Algorand (ALGO) Governance - What You Should Know

Algorand blockchain is currently one of the most renowned blockchain protocols available today. It is also a unique pure proof-of-stake (PPoS) blockchain.

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.

Algorand (ALGO) governance cycle 2

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.

⬆️For more cryptocurrency news, check out the Altcoin Buzz YouTube channel.

Sign up with Binance using our Affiliate Link and get the following benefits:

  • Get a $100 instant bonus with a first-time deposit of $50 within 7 days,
  • Get a 20% trading fee discount for life!
  • Get $200 worth of 2 months of Altcoin Buzz Access PRO Membership
  • (50+ Trading Signals, Hidden Gems) and unlock up to $500 more in prizes

Click on the following link (as per your location) to avail the benefits.
Binance Global
Binance US
For further details visit our special Binance Page.

Terms & Conditions Apply.
Disclosure: Altcoin Buzz may receive a commission, at no extra cost to you, if you click through our links and make a purchase from one of our partners.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.