Seeing as Algorand (ALGO) is a proof-of-stake (PoS) blockchain, its security and success are based on its community members and stakers. These stakers are also majorly in charge of its entire governance process.
This article is a deep dive into the Algorand (ALGO) ecosystem and what you should know about its governance process. Before we move on, let’s find out more about Algorand (ALGO).
What Is Algorand?
Algorand is a pure proof-of-stake (PPoS) chain. One of Algorand’s main interests is to provide a reliable solution to the issue of security and decentralization in the blockchain sphere. It is also interested in ensuring blockchain transactions are sustainable and cost-effective.
To ensure the seamless running of the blockchain, it relies on the staking activities of its community members. Stakers are required to lock up a certain amount of crypto. Active stakers also receive passive income as a reward for their staking activities.
Previously, Altcoin Buzz examined the particulars of Algorand staking
When Was Algorand Created?
Launched in 2017, Algorand was designed to solve issues facing the blockchain and crypto space. Issues like high gas fees, slow transactions, and porous security.
The unique pure proof-of-stake (PPoS) blockchain is the brainchild of cryptography guru and MIT professor Silvio Micali. He, alongside other renowned mathematicians and cryptographers, designed the Algorand chain to be secure as well as truly decentralized.
How Algorand Governance Works
As previously disclosed, Algorand is a pure proof-of-stake (PPoS) blockchain network known for its green stance. As a PPoS chain, its mechanism goes beyond what most proof-of-stake (PoS) blockchains offer. Stakers are also a major pillar of the Algorand chain. Simply put, stakers are tasked with shaping the Algorand ecosystem. They are a major part of the decision-making process as well as the general growth and development of the ecosystem. In return for their service, they also earn passive income from their asset stakes.
Interestingly, Algorand community governance is divided into different periods or cycles. Since its inception, Algorand has had a total of three governance periods. Its fourth governance period will soon take place. Algorand users and community members are encouraged to let their voices be heard by registering and taking part in the governance cycles.
The first Algorand governance cycle took place between Oct 1st to Dec 31st, 2021, with voting starting on November 1, 2021, and lasting for 14 days.
The vote was on how governance rewards should be distributed. That is, either as:
- A – Simplified model with no slashing or stake penalties.
- B – An increased annual reward pool with an 8% slash for inactive governors.
Option A won the governance cycle, so governance rewards will maintain the simplified commit and vote model with no slashing.
Both governance cycles two and three also involved voting on new features and helping to direct the course of the blockchain platform.
What Is Algorand Used For?
Algorand boasts of several unique Layer 1 features all designed with exciting use cases. Some of its unique features include:
- Algorand Standard Assets (ASA)
- Atomic Transfers
- Smart Contracts and AVM
- Rekeying
Notably, each of these features all has unique use cases.
1. Algorand Smart Contracts, for example, provide a seamless solution that is also scalable and cost-effective. Their execution also takes place on-chain, therefore, ensuring they are error-free and tamper-proof.
2. Algorand Standard Assets (ASA) can represent any assets on Algorand. Its use cases include:
- Tokenization of assets
- Democratization of access to investments
- 3rd party asset issuance, etc.
3. Its Rekeying feature will ensure:
- Faster and hitch-free method of preserving public address permanence
- More security for existing accounts
- Flexibility to have a single Public Address and change the Private Spending Key at any time, etc.
The video below throws more light on the Algorand (ALGO) Rekeying feature.
When Are Algorand (ALGO) Governance Rewards Paid?
Algorand has a well-designed reward model for its governors. Furthermore, ensuring that the reward is based on amount staked as well as the commitment of individual stakers. Using the second governance cycle as an example, governors started earning rewards from January 1, 2022.
The diagram below is a graphical representation of the Algorand reward model for its second governance cycle.
Source – Algorand Blog
In conclusion, Algorand (ALGO) continues to redefine the possibilities embedded in the blockchain and crypto space while soaring on the wings of its governors.
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