Algorand (ALGO)

Algorand is a Layer 1 smart contract platform that has made strides in solving the “Blockchain Trilemma” of scalability, decentralization, and security.

Algorand uses its own consensus mechanism as well as a two-layered smart contract architecture to approve transactions quickly and minimize the odds of a network attack.

Projects built on Algorand’s blockchain can build dApps and tokens that can process faster, cheaper, and more secure transactions than Ethereum and some “Ethereum killers.”

How does Algorand work?

Most projects that use proof of stake (PoS) consensus mechanisms involve nominating validators based on how many native tokens they’ve staked into the network.

Algorand pioneered the use of Pure Proof of Stake (PPoS) protocol where block creation depends on randomly selected token holders.

Block creation happens in two “cryptographic sortition” phases:

  1. The proposal phase randomly asks one token holder to propose the next block.
  2. Another 1,000 randomly selected token holders then conduct the voting phase where they approve the proposed block.

Validators don’t need to compete for the next block, so the network has low computational requirements (sustainable). And because validators only approve one block at a time,

Algorand’s blocks can reach finality faster (scalable) and they can’t be forked (secure). Finally, the random selection of block creators promotes security in the network (decentralized).

Aside from instant consensus, Algorand also uses a two-layered smart contract architecture to improve throughput.

The first layer executes simple smart contracts on-chain. Examples include atomic transfers and tokens and NFT creation and management.

The larger, more complicated smart contracts are computed in another layer off-chain. Contracts that need to consult and filter databases, for example, are made on this layer.

What is the ALGO token?

Algorand’s native token ALGO is mainly used to pay network fees and participate in block-creation activities.

ALGO owners can also stake their tokens on-chain–and even when held on an exchange–to earn small inflation rewards.

Algorand is one of the bigger “Ethereum killer” competitors so ALGO is available on major crypto exchanges and can be stored in Ledger, Trezor, Algorand Wallet, and other major wallets.

Team background

Turing award winner and MIT professor Silvio Micali founded Algorand in 2017 before launching on mainnet in 2019.

Micali won the Turing award for his work which sought to create a public, permissionless blockchain that is both scalable and secure without fear of fork splits.

He also co-invented Zero-Knowledge Proofs as well as the Verifiable Random Functions that Cardano’s Ouroboros currently uses.

Algorand Inc., a Boston-based private corporation, is in charge of developing Algorand’s core protocol, while Algorand Foundation oversees ecosystem research, growth, and decentralization.

Notable Investors: Digital Asset Capital Management, Hash Capital, Eterna Capital, NEO Global Capital, Multicoin Capital, Union Square Ventures, Polybius Capital

Notable Projects:

  • Yieldly Finance: DeFi Suite of liquidity mining, no-loss prize games, staking, cross-chain swaps
  • Algofi: lending market, stablecoin issuer
  • Tinyman: automated market maker

Token Metrics:

  • 15.264M unique addresses created
  • Circulating Supply: 7.018B ALGO (updated Oct. 2022)
  • Max supply: 10B ALGO
  • Inflation Rate: 22.97%
  • Though all 10B ALGO were minted at launch, not all have been unlocked. Over time, ALGOs will be unlocked to reward relay nodes depending on ALGO price acceleration.

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