Whatever Happened To Internet Computer? Is ICP Dead In The Water Or On The Verge Of A Revival?

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Whatever Happened To Internet Computer? Is ICP Dead In The Water Or On The Verge Of A Revival?

In May 2021, the Internet Computer governance coin entered the charts like an out-of-control train. The ICP debuted around the $500 mark and reached a $700 all-time high. It instantly became a Top 10 coin. Throughout that first month, it typically traded around the $300 mark. And then, within the span of a few weeks, it fell off the top 10 charts as drastically as it had entered. At the time of writing, it trades at $17.23, near its all-time low of $14.88.

While some researchers qualify this as a rug pull, the project’s founder says that Internet Computer fell victim to the whims of the market and bad timing. While some crypto experts gave up ICP for dead, others are energized by recent news and predict a comeback. 

Who’s wrong and who’s right? Keep reading to find out.

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The brief history of Internet Computer

The ICP token has been in the big leagues from the start.  The day it debuted, it was listed in most major crypto exchanges. Less than a month later, it was announced that the network had more than a thousand independent nodes located in data centers around the world. The company behind Internet Computer, Dfinity, raised more than $100 million at a $9.5 billion valuation from the cream of the crop of Silicon Valley’s venture capital firms.

The World Economic Forum (WEF) backed the project from the very beginning. Reportedly, at the 2020 WEF in Davos, Switzerland, people introduced Dominic Williams as the next big innovator in blockchain technology. And it’s worth noting that the Dfinity Foundation is a Swiss nonprofit. At the conference, the company showed the prototype of a LinkedIn-like social network called LinkedUp. The thing is, it was built over Internet Computer.

Some people qualify the project as a Layer One smart contract platform, an Ethereum-killer if you will. The Internet Computer is a little more ambitious than that. 

The project’s marketing pitch is that they want to help the little guy publish software or content without involving the tech giants. The company says they want to replace the whole Internet with a new blockchain-based one. In the Internet Computer’s model, developers and not users fund the system’s usage by paying gas fees.

The Internet Computer system requires that every user goes through full-KYC procedures and uses a unique Internet Identity. The code is not open-source, so it’s not auditable. There’s an internal governance mechanism in which the user’s vote weights proportionally to their staked ICP. So, the protocol’s creators win every argument. Plus, at the center of the Internet Computer, there’s a Network Nervous System (NNS) that can change into the tokenomics of the ICP token. The NNS is as central as it gets.

If all of those characteristics appeal to you, we have great news. Dfinity is calling 2022 “the year for ICP.” According to them, there are 500 developers working on the network. The dapps, from DeFi to websites built in the Internet Computer, have 250K daily active users.

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What Exactly Happened? What Are The Accusations?

Nobody knows for sure if the initial investors dumped ICP on the retail investors, but that’s the leading theory. Before Internet Computer appeared on the scene, in 2017, a crowdfunding round gave small investors the chance to get cheap ICP tokens. When the coin debuted, those small investors got confusing and extremely technical instructions and had to deal with an unreliable system that effectively kept them from selling at all-time high.

Suspicious. Following the blood, Arkham Intelligence released a comprehensive report that seems to point to an old-fashioned rug pull. What did they find out and how did they do it?

• First, they identified “addresses we suspect belong to the Dfinity treasury and project insiders have deposited 18.9 million ICP, worth ~$3.6 billion at time of deposit, to exchanges.”
• They determined that “deposits from the Treasury plus suspected insiders account for approximately 75% of total ICP deposits to exchanges.”
• And here come the grave accusations. “It has nonetheless come out that Dfinity imposed 4-year vesting on small seed supporters, who collectively own about 25% of the ICP supply, while having no vesting for the Dfinity foundation.”
• Also, as we explained, “Seed supporters who viewed them eager to claim their tokens were confronted with pages of complicated technical steps that many say they weren’t able to complete.” Which was ironic, considering the claim that “for many of these supporters, buying ICP in 2017 may have been the best financial decision of their lives, and accessing their tokens could be life-changing.” 

Then, through On-Chain analysis Arkham Intelligence determined:

• Easy. The “Treasury” is the biggest address. “What we will call the Treasury is the key address we believe belongs to Dfinity. The Treasury received about 107 million ICP from the mint at genesis, almost a quarter of the total ICP supply of about 470 million. This made it by far the largest holder of ICP on the blockchain.”
• Then, Arkham Intelligence identified suspected insiders whose “addresses have been linked to the Treasury in one of two ways: they received ICP from the Treasury, or they deposited ICP to an exchange deposit address also used by the Treasury.”

Arkham Intelligence’s report summarizes the situation as follows.

“The Treasury and suspected insiders have continually sent millions of ICP worth billions of dollars to exchanges, totaling 75% of the total deposited, possibly driving ICP’s price collapse. We do not have clear and direct evidence that these deposited tokens were sold. But deposits to exchanges and trading platforms are generally for the purpose of selling.”

Even with all of that circumstantial evidence, it’s impossible to prove exactly what happened. 

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Internet Computer Strikes Back

For a formal response to all the criticism and accusations, we have to quote Crypto Slate’s interview with Dominic Williams, the Dfinity Foundation’s and Internet Computer’s Founder and President. He blames the overarching market’s whims. “Why did this happen? We will never know exactly. What is obvious is that the Internet Computer underwent Genesis on the last day of a huge bull run in crypto.” 

At the time, Bitcoin went from a $60K all-time high to $30K within the span of a few weeks. “The sudden change in sentiment had an outsize effect on ICP, because it is a new token,” Williams told the publication. Then, he addresses the elephant in the room. “Founders and executives were locked up entirely for the first week. For my part, I have sold substantially less than 5% of my holdings since Genesis – after working day and night on the project for years.”

Do we believe him?

In any case, Internet Computer’s development seems to be picking up. Recently, the network welcomed Terabithia, a cross-chain protocol that serves as a bridge to Ethereum. Plus, Yahoo! Finance reports that Internet Computer received 25 improvement proposals at year’s end. And that everybody can create censorship-resistant decentralized websites using Fleek, a free-to-use project that wants to “enable the transition to the new internet: Open, trustless, permissionless, borderless, and user controlled.”

Is all of this enough to ignite new interest in the Internet Computer project? Or is ICP dead in the water? These could be million-dollar questions.