pi network has been controversial ever since it
launched back in 2019 The prospect of being able to mine its Picoin on a phone for free attracted
tens of millions of users who then had to complete KYC to actually claim it The result is that Pi
Network technically has the largest number of verified users of any crypto project Naturally
this unique set of circumstances has everyone wondering how much potential the Pi coin has And
that’s why today we’re going to do a deep dive into Pi network including where it came from how
it works how high Pi could go and what’s coming next for this crypto project My name is Nick
and if you hold Picoin this is a video you can’t afford to miss If you ask who founded Pi Network
the first answer you’ll get is Nicholas Kokalis and Cheng Dao Fan both graduates of Stanford
University But if you dig a little deeper you’ll find that there are not two co-founders but
four And these include Nicholas Chengalo Vincent McFillip and Orurelion Schultz Those last two also
graduates of Stanford University And if you go down the rabbit hole you’ll discover that Vincent
sued Nicholas and Cheng Dao in 2020 alleging that he was unfairly fired And this lawsuit was
reportedly settled in 2023 And it’s surprisingly hard to find information about it And that might
be because it revealed lots of sensitive details about Pi Network’s operations For the purposes
of this video the only detail that’s important is that Pi Network raised at least $800,000
from investors between 2019 and 2020 Do note that it’s not clear whether this raise involved
Social Chain Inc the Californian company behind Pi Network or the Pi Network Company the Cayman
Islands company that presumably operates the Pi Foundation nonprofit However what is clear is
that this important detail calls into question the claim that Pi Network never raised any money
in an ICO A claim that was made by Chang Dao as recently as February this year To be fair it’s
possible that this claim is technically correct and that only shares were sold And that’s because
Nicholas participated in a panel discussion about ICOs back in 2017 and he basically argued that
selling shares is better than selling coins in an ICO In any case whereas Vincent left or was fired
from Pi Network in 2020 Aurelion stayed on as one of its core developers He notes himself as Pi
Network’s director of engineering on his LinkedIn and he continues to contribute to its GitHub He
also seems to keep a very low profile By now it should be clear that Pi Network hasn’t been very
transparent and that’s putting it lightly Funnily enough the trend of opacity dates all the way back
to the beginning of the project Even though it was officially founded in March 2019 it has been
building in stealth since at least September 2018 Not only that but Pi Network hasn’t posted nearly
as many updates as you’d expect from a crypto project that’s been around for so long and has
supposedly seen so much adoption For example its X profile only has around 700 posts This at least
makes it easy to scroll all the way back in time to the project’s early history using its social
media profiles which reveals even more opacity Many of Pi Network’s early updates appear to
have been deleted particularly those involving Vincent Thankfully we didn’t find any major
gaps in Pi Network’s history and its founders have been consistent about its origin story In
short Nicholas and Vincent were both involved in blockchain initiatives at Stanford and realized
that there was a need for onboarding users into crypto in an easy way and also being compliant
Pi Network was their solution to this problem Nicholas revealed in an October 2022 interview
that Pi’s approach and design was inspired by Facebook He noted that social media didn’t gain
traction until people started using their real identities on Facebook and Nicholas wanted to
make the same thing for crypto And this is very important to note because it means that Pi network
is focused on the social aspects In other words it’s a social finance or social fi crypto project
From our perspective Pi network is essentially a combination of Worldcoin and Notcoin that emerged
long before people understood their incentives For context Worldcoin is another controversial crypto
project which gives people WLD tokens for scanning their eyeballs using a somewhat dystopian orb a
bit like Pi Network’s custom KYC As for Notcoin it’s a crypto project which people could earn
tokens for simply tapping on a screen Like Pi Network’s mining process Pi Network effectively
combined both and added a user-friendly social media style app The original app launched in March
2019 along with Pi Mining Pi coins became real when Pi Network’s mainet launched in December 2021
but it wasn’t until February this year that these coins became tradable And this long delay was
supposedly a result of the team wanting to make absolutely sure that all recipients of Pi were
genuine users Hence the uh KYC requirement to claim According to the Pi network website over
14 million users have completed KYC As noted in the introduction this means that Pi Network
technically has the highest number of verified users of any crypto project As you’ll soon see
this could become a massive selling point as the crypto industry evolves All we want to see is
more of you subscribed to the channel Apparently Now let’s look at how Pi Network works Now what’s
interesting is that Pi network is practically a fork of Stellar Now to be exact the Pi network
blockchain uses a modified version of the Stellar Consensus Protocol or SCP which involves using
a network of trusted nodes and validators to process transactions Pi network can reportedly
process up to 70,000 transactions per second but this seems unlikely given that Stellar can only
process a few thousand transactions per second Then again it’s possible given that Pi network
appears to be extremely centralized presumably for scalability purposes According to the Pi Scan
Explorer the blockchain currently has just 28 nodes and just three validators And notably all
three validator nodes are noted as being run by the core team As a fun fact this is probably why
Pi has had a hard time listing on more exchanges Exchanges will typically only list a crypto
project once its blockchain has become quite decentralized because otherwise it’s just a
centralized database Regardless the use of the Stella consensus protocol means that there are
technically no staking rewards at the blockchain level Of course there are mining rewards Now the
base reward is currently 0.09 Pi per day but can be boosted with things like referrals The catch
is that mining does not contribute to consensus unless you are running a node At least according
to the white paper Per the white paper the purpose of the mining is to confirm that a user is not a
robot on a daily basis and to quote validate their presence However this only scratches the surface
of the real purpose of Pi mining Whereas the idea and design of Pi network came from Vincent the
incentive behind Pi appeared to have come from Changeng Dao who is an anthropologist by trade
not a cryptogeeek per se In a video from March 2020 Vincent and Changda revealed that they
were closely watching how people would exchange Pi tokens in the app to see what people would be
willing to exchange for Pi And this suggests that Pi mining rewards are exactly that an experiment
to see what users are willing to exchange for Pi tokens It turns out they’re willing to exchange
quite a lot including their personal IDs and details Speaking of which in case you missed it
Pi Network uses its own KYC solution In a March 2022 interview Chang Dao and Nicholas claimed
that they had developed their own KYC solutions because third-party KYC processes couldn’t handle
the volume of users applying to do KYC And this claim is questionable given that KYC companies
have had no issues doing KYC for hundreds of millions of users on exchanges In our view it’s
more likely that Pi Network developed its own KYC solution so that it could do things like sell
detailed user data And we say this because that’s what Social Chain Inc.’s privacy policy for the
mobile application and Pi browser seem to suggest We’ll leave a link to it down below for you to
check out later quote “We do not share or sell the personal information that you provide us with
other organizations without your express consent except as described in this privacy policy We
disclose personal information to third parties under the following circumstances Affiliates
uh we may disclose your personal information to our subsidiaries and corporate affiliates for
purposes consistent with this privacy policy.” Perhaps we’re mistaken but this means that Pi
Network could be selling user data to third parties it’s affiliated with And this is evidenced
by the fact that they have a Pi ad network campaign wherein advertisers can use Pi to pay for
ads that are shown in Pi Network’s applications on its mobile app and chances are that these ads
are curated based on users personal details But uh we couldn’t confirm this On that note according
to the website there are 70 apps on Pi network and counting and they include things like Pi’s KYC
solution The most significant of these seems to be the Fireside forum a Twitter Xstyle social
media platform launched by the Pi team in 2023 that serves as its main info hub I should also
note that all Pi developers must also complete KYC to build on the Pi network As some of you
may have heard Pi Network recently announced the launched of Pi Network Ventures which will invest
100 million in USD and Pi coins to incentivize the development of more apps on the network What’s
strange is that the announcement notes quote Pi Network Ventures is established through
the Pi Foundation an ownerless organization We are honestly not sure what that even means The
white paper specifies that the Pi Foundation is a nonprofit And you’ll recall that we believe the
legal entity behind the Pi Foundation could be the Pi Community Company which is based in the
Cayman Islands We say this because many crypto projects have entities in the Cayman Islands
that operate their nonprofit organizations And this is usually done to avoid regulatory scrutiny
around token or coin issuance Whatever the case this relates to its tokconomics Pi is the native
cryptocurrency coin of the blockchain It’s used to pay for transaction fees is used as a means of
payment within Pi apps and is also used to pay for things like ads within these apps I’ll quickly
note that Nicholas did say in an April 2021 video that all transaction fees would be burned but this
doesn’t seem to be the case right now According to a blog post from April Pi has a maximum supply of
100 billion which was allocated as follows 65% to mining 20% to the team 10% to the foundation and
5% for liquidity Regarding investing quote each allocation mentioned above tracks the community
migrated mining rewards issuance pace So the proportions of each allocation in the total supply
remains the same at any given time According to the official Pi network explorer 7.2 billion
Pi have been mined and migrated so far And this works out to just over 10% of the 65 billion PI
allocated to mining Logically this means that the team and foundation which is likely controlled by
the team have received 3 billion of their vested pie In case you didn’t notice this means that most
of the circulating supply is controlled directly or indirectly by the team And that’s because even
though 7.2 2 billion Pi coins have been mined and migrated Only two billion are currently unlocked
Meanwhile over 3 billion Pi coins have been unlocked to the team and foundation which is also
likely controlled by the team If our calculations are correct then this could explain why Pi’s price
hasn’t crashed more After all Pi was air dropped to tens of millions of people who have been
waiting to sell for years By all accounts Pi’s price should have gone straight to zero As always
the devil is in the details According to Pi Scan exchanges hold just 300 million Pi coins at least
based on known wallet addresses For reference that’s more than 20 times smaller than Pi’s
circulating supply What this means is that there’s low liquidity on exchanges relative to its market
cap and this makes it easier to pump or dump Pi’s price This means that it’s possible keyword
possible that Pi Network has been doing the same thing that many other large crypto projects
do and that’s selling Picoins OTC and using the proceeds to work with market makers to manipulate
Pi’s price We only say this because it’s something we’ve seen with many crypto projects most recently
with one whose price crashed by 90% You’ll know which one I’m talking about Not surprisingly many
have alleged that the team is pumping and dumping Pi’s price and there is some onchain evidence of
this and you can actually see transfers from Pi Foundation wallets to exchanges on Pi Scan The
good news is that these transfers haven’t been very big The bad news is that the low liquidity
conditions I just explained means that even a small amount of selling can cause a big crash
And this begs a bigger question and that’s how big Picoin could get In case it wasn’t clear
enough the answer could ultimately depend on how much its price is being manipulated If it’s
being heavily manipulated then we could see Pi grow much larger than investors expect just like
we saw with other similar cryptos From a purely technical perspective Pi coin could rally as high
as $5 Now this seems insane at first glance as it would give it a market cap of over $30 billion and
a fully diluted market cap of over 500 billion But now that we’ve taken a closer look though the
relatively low Pi liquidity on exchanges makes this possible And if you’re thinking of buying
selling or trading Picoin then you have to check as these are likely to trigger pumps just like
what we saw after Nicholas’s recent appearance at the consensus event in Toronto That reminds
me the panel discussions Nicholas participated in was about AI and he pitched Pi Network as
a solution to an emerging problem and that’s that more and more crypto users are actually just
bots Be that as it may Pi’s road map can be found on its website It contains dozens of milestones
about everything from its app to its community This video is already getting lengthy so we’ll
focus on the most important ones And we’ll leave a link to the road map in the description if you
want to come back and read the full list later For mining the most important milestone is making
it possible for users also known as pioneers to migrate more of their Pi coins to the mainet Any
pioneers in the crowd will know that it’s so far been a pain to migrate coins to the mainet and
that there have been lots of complexities related to lockups Before you ask we don’t have the time
to get into these details here but may do so in a future video Let us know down in the comments
below if you would like to see that video Perhaps the most important milestone is making it possible
to convert Fireside tokens to Pi coins Now besides the fact that this could mean more Pi coins for
Pioneers it could also mean more Pi coins for the team and their affiliates Take a second to
consider that there are some of the most active on Fireside For developers the most important
milestones are improving the developer onboarding experience and also improving the development
experience itself I should note that some of these milestones have technically been met in recent
months It’s hard to know though as the road map doesn’t seem to be up to date To add insult to
injury the Pi team continues to post infrequent updates despite having launched the Pi coin And
some would say that now is time for the Pi team to be attentive to its community and answer all
the questions they have about the Picoin migration The fact that secondary sources have garnered
millions of views is evidence that the team has done a very poor job at communicating and that’s
the problem And this brings me to the challenges that we foresee for Pi Network and the first is
the big one and that’s a lack of transparency or communication Take the Pi Foundation for instance
a quote ownerless organization that emerges out of the blue to launch a $100 million venture fund
consisting of US dollars and Pi coins This is pretty damn suspicious even by crypto standards
And this highlights the fact that most opaque parts of the Pi network all involve money Who
originally invested in the project back in 2019 and 2020 did they just purchase shares or
were there also tokens involved were there any subsequent fundraising rounds and is the Pi team
raising funds now by selling Pi coins OTC these are just a few of the many questions that the Pi
team will need to answer in full if it wants to be seen as a legitimate crypto project by the broader
crypto community To be clear this is not something that’s unique to the Pi network Most crypto
projects fall short on transparency but Pi network is one of the most extreme examples in this regard
Fortunately this is something that can easily be addressed through communication Unfortunately uh
this won’t help addressing Pi network’s second challenge and that’s tokconomics It doesn’t
take an economist to see that the Picoin has a supply and demand imbalance There’s a huge supply
sitting with the team and pioneers that’s waiting to be sold and not many people are buying Again
improving transparency and communication would go a long way towards bringing in buyers Even then
though it faces a peculiar problem and that’s that the Picoin is being used to incentivize people to
do things in the app namely mining Pioneers have learned the hard way that earned Pi and available
Pi are two very different things Unless the Pi is available to sell it’s not worth anything as
far as users are concerned But if too much is available to sell it could crash the price
And that’s likely why the PI team has been engaging in not so subtle supply manipulation by
adjusting the conditions for PI migration Raising those requirements results in less available Pi
while lowering them results in more available Pi Come to think of it if the Pi team is manipulating
the price this could be to incentivize Pioneers to keep using the app by making them think “If
I just wait a little longer I’ll be rich.” And this pertains to Pi Network’s third challenge
and that’s its broader appeal particularly among institutions In theory Pi Network has a powerful
selling point We have over 14 million KYC users And this means that advertisers can be sure that
their ads are being seen by real people It also opens the door to things that aren’t currently
possible on other blockchains like issuing regulated assets on Pi network In practice however
this selling point assumes that Pi Network’s KYC process is as legitimate as it claims to be In
other words it assumes that institutions will see Pi Network’s KYC as legitimate compared to other
existing solutions We believe it’s possible key word again possible that Pi Network’s KYC solution
isn’t as airtight as it needs to be and that there could be some leakage like say millions of fake
KYC accounts What’s wild is that this kind of leakage would be preferable to the other kind
like millions of legitimate KYC accounts being leaked which allegedly happened back in 2021
The caveat is that this only affected 10,000 Vietnamese users who had used a third-party KYC
solution for Pi network Even so when you combine the possibility that the number of verified users
on Pi network is inflated with the fact that most Pioneers only log on to mine Pi and see if they
can unlock all their locked Pi it’s easy to see how institutions would steer clear of Pi network
especially since they also need to complete Pi Network’s KYC to participate And this could be
yet another reason why more exchanges won’t list Pi With all that said though it’s not that
hard to see why many believe that Pi network has potential As I mentioned at the start of the
video Pi Network is literally a combination of Worldcoin and Notcoin The only difference is
that it’s much less transparent and emerged earlier than both of these other crypto projects
The irony is that neither Worldcoin norcoin are seen as particularly alluring bets to the broader
crypto community Given this fact we reckon it’s fair to say that even if Pi network improves
its transparency and communication the Picoin will still have limited potential compared to
other crypto projects The only exception is if you are mining Pi in which case it’s free money
Then again when something is free it usually means that you’re the product and that’s sobering
to consider given Pi Network’s KYC requirement Anyways if you want to learn more about Worldcoin
or Notcoin then you can watch our video on that right over here And if you’re not subscribed to
the channel yet you can do that right over here This is Nick signing off Thank you very much
for watching and I’ll see you guys again soon
