Algorand

Algorand is a proof-of-stake blockchain and cryptocurrency.
Algorand's native cryptocurrency is called ALGO.

The SEC has filed several lawsuits alleging ALGO is a security which is subject to regulation under U.S. securities laws, along with a few other crypto assets.

Algorand may also refer to the private corporation based in Boston, as well as to the nonprofit Algorand Foundation Ltd., incorporated in Singapore.

History

Algorand was founded in 2017 by Silvio Micali, a computer scientist and professor at the Massachusetts Institute of Technology (MIT).

Algorand's test network was launched to the public in April 2019.

The main Algorand network was officially launched in June 2019.

Design

Algorand can only be forked intentionally through soft forks and source code forks.

Consensus algorithm

Algorand uses a Byzantine agreement protocol that leverages proof of stake, which contributes to its energy efficiency. It is a competitor to layer 1 blockchains such as Ethereum.

The Algorand Foundation funded an article which claims Algorand's overall protocol frame-work is sound under certain conditions.

Cryptographic sortition

The core principle of Algorand consensus is the cryptographic "self" sortition. The sortition procedure runs locally and privately, on each node of the network participating in the consensus protocol, without a centralized coordination. The goal of the sortition algorithm is randomly selecting a subset of users participating in the consensus protocol (committees) ensuring two properties: the sortition's result can be easily verified once it is published, while it can not be determined ahead of time by malicious adversaries. The number of selected users in the sortition (committee size) is defined as a statistical expectation on the outcome of a pseudo-random process. The likelihood that a given user will be selected (in the committee) is influenced by the number of ALGO tokens held by that user (the stake).

Consensus steps

Algorand's consensus steps are: block proposal, proposals filtering (soft vote) and committing the block (certify vote). Each step relies on an independent run of the cryptographic "self" sortition, to elect a voting committee with different sizes (statistical expectations on the sortition outcome) and voting thresholds.

Block proposal

In the first step the cryptographic sortition selects a subset of users (proposal committee) which assemble and propose a block for the next round of the protocol. At the end of the step there will be a few block proposals (the protocol is tuned with a statistical expectation of 20 proposals) with different random priorities. After determining if a user is on the proposal committee, that user can build a proposed block and gossip it to the network for review/analysis during the second phase. The user includes the result of the VRF (h) and cryptographic proof (𝜋) in their block proposal to demonstrate committee membership.

Proposals filtering

In the second step the nodes in the networks wait for an adaptive period of time (𝜆), measured by nodes' local clocks, to be sure that the block proposals gossiped in the previous steps have been observed.

A new cryptographic sortition selects a subset of users (soft vote committee) to vote and reach a Byzantine Agreement (called "BA*") on the proposal with highest priority. When users have determined that they are in this second-phase voting committee, they analyze the block proposals they have received (including verification of first-phase committee membership) and vote on the highest priority one.

Certify block (commit)

Once a threshold of votes is reached in the previous proposals filtering step, the third and last step of the protocol begins. A new cryptographic sortition selects a subset of users (certify committee) to vote and reach a Byzantine Agreement on the content of the proposed block with respect to the state of the ledger (e.g. the block does not contain double spending, overspending or any other invalid state transition between accounts).

If the certify committee achieves consensus on a new block, then the new block is disseminated across the network and appended to the ledger.

Algorand funded a security audit which claims their model also accounts for timing issues and adversary actions, e.g., when the adversary has control over message delivery.

Recovery

The Algorand consensus protocol privileges consistency over availability (CAP theorem). If the network is unable to reach consensus over the next step (or block), within a certain time, the protocol enters in a recovery mode, suspending the block production to prevent forks (contrary to what would happen in blockchains based on the "longest-chain principle", such as Bitcoin). The Algorand team claims the recovery mode of the protocol ensures that the block production resumes eventually, with no need of reconciliations or reorganization, if a Byzantine Agreement is reached again.

Network

An Algorand network is a distributed system of nodes, each maintaining a local state based on validating the blockchain and the transactions therein. Nodes are spread geographically, communicating with each other over the Internet. The integrity and the consistency of the global network state and distributed ledger is maintained by the consensus protocol. Algorand nodes communicate through message gossiping (broadcasting) either in peer-to-peer or via relay nodes (which facilitate efficient broadcasting with minimal message hops and low latency).

ALGO

The unit of account of the Algorand protocol is the ALGO. The protocol's supply of ALGO is limited to 10 billion units. One ALGO is divisible to six decimal places, the smallest unit is called microALGO (𝜇ALGO), equal to 1/1,000,000 (one millionth) ALGO.

Adoption

Since 2019, Algorand has been a partner of World Chess.

In 2021, Italia Olivicola, Italy's largest olive and olive oil producers' organization, partnered with Euranet to implement blockchain technology based on Algorand. SIAE, the Italian Society of Authors and Publishers, also announced a project on copyright management using Algorand in the same year.

In 2022, Algorand's blockchain was used by Robert Irwin and the Australia Zoo for a series of NFTs.

In 2023, Italy's 'Fideiussioni Digitali' initiative to reduce fraud in bank and insurance guarantees, selected Algorand as its blockchain.

In 2024, CNBC-TV18 reported that Algorand's blockchain was being tested for use in a digital identification to help women in India access public health programs.

The Algorand blockchain had its first tokenized money market fund launch in June 2024.

References

{{Cryptocurrencies, state=expanded

Blockchains
Alternative currencies
Cryptocurrency projects