As one of the most questionable aspects of the Chia project, the 21 million tokens strategic reserve is publicly available on the chain, but there are still many investors and users who have questions about it. How will they ensure the proper management and utilization of this portion of funds?
This article tries to get a glimpse of Bram Cohen’s thoughts on this part of the fund from the available information and interviews.
Among the Western blockchain “old leeks”, there is a group of what might be called “Bitcoin fundamentalists”, or “Bitcoin believers”, who firmly believe that Bitcoin is the only virtual currency with real value and faith, and that only Bitcoin is pure, no team share and purely voluntary development.
Chia is not Bitcoin, and its legacy and code vision will make it more compliant than Bitcoin, which has become a legal risk-averse and energy-intensive tool, as evidenced by its expected IPO as soon as this year. Therefore, regardless of the team share reservation of other blockchain projects, if we look at Chia from the perspective of a traditional listed company, all listed companies will set aside a portion of their reserves in the company itself as a promise of the future value of the company, and also to take advantage of the later equity delivery.
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Bram previously tweeted that so far, equity investment against Chia is the main source of funding for Chia team’s operation and development, which is a very traditional way of investment. Neither shareholders, team nor development will get any tokens at this stage, but they will get compensation tokens only after the project is listed, and these assets will be liquid. Even from a profit perspective, for a team with an expectation of going public, dumping tokens at the current market is a very foolish move and is tantamount to giving up the future wealth effect.
This does not mean that no one is selling off the current XCH. Bram believes that some of the early capital that purely invested in Chia tokens and did not involve equity in the company owns more tokens and there is a possibility of selling off, and it is unavoidable that as soon as a cryptocurrency project goes live, there will be a giant presence that will immediately make a sell-off. For some investment institutions, playing with cryptocurrencies is not a matter of belief in their future and that this type of trading will change the world, but simply to be able to sell off faster for profit. chia is not immune to such a situation, but such a sell-off usually takes place only for a short period of time in the early days and cannot have a long-term impact on the price of the currency.
So will this strategic reserve of 21 million tokens, once unlocked, affect mining returns?
Bram said that even if in the distant future this pre-mined tokens need to be released in an emergency to keep the team operating, it will only be distributed and diluted among the company’s shareholders and will not put this pressure on the miners, in other words, the chances of miners mining the coin will not be reduced by the release of this reserve token. The chances of miners mining XCH depends only on the proportion of the hardware storage mined to the network-wide storage.
So how do you secure these 21 million reserve tokens?
So far, this part of the tokens is placed in Chia’s official cold storage, a multi-signature account that needs to be unlocked by multiple people, and these private keys are also hosted by sufficient security personnel, and in the future, the project will develop the relevant technology to put the movement of this part of the funds on the chain, so that all users can jointly monitor. The effect is that investors will know in advance wherever this money is going.”
As in our previous article “Connecting with Bram Cohen: Chia’s New Features, XCH Price and IPO Plans,” Bram mentioned a “rate-limiting wallet” that has a hot key and a cold key, with the hot key having partial access to the wallet and the cold key being able to transfer all of the wallet’s assets in extreme cases. In the future, Chia officials may use this technology in the wallets of reserve tokens. The official idea is that after the reserve funds are taken out using the hot key, the funds will be locked for a period of time, during which the funds can be recalled using the cold key if it is found that the withdrawal is against the rules. This will ensure the absolute safety of the reserved funds.
With 21 million reserve tokens still listed, is this project still decentralized?
Many people worry that the biggest drawback of Chia as a project, compared to Bitcoin, is that it doesn’t appear to be decentralized. But in fact, while Chia is an operating entity, it is only there to support Chia development and operations, and the Chia network is completely decentralized, as is Bitcoin, and even if the team disappeared tomorrow, it would not affect the network operations.
In fact, Chia is currently ranked number one in terms of addresses and is probably more decentralized than Bitcoin.
Chia’s corporatized operational support instead helps the project grow faster. In addition to being more environmentally friendly, Chia has gone further than Bitcoin in other ways, such as Chia already using taproot as a regular transaction method, while Bitcoin took a full year to decide on this feature at the time.
Chia will go further than bitcoin and become a true cross-circle cryptocurrency, gaining wider adoption and support, while early miners will also reap huge benefits. chiaCloud Chia will provide users with first-hand information news and the most reassuring investment services, allowing early Chia miners to reap stable and long-term returns.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/will-chias-21-million-token-strategic-reserve-affect-miners/
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