Cryptopedia Chapter 6 - Algorand (ALGO)

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Introduction

Algorand is an open-source, decentralized blockchain network that leverages a two-tiered structure and a unique variation of the Proof-of-Stake (PoS) consensus mechanism to increase transaction speeds and achieve finality. Algorand’s block rewards are distributed to all ALGO coin holders, offering all ALGO holders an opportunity to earn rewards instead of just block producers.

Algorand is a decentralized network built to solve the blockchain trilemma of achieving speed, security, and decentralization simultaneously. It is a permissionless and open-source blockchain network upon which anyone can build. Algorand is designed to be a payments-focused network with rapid transactions and a strong focus on achieving near-instant finality — that means processing over 1,000 transactions per second (TPS) and achieving transaction finality in less than five seconds.

As a public smart contract blockchain that relies on staking, Algorand is currently capable of hosting decentralized application (dApp) development and providing scalability. Rising gas fees on Ethereum have led many dApp developers and decentralized finance (DeFi) traders to look for alternative blockchain solutions, with some turning to Algorand as an Ethereum-alternative for dApp development and DeFi applications.

Inception

Launched in June 2019 by computer scientist and MIT professor Silvio Micali, Algorand is a permissionless and open-source blockchain network upon which anyone can build.

A non-profit organization called the Algorand Foundation oversees the funding and development of Algorand Inc. and the Algorand protocol itself. The Algorand Foundation supports developer education in universities and educational settings. Its Global University Program includes prestigious universities like MIT, UC Berkeley, and other leading institutions around the world.

Technology

Algorand uses a Proof-of-Stake (PoS) consensus mechanism, and distributes validator rewards to all holders of its native ALGO cryptocurrency. Through strong throughput capacity and equitable community incentivization, Algorand is capable of managing the high-throughput requirements of widespread global usage and a variety of use cases.

Algorand has a unique two-tiered blockchain structure. The base layer supports smart contracts, asset creation, and atomic swaps between assets. All of these processes take place on Layer 1 of the Algorand blockchain, which helps ensure security and compatibility.

The second layer of Algorand is reserved for more complex smart contracts and dApp development. It’s this bifurcation of the network, between Layer 1 and Layer 2, that allows Algorand to process transactions so efficiently. With more complex smart contracts taking place off-chain, simple transactions can be processed more quickly on Layer 1 without being bogged down by larger, more complex smart contracts.

Statistics

(At the time of writing)

Price $1.67

Market Cap $9,394,202,862

Circulation 5.6 Billion

Total Supply 6.2 Billion

References: Wikipedia Gemini Ethereum.org

Disclaimer: This post is for informational purposes only and not a financial advise. DYOR.

Previous posts

Cryptopedia Chapter 1 - Bitcoin (BTC)

Cryptopedia Chapter 2 - Ethereum (ETH)

Cryptopedia Chapter 3 - Litecoin (LTC)

Cryptopedia Chapter 4 - Cardano (ADA)

Cryptopedia Chapter 5 - Ripple (XRP)

Edit: As pointed out by u/Man_Reb0rn Algorand is starting a Governance Rewards system. Below is some basic info about the topic.

The Decentralised, Community Governance Rewards model has been designed to highly value and reward the commitment of Algorand Governors to the Algorand ecosystem and their participation in voting.

This is currently running at a rewards rate of 5.6% annualized. On top of this, 60M ALGO has been allocated as the governance rewards pool for the 1st Governance period.