What’s Got Algorand’s ALGO Jumping 26% And Still “Hot”

  • Algorand flying, up 100% in 2020 so far, got fuel for another 100% run-up
  • Binance.US announcing support for Algorand (ALGO) staking that went live earlier this week
  • Technicals along with the new tokenomics reducing Node Runners issuance rate in 2020 from 50% to 3% could also be a potential driver behind the pump

In the past 24 hours, Algorand (ALGO) has shot up 26.27% as it trades at $0.458, a level last seen in August 2019.

The 35th largest cryptocurrency by market cap of $209 million, ALGO has increased over 100% in 2020 so far.

Given that it’s alt season with altcoins flying, harder than Bitcoin with some like ICON and BSV are up over 200% while Lisk (178%), Tezos (175%), Chainlink (130%), ZEC (116%), Ethereum Classic (103%), and Dash (145%), among others, also recording substantial gains, ALGO is also enjoying the rally.

However, another potential reason for this price boom could be the Binance.US announcing support for Algorand (ALGO) staking that went live earlier this week.

In order to qualify or staking rewards, to be calculated daily and distributed monthly, Binance users must hold at least 2 ALGOs.

Given that baking has Tezos reaching its all-time high in 2020, expectations are high for ALGO as well.

“I realize I'm shilling algo hard but I don't care. This look has me so hot and bothered I can't even. When it breaks up… oh my. Cloud plus MAs for DRAMA,”

wrote trader Ledger Status.

Another popular trader The Crypto Dog also noted, “There's a vacuum from about 4000 to 5500 sats.”

The Change in ALGO Tokenomics

Yet another cause behind this surge could be the new tokenomics, according to analyst Ceteris Paribus.

In late November, Algorand made the news public that their relay node runners have approved a new long-term vesting plan for their rewards. Then in early December, it reported on the Economic Improvement Proposal or EIP-09092019PC that suggested imposing a 30-day suspension of daily reward for relay node runners.

As per the changes to node rewards vesting schedule ratified by the node runners, the unvested tokens’ schedule is moved from a 2-year timeframe to a 5-year one but with a caveat. Also, node runners have already received 14% of their restricted ALGOs before the current vesting freeze.

As per the vesting schedule of the unvested ALGO tokens, initially, 50% of the unvested tokens were to be released in year one but now only 3% will be. This will,

“significantly reduce near term supply inflation & selling pressure. However, the total supply has not changed, it's just dragged out.”

After 3% in Year 1 (2020), in Year 2 (2021) 8%, in Year 3 (2022) 25%, in Year 4 (2023) 35%, and in Year 5 (2024) 40% will be released.

The relay node runners will also be getting 125% of their initial allocation back instead of 100%, “this is mostly paid for by reducing normal participation rewards for staking wallets by 50%.” They will be further incentivized to do a better job as if the price of ALGO increases, the vesting schedule will accelerate too.

Ceteris Paribus notes, if price increases, the total supply will also be unlocked, which “will put downward pressure if price gets out of hand by unlocking new supply.”

Also, if the price of the ALGO tokens increases, the Node Runners will capture “awards” — additional ALGOs — much faster than the base rate, as such vesting period will be accelerated significantly as well and will be reached quicker than five years.

“This will help cap significant price runs with increased inflation.”

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