SUPERALGOS PROJECT
Why Contribute to Superalgos?
The short answer is because it’s worth it. This is why…
I wrote this piece borrowing heavily from another article I published after the FTX debacle. Feedback suggested it is the best way to explain how the project is structured and why it’s worth contributing to Superalgos, so here it goes!
In a way, it’s easy to point why it’s worth contributing to open-source in general: because you’re contributing to improving a public good and giving back to a community that spent hundreds of thousands of human hours building infrastructure that you may enjoy for free, no questions asked.
But in the case of Superalgos, there’s a lot more to it.
Save for a few exceptions, crypto has been a major disappointment. The potential for a technological disruption that would enable decentralization created an immense bubble of speculation and easy money that attracted the worst of humanity. The space got filled with greed and scams overnight.
The Superalgos Project is, in a way, an attempt at rehabilitating the crypto industry.
Bitcoin is the soundest form of money that has ever existed. Adoption keeps growing, and all the major foreseeable hurdles since the inception of the ultimate monetary network have been cleared.
But where do we stand in the quest to decentralize applications other than money?
Will we ever build application-specific frictionless networks that grant everyone better access to resources?
Will decentralized communities ever be able to compete with the centralized powers that be?
Superalgos is one such network building public open-source infrastructure that grants users access to state-of-the-art trading automation technology and enables decentralized trading.
But how did we do this? How did we escape the temptation of easy money and speculation that pervaded the crypto industry from the very beginning?
The Original Sin
The crypto industry was an opportunistic spinoff of bitcoin, doomed to fail. It may not have been obvious in the beginning, but it is now.
In a way, the industry was built on original sin.
Crypto took Bitcoin’s technological breakthrough and appropriated the freedom/decentralization narrative to run with it — all while discarding Bitcoin’s core principles.
The problem is that those principles are — precisely — what makes decentralization and freedom possible.
Jack Mallers put it best when he said that “the crypto industry and blockchain is an arbitrage on the trend… and the arbitrage has been margin-called.”
The only way to redeem ourselves from the original sin is to repent and ensure we don’t fall back into sin again.
How?
By embracing our Bitcoin roots.
Back to Square One
The only way crypto will ever work is by adopting Bitcoin’s core principles — and that’s precisely what we did.
- We optimized for decentralization, openness, and permissionlessness. These are the principles that enable resilience and censorship resistance.
- We respected the first law of thermodynamics. You can’t print tokens out of thin air and expect them to hold value. Tokens must be backed by some form of energy or work.
- We bootstrapped until achieving product-market fit. This enables a fair launch, which is crucial to show new stakeholders that the system is just as they join the network over time.
- We went the open-source, meritocratic, community-owned route. This enables massive collaboration and fosters the emergence of collective intelligence, a crucial feature that allows projects to compete with well-funded centralized entities.
- We designed incentives to optimize for long-term goals. A smart design of incentives guarantees that the project will dominate a space.
- We defined an economic policy. An economic policy may be described mathematically or algorithmically. The requirement is that it’s set in stone from day one and that no one can alter it afterward. This makes the economy predictable and the rules fair, as they are the same for everyone, forever.
The above principles derived from the design of Bitcoin are Superalgos core principles too. Any departure from these principles would weaken the project and turn it into a house of cards, at the mercy of the implacable polar winds that reign the recurrent crypto winters we’re all so familiar with.
So You Got Some Principles
That’s a start! But how do those principles translate into a setup conducive to building and sustaining a network economy?
Let me paint a broad-brush picture of how Superalgos is designed as a project. The framework I will describe may as well serve as a template for other projects, so I’ll keep the explanation generic.
First of all, forget companies, early funding, angel investors, and venture capital. Instead, picture a typical bootstrapped open-source setup that you’ll later boost with a native tokenized economy.
In our case, the original mindset was to go with a typical for-profit fintech startup setup. Fortunately, we learned a few lessons early on and ended up pivoting to the open-source paradigm soon enough.
When I say a typical open-source setup, I mean an open-source project started by a few devs in their free time, building something they are passionate about.
You don’t need capital, lawyers, accountants, licenses, a business plan, or backing of any sort. All you need is some time to spare and passion. Throw in a vision if you wish — but even that is not required early on.
Build something you want to use and that others may be interested in.
The Token
At some point, we attracted a first follower — a user willing to put in some effort and contribute to the project.
That’s how we started a grassroots movement!
And that was the right time to consider deploying the project’s token. We could do it then, or later on, but never earlier.
The reason is that we used the token to incentivize contributions. That is how we distribute the token fairly. The project doesn’t sell tokens. Instead, it distributes tokens among open-source contributors in proportion to the value they add to the project.
When there are no contributions, there’s no value added and no tokens to distribute.
That’s how we respect the first law of thermodynamics. Our token is backed by the human work required to produce something of value. In other words, each token is backed by the value entailed in the improvements made to the project by contributors.
That’s how our grassroots movement grew into a meritocracy.
Notice that the founders are contributors like everyone else and get token rewards under the same rules. There is no pre-mine.
Also notice that the type of work that adds value is not just technical. As the project grows, we need all sorts of skills deployed by people with different backgrounds.
Low Time Preference
For a long time, the token had zero value as there wasn’t a market nor demand, thus no price discovery. At that point, the token was merely a measure of the contributors’ reputation.
That was the case until October 2021, when an open group of community members joined forces to set up the first market for the Superalgos SA token. We opened up the market after four years of hard work and twelve open beta versions of the platform.
As you can see, the setup required a low time preference from everyone involved. That’s why the project attracted people that are passionate about what we’re building, instead of scammers and idiots with a get-rich-quick mindset.
Because we don’t have money for marketing, speculators haven’t found us yet. This is great for developing a low-time preference culture and aligning everyone’s interests toward a long-term goal.
Grassroots open-source projects are inherently well-suited to deliver decentralization.
It’s the only paradigm in which the movement can stay clear of the greed that drives all the scams and ill-conceived systems that the crypto industry has produced.
Premium Products and Services
How did we end up with a sustainable economy?
How do builders with a low time preference get rewarded for their entrepreneurship?
Because the product is good, the project is growing an organic user base purely by word-of-mouth. The product and network we’re building is open, permissionless, and free for everyone. This is crucial to lower entry barriers and reduce friction.
This model accelerates adoption, contributions, and overall growth. It also disrupts centralized entities that may want to compete with inferior extractive business models.
As the user base grows and the overall quality of the offering improves, we started thinking about building use cases for the token. A potential avenue was delivering premium community products and services accessible only to token holders.
Such a line of business directly benefits contributors — a highly desirable and healthy underpinning of our meritocracy. The message to the world is “use our infrastructure free of charge, but if you wish to access these special perks, you need to contribute!”
What about users who can’t contribute work?
Those may buy the token from contributors in a peer-to-peer fashion, or in a more convenient open market: a liquidity pool on a decentralized exchange.
Closing the Feedback Loop
So we’ve got contributors incentivized by a token that now has a market value.
Do you see how such a setup leads to an ever-improving network destined to conquer its target market?
As the user base grows, organic demand for the token increases, adding buying pressure in the market. User growth leads to organic token appreciation.
Then, a higher value of the token results in greater incentivization power for the project. More incentives attract more contributors, resulting in faster development and improvements. This, of course, makes the product more attractive and leads to further growth of the user base.
It’s a positive feedback loop by design of incentives.
Marketplaces and Payments
Notice how the use case of the token doesn’t involve spending it. Tokens prove that the holder has contributed to the community and deserves the premium perks.
Think of holding tokens as holding a membership card. Of course, different benefits may have specific token-holding requirements!
If the project ever features a marketplace or requires payments, we won’t try to reinvent the wheel. That’s Bitcoin’s and the Lightning Network’s competency. There’s no other form of money or electronic payments superior to that combo.
What About Howey?
If you paid attention to the subtleties of how the token is issued, distributed, put in the market, and required to access specific goods and services, you may have noticed that it fails the Howey Test and is not an investment contract in the light of US securities laws.
Let’s quickly check the test:
- An investment of money.
Fail. No one is investing money to get the token, as it’s distributed as a reward for voluntary work. The project does not sell tokens. There is no private sale and no public sale. There is no marketing. The token may or not be listed in decentralized exchanges by independent parties — random contributors who hold tokens — not the project. Whoever buys the token does it either to support the development or to access premium products and services. Since there is no investment, the rest of the test becomes irrelevant.
Wrapping Up
Do you see how everything ties up together?
We’ve got a project with zero overheads driven by open-source contributions — as resilient as they come!
We’ve got a collective business model around the token, with all incentives aligned toward a long-term goal. The goal is to conquer a target market with a self-sustained and ever-evolving organism that never stops improving itself.
Everything is organic, based on the premise that the project must satisfy specific market needs to succeed.
There’s no centralized marketing, speculation, leverage, or scams.
If the project doesn’t take off for whatever reason at any point, no one gets screwed. No one gets rug-pulled out of their life savings.
There are plenty of things we haven’t covered and thousands of details that escape this article. Think about distributed governance, how to value contributions, how to scale a decentralized human collaboration, and many other specifics that may affect the success and viability of the project.
I won’t go into those details in this article, but you will learn more as you progress through the series of blog posts that explain how to contribute.
Mastering Contributions
You just read an article in the Mastering Contributions series exploring some of the crucial aspects of the Superalgos Collaboration. To continue your journey learning about how to contribute to Superalgos, just keep reading:
- Why Contribute to Superalgos
- How to Contribute to Superalgos
- Why We Reward Value Creation Only
- What Is and What Isn’t a Contribution that Adds Value
- All About Proof of Value Reports and Teams Formation
- The Superalgos Contributor Mindset
- The Good Governance Citizen
- More Thoughts on Governance and the Allocation of Rewards
