Synereo launches its second crowdsale at 8pm PST, 11pm EST today, September 19 (3am GMT on Sept 20th), on the heels of several major developments.
Two weeks ago, Synereo revealed its alpha version at a seminal conference focused on Synereo. Over the weekend, they announced they will burn half of their total AMPs and allocate more funds to developer bounties.
Synereo has been building quiet momentum over the past year. It held its first crowdsale over a year ago. It set a cap of 4700 BTC and raised approximately 500. Undeterred, the team kept up development while strengthening ties with the Ethereum team to work on sharding–the means of scaling a distributed computing platform. They were recently accepted into a Silicon Valley accellerator, NFX. Over the past couple months, they’ve built a network of community managers, called “Amplifiers,” including two in China.
Smith+Crown met with Synereo in April to understand their protocol and roadmap for development. At the time, many thought Synereo was a social network–a blockchain-based Facebook killer, but Synereo is much more than that.
The Decentralization Revolution
The team foresees major technological shifts on the horizon and thinks distributed computing platforms will play a major role. Dor and his colleagues have designed Synereo to integrate social dynamics into distributed systems: not a social network but a social layer that any protocol can use and upon which many distributed applications can be built.
Synereo has been cultivating a community of aspiring distributed application (dApp) developers and is engaging new ones. They’ve designed their technology stack to encourage aspiring distributed application developers. The first layer of their stack, a distributed ledger called Rchain, can scale quickly and cheaply. They have developed a unique data storage and retrieval protocol called SpecialK, which makes finding and accessing content throughout the network easy for new applications. Their smart contract language, Rholang, is similar to Ethereum’s Solidity, but there are some key differences intended to make it more secure and more scaleable.
An ecosystem of applications built on top of Synereo can help decentralize far more than banking or social networks.
“When you look at all of the possibilities that the decentralization revolution brings with it, you’re going to see a major shift much greater than the shift from the pre-Internet times to day.” – Dor Konforty (discussing the combination of blockchain tech and other emerging digital technologies)
There are many ways to participate in the crowdsale. Read about them here.
Designing the Crowdsale: Choppy Waters
In designing their second crowdsale, Synereo navigated uncharted waters. AMPs are actively traded on exchanges today, and their price has fluctuated over the past 3 months from a low of around $.05/AMP to a high of over $.20.
This presented a dilemma: how do you price the crowdsale when the token was on the market?
They opted to set the price at 33,000 satoshis per AMP (.000033 BTC or around $.20 USD), and then increase the price to 36,500 satoshis after two weeks and then again to 40,000 after another week. Crowdsale participants could get bonus AMPs if they contributed more–up to 15% for over 200 BTC.
This design met backlash among the Synereo community. It was seen as controversial for two primary reasons, and its announcement raised a third issue.
- The bonuses for larger purchases runs counter to the philosophy of decentralization by encouraging whales. Users with smaller pocketbooks felt that they would be out purchased.
- The announcement of a set price puts breaks on any market activity leading up to the sale.
- The announcement highlighted the overall distribution of AMPs, which made many users uncomfortable.
Synereo responded to each of these points.
First, bonuses for large investors is common for a cryptocurrency ICO/crowdsale. They did not include one in their first crowdsale–an omission which may have caused the sale to miss its target. An ‘(cryptocurrency) industry-standard offering could encourage larger investors–and as a result, more investment.
Second, a set price in a second sale does have precedent on the non-crypto corporate world. When a company sells additional shares, typically called a ‘subsequent offering,’ they can set a ‘subscription price’ or sell directly to the market at market prices (by acting as any other seller placing orders). This isn’t something crypto-investors would be used to.
Synereo’s situation is a bit unique, because cryptocurrencies themselves differ from publically-listed corporations in several ways. Synereo is selling AMPs currently held in a multi-sig wallet intended for future sales: they aren’t owned by the founding team or other investors. It isn’t common for companies to have such a reserve–either they sell from founder/investor wallets (technically non-dilutive) or they create new stock (dilutive). Having tokens held in reserve that are intended for future purposes is a special feature of cryptocurrency projects.
Finally, the overall distribution of AMPs has been an ongoing point of discussion (and contention) among the community. The team shares its crypto and fiat finances on a public google sheet. Initially, the team created 2 billion amps. It offered 18% of these in the first crowdsale and burned the 16% (of 2 billion) that weren’t sold, resulting in something like a buyback scheme. As a result of this, subsequent individual sales (anyone could buy AMPs directly from Synereo; sales are recorded in the sheet), and bounties, there are approximately 60 million AMPs on the market today. This particular sale will involve 45 million AMPs (a soft fundraising cap of $8 million), or 2.6% of the remaining unburnt AMPs. The founders retained 200 million AMPs (about 12% of the unburnt AMPs), locked in a wallet and released in 40 million increments after different milestones have been met.
This distribution is not uncommon in the non-crypto corporate world (Google’s IPO included 5% of its total shares, with Larry Page and Sergey Brin holding 33% of all outstanding shares [and even more voting power due to a two-class stock structure].
Burning AMPs: Decentralizing the Network
Over the weekend, Synereo announced it would burn half the remaining AMPs, leaving 949,291,063 in existence (including those in circulation and those locked in special purpose wallets). This included half of their own holdings, half of the funds allocated for future funding, and half of future user and content-creator rewards, and 55 million AMPs from the bounty wallet. They also will create a new fund, Project 11, of 55 million AMPs that will be controlled by separate curators and not by Synereo itself. This leaves 42% (396,901,858) of all remaining AMPs for future funding rounds.
This effectively increases the relative percent of total AMPs for existing AMP holders and participants in this crowdsale.
“It was never our intention to be the central bank for our information flow currency. Such centralization goes against the very principles Synereo stands for.” – Synereo Blog
Reaction to the announcement seemed positive: following the announcement, the trade price of an AMP jumped from around $.165 to a high of $.20, technically above the crowdsale price with bonuses included.
- Initial materials indicated the team would create 1 billion AMPs. Due to some errors, the team ended up creating 2 billion and adjusting the distribution so it didn’t result in dilution.
Smith+Crown did not receive compensation for the production of this video. It is a reflection of our interest in and passion for the evolving blockchain industry.