My Strongly Worded 1-Star Review of Avalanche (AVAX), by a former supporter.
See article here: https://read.cash/@J-Stodd/why-avalanche-avax-is-a-centralized-and-fraudulent-scam-2b77662e
Im going to rewrite my article here for those who cant see the read.cash link:
Why Avalanche (AVAX) is a Centralized and Fraudulent Scam.
Im going to say right now it hurts to write this article, and I don't do it with pleasure. I do it because it needs to be done. And it sucks. But its time to sever all ties emotionally and otherwise with this project, and warn all newcomers about it.
For more context this is my previous article on the subject, when my faith in AVAX first began to waver. It hurts to write all of this because I was so excited about this project when it first came out, I worked so hard to build it up and spread the good word about it, and its dreamcrushing to come to the conclusion that ethically and morally I can no longer be a part of it.
To summarize what Im going to cover in this article:
- Avax Validators not receiving their Avax rewards
- Censorship on the official Avalanche Hub forum
- Lies from the AvaLabs team about building a trustless bridge
- Lies on the subject of burning fees
- More lies and misleading claims from the AvaLabs team on transaction fees
- Emin Gun Sirer wasnt even a Bitcoin believer in the early days
- Another look at the centralized coin distribution with the advantage of both good retrospect and having had enough time to see things play out
I hope you make it to the end of the article. I know most probably wont. But if you are on the fence about AVAX, I think this is important information. At least hear me out on my side of the story.
Avax Validators Not Receiving Their Rightfully Earned Staking Rewards
It all started with this tweet by Collin Cusce, ex-member of AvaLabs and techie. Im imagining this thread was inspired by a wave of validators complaining they never received their rewards, because the very next day I too ran into the same problem. https://archive.md/hQ4VI
As you see people in Avalanche are now making the claim that you shouldn’t be able to expect to receive your validator rewards unless you have "100% uptime". But this isnt really possible to achieve on a practical level, and its not what was advertised whatsoever. Whats currently being advertised is that you need at least 80% uptime.
But this isn’t the end of the story. This time last year, it wasnt "at least 80%" uptime that was required. It was 60%. They changed it, increased it by a whole 20%. This massively increased the risk of monetary loss for all of the validators who already staked and ran into technical hurdles. 80% uptime is not what I and other OG validators agreed and consented to, it was changed after we staked, which is fraud. You can see upset validators commenting on this issue here: https://archive.md/h2J7G
Proof of these contrasting requirements: https://archive.md/wip/NwbuP https://archive.md/wip/FUPlC
Aside from fraudulently changing the 60% uptime requirements to 80% without discussion, a governance proposal, a vote, or even so much as a forewarning on all those who were locked into the system and did not consent to it, I personally lost all of my validator rewards despite having over 85% uptime. This is also despite using a script provided by an official AvaLabs member, so my node should have had no problems to begin with unless their script was bugged.
Thats thousands I’ve lost for no good reason. Sweat, blood, and tears went into that. The opportunity cost incurred by having to wait a whole year, the countless hours I poured into researching, troubleshooting, and updating my node, the monetary risk i took in buying Avax to stake it, the money I paid my cloud service provider, the literal work I did for the Avalanche network... All for absolutely nothing. Words don’t describe the devastation here.
The short story here is that even IF you have enough uptime, you can still lose 100% of your Avalanche rewards, and AvaLabs centrally and willy-nilly changes the requirements for that without warning or explanation, spontaneously, and therefore you cannot properly assess the risks of long-term staking. These are serious concerns to take very seriously if you ever decide to stake Avalanche.
Censorship on the Avalanche Hub Forum
I ranked in the top five of participants in the Avalanche Hub website (formerly known as AvaHub). I wrote dozens of articles, infographics, and onboarded a ton of new people. I even gave away thousands of dollars in AVAX.
Over night I saw I was locked out of my account. It required a Google 2FA but I never set up a Google 2FA. I assumed someone would fix it so I reached out to AvaLabs then I waited. But 4 months or so go by and Im still locked out. So I create a new account so I can go back in and see whats going on, and to my shock and dismay, all my reputation was wiped to zero.
I thought this act of censorship deserved to be on this list because its a huge slap in the face to all the work ive done, my amicability and willingness to peacefully go our separate ways, and its a huge slap in the face to fairness and the reliability of AvaLabs' promises.
If you decide to ever invest your time and energy into Avalanche Hub, keep in mind that everything you worked for can be ripped away from you at any moment.
Lies From The Avalanche Team About Building A Trustless Bridge
This incident in particular struck a bitter chord with me, because i was so extremely enthusiastic and excited for it. Kevin Sekniqi on Twitter showcased, on the official Avalanche Wallet, moving "trustless" BTC and ETH on and off the wallet. He said this technology was being tested and would soon be deployed on Avalanche.
Later on when AvaLabs released its "new and improved" bridge, Kevin was talking about how it was trustless: https://archive.md/7pgN7
According to the officially released article, this bridge uses a "consortium of trusted partners" which requires "agreement from 3 out of 4 wardens". Does that sound trustless to you? Yeah, me neither.
Lies On The Subject of Burning Fees
In section 5.1 of the Avalanche token whitepaper, the role of fee burning is as follows:
"Staker Fees. Unlike other protocols that pay all fees to the elected leader, such as in Bitcoin, in Avalanche fees are simply burned. Therefore, payment is global and for the good of the entire ecosystem. Fee burning increases scarcity of tokens in the system. The minting process offsets the transaction fee burning, therefore there is no danger of the system grinding to a long term halt due to gradual destruction of coins."
This was confirmed here: https://archive.md/wip/2VzSX
But Emin Gun Sirer is telling us a different story.
This seems to be a classic case of "Having Your Cake and Eating it Too". Fees on Avalanche are simultaneously "burned forever" and will likely be "reminted to pay validators". If any of this is to be believed, then the conclusion to be drawn is that Avalanche has centrally planned monetary policy by AvaLabs, and is therefore not fundamentally decentralized on the monetary level.
These kind of lies from Emin Gun Sirer are not a first either. Here he claims that Avalanche "invented" fee burning: https://archive.md/Wnx6k
More Lies and Misleading Claims From the AvaLabs Team on Transaction Fees
Avalanche has been advertised as a "low-fee" chain since it's inception, which really is simply not true. But aside from this, the people in AvaLabs including Emin Gun Sirer have gone as far to make these lies way more obvious. See here as he claims that Avax is the cheapest chain: https://archive.md/OmW7N
In reality, X-Chain transfers cost 0.001 avax or about $0.07, and C-Chain transfers cost about 0.015 AVAX or $0.60, making the X-Chain almost 100x more expensive to use than Bitcoin Cash, and the C-Chain between 10x-50x more expensive to use than SmartBCH. The only thing that Avax is cheaper than is BTC and ETH, and thats not hard to achieve. I compare AVAX with Bitcoin Cash because Bitcoin Cash has both a UTXO chain and an EVM sidechain like AVAX, and it is a good representation of Nakamoto Consensus in action compared to Avalanche consensus in action.
And while on the topic of transaction fees, we may as well go over where Emin Gun Sirer lied and said that the plan was to reduce fees by two at approximately each step, but then in the next phase fees weren't reduced at all:
Phase 1: https://archive.md/9VW4A
The Promise: https://archive.md/kfHtT
Phase 2: https://archive.md/6NX2v
This lie matters because its context was it was answering a question I asked about fees not being reduced enough. After price rose well over 10x Avalabs didnt want to decrease the fees to 1/10th of what it was, and instead only wanted to reduce the fees on one of the chains by half (the C-Chain) and then leave the P and X chains the same. This promise was supposed to be an assurance that they were not done correcting the fees, but apparently the promise was worthless because it wasn't kept. Even after Phase 3, fees on the X and P chains still were not lowered.
Emin Gun Sirer Wasn't Even A Bitcoin Believer In The Early Days
Emin Gun Sirer (he prefers to go by Gun rather than Emin) makes himself out to be the biggest Bitcoin and Crypto OG on the block. He makes references how it was him, not Satoshi Nakamoto, that invented the first cryptocurrency (with his now dead and abandoned project, known as Karma).
Remind you of anyone? Emin Gun Sirer is arguably the second most self-centered and self-embellishing fraud in the crypto space, right next to Craig Wright.
In reality, Gun has been a skeptic and critic of Bitcoin since day 1. Here you can see him mocking those who bought Bitcoin at sub-$100:
Emin Gun Sirer is also infamous in some circles for his article titled "Bitcoin is Broken", where he says that the entire Bitcoin system can be taken over by "attackers" who "selfish-mine" (which is to wait to publish blocks until after competitors waste their time trying to solve them), with as little as 25% of the hashrate. He goes on to imply that this would spell the end for Bitcoin and that somehow it would stop functioning, saying it's a "fundamental flaw" in Bitcoin's architecture. https://archive.md/AX7TI
The entire paper attacking Bitcoin seems to hinge on the fallacy that this little advantage one group of miners could have over the other would somehow be asymmetrically in favor of attackers. A more sensible conclusion would be that if this becomes the winning strategy, then everyone would just do it and then no miners would have advantage over each other anymore. Either way, Bitcoin has been running for a long time, almost eight whole years since this paper was released, and theres no evidence of attacker miners ruling the chain like he fearmongered. And its clearly fearmomgering. Heres some more context:
Avax Centralization
Its no secret that the people in AvaLabs constantly boast about Avalanche's "decentralization", as if it had any. Here's just Emin Gun Sirer and his constant shilling of it:
But is Avax really decentralized? Id argue not in the slightest. Decentralization is not determined by the number of nodes in a system, but by how much power each node has. And I can prove to you mathematically, that AvaLabs has over 51% of the voting power over the Avalanche network.
The genesis coin distribution for AVAX can no longer be found on info.avax.network because it has been removed to avoid further bad publicity, but I have an archive of it here. The allocation is as follows:
18M: Seed Sale
24.9M: Private Sale
7.2M: Public Sale Option A1
60M: Public Sale Option A2
4.8M: Public Sale Option B
18M: Airdrop
2M: Denali Incentive Airdrop
72M: Team
66.7M: Foundation
36M: Strategic Partners
50.4M Community and Dev Endowment
360M Staking Rewards
Looking back on their original coin distribution chart, with the benefit of hindsight giving us better context, we can see clearly three categories: AvaLabs-Controlled Allocation, Non-AvaLabs Insiders-Controlled Allocation, and Public Allocation. (For the sake of the argument im excluding staking rewards which represent 50% of the coin distribution, because they are by definition not initial distribution, they are locked, not affecting overall voting power, and in theory would be received by all participating coinholders equally).
The Team tokens, Foundation tokens, and Airdrop tokens all fall under AvaLabs-Controlled Allocation, and sits at 156.7M tokens, or 43.5% of the token distribution. The Airdrop sits in this category because its never been distributed and there seems to be no plan to do so, and the Foundation tokens fall under this category because the Team admittedly controls the Foundation.
The Seed Sale, Private Sale, Strategic Partners, and Community and Dev Endowment all fall under the Non-AvaLabs Insiders Allocation category, and sits at 129.3M tokens, or 35.9% of the token distribution. Previously I may have steelmanned Avalanche and said community and dev endowment falls under public, but the vast majority of those tokens were given to close friends of AvaLabs (an example being Avascan, who both received funding and also became a Warden on the Avalanche Bridge), and what little went to Avalanche Hub for example, is on a censored and curated forum.
The three public sale options and denali testnet rewards would be what falls under the Public Allocation category, and represent 74M tokens, or 20.5% of the token distribution. I consider Denali a public allocation because everyone was allowed to participate and I saw this from firsthand experience.
With ~44% of all tokens controlled by AvaLabs, ~36% controlled by other Insiders, and ~20% controlled by the Public, your first thought may be that "technically, this isnt 51% control". But you'd be incorrect. Because not everybody is staking, but AvaLabs sure is. By their own admission the team and foundation tokens are all routinely staked, despite only 63% of all tokens being staked. So if you divide 44% of all tokens staked by 63% of all stake online, you'd have an effective voting power of 69.8%.
An effective voting power of almost 70% is well over the target 51% I promised you that AvaLabs had over the network. Its not possible, in reality or in theory, to have "decentralized" governance when one party has 7/10ths of the vote. AvaLabs will always be doing whatever it wants, whenever it wants, and no amount of community action could ever dispute them.
Conclusion
Avalanche (Avax) is not a decentralized cryptocurrency. AvaLabs control roughly 44% of the active token supply and about 70% of all voting power on the network. AvaLabs is also notorious for its constant lying, dishonest shilling, and bait-and-switch schemes. Most notoriously was the millions of dollars in honest staker revenue lost when AvaLabs unilaterally and arbitrarily changed the node uptime requirements from 60% to 80% overnight, fraudulently ripping off hundreds of long-term honest validators and further centralizing the network and lining their own pockets.
AvaLabs engages in censorship against any detractors, and tries to bury the truth to preserve their reputation instead of confront it honestly. Anyone still involved in AvaLabs at this point is surely complicit in the dishonesty and lies. I've barely scratched the surface when it comes to lies, misleading statements, and false promises produced by AvaLabs. I could probably write an article 10x longer covering all those details, im just constrained by time, willingness, and the fact nobody would read something that long anyways.
My urgent message to all those still involved in Avalanche at this point, is to get out. Avalanche has already over 100x'd from its ICO sale of $0.50 to its current price of over $50. The pyramid scheme has most likely already done most of the ponzi gains it will do in its lifetime. And its ponzi'd so far its already overcome the market capitalization of Bitcoin Cash, which does everything Avax does but 100x cheaper and with 100x more adoption on an actually decentralized blockchain with a real community. Leaving Avax for Bitcoin Cash (and SmartBCH) which has stronger fundamentals would give you more price upside anyways.
I'll let you do what you will with this information. And you're free to amicably disagree with me. But when the rug is pulled out from under you by these scammers, don't say I didn't warn you.
