The $10 million entry fee to join the Facebook-developed cryptocurrency’s Libra Association is merely a minimum. Members who’ll verify transactions can opt to invest more in exchange for more Libra Investment Tokens that will earn them dividends from the interest earned by the Libra Reserve after it pays for infrastructure and operations costs.

If regulators allow it to launch after today requesting a halt of development, and the cryptocurrency grows popular with tons of people cashing in local currencies for Libra, the Reserve that holds those assets could grow huge and generate meaningful returns via interest — especially for members willing to sink a ton of money in early.

But therein lies potential disalignment of incentives.
Each Libra Association member only gets one vote on the council, including Facebook . But if Facebook puts in $500 million and another member like eBay antes up just the $10 million minimum, Facebook has a much bigger incentive to get people cashing into Libra and holding onto the cryptocurrency so the Reserve earns interest on those dollars or other fiat, rather than just getting people to transact with it regardless of whether they hold on to Libra permanently. That could lead Facebook (and its Calibra subsidiary representing it) to push governance decisions that would disproportionately benefit it.

Ahead of the Libra announcement two weeks ago, Facebook’s head of blockchain and now Calibra David Marcus told me, “The reserve earns interest on some of those treasuries. It’s a small amount and it’s variable, but if the reserve becomes big it could become a substantial way to fund the association but also return capital to investors.”

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