- Once praised by SEC Chair Gary Gensler, layer-1 blockchain Algorand is struggling.
- ALGO is the cryptocurrency with the most holders in loss among those tracked.
With the crypto market taking a downturn, portfolios of crypto investors have taken a hit. But some have fared worse than others.
90% of those holding blockchain project Algorand’s native ALGO token are underwater on their investment. 2% are currently at break even, while only 7% are in profit, according to data from crypto analytics platform IntoTheBlock. ALGO is the cryptocurrency with the most holders in loss among those tracked by the platform.
Algorand is a so-called layer-1 blockchain founded in 2017 by Silvio Micali, a computer scientist and professor at the Massachusetts Institute of Technology.
The project and its founder were previously lauded by US Securities and Exchange Commission Chair Gary Gensler during his time teaching at the MIT Sloan School of Management in 2018 and 2019.
“Silvio’s got a great technology, it has performance, you could create Uber on top of it,” Gensler said during a presentation at the MIT Sloan School of Management in 2019. Many crypto investors have taken Gensler’s comments as an endorsement of the project — more so after he became SEC Chair in 2021.
Gensler’s praise of Algorand received renewed interest last April, after an SEC lawsuit brought against crypto trading platform Bittrex argued that ALGO was a security.
Algorand has struggled in recent years and underperformed its peers. The ALGO token, which hit an all-time high of $3.56 three months after Gensler’s 2019 presentation, now trades at around $0.17 — a 95% drop.
In the same period, top cryptocurrencies Bitcoin and Ethereum have rallied 612% and 860% respectively.
Gensler and Algorand
While Gensler’s most frequently cited comments about Algorand come from his 2019 presentation, the SEC Chair first mentioned the project in 2018.
During the seventh lecture in his Blockchain And Money course taught in the autumn of 2018, Gensler used Algorand as an example of alternatives to Bitcoin’s proof-of-work consensus algorithm.
He explained how Algorand randomly picks groups of nodes on the network to accept new transactions, then allows a broader group of nodes to check their work.
“I apologise if I’m a little oversimplifying Silvio’s brilliant work,” he said.
Gensler’s praise of Algorand may have a simple explanation.
Both Gensler and Algorand creator Micali are faculty members at MIT. With the pair working at the same institution, it would make sense for Gensler to be more familiar with Algorand and use it as an example of blockchain technology in his lectures and presentations.
One issue that has weighed on Algorand and other cryptocurrencies is whether or not they are securities.
The SEC has previously argued that Algorand’s ALGO token is a security, and should be subject to US securities laws.
The Algorand Foundation, a nonprofit tasked with developing the Algorand blockchain, said it believed Algorand’s ALGO token was not a security under US law.
Tim Craig is a DeFi Correspondent at DL News. Got a tip? Email him at tim@dlnews.com.
