Aleo mainnet launch: King becomes "heavenly demise"? Miners cry out that they have been severely scammed

Author: Frank, PANews

As a star project with over $200 million in funding, Aleo's progress has been closely watched. On September 18, 2024, Aleo's mainnet officially launched, and the tokenomics were finally disclosed. However, after the mainnet launch, Aleo failed to gain community recognition, instead facing a barrage of skepticism on social media, particularly from miners. Many users expressed on social media that this is yet another case of a star turning into a "fallen star."

Buffed Star Project

Founded in 2019, Aleo aimed from the outset to build a privacy-protecting, permissionless, and programmable platform. The official introduction highlights its main technologies, including Simple Proof of Work (PoSW), the Leo language, AleoBFT, and Varuna. These technologies primarily construct an L1 blockchain network centered on privacy protection, utilizing zero-knowledge proof technology in conjunction with POW, POS, and AleoBFT consensus mechanisms. Overall, Aleo resembles an L1 blockchain network that integrates the consensus mechanisms of Ethereum and Solana, enhanced by zero-knowledge technology.

The founding team of Aleo also has a standard academic background, with key members hailing from the University of California, Berkeley, and having previously worked at renowned Silicon Valley companies such as a16z, Coinbase, and Amazon. The star team combined with innovative concepts enabled Aleo to secure funding smoothly, raising $28 million in Series A funding in 2021 and completing $200 million in Series B funding in 2022, reaching a valuation of $1.45 billion. The investor lineup includes well-known institutions such as a16z, SoftBank, Kora, and Coinbase.

However, the development progress of the Aleo team seems somewhat sluggish. The final version of the testnet was only launched in May 2024, despite claims of a mainnet launch as early as 2023, with the planned mainnet release originally set for January 2024 being delayed until September. During this process, Aleo missed the opportunity to capitalize on the early bull market, causing early participants and waiting miners to suffer.

It can be said that, in terms of team background, technical concepts, and investor lineup, Aleo is fully buffed; if not for the slow launch speed, it might have already joined the ranks of top new public chains.

Since Aleo's official data platform does not display specific wallet address numbers and daily transaction statistics, the actual activity level of Aleo's ecosystem cannot be directly verified through data. We can only speculate on Aleo's ecosystem development through other data.

The Puzzle wallet is the most frequently called program on Aleo, with over 10,000 calls on September 19, achieving explosive growth. From the timeline, this surge may stem from Aleo's announcement on September 18 that users could claim airdrop tokens through the Puzzle wallet. Prior to this, the daily calls for programs on Aleo did not exceed 100. According to Puzzle's official promotion, the wallet currently has over 30,000 users.

Additionally, Aleo founder Alex Pruden stated on social media while celebrating the mainnet launch: "This achievement would not have been possible without the efforts of dozens of employees, hundreds of ambassadors, and thousands of community members." Based on the above data, Aleo's ecosystem activity level does not seem high. However, the number of projects in the Aleo ecosystem is relatively considerable, with over 50 projects currently.

Airdrop Lockup and Price Plunge Deal Double Blow to Miners

Although the mainnet has been slow to launch, Aleo's over $200 million in funding has been imagined as a potential stock by various mining studios and miner groups. Well-known mining pools like Bitmain and Fish Pool also launched mining services for Aleo test coins early on. As a result, many miners invested their computing power into pre-mining.

According to Aleo's official browser, the Aleo mainnet went live on September 5, although the official announcement was not made at that time. Some miners who sensed the opportunity began deploying for mining. The initial market price of the produced tokens was close to $9, while the official announcement of the mainnet launch came only on September 18. This series of actions raised suspicions within the community, with some believing the official was pre-mining tokens or allowing VCs time for pre-mining.

A miner who participated in Aleo's early mining told PANews that they were hesitant to deploy too much computing power because they could not be sure whether the mined tokens would be recognized by the official. However, by early September, many within the community had begun to see off-market traders purchasing Aleo tokens at around $9. Based on the calculation that a single 4090 generates 1.5 tokens per day, daily earnings would be about $13.5, meaning it would take approximately 158 days to recoup the investment in the graphics card. If Aleo's price rose to $20, the graphics card investment could potentially break even within three months. Thus, the expected returns from Aleo filled many miners with anticipation.

However, this situation dramatically changed after the official announcement of the tokenomics on September 16. According to Aleo, the initial supply of Aleo tokens reached 1.5 billion, which will increase to 2.6 billion over ten years due to mining activities. At a price of $9, Aleo's initial market capitalization would reach $13.5 billion, which would mean Aleo could become one of the top ten crypto projects, surpassing long-established public chain tokens like TRON and ADA.

For a project with only tens of thousands of addresses as ecosystem users, this market cap expectation is clearly too high. Consequently, Aleo's price plummeted significantly following the announcement of the tokenomics, dropping to $3.4. As of September 20, Aleo's market cap was approximately $5 billion, placing it among the top 20 in terms of crypto market capitalization.

However, the sudden price drop sharply reduced miners' earnings, and when factoring in costs such as electricity and network fees, the payback period could extend to ten years.

Moreover, early miners participating in the testnet will receive incentives from Aleo. According to the official announcement, 34% of Aleo tokens will be used for rewards to early supporters. However, this reward is not immediately liquid, as the official policy states that rewards for both U.S. and non-U.S. users (echoing Lu Xun's "I have two jujube trees in my backyard" style) will have a one-year lock-up period. This news hit early miners, who were eager to recoup their costs, hard, forcing them to silently endure another betrayal from the official side.

Interestingly, Aleo, which aims to create a privacy-first blockchain, required all users to complete KYC to claim airdrops, asking users to upload identification documents, proof of address, and selfies. This requirement sparked strong dissatisfaction within the community.

Capital First to Recoup? Continuous Community Doubts

According to Aleo's latest information, becoming a mainnet validator requires at least 10 million Aleo tokens, which is nearly impossible for most ordinary users in terms of both the capital scale and the amount of tokens (there may not be that many circulating tokens in the early market). Some users also noticed that when Aleo's mainnet launched, there were already 16 validators operating, most of whom were early investors.

Although the tokens for investors also have a one-year lock-up, they can directly convert the locked tokens into staking tokens for validators. Meanwhile, the daily reward tokens for staking do not have a lock-up period and can circulate at any time.

As of September 20, data showed that the most validators had received over 1.1 million Aleo tokens, while the least had received over 270,000 tokens. Among the validators, investors or project-related institutions such as Coinbase, unit410, and the Aleo Foundation accounted for the majority.

Many community users believe that the project's actions prioritize capital recoupment first, allowing the mined tokens to be taken over by retail investors. Meanwhile, miners who have invested their own money must weigh the payback period against costs such as electricity and equipment.

From the changes in mining earnings, prior to the announcement of the tokenomics, Aleo's mining difficulty was increasing exponentially. Following the announcement of the tokenomics, possibly due to many miners exiting, the mining difficulty began to decrease.

On social media, the evaluation of Aleo has shifted from recommendation to skepticism. Twitter user @alexlizeros stated: "From this fallen star project ALEO, we can see that sometimes a big project does not bring profits, but rather greater losses!" KOL @Supervellear published a tweet questioning Aleo and was subsequently blocked by Aleo founder Alex Pruden on social media. @alexlizeros listed Aleo's delays in mainnet launch, airdrop lock-ups, and excessive market cap as points of contention in the tweet, concluding: "When you don't know where liquidity comes from, you are the liquidity."

As of now, Aleo's official response to the community's numerous doubts has been absent. However, based on the current social media sentiment and token performance, Aleo may need to provide more reasonable explanations and genuine intentions to regain market confidence.