Founded by Turing award winner and MIT professor Silvio Micali, Algorand is a permissionless pure proof-of-stake blockchain protocol. Unlike first-generation consensus mechanisms, Algorand’s technology finalizes blocks in seconds and aims to provide immediate transaction finality while preventing forks. Algorand does also not reward validators with newly minted tokens.
With a focus on developers and their needs, Algorand’s node repository has been open sourced and is publicly available. Algorand provides a robust set of developer tools, dApp analytics through a partnership with Flipside Crypto, and has a number of partners building on its blockchain, including OTOY, Syncsort, TOP Networks, Asset Block and more.
The Algorand blockchain has a native cryptocurrency, called the Algo, to incentivize network participation and power transactions or state changes. Users can stake their ALGO in exchange for inflation rewards by signaling their status in the system as offline or online.
The allocation of Algos and how they are being distributed is presented in the Emissions section. The Foundation holds Algos to contribute to the stability of the Algorand blockchain, to incentivize network participation, and to support the Algorand community, ecosystem building, and research. The Algos enter the ecosystem via various channels including development and research grants, participation rewards, and sales. All such activities are disclosed with full transparency to the Algorand community.
Algorand utilizes a Pure Proof of Stake, where validators are not rewarded nor are they at risk of being slashed. It becomes impossible for the minority to cheat and irrational for the majority to cheat the system as it would devalue their holdings. There is also no locking of tokens so a user has their tokens available at all times. Blocks are created in two phases where a single token is selected randomly and its owner proposes the next block. Subsequently, 1000 random tokens are selected with their owners then approving the block proposed by the first user.
These phases are ensured by the core protocol called Binary Byzantine Agreement, or Byzantine Agreement ★ (‘Star’), encompassing the following advancements:
Cryptographic sortition (self-selection) To prevent an adversary from targeting committee members, BA★ uses verifiable random functions (VRFs) to randomly select committee members in a private and non-interactive way.
Participant replaceability. BA★ mitigates adversary targeting a committee member by requiring committee members to speak just once, thus becoming irrelevant to BA★.
Experimental results running on 1,000 Amazon EC2 VMs demonstrate that Algorand can confirm a 1 MByte block of transactions in ~22 seconds with 50,000 users, latency remains nearly constant when scaling to half a million users, it achieves 125X the transaction throughput of Bitcoin, and that Algorand achieves acceptable latency even in the presence of actively malicious users.
A test network for the protocol was launched in July 2018, and the first open-source code was released on Github in October 2018. As such, Algorand encourages anyone to audit its version of the VRF, forked and extended from the widely popular libsodium cryptographic library.
The Algorand Foundation’s Economic and Technical Advisory Committees are assisting with the launch stages and initial governance of the public Algorand blockchain. The foundation is a research and governance organization committed to encouraging continued development and innovation on the Algorand network. The long-term vision is to transition to a governance structure equipped with a constitution and designed for community involvement.