Probably Fishing

If You Give A Mouse A Cookie

· 4 min read algorand tokenomics governance

A lot of people are criticizing the idea of uncapping ALGO. I want to try and convince you that uncapping ALGO isn’t what’s going to kill Algorand. The much more immediate threat is the Algorand Foundation spending all of the ALGO in the treasury without meaningfully growing the network or the txn fees or the community.

I feel *frustrated.*I wrote a handful of long-form posts over the years about sustainability, only to be met with more spending on increasingly useless things. It seems like many of the suggestions the community makes (reduce headcount, cut spending, build better governance) are met with the complete opposite, even when it’s the obvious choice. The community cannot solve fundamental mismanagement. I don’t believe any change to the tokenomics can have more of an effect than the AF dumping the treasury ALGO and making no tangible impactfor the network. That is the core of the issue. If they were selling ALGO, but then demand for ALGO went up, then everyones happy. It’s the fact that they sell ALGO and what they then spend on is the most useless shit you could ever think of.

In my opinion, emissions are a healthy mechanism for maintaining consistent validator rewards, especially when txn fees or the validator count are low. They act as an adaptive buffer for validators. I like it because without it, you’re relying entirely on txn fees, which can vary for any number of reasons. It provides the network an extra layer of economic security at little to no cost (if you also have a burn mechanic to offset).

Pairing emissions with a burn makes it so under the right balance, simple example — 3% annual burn and 2% annual emissions, the network could be net-deflationary while still maintaining healthy validator rewards. This would be an even better scenario than having a fixed supply.

The issue is that we’re only having this conversation now because the foundation has spent so much of the treasury and no longer wants to boost validator rewards. If they had managed the treasury responsibly, those treasury funds could have continued supporting validator rewards until txn fees naturally scaled. So emissions become necessary now not because the original idea two years ago was flawed, but because the reserves are being depleted at an alarming rate and the price of ALGO remains near ATLs and the remaining rewards run out in a year.

AF will come out with their proposal paper in Q1 of 2026 (late of course), and what validators get to vote on will likely be whatever the AF initially proposes (because to change it would take another 6 months). This vote will give the ALGO holders the power to reject AFs proposal as they will need 90% of stake to upgrade to the new version, which I don’t believe the AF has control over. I think it’s very important, even if it’s a good proposal, that we as a community come together and reject it.

We cannot keep giving the mouse a cookie, meaning, if we don’t receive concessions from the Algorand Foundation in regards to their spending, then we shouldn’t make life easier for them by adding emissions.

There are two scenarios — 1) Accept their proposal, allow them to keep spending the remaining 1B ALGO on useless shit, validator rewards get funded via emissions but ALGO trends towards zero and we get no substantive change. 2) Deny their proposal, demand they cut spending, reduce headcount, and work on the necessary governance & organizations needed to give the community control (real control) over the treasury before it’s gone. They continue spending ALGO and the network potentially suffers, but this is our only leverage to get AF to concede to our demands.

If we go with option 2 (which I believe is the best path), it’s crucial that we receive the organizational changes needed **first,**before upgrading to the new node version with emissions. Trust has been broken unfortunately between the AF and the community and I don’t think it’d be wise to trust their timelines on any of this.

Here’s a non-exhaustive list of things which we could ask for:

I will keep repeating, there is no silver bullet. Even if all our demands were met overnight it doesn’t mean anything would suddenly change. This is still a brutally competitive market, with more entrants everyday, with bigger bank rolls and flashy partners. But I do believe if our demands were met, you would see the Algorand community rally like never before. I think many of us are so battered and bruised that it feels hopeless, and so we stop engaging, stop building, stop trying. I want to encourage everyone to be optimistic, it isn’t over until it’s over, and things can change quickly. We just need to act together, and stick firm to our demands, and repeat them loudly until they’re acknowledged and acted on. AlgoScout said it best “I’d rather see ALGO go to ZERO than reward reckless spending”. I think most of the community agrees with this. That’s why we need to come together and formulate demands for the AF. No new version of Algorand should be accepted by node runners until x y and z demands are met.

This piece originally appeared on Medium .