Algorand (ALGO)

From CryptoWiki

A proof-of-stake blockchain first created by MIT professor Silvio Micali in 2019 has gone live for public test net use; 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. However, due to it's structure it is called permissioned non the less.

Algorand
Consensus mechanismPoS
Total supplyCMC: 3,089,748,113 ALGO Foundation says 10 billion Algos
Websitehttp://algorand.foundation/ https://www.algorand.com/

Basics

History

Audits & Exploits

"Silvio Micali’s blockchain has competed comparably well with other well-rated blockchains from our chain scores. A concerning point for the ALGO chain, however, is the fact that the chain operates on a a single node software implementation, go-algorand. If the software has a significant issue requiring the AVM to go down, so would the chain. The available documents are fairly complete for configuration and architecture; we would love to see more software function coverage for the go implementation. We could identify an average of at least 50+ days of discussion per update releases, demonstrating acceptable reviews and due diligence upon releasing updates. The ecosystem developers and users have access to at least 4 explorers: Goalseeker, AlgoExplorer, BitQuery and AlgoScan.

Algorand's testing efforts, on the other hand, leave us feeling neutral. Available testing lines per code is rather low and code coverage is listed at roughly 55%. We couldn’t find a complete public testing set. However, test instructions and reports are provided, which is good testing practice. We will highlight that we were unable to get an answer from Algorand devs.

To finish off, Algorand’s security efforts are poorly documented. We were unable to find any public audit reports made on go-algorand, while the chain’s bug bounty is relatively low; a critical bug is eligible for a reward of 2500$ as per Hackenproof."

Bugs/Exploits

Governance

"The Algorand platform takes a consensus approach to protocol changes, which facilitates continuous evolution of the protocol and eliminates potential hard forks that could fracture the community. This ability is powered by the Algorand consensus protocol that enables the users to reach consensus on anything. Not just on the next block, but also on a protocol upgrade."

"The Algorand Public Blockchain seeks to have a constitution and long term governance structure designed with community involvement. More details on our constitutional assembly and governance policies/processes will be shared soon.

At launch, governance of the network is assisted by the Algorand Foundation's Economic and Technical Advisory Committees, with committee members selected by our University & Non-Profit Program participants."

  • "Proposals are considered (3-12-2019) as approved if a majority of relay node runners indicate their consent. The majority is defined as over 50% of operating Nodes."

Development & Upgrades

  • From the Foundation's website (19-2-2020):

"Algorand’s upgrade process when a consensus version change is involved is as follows:

  1. A new binary that supports a new consensus version is released. This binary supports the current version and the next one.
  2. Online nodes update their software with the new binary:
  • The consensus version does not change during this step
  • Anyone proposing a block attaches a flag with their block that effectively says “I am ready for the next consensus version”
  • The protocol tracks blocks with this flag over a 10k block period:
  • If >=90% of the block Proposers state “I am ready for the next consensus version”, the new version is approved. In this case, the upgrade protocol observes that the vast majority of the network supports the new version. Everyone with the new binary would switch to speaking in the new consensus version 10k blocks in the future. The rest of the nodes can upgrade during that time window to avoid disconnecting from the rest of the network.
  • Otherwise, the new consensus version is not approved (for now) but may be approved in the following windows."

Relay Node Runners Approve New Long Term Vesting Plan

  • From the Foundation's website (3-12-2019) 

"The relay node runners completed a vote today to ratify a change to their node awards vesting schedule. The new vesting schedule, based on a Conditional Accelerated Vesting model, has moved from a 2-year timeframe to a greater than 5-year timeframe but with the opportunity for that timeframe to be reduced under certain conditions. The relay node runners will receive an increased allocation of Algo to compensate for the vesting extension. For a detailed view of the new vesting schedule, please click here to view the full EIP.

Of the node runners earning daily rewards as part of the early relay node running incentive programs, here is the outcome of their votes:

  •  55 YES votes in favor of the proposal*
  •  1 NO votes not in favor of the proposal.
  •  25 abstained"

Token

Launch

Token allocation

Coin Auctions

  • From (2-2020) the Foundation's website:

"The total supply of Algos is 10 billion Algos. The full 10 billion Algos were minted in the genesis block with the following distribution:

  1. Algo sales to community (distributed over time) 2.5B
  2. Incentives and ecosystem support (distributed over time) 2B
  3. Relay node runners (distributed over time) 3B
  4. Algoranc, Inc 2B
  5. Algorand Foundation 0.5B"
  • "The Foundation holds (12-2-2020) Algos to contribute to the stability of the Algorand blockchain and to support the Algorand community, ecosystem building and research. The Algos will enter the ecosystem via various channels including development and research grants and sales."
  • Algos will initially enter (12-2-2020) circulation via a sequence of periodic Dutch Auctions.

"All bids, including successful bids, are tracked on the Algorand blockchain and associated with an account that has satisfied KYC/AML requirements. Additionally, the auction settlements will be posted to the Algorand blockchain. Therefore, all addresses that successfully purchase Algos will be recorded along with the amount of Algos that they received.

Participation in auctions is not possible for the following excluded jurisdictions: United States of America and its territories, Canada, Democratic People's Republic of Korea, Cuba, Syria, Iran, Sudan, Republic of Crimea, People's Republic of China.

The first Algo auction was held on June 19, 2019. A total of 25,000,000 algos were sold at a clearing price of $2.40."

"The auction brings Algos, the native token of the Algorand blockchain platform, into market circulation for the first time. Originally scheduled to last for more than five hours, the auction sold out in under four hours, due to oversubscribed demand from a large group of global participants. The Dutch Auction mechanism ensured the market, not the seller, set the price of the offering and that each participant paid the same price per Algo."

"The total supply from direct Foundation sales, planned to approach 1B over 2019 and 2020, was eventually amounted to around 6M in 2019. Now the Foundation has decided to resume sales to fund research and ecosystem development, but with a maximum possible amount of 150M in 2020, and will structure the sales to have the minimum impact on the market dynamics."

Refunds and Burns

"One of these features was the 90% Refund, a right owned by the auction buyers only, and not directly associated with the Algos bought at auction. On August 1, the Early Redemption of Auction Refund was announced: auction buyers could receive 85% early redemption if they transferred Algos back to the Foundation. This way 19.9M Algos, out of a total of 25M Algos sold at the auction, were permanently retired from supply and eventually burnt by the Foundation."

Algorand Treasury

"Per its most recent report in Jan. 2020, Algorand owns 2.02 billion ALGOs, up from 2 billion at launch. The project also used 155 million ALGOs (up from 111.2 million ALGO in the Nov. 2019 report) to incentivize contributors and open-source developers via token grants and investments. Algorand did not sell any of these tokens directly on the secondary market, only issuing payouts in the form of ALGO tokens. But the company does intend "to sell tokens periodically in 2020 to fund development initiatives."

Utility

"The most prominent use cases for ALGO tokens are payments and staking (i.e., network security). Alogrand tokens are used to payment network transaction fees, compensating the relay nodes for processing state changes. ALGO holders can also stake their tokens on-chain, which requires a holder to correctly designated their status in the system as offline or online. Staked tokens offer a level of security and resiliency to the system and give stakeholders the right to a percentage of the ALGO rewards pool (in proportion to the number of tokens a user has staked)."

"Under the guidance of the Economic Advisory Committee (EAC), the Foundation has:

1. Supported temporary suspension of the distribution of Algos going to the early backers performing the role of Node Runners. The suspension came into effect on September 27, 2019. During the suspension, the Foundation agreed with the Node Runners on a new distribution plan that, in 2020, will release a minimum of 3% of the tokens allocated to the Node Runners, instead of the originally planned 50%.

2. Reduced the Foundation's own selling plans for 2019 and 2020 from around 1 Billion Algos to a maximum of 150 Million Algos.

3. Halved the speed of distribution of the participation rewards that go evenly to all Algo holders to reflect the significantly reduced token supply. The distribution will go down from an annual quantity that amounted to almost 20% of the circulating supply in 2019 to a percentage just under 10% in 2020, reducing inflation.

The above measures mean for 2020 a reduction of Node Runner distribution (potentially by more than 90%), a reduction of Foundation selling by more than 80%, and a halving of the distribution of participation rewards.

The oversupply from Node Runners vesting and its impact on the Algo market was the focus of the previous State of the Economy report. The new vesting agreement includes drastic cuts in the vesting rate, hence it is expected to have a major impact on the Algo market. Specifically, 3.2M Algos were vested daily during the summer, exerting a powerful downward pressure (even if only a percentage reached the market). In contrast, only 205K Algos will be vested daily under the base rate in the new agreement during 2020. This distribution rate is only accelerated when the Algo price increases, specifically if a moving average of the Algo price rises above the previous high reached since the beginning of the new agreement.

The new agreement therefore creates an incentive for Node Runners to hold Algos and support the market to obtain steady growth. Moreover, backers that sell their vested Algos (despite the incentive to hold) have a stabilizing effect on the currency, since dropping price will revert the vesting back to its base low rate.

In return for this significant vesting delay, an additional 25% reward is allocated to Node Runners. This is done without altering the total Algo supply, as the Foundation sales amount has been reduced by an equivalent figure. This 25% will not undermine the effectiveness of the new vesting plan, since under the base vesting schedule these additional Algos will be vested only in 5 years from now, when circulating supply will be much larger than it is now, making this vesting plan harmonic with the evolution of market circulating amount."

Token Details

Stablecoin

"Centre announced a multi-chain framework for supporting USDC on non-Ethereum blockchains. Algorand will be the first to receive stablecoins powered by USDC. Tether has also tapped Algorand as a vehicle for expanding its footprint."

Coin Distribution

Tech

Whitepapers

  • Has five whitepapers on their website (12-2-2020). Their abstracts come from the website and can be read below:

"Pixel: Multi-signatures for Consensus

3-12-2019

By Manu Drijvers, Sergey Gorbunov, Gregory Neven and Hoeteck Wee

In Proof-of-Stake (PoS) and permissioned blockchains, a committee of verifiers agrees and sign every new block of transactions. These blocks are validated, propagated, and stored by all users in the network. However, posterior corruptions pose a common threat to these designs, because the adversary can corrupt committee verifiers after they certified a block and use their signing keys to certify a different block. Designing efficient and secure digital signatures for use in PoS blockchains can substantially reduce bandwidth, storage and computing requirements from nodes, thereby enabling more efficient applications.

We present Pixel, a pairing-based forward-secure multi-signature scheme optimized for use in blockchains, that achieves substantial savings in bandwidth, storage requirements, and verification effort. Pixel signatures consist of two group elements, regardless of the number of signers, can be verified using three pairings and one exponentiation, and support non-interactive aggregation of individual signatures into a multi-signature. Pixel signatures are also forward-secure and let signers evolve their keys over time, such that new keys cannot be used to sign on old blocks, protecting against posterior corruptions attacks on blockchains. We show how to integrate Pixel into any PoS blockchain. Next, we evaluate Pixel in a real-world PoS blockchain implementation, showing that it yields notable savings in storage, bandwidth, and block verification time. In particular, Pixel signatures reduce the size of blocks with 1500 transactions by 35% and reduce block verification time by 38%.

This paper was peer-reviewed and will appear at USENIX Security 2020. The paper can be viewed here.

Vault: Fast Bootstrapping for the Algorand Cryptocurrency

24-2-2019

By Derek Leung, Adam Suhl, Yossi Gilad, Nickolai Zeldovich

Abstract: Decentralized cryptocurrencies rely on participants to keep track of the state of the system in order to verify new transactions. As the number of users and transactions grows, this requirement becomes a significant burden, requiring users to download, verify, and store a large amount of data to participate. Vault is a new cryptocurrency design based on Algorand that minimizes these storage and bootstrapping costs for participants. Vault’s design is based on Algorand’s proof-of-stake consensus protocol and uses several techniques to achieve its goals. First, Vault decouples the storage of recent transactions from the storage of account balances, which enables Vault to delete old account state. Second, Vault allows sharding state across participants in a way that preserves strong security guarantees. Finally, Vault introduces the notion of stamping certificates, which allow a new client to catch up securely and efficiently in a proof-of-stake system without having to verify every single block. Experiments with a prototype implementation of Vault’s data structures show that Vault’s design reduces the bandwidth cost of joining the network as a full client by 99.7% compared to Bitcoin and 90.5% compared to Ethereum when downloading a ledger containing 500 million transactions.

The peer reviewed white paper can been viewed here.

Algorand Agreement - Super Fast and Partition Resilient Byzantine Agreement

28-8-2018

By Jing Chen, Sergey Gorbunov, Silvio Micali, Georgios Vlachos

Abstract: We present a simple Byzantine agreement protocol with leader election, that works under > 2/3 honest majority and does not rely on the participants having synchronized clocks. When honest messages are delivered within a bounded worst-case delay, agreement is reached in expected constant number of steps when the elected leader is malicious, and is reached after two steps when the elected leader is honest. Our protocol is resilient to arbitrary network partitions with unknown length, and recovers fast after the partition is resolved and bounded message delay is restored. We will briefly discuss how the protocol applies to blockchains in a permissionless system. In particular, when an honest leader proposes a block of transactions, the first voting step happens in parallel with the block propagation. Effectively, after the block propagates, a certificate is generated in just one step of voting.

This white paper has been published here.

Algorand: Scaling Byzantine Agreements for Cryptocurrencies

31-10-2018

By Yossi Gilad, Rotem Hemo, Silvio Micali, Georgios Vlachos, Nickolai Zeldovich

Abstract: Algorand uses a new Byzantine Agreement (BA) protocol to reach consensus among users on the next set of transactions. To scale the consensus to many users, Algorand uses a novel mechanism based on Verifiable Random Functions that allows users to privately check whether they are selected to participate in the BA to agree on the next set of transactions, and to include a proof of their selection in their network messages. In Algorand’s BA protocol, users do not keep any private state except for their private keys, which allows Algorand to replace participants immediately after they send a message. This mitigates targeted attacks on chosen participants after their identity is revealed.

We implement Algorand and evaluate its performance on 1,000 EC2 virtual machines, simulating up to 500,000 users. Experimental results show that Algorand confirms transactions in under a minute, achieves 125x Bitcoin’s throughput, and incurs almost no penalty for scaling to more users.

This whitepaper has been peer edited and reviewed and is published here.

Algorand Theoretical Paper

26-5-2017

By Jing Chen, Silvio Micali

Abstract: A public ledger is a tamperproof sequence of data that can be read and augmented by everyone. As currently implemented, however, they scale poorly and cannot achieve their potential. Algorand is a truly democratic and efficient way to implement a public ledger. Unlike prior implementations based on proof of work, it requires a negligible amount of computation, and generates a transaction history that will not “fork” with overwhelmingly high probability.

This whitepaper has been peer edited and reviewed and is published here."

  • Code can be viewed [insert here].
  • From their blog (16-6-2021):

"The Algorand Blockchain itself is open sourced. Today, we’re excited to announce that the official Algorand Wallet codebase has been open sourced and is now publicly available."

  • Consensus mechanism: PoS
  • Algorithm: Pure-Proof-of-Stake
  • Virtual Machine: Algorand VM
  • Development language: Go

Transaction Details

  • Capacity (TPS) and latency: "Performance on the Algorand platform exceeds 1000 transactions per second (TPS) with a latency of less than 5 seconds." Update (22-10-2021): "[Has] plans to upgrade to 46,000TPS. Transaction times are also at roughly 4.5 seconds block, with further plans to improve this to 2.5 seconds."

How it works

  • Algorand uses a pure proof-of-stake (PPoS) consensus protocol built on Byzantine agreement.
  • From their blog (13-4-2021):

"The PPoS protocol is also built on Byzantine consensus, and each token holder’s influence depends on its stake in the system. The trick is that the protocol selects users randomly, irrespective of their stake."

Fees

Upgrades

Algorand 2.0

"The Algorand Foundation released an update to the blockchain’s protocol on Thursday, adding decentralized finance (DeFi) features plus the long-awaited smart contracts. “Algorand 2.0” is the largest expansion of the network’s capabilities since the network’s launch in June 2019.

Algorand’s ASC smart contracts have back-end differences from the smart contracts pioneered by blockchains like ethereum. That’s because Algorand’s new in-house programming language Transaction Execution Approval Language (TEAL), is non-Turing-complete. TEAL smart contracts are safer to write and execute, despite having more limited potential functionality, Algorand argues. For example, ASC cannot support recursive logic, according to the developer page.

“We don’t believe that turing-complete is necessary for the majority of the use cases,” said Paul Riegle, head of product at Algorand. “It adds immense attack surface and a potentially steep performance impact.”"

Layer 1 components

  • From the Foundation's website (12-2-2020):

"Algorand Standard Assets; ASAs are standard blockchain assets with customizable options, directly in Layer-1.

Atomic Transfers; Secure transfers and immediate transaction settlement for multiparty transactions built in Layer-1.

Algorand Smart Contracts in Layer 1; ASC1s are stateless smart contracts in Layer-1 with numerous possibilities for governed transactions."

Staking

Validator stats

"Algorand’s 1400+ nodes network is a positive indicator of decentralization for software maintenance. Through relay/participation nodes, Algorand’s software has significant support, although we could not find information on geographical locations of nodes."

  • As of November 2021, there are approximately 120 relay nodes (all chosen by the foundation).
  • From the Foundation's website (12-2-2020):

"In addition, in the early stages of the Algorand blockchain, Algorand Inc. will put only part of its total stake online, so as (1) not to have a controlling position while (2) offering resiliency against hostile takeover attacks. We believe these steps will ensure that the Algorand network will reach its goal of true decentralization in the safest and quickest way possible."

"The Foundation’s stake is 500M Algos (and the participation rewards thereof). This stake participates in the consensus protocol contributing to the protocol’s integrity."

  1. Online Stake: 1,896,905,236.810761 Algos
  2. Circulating Supply: 3,089,762,985.889303 Algos

"17.5% of the supply (1.75 billion ALGO) will be periodically distributed to staking participants via the Algorand Foundation. These staking rewards are distributed to any ALGO holder who has correctly designated their status in the system as offline or online. In its Pure Proof-of-Stake (PoS) model, users earn awarded tokens in proportion to their stake for every new block. Rewards will be deposited by the Algorand Foundation into a “rewards pool” every 500,000 blocks (about once every month). Reward allocations are designed as a tiered system to favor early participants to compensate for the additional risk. Additional incentive mechanisms may be introduced at a later date, but no further details have been provided.

Algorand also allocated tokens to select Relay Node operators and end-user grants. Early Algorand supporters that opted to run some of the first relay nodes will receive the opportunity to earn ALGOs according to vesting schedules that range from 2 to 5 years. The end-user grants are dedicated to open-source developers and community members to help incentivize protocol development and innovation. The ALGOs will be distributed via various programs like hackathons, competitions, and events."

  • Stake.fish is a Relay node operator. Figment is a staker. From their website (9-3-2020): "Operating investor Relay & Participation nodes since network launch on 6/19. Serving Algorand’s original investors and world’s largest ALGO holders."

200 Million Algo Staking Reward Program

"The program provides 200 million Algos to registered participants, allowing them to increase their position in Algos by holding the token. The rewards will be distributed over the course of four 6-month periods, a total of two years, to qualifying participants who commit by registering (via a micro transaction) by block number 1618450, which is expected to happen on August 31st, 2019. Only the first 200 million Algos across the registered wallets will be eligible.

Participants have an opportunity to earn a return of more than 100% by participating in the program. The return rate could increase if some users choose to voluntarily disqualify themselves by dropping out of the program. The Algos which the disqualified users would have received are returned to the reward pool to be distributed to the remaining eligible users.

The entire reward pool is fixed, and 50 million Algos will be distributed on a stake weighted basis to remaining qualifying participants at the end of each 6-month period, according to a published schedule."

  • Requires KYC:

"The Foundation requires (3-2020) all participants to pass through a KYC/AML check as a condition to receive the staking rewards. The Algorand Foundation has enlisted Coinlist to facilitate the completion of the KYC process."

However, they did extend the deadline (7-10-2019) from 10-10-2019 to 10-2-2020 "to allow more time for participants to complete the KYC process.". 

Scaling

"Micali estimated that the world needs ledgers to be capable of processing at least 1,000 transactions per second (tps) at this point. Ideally, they would compare with credit cards, whose throughput is about 16,000 tps on average and can reach 40,000 tps. However, unlike credit cards, which are operated by centralized entities, the goal of a blockchain is to make sure that the transaction is not only processed but also shared, visible, and verifiable. Algorand does this by selecting validators randomly from all token holders. The network relies on an algorithm that automatically picks the next group of nodes that become eligible to add blocks. This approach maintains decentralization since everyone can be selected by the system. The fact that no one knows who the next validators will be ensures security, which is another important element in the trilemma. The system is scalable because the lottery happens in one microsecond."

Other Details

"The Algorand consensus protocol proceeds in a series of rounds. Each round, the nodes certify a block to add to the blockchain. If the network is partitioned, several attempts--called periods--may be necessary to certify a block. For more details, see the Algorand Blockchain Features Specification and this journal paper on Algorand."

"Algorand does not reward validators with newly minted tokens. 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."

"A unique committee of users is randomly and secretly selected to approve every block. Nodes are run by entities representing diverse backgrounds across many different countries. Users do not need the approval of a trusted authority to use the Algorand blockchain. There is a single class of users and no gatekeepers. Every participant can read every block and have the opportunity to write a transaction in a future block. Users are randomly and secretly selected to both propose blocks and vote on block proposals. All online users have the chance to be selected to propose and to vote. The likelihood that a user will be chosen is directly proportional to its stake.

In contrast to DPoS, PPoS doesn’t put a small set of users in charge of block generation, and users do not need to delegate their voting power to the selected few. Every user may propose and vote on blocks with a probability directly proportional to their stake, and there is no special group of users for an attacker to target.

PPoS does not require users to set aside part of their stake in order to participate in the consensus protocol, and participating in the consensus protocol does not reduce a user’s ability to spend their stake. In Algorand, users are free to spend their stake at any time. No stake is ever held hostage. All stake is always where it should be—in users’ wallets ready to be spent or in the various financial instruments that the Algorand blockchain underlies."

Tx Finality

  • From the Foundation's website (19-2-2020):

"The Algorand blockchain does not fork. Unlike with proof-of-work protocols, two different blocks can never be added to the chain in the same position. Only one block can have the required threshold of signatures in order to be certified in a given round. All transactions are final in Algorand. Even if the Internet is split into multiple pools of users, only one safe and consistent Algorand chain will exist."

Node Types

  • From the Foundation's website (12-2-2020):

"The Algorand network supports two types of nodes to simultaneously optimize for transaction throughput and decentralization: relay nodes and participation nodes. The difference between these nodes is one of configuration only, not software.

Relay nodes serve as network hubs and maintain connections to many other nodes. These nodes have high-performance network connections which allow for efficient communication paths, ultimately reducing the number of hops and the transmit time of sending a message throughout the network. Relay nodes decongest noise in the system by accumulating protocol messages from participation nodes and other relay nodes connected to them, performing deduplication, signature checks, and other validation steps and then re-propagating only the valid messages. Relay nodes are also often located at internet exchange points to decrease propagation time. Anyone may (and is encouraged to) run a relay node.

Click here to learn how to run a relay node.

Participation nodes are connected to Relay Nodes. They act as a user’s agent in the system. Authorized by the user’s participation key, these nodes contribute to the Algorand consensus protocol by proposing and voting on blocks on behalf of the user’s stake within the consensus algorithm. Participation nodes may represent any number of users provided the appropriate participation keys are registered with it. As with Relay Nodes, anyone may host a Participation Node.

Offline accounts: For users who choose not to participate in the Algorand consensus protocol, the Algorand blockchain offers an offline mode.

To this point, while Algorand’s Relay and Participation Nodes are public and permissionless, they have been bootstrapped by a number of entities representing a wide array of technical and organizational backgrounds across many different countries and continents."

Node Runner Grants

  • Node runner rewards (12-2-2020) have vesting schedules that range from 2-5 years. Unvested grants will not participate.

Assets (ASA)

  • From the Foundation's website (12-2-2020):

"ASAs provide a standardized, Layer-1 mechanism to represent any type of asset on the Algorand blockchain. These can include fungible, non fungible, restricted fungible and restricted non fungible assets."

Role Based Asset Control (RBAC): Optional and flexible asset controls for issuers and managers for business, compliance, and regulatory requirements. This includes:

  1. Quarantine asset accounts for investigative purposes
  2. Force transfer an asset where legal or other regulations require it
  3. Whitelist model for privileged asset transacting, which allows only specific addresses that have been approved to transact within a specific asset (all others will be restricted)
  4. Flexible asset reserve models for custom business requirements
  5. Off chain asset documentation included in on chain asset definition

User Protections: Asset spam protection that prevents unknown assets that may have tax, legal, or reputational risk from being sent to users without their explicit approval (users must opt-in to accept new assets)."

Differentiators

  1. ASAs are incredibly fast and secure, as they are built directly into Algorand’s Layer-1
  2. ASAs are low cost to execute, due to Algorand’s miniscule transaction fees [as of 12-2-2020 medium tx fee was 0.001 Algo, with a price of around $0.3 per Algo]
  3. Easy and simple asset issuance for developers and enterprises
  4. Universal interoperability of all assets issued on Algorand

Use Cases

  1. Asset tokenization
  2. 3rd party asset issuance on Algorand
  3. Democratize access to investments
  4. Disintermediate cross border transactions"

Atomic Transfers

  • From the Foundation's website (12-2-2020):

"Atomic Transfers offer a secure way to simultaneously transfer a number of assets among a number of parties. Specifically, many transactions are grouped together and either all transactions are executed or none of them are executed.

Truly atomic, there is no need for escrow or reliance on hash time-locked contracts. This is a new way of technical execution of complex transfers that is smooth and fast.

Use Cases

  1. Simplified and expedited debt settlement
  2. Efficient matched funding
  3. Decentralized exchanges, when combined with Algorand Standard Assets (ASA) and Algorand Smart Contracts (ASC1)
  4. Instantaneous settlement of complex multi party / multi asset transactions
  5. Any instance of a multilateral trade"

ASC1: Algorand Smart Contracts at Layer-1

  • From the Foundation's website (12-2-2020):

"They are economic relationships made up of basic transaction primitives written in a new language called Transaction Execution Approval Language (TEAL).

Private key management is not required for accounts governed by ASC1s.

Use Cases

  1. Cross chain Atomic Transfers
  2. Regulated disbursements
  3. Fee execution
  4. Escrow accounts
  5. HELOC
  6. Decentralized exchanges
  7. Reimbursement validation
  8. Collateralized debt
  9. Delegated / high security account management
  10. Interface with oracles or other off-chain data providers"

"Runtime Verification Verifies the Algorand Blockchain Will Never Fork"

"To achieve even greater assurance about the Algorand protocol, and to make future design and validation of new protocols easier, we have chosen to enhance our mathematical proofs on paper with machine-checkable formal verification approaches. For this purpose, we engaged Runtime Verification, a company with deep verification expertise, to verify the correctness of the Algorand consensus protocol. We are pleased to report a major milestone in this effort: Using the Coq theorem prover, the team has developed a precise mathematical model of the protocol and formally verified its safety guarantee (that the blockchain never forks). They have written a blog post describing this effort with links to the repository containing the model and the proof. We want to thank Grigore Rosu, Musab A. Alturki, Brandon Moore, Karl Palmskog, and Lucas Pena for their great effort and achievement."

"The Algorand blockchain never forks. Two blocks can never be propagated to the chain at once because only one block can have the required threshold of committee votes. At most, one block is certified and written to the chain in a given round. Accordingly, all transactions are final in Algorand. Once a block appears, users can rely on the transactions it contains immediately and they can be confident that the block will forever be part of the chain, which means the money they receive is safe."

Oracle Method

Privacy Method

"“By putting proper AML transaction monitoring in place, Algorand is demonstrating its commitment to transparency, safety, and compliance," said Jason Bonds, Chief Revenue Officer, Chainalysis. "This is the commitment required to build trust and encourage both decentralized financial businesses and traditional finance and to embrace cryptocurrency in Singapore and across the world.”

By leveraging Chainalysis KYT, cryptocurrency organisations like the Algorand Foundation can monitor large volumes of cryptocurrency activity and identify high-risk transactions on a continuous basis. Real-time alerts on the highest-risk activity allow compliance teams to focus on the most urgent activity and fulfill their regulatory obligations to report suspicious activity. Chainalysis Reactor assists cryptocurrency businesses to further investigate suspicious transactions and provide more detailed reporting on criminal activity such as fraud, extortion, and money laundering on the blockchain."

Compliance

"The Securities Framework Asset Ratings of the Crypto Rating Council (CRC) attributed the score of 2 out of 5 to Algorand and provided the below summary:

  1. Sale of the token or token interests after the system had existing utility
  2. Absence of investment-like language or marketing
  3. Decentralized development efforts

The CRC is a member-owned and operated organization whose purpose is to assess if a crypto asset, or its development, issuance, and use have characteristics that make it more or less likely to implicate federal securities laws. According to the CRC framework, a score of 5 results when an asset appears to have many characteristics that are consistent with the Howey-test factors. A score of 1 results when an asset appears to have few characteristics that are consistent with the Howey-test factors."

Their Other Projects

Roadmap

  1. "Public TestNet Release - April 2019 - Testnet launch
  2. Algorand 1.0 Launch - June 2019 - Network launch
  3. Algorand 2.0 release - November 2019 - On-Chain Upgrade
  4. Conditional Accelerated Vesting - December 2019Economic - Supply Lock
  5. Algorand v2.0.2 release - December 2019 - On-Chain Upgrade (Algorand v2.0.2 increased the amount of time (represented in block time) nodes have to upgrade following a successful voting period (which requires an agreement from a minimum of 90% of network nodes) and protocol upgrade. This new version increased the node “upgrade-required window” from 10,000 blocks (~12 hours) to 140,000 blocks (~7 days).)
  6. Vault - March 2020 (Enables full node users to download one piece of information to begin validating blocks. They also can provide the content of any past block and a verifiable proof it is correct.)
  7. Atomic Swaps - June 2020 (Allows same-chain atomic swaps to be executed in a single transaction)
  8. Post-and-Sale Trades - June 2020 (Enables sellers the option of a non-interactive swap where they set the price or an auction where the market determines the price)
  9. Pixel - no date (Digital signature scheme that aggregates the signers of a block into a single signature and prevents any adversary from forging it)
  10. Self-Validating Transactions - no date (Separates consensus and storage so one can verify balances without having prior knowledge of every key's balance)"

Usage

Projects building on Algorand

  • The Foundation has a list of projects and companies using, or partnering with, Algorand on their website (19-2-2020).
  • AssetBlock joined (23-5-2019) the Algorand Ecosystem to build exclusively on Algorand to modernize Real Estate Investment.
  • Curv; "The arrangement will see Curv integrate Algorand within its “asset-agnostic” infrastructure, while Algorand will leverage Curv’s custody solutions internally." (28-1-2021).
  • Otoy started (5-6-2019) building on Algorand to 'Democratize Holographic Computing'
  • Meld; a gold-backed token. It wants (1-4-2020) the entire Australian gold supply chain on Algorand's blockchain.
  • MESE; "The International Blockchain Monetary Reserve (IBMR) has launched MESE.io, a microequity exchange based on the Algorand blockchain." (29-9-2020)
  • Props, a network built to reward application users with a financial stake in the network they contribute to. Will have (30-4-2020) a transition of its PropsChain to the Algorand blockchain.
  • QCAD; from this article (11-12-2020):

"The digital Canadian dollar ‘QCAD’ stablecoin will be moving to the Algorand platform. Canada Stablecorp is a joint venture between 3iQ and Mavennet Systems and launched QCAD in February 2020 on Ethereum."

"[It] has attracted RHOVIT, a gamified content platform, Meld Gold, an Australia-based tokenized golf asset trading network, and the tokenized investment platform, Republic."

 Usage

Projects that use or built on it

"Centre announced a multi-chain framework for supporting USDC on non-Ethereum blockchains. Algorand will be the first to receive stablecoins powered by USDC. Tether has also tapped Algorand as a vehicle for expanding its footprint."

Pros and Cons

Pros

Cons

  • Permissioned, even though they advertise otherwise (22-12-2021):

"Algorand Inc, Algorand Foundation, Early Backers including universities and commercial entities, and the successful participants slected from the Pilot Relay Node Running Program are running relay nodes. We are working on a model where the decisions on relay nodes will be done in a more decentralized way."

Having no plan in place after 4 years is not inspiring confidence.

Competition

"Perhaps the biggest area in which Algorand can rival Ethereum 2.0 is in development on the platform. Two of the biggest stablecoins issuers, Tether and USD Coin, operate on Algorand. In April, Props Project, a decentralized network of apps, migrated from a private blockchain to Algorand."

Algorand Protocol Team

Team

Investors

Partnerships

  • "IDEX Plans for Next-Generation Decentralized Exchange on Algorand" (4-9-2019)
  • "Securitize, a platform delivering trusted global solutions for compliant digital securities, has partnered with Algorand to support Securitize’s DS Protocol on the recently launched Algorand blockchain. Securitize’s platform-agnostic DS Protocol will now support Algorand, giving issuers using Securitize an additional high-performance platform option for issuing, trading, and performing corporate actions using digital securities." (10-9-2019)
  • Is (11-2-2020) 'Playbook Partners' with The Blockchain Education Network .
  • Flipside Crypto and Algorand partnered (12-6-2019) to Enable Analytics for DApps
  • Algorand has become (17-7-2019) a member of the International Swaps and Derivatives Association (ISDA). "ISDA developed its Common Domain Model to allow all financial institutions to have a single, common digital representation of derivatives trade events. Algorand is implementing the ISDA Common Domain Model on their blockchain."
  • On it's website (12-2-2020) it has a long list of partners, including the following:

Pillar, Foundation Capital, Hex Capital, MetaStable, MultiCoin Capital, NEO Global Capital, P2P Capital, Spark Pool, Wing, Youbi Capital, Nirvana Capital.

  • The Foundation has a list of projects and companies using, or partnering with, Algorand on their website (19-2-2020).
  • Is one of the announced partners of Unmarshal during their first months (5-4-2021).
  • Is mentioned as a partner on the GateToken website (22-10-2021).

Algorand Foundation

Basics

  • Located in Singapore.
  • "The Foundation holds (12-2-2020) Algos to contribute to the stability of the Algorand blockchain and to support the Algorand community, ecosystem building and research. The Algos will enter the ecosystem via various channels including development and research grants and sales."
  • Is partaking (19-2-2020) in staking, with an initial amount of 500M.

University Program

"The Founding Members of the Algorand Foundation’s university program include:

  1. Massachusetts Institute of Technology
  2. Peking University
  3. Sapienza University of Rome
  4. Stony Brook University
  5. Tel Aviv University
  6. Tsinghua University
  7. University of California, Berkeley
  8. University of Salerno
  9. Università della Svizzera Italiana
  10. University of Waterloo

Specifically, the Founding Members will be involved in suggesting technical research efforts, and supporting the decentralized Algorand platform. Each institution will have a program representative that will work closely with the Foundation. As advisors, the program representatives will also work to identify areas of potential development and innovation in both blockchain and cryptography."

Team

  • Full team can be viewed here (19-2-2020).
  • FangFang Chen; Head of Operations, Algorand Foundation. "Fangfang has extensive financial services industry experience, having held strategy and management positions at Fidelity Investments and American International Group. Prior to that, she was a management consultant, leading strategic engagements for Fortune 500 clients. Fangfang holds a Master of Business Administration degree from Yale University and a Bachelor’s degree in economics from the University of International Business & Economics in Beijing. "

Funding

"Period: November 2, 2019 to February 10, 2020. A total 125K Algos were used as compensation for members of the Foundation’s board of directors and its advisory committees."

"In June, Arrington XRP capital, a digital manager with over USD$1 Billion in assets, pledged USD$100 Million in funding to invest in projects on the Algorand blockchain, with a highlight on Non-Fungible Tokens (NFTs) and Algorand’s partnership with the city of Miami to use its blockchain in municipal projects.

SkyBridge Capital, a global investment firm, and Valkyrie Investments Inc, an alternative asset management firm, have committed a further USD$100 million and USD$250 million to their respective Algorand funds, which would not only accelerate the blockchain’s growth, but also buy up $ALGO for their funds to push prices up."

Algorand Economic Advisory Council

  • Was appointed around the time of the inaugural auction.
  • The Algorand Foundation's Economic Advisory Committee is responsible for establishing economic guidelines and economic research priorities. Committee Members include Massimo Morini and Co-Pierre Georg.
  • Massimo Morini; "Massimo is a member of the Algorand Foundation's Economic Advisory Committee and also serves as head of Rates and Credit Modelling, and Coordinator of Model Research, at IMI bank. He is Professor of Fixed Income at Bocconi University and teaches Blockchain and Cryptocurrencies at Swiss Finance Institute Lugano. He has been Advisor and Trainer at the World Bank, the Monetary Authority of Singapore and several private and public financial institutions."
  • Changed Tokenomics of Algorand in early 2020. See more above under 'Coin'.

Technical Advisory Committee

Algo VC Fund

  • Algo Capital has raised $200 million for its Algo VC Fund, with the cash intended to support projects in the Algorand economy. The firm lost (5-10-2019) a few million dollars in USDT and ALGO tokens after its chief technology officer’s phone was breached. This fund should not be confused with the 200M Algo Staking Reward program.

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