launch of the mainnet until September 18. This wave of operations also aroused a lot of suspicion in the community. Some people believed that the official was taking advantage of this time to pre-mine tokens or leave time for VC to pre-mine.

A miner who participated in the early mining of Aleo told PANews that they did not dare to deploy too much computing power because they were not sure whether the mined tokens would be officially recognized. However, in early September, many over-the-counter merchants in the community began to purchase Aleo tokens at a price of around $9. Based on the price of a 4090 generating 1.5 tokens a day, the daily income is about $13.5, and it will take about 158 ​​days to recover the graphics card investment. If the price of Aleo rises to $20, the graphics card investment may pay back within three months. Therefore, Aleo's profit expectations have made many miners full of expectations.

However, this situation changed dramatically after the official announcement of the token economics on September 16. According to Aleo, the initial supply of Aleo tokens reached 1.5 billion, and will increase to 2.6 billion within ten years with mining activities. Based on this $9, Aleo's initial market value will reach $13.5 billion, which means that Aleo may become a top ten crypto project, surpassing public chain tokens such as TRON and ADA that have been developed for many years.

As a project with only tens of thousands of addresses, this market value expectation is obviously too high. Therefore, the price of Aleo has taken a big dive since the announcement of the token economics, and has fallen to $3.4. As of September 20, Aleo's market value is about $5 billion, which can also rank among the top 20 crypto market capitalizations.

However, the sudden price plunge has caused a sharp drop in miners' profits, and taking into account costs such as electricity and network, the payback period may be extended to 10 years.

In addition, early miners who participated in the testnet will receive incentives from Aleo. According to the official introduction, 34% of Aleo tokens will be used to reward early supporters. However, this reward cannot be cashed out immediately. The official policy states that rewards for US and non-US users (quite in the style of Lu Xun's description of "There are two jujube trees in my backyard") have a one-year lock-up period. Once this news came out, early miners who were eager to recover their costs could only silently endure the backstab from the official again.

Interestingly, Aleo, which aims to build a privacy-first blockchain, stated that all users need to complete KYC when applying for airdrops, and required applicants to upload their ID, address proof, and selfie. This requirement also caused strong dissatisfaction in the community.

Will the capital be recovered first? Social media continues to question

According to the latest information from Aleo, becoming a mainnet validator requires at least 10 million Aleo tokens. For most ordinary users, this amount of funds and tokens (there may not be so many circulating tokens in the market in the early stage) are almost impossible to achieve. Some users noticed that when the Aleo mainnet was launched, 16 validators had already started running, and most of these validators were early investors.

Although the investor's token circulation is also locked for one year, they can directly convert the locked tokens into the validator's staked tokens. At the same time, the staked daily reward tokens do not have a lock-up period and can be circulated at any time.

As of September 20, data showed that the largest number of validators had received more than 1.1 million Aleo tokens, and the smallest number of validators had received more than 270,000. Among the validators, investors or project-related institutions such as Coinbase, unit410, and the Aleo Foundation accounted for the majority.

Many community users believe that the project owner’s operation is to first recover the capital and then let retail investors take over the mined tokens. Miners who pay out of their own pockets have to weigh the payback period of electricity, equipment and other costs.

Judging from the changes in mining revenue, before the announcement of token economics, the mining difficulty of Aleo increased exponentially. After the announcement of token economics, perhaps because many miners withdrew, the mining difficulty began to decline.

On social media, the evaluation of Aleo has also changed from recommendation to doubt. Twitter user @alexlizeros said: "From this death-level project ALEO, we can see that sometimes a large project does not bring profits, but brings greater losses!". After KOL @Supervellear posted a tweet questioning Aleo, he was blocked by Aleo founder Alex Pruden's social media. @alexlizeros listed Aleo's doubts about the mainnet delay, airdrop lock-up, and excessive market value in the tweet, and concluded at the end: "When you don't know where the liquidity comes from, you are the liquidity."

So far, Aleo officials have not responded to the community’s many questions. However, judging from the current social media trends and token performance, if Aleo wants to regain the market’s confidence in it, it may need to give a more reasonable explanation and more practical sincerity.