Algorand is supposed to have a max supply of 10B and was launched in June of 2019. As of Jan. 01st 2021 it had a price of $.399 and a circulating supply of 1.19B it ended the year with a price of $1.66 and a circulating supply of 6.36B. Meaning over the course of a year in 2021, Algorand inflated at a rate of 533%.
ALGO Information Jan. 01st 2021
ALGO Information Dec. 31st 2021
ALGO Circulating Supply graph 2021
If we look at just the last year the circulating supply increased from 3.11B to 6.97B an increase of 224% over the last year. Meaning for every 1 Algo that was in circulation 1 year ago there is now 2.24 Algo. That huge increase in the total number of circulating Algo helps to explain why the price has crashed so hard during this bear market.
ALGO Circulating Supply past year
So the question is; What caused this mass inflation and should I be worried?
What Caused the mass inflation: The short answer is Algorand Accelerated Vesting played a huge role, the Algorand team gave away 3.1B Algo through this program with most of that being given away in 2021. Algorand Accelerated Vesting was designed to act as a loyalty system for early supporters of Algo and was proposed in Nov. 2019. It was designed to reward those vesting their Algo and provide an additional bonus for node runners.
The proposal was originally set to run through 2024, however there was a backup that would flood the market with Algo through the vesting program, if the price of Algo rose too quickly. Which as a result of the 2021 bull run - the vesting ended three and a half years early.
Should I be Worried: Yes/No
Roughly 400M difference between circ. supply and total supply
The Algo Foundation website regarding distribution doesn't exactly help with the confusion. In total the circulating supply has increased from 1.19B in the beginning of 2021 to roughly 6.97B today an increase of roughly 585% in a year and a half with the total supply sitting at 7.37B. According to the foundation website, Algo is supposed to have a total supply of about 6.67B by 2023 and we're already at 7.37B - again this can partially be accounted for by the fact that accelerated vesting finished three and a half years early.
Also note according to the chart below the last roughly 1M tokens is supposed to be distributed from the end of 2025 to 2030.
So technically speaking ALGO inflation is "supposed" to decrease exponentially over the coming years so it's not totally surprising to see high inflation in the short term. If it does as it's supposed to we're through the worst of the inflation and the rate of inflation in 2026 will be a very low single-digit percent.
If the ALGO 10B total supply number holds it's just a matter of riding out the massive inflation in the short term. But a word of caution, JASMY was supposed to have a total supply of 4.7B yet in total, it is over 20B.
TLDR: Algo mass inflated 585% in a year and a half, could be good for some - bad for others, assuming the 10B total supply holds. But the future inflation rate isn’t clear at this point.
Edit: I didn't realize this needed to be said upfront. But NO I do not think mass inflation is 100% responsible for the current downward price turn of ALGO. Of course the greater market economic outlook is impacting it as well. However people claiming the mass inflation has nothing to do with the price impact - you're being disingenuous.
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