There have been a lot of questions, and a fair few number of confused answers, about the Chia Network prefarm – 21 million XCH held in two wallets by the developers. Based on previous answers it appeared that Chia Network planned on using the prefarm as a capital supply for market makers to ensure liquidity,
That would make sense, and may still be part of the plan but it appears that there is a more simple explanation that many of us have theorized about but have missed the confirmation on. Until today.
In a move that is a little reminiscent of an ICO (Initial Coin Offering) it appears like Chia Network plans to distribute at least some of the pre-farm among investors after an IPO. I think there are more details needed here, but I suspect those will begin to become clear as we approach this Initial Public Offering.
Honestly, this answer disappoints me. From what I have read, this is not a good sign for a long term project. Lets hope Chia is different.
Edit: Including the relevant section from the Business Whitepaper on the strategic reserve to highlight how unclear this has been.
“The Company expects to create 21 million chia at mainnet launch (Chia Network’s Strategic
Reserve or pre-farm) and place those on our balance sheet. The Company established 21
million as an homage to the work that has come before. It is challenging to predict the resources
needed to drive adoption of the Chia blockchain, especially those denominated in chia. Thus we
hope we are conservatively erring on the side of having an excess Strategic Reserve of chia
owned by the Company and ultimately the shareholders. As discussed below, we believe that
the public company structure, in conjunction with sound corporate governance, will provide a
prudent framework to manage the Strategic Reserve and allow us to distribute excess chia, if
any, in a fair way to shareholders using traditional corporate tools.
Edit 2: Additional clarification from Gene