The dark secret behind the 90% ICP outflow from Dfinity Foundation

Is it just a coincidence that ICP volume on the major exchanges has remained at a new high range since the shady ICP outflow from the Dfinity Foundation address? Or is there an invisible hand behind the scenes that is manipulating all this.

The dark secret behind the 90% ICP outflow from Dfinity Foundation

The Dfinity team recently released a statement on Reddit in response to the ICP blackout news. The team tokens have a total release period of four years and will only be distributed to team members if the ICP token trading volume reaches a certain threshold, and said that these tokens need to be allocated after deducting certain tax fees, so the amount of tokens allocated to the team will be less.

The dark secret behind the 90% ICP outflow from Dfinity Foundation

But is it really true as the team members say, this remains to be proven, after the main online so far the Foundation outflow of more than 9,000w ICP, outflow of large-scale time nodes can be divided into a week before the launch of May 17 outflow of a total of 30.31 million ICP and June 11 outflow of a total of 5,000w ICP these two major time nodes, in May 10 when the Foundation address to a 32c4 address transferred a total of 1,000w ICP. On May 10th, the foundation address transferred a total of 1,000W ICP to a 32c4 address, of which 1 million were transferred to other addresses, and all of these receiving 1,000W ICP addresses eventually flowed to the Coinbase exchange.

Receiving 10 million ICP addresses.

32c46b6795b0993b9f2edf1845f52eebce172ff2db5e1a76b6af08163955937d

Receive 50 million ICP address.

52757335752ff4029c423aaf2b820462c165ef38d77df9dde49745536e47c99f

View details of the 10 million ICP address outflow at

The dark secret behind the 90% ICP outflow from Dfinity Foundation

For this reason Cycles_Dao team published their opinion by investigating Genesis origin account data: based on hard data in the market perspective to unveil the layers of darkness behind Dfinity Foundation’s outflow ICP. The Cycle_Dao team investigated through the origin accounts mapped to Neuron’s open source code and origin accounts and found that there were 375 origin accounts for seed rounds and early contributors, with seed rounds divided into 49 months of dissolution delay and early contributors being 31 months of dissolution delay.

Origin accounts mapped to Neuron open source code at

Originating accounts are viewed at

Full data view:

https://ic.rocks/genesis
Cycle_Dao team view.

The dark secret behind the 90% ICP outflow from Dfinity Foundation

” Note: Any assumptions made below are only educated guesses, and exact numbers may change once the Dfinity team releases more detailed information about token allocations.
Dfinity is an ambitious project, one that has taken a total of 7 years from years of in-depth research, prototyping, testing, rewriting, more research, more testing and finally a release in May 2021, from the conception of the concept in ’14 to now. No project is perfect upon release, and project launches like this receive scrutiny from a variety of participants: early investors, cryptocurrency trading, large market makers, developers from other communities in the industry, the media, and of course the masses on Twitter and Reddit, and in this post we share our understanding of ICP from a market perspective from launch to now.

  1. market participants.

At 16:00 (UTC) time on May 10, 2021, ICP was circulating on Coinbase, providing initial liquidity from four main sources
Initial liquidity from the financial markets
When launching a new trading product on an exchange, whether it is a centralized or decentralized trading market, it must have sufficient liquidity for an accurate price to be issued, and for most project parties themselves this initial liquidity is provided by the project parties themselves, and Dfinity is no exception here, as we checked that on May 10th up to 3.5 million ICPs were distributed to Coinbase, Binance, Firecoin, and OKEx exchanges. The specific data can be checked at Ic.rocks. Potential tax sales
When there is a market consisting of illiquid tokens, the increase in valuation usually comes with a tax burden, and in order to cover this cost, the Dfinity fund may sell the tokens. We speculate that 10 million ICP account 32c4 was allocated for tax expenses. 1 million ICPs from this account were transferred to the Coinbase exchange at the launch of the main network.

The dark secret behind the 90% ICP outflow from Dfinity Foundation

Detailed view of the 10 million ICP address outflow at
https://ic.rocks/account/32c46b6795b0993b9f2edf1845f52eebce172ff2db5e1a76b6af08163955937d
Restricted DFN Agreement
Employees who joined before mid-2018 received a “Restricted DFN Agreement”, which is similar to a traditional startup offering options, and these option contracts can be used in exchange for future ICP tokens, which are gradually replaced over time with ” Restricted Token Units” (RTUs), which are similar to RSUs and have different tax implications than options. RTUs also have different time vesting schedules, with the first vesting of RTUs occurring on June 24. Option contract holders have the unique advantage of full liquidity at network launch, with up to 20 million ICPs from option holders constituting the bulk of the liquidity coming online. This ICP liquidity flows out of the Neuron 4000 address.

The dark secret behind the 90% ICP outflow from Dfinity Foundation

Note: Data from the chain data, the above data is May 10th Dfinity all outflow ICP data for a total of 3000w, here is a blind spot of understanding note separately, one of them is transferred out 10 million ICP for tax purposes, the remaining transfer out 20 million is the ICP of early employee option holders.
Restricted DFN Agreement: A restricted option agreement belonging to DFINITY
Restricted Token Units: Restricted Token Units (RTUs) are similar to Restricted Stock Units (RSUs) in their treatment. At the time of grant, the employer commits to issue a certain number of tokens to the recipient in the future that are tied to specific requirements that must be met during the vesting period.

Other Participants

This finally leaves other participants, which may include other early employees and investors who have different arrangements or other non-standard contracts. Due to confidentiality agreements and other legal obligations, it is unlikely that we will know the exact details of these arrangements, and some of the previous 20 million ICP liquidity could actually be held by this group. Accounts that fall into this category may include df4a and 0afb accounts, both of which were allocated 2.5 million ICP and subsequently transferred or further allocated 500,000 ICP.

The dark secret behind the 90% ICP outflow from Dfinity Foundation

df4a account address: df4ad42194201b15ecbbe66ff68559a126854d8141fd935c5bd53433c2fb28d4

The dark secret behind the 90% ICP outflow from Dfinity Foundation

0afb account address: 0afb75caa152b4746c497bed346443ac2295a8855df370ec298930fd7a67b89f

Who was not a market participant at the time of release?
Genesis

It is important to note that Genesis account holders (seed round/early contributors) must go through a KYC process to claim tokens, and these participants can only initiate the KYC process prior to the network launch. And the time when liquidity is available to these participants is 2021-5-10-20:54UTC time, which is 4 hours after the opening. The following table summarizes when liquidity will first be available to main network accounts.

The dark secret behind the 90% ICP outflow from Dfinity Foundation

In total, only 880k ICP liquidity was available in the Genesis account in the first week. Foundation Divestment
Probably due to the listing requirements imposed by Coinbase, the Foundation was unable to divest any of its own token assets in the first week after launch, but the project operations incur certain expenses (payroll) that must be paid in fiat currency – any functional foundation would have to sell some of its token assets in order to operate, and the Foundation is likely to sell some of its token assets after May 24th at Below the average ICP price of $150 to sell some of its ICP assets.

The dark secret behind the 90% ICP outflow from Dfinity Foundation

Details of the sale on May 24.
https://ic.rocks/account/49f1d4f9808fef78a0a237c9ba67c0a8fc5551e09ff3984efb147c015e2a3734

The dark secret behind the 90% ICP outflow from Dfinity Foundation

Pre-sales rounds/strategic rounds

We know that the vesting (dissolution delay) schedule for Pre-Sale Round and Strategic Round investors is divided into 12 and 36 months, but we don’t know if there are special start dates and upfront liquidity provisions by the terms of any of the participants, and perhaps some of them may indeed receive a small portion of their allocation on launch day. Existing Employees
As mentioned earlier, RTU agreements only start distributions on June 24, long after the market opens, and the vast majority of existing employees use this arrangement, with the transition from options to RTUs having been completed in June 2020. RTUs vest (with dissolution deferral) over 4 years and have tax deductibility, and there is now an employee plan to incentivize long-term mortgages. As is the norm for fast-growing startups, compensation packages for early employees who take risks and join a new business can be on the high side and then standardized (reduced) over time. The allegation that “each employee has $1,500 in liquid tokens” is completely untrue and frankly offensive.
Impact
We can estimate that at launch there is up to 25 million ICPs of liquidity available. We can see that the vast majority (up to 81.6%) of the initial liquidity was provided due to the “Restricted DFN Agreement”, which provides liquidity for market making and tax purposes, accounting for the remaining 18.4%.

The dark secret behind the 90% ICP outflow from Dfinity Foundation

We know that the total issue of ICP at launch was around 4.69E ICPs, with 25 million ICP liquidity at launch accounting for 5% of the total supply taken, we also know that the ICP futures market on FTX was popular before ICPs were in circulation, and the limited supply, combined with the common speculative based market sentiment at the launch of the new token, set the stage for ICPs to be traded at prices as high as $700 Trading created the necessary conditions for a slow version of the Genesis account supply to become available over the next few weeks, with pre-sales and the first allocations of strategic rounds having been sent out, causing the price to gradually plummet and the fact that market sentiment turned bearish only furnished the downward trend. Obviously this is not an ideal situation, what could be improved?

The Genesis account KYC process starts a few months before the main online release: Month 0 neurons should have been fully unlocked ready for the number to be functionally supplied to the market at the start of trading, which would allow for a better priced release.

Genesis account holders need better tools at the time of release. When starting a network: There are always a lot of limited matters to balance and unfortunately the tools for the seed round are not high enough on that list, having a smooth user experience will give these investors the confidence to actually transfer funds and help alleviate supply issues.

The Restricted DFN Agreement should be less favorable to former employees: employees who voluntarily leave DFINITY (or are terminated) retain these very favorable terms, and some more senior employees, such as VPs or directors who joined in 2018, could have negotiated very lucrative compensation packages and then left (or were terminated) and had the ability to deal on the maximize profits on day one, but of course this agreement is legally binding, so there’s really no way around this.”

The above is the purpose of Cycles to make an analysis of the Dfinity Foundation ICP flow based on hard data standing in the market perspective, and there is a reasonable explanation for the flow based on sex, we can conclude based on the above analysis that a total of 30.31 million ICP tokens flowed out of the foundation address on May 10th, of which there was an outflow of 20 million belonging to the early employees in June 2020 ( The remaining 10 million ICPs were used for tax purposes, while 3.5 million ICPs were distributed to Coinbase, Binance, Firecoin and OKEx exchanges on that day to provide liquidity, and other participants had a total of 5 million ICP tokens in their hands. On May 24th, the Foundation sold a total of nearly 4 million ICP tokens to the Coinbase exchange for operating expenses, and the outflow of ICP tokens resulted in a significant change in the structure of the new holdings, for which the Foundation transferred out a total of 50 million ICP tokens.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/the-dark-secret-behind-the-90-icp-outflow-from-dfinity-foundation/
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