What is Algorand (ALGO)?

Algorand is a blockchain platform that boasts great performance, with transactions that are both quick and inexpensive, backed by the platform’s in-house Pure Proof-of-Stake (PPoS) consensus algorithm. It allows for the creation of smart contracts, applications that are decentralized, and digital assets to be issued.

On the Algorand blockchain, an ecosystem consisting of a multitude of DeFi, NFT, and Web3 services is now under development, in addition to hundreds of solutions for the conventional market.

How Does Algorand work?

The developers of the project think that they have been successful in resolving the “blockchain trilemma” by achieving high performance, scalability, and security with the implementation of the “pure proof of stake” consensus process and a number of other advances.

For the sake of high performance, blockchain platforms that are based on the Delegated Proof-of-Stake (DPoS) consensus algorithm and its variants limit the number of validators to a few hundred or even tens. This decreases the level of decentralization and increases the likelihood that the platform will be abused.

In Algorand, a high level of decentralization and security is maintained by the fact that the validators of the next block are selected in a way that is both secretive and random from among all wallets that hold at least one ALGO coin. This allows for a large pool of potential validators to be chosen from.

In accordance with the protocol of the Byzantine agreement, each block undergoes approval in one of the following three stages:

Sentence. Soft vote refers to the process in which a leading wallet is chosen at random to propose a block for approval. A committee of wallets chosen at random makes the decision of which of the proposed blocks will be the sole candidate for certification and voting confirmation. Another committee that is chosen at random examines the newly added block to check for faults such as overspending, double spending, and other problems before approving it for inclusion on the blockchain.

At each stage, a verified random function (VRF) is utilized to choose wallets. This VRF operates similarly to a weighted lottery in that the greater the number of ALGO tokens that are contained within a wallet, the greater the likelihood the wallet will be chosen.

Additionally, the Algorand network comprises over 120 relay nodes, each of which is a full node and maintains an accurate copy of the blockchain at all times.

The network throughput is able to reach 1000 transactions per second while maintaining a block time of 4.5 seconds because of this architecture. One transaction will set you back 0.001 ALGO, which will be equivalent to around $0.0003 in July 2022.

Not just in comparison to PoW cryptocurrencies, but also in comparison to the majority of DPoS cryptocurrencies, the Algorand blockchain has a very high energy efficiency and cost-effectiveness per transaction. This is another crucial consequence of using the Algorand blockchain.

The blockchain runs on its very own virtual machine, called Algorand (AVM). The Ethereum virtual machine and smart contracts written in Solidity are incompatible with this component of the system.

TEAL is the language that was first used by AVM. Python, on the other hand, is a language that is utilized in many fields other than the cryptocurrency business and can be used to write smart contracts and decentralized applications.

How Does the Algorand Tokenomics Framework work?

The Algorand blockchain’s native cryptocurrency is denoted by the symbol ALGO. Staking, maintaining relay nodes, paying transaction fees, and acting as a governance token are among the uses for this token. The coin is listed on the most important exchanges (including Binance, Coinbase, Huobi, Kraken, and FTX, among others), and its market capitalization is among the top 50.

As part of the premine, all 10 billion coins that were up for grabs from the ALGO offer were distributed. The majority of it was distributed to the group of developers, early investors, and the Algorand Foundation, which is a charitable organization.

Since it was first introduced, the ALGO release schedule has undergone a number of significant changes. The Algorand Accelerated Vesting program dispersed 3.1 billion ALGO in 2020-21 to early adopters, relay node holders, and developers as part of its early adopter support program. The total number of ALGOs in circulation climbed to 6.97 billion in 2021, from 3.11 billion the previous year.

The remaining locked coins are scheduled to be dispersed by grants, prizes for staking, management, and maintenance of relay nodes by the year 2030, according to the plans that are now in place.

After the creation of each new block, stake rewards are transferred to the wallets of those who own ALGO. The yield from staking is approximately 6% per year.

Who is in Charge of Algorand?

At the beginning of the project, the private company Algorand Inc. was responsible for both the management and the technological developments. In the year 2019, Singapore was the location where the Algorand Foundation was established. This organization was given the responsibility of financing and growing the network, in addition to providing training and assistance for developers.

ALGO is owned to a significant degree by the Algorand Foundation. The activities and initiatives that the group undertakes on the Algorand blockchain are funded using bitcoin, and the organization uses accelerator programs to do so.

The Algorand Foundation established the Viridis DeFi Fund with an initial capitalization of $300 million from its own resources in the month of September 2021. The framework provides financial assistance to groups working on the creation of wallets, interconnection bridges, and various other ecosystem services.

The Algorand blockchain started making the change to a decentralized governance model during the last three months of the year 2021. This change will enable all ALGO owners to have a say in the most important decisions that are made.