In brief
- Props is moving from a private blockchain to the public Algorand blockchain.
- It will do so later this year.
- It’s one of the first tokens that received a special exemption from the SEC.
Social media blockchain protocol Props today announced plans to migrate its 3 million users from its own, private blockchain to Algorand’s open-source, public one. The move, which Algorand’s CEO told Decrypt will take place later this year, was made possible by a $2 million raise led by Union Square Ventures.
Props is a token-based rewards system for social network sites. Whereas Facebook extracts your data and provides nothing in return, social network sites that integrate Props reward users in the platform’s native token.
The company is owned by New-York based YouNow, a live-streaming site that claims it has 50 million users (a decline from 100 million monthly users five years ago). Though YouNow, as well as several other multi-million-strong social networks, are integrated with Props, the blockchain protocol has only 3 million users, according to a press release today.
The Props blockchain is a private “sidechain” of the Ethereum blockchain; token balances and smart contracts are based on Ethereum, while anything that happens within the Props app takes place on Props’ own private blockchain. Now, the whole protocol is moving to the public Algorand blockchain. According to a statement provided to Decrypt, this is because Algorand supports a higher volume of transactions.
Algorand’s CEO, Steve Kokinos, told Decrypt that the significance of the move to Algorand is analogous “to the early days of cloud computing,” when companies moved from private clouds to public clouds, like Amazon Web Services.
He says Props' decision to move from a private to a public blockchain corrects misunderstandings about the performance constraints of public blockchains and shows that public blockchains can also accommodate regulatory demands—at least until the SEC kicks up a fuss.
Props is notable for being one of the first tokens that received a Regulation A+ exemption from the SEC. That meant that anyone could invest in it, not just “accredited investors.” In July 2019 it became the second token to receive the exemption; Blockstack received it a day earlier.
“Having the right plumbing in there so that people can meet those obligations is something that was built in from the beginning,” he said. Regulatory demands can be met in the base layer of the blockchain rather than necessitating a new form of smart contract, he said.
Investors in Algorand might be put off by the price of Algorand’s native token, which is a common indicator of the health of the network. It peaked at $3.28 around its July 2019 launch but has since fallen to $0.22.
Kokinos said he does not comment on token price, and instead pointed to the various partnerships, technical advancements, and initiatives on the platform that “bring long-term value to the platform.”
“The market will figure out what it thinks about that over time,” he said.