Algorand (ALGO)

On July 5, 2016, Silvio Micali submitted the first version of the paper “ALGORAND” to arXiv, revising it several times afterward. The paper proposed a “truly democratic and efficient” way to implement a public ledger: unlike proof-of-work designs, it requires a negligible amount of computation and generates a transaction history that will not “fork” with overwhelmingly high probability; at its core is a novel and very fast message-passing Byzantine agreement protocol.⁠[1][1][1]

In 2017, Micali and a small group of cryptographers and engineers conceived Algorand at his home in Cambridge, Massachusetts. Micali, a Turing Award winner and MIT computer science professor, had helped create foundational concepts of modern cryptography such as probabilistic encryption, zero-knowledge proofs, and verifiable random functions; he was then studying the technical limitations of so-called “second generation” blockchains and wanted to design an environmentally friendly blockchain that could achieve enterprise-grade scalability without sacrificing security or decentralization. That year he first unveiled the project.⁠[2][2][2][2][3]

In February 2018, Algorand closed a $4 million seed round with participation from venture firms Union Square Ventures and Pillar; over the course of 2018, the project raised about $66 million in total. In July of that year, Algorand launched an invitation-only testnet, and several hundred users took part in the private test period.⁠[3][3][3]

On April 16, 2019, the company developing Algorand announced that its testnet was open to the public, hoping more users would test it and give feedback on the quality, function, and overall experience of the protocol. CEO Steve Kokinos called it a major milestone on the journey to the open-source release of the technology.⁠[3][3][3]

In June 2019, the Algorand mainnet launched. That month, Miami-based investment firm Borderless Capital launched the $200 million ALGO Fund I dedicated to Algorand ecosystem projects, which over the following 30 or so months invested in more than 100 companies, including Tinyman, Yieldly.Finance, Reach, Opulous, and Flare Network.⁠[4][5][5]

On November 21, 2019, the Algorand Foundation released the Algorand 2.0 protocol upgrade, the largest expansion of the network’s capabilities since its launch, adding support for smart contracts (Algorand Smart Contracts, ASC1) for the first time. The contracts use the in-house Transaction Execution Approval Language (TEAL), which was deliberately made non-Turing-complete and does not support recursive logic; head of product Paul Riegle argued that Turing completeness is not necessary for most use cases and adds immense attack surface and a potentially steep performance impact. The same upgrade added the Algorand Standard Asset (ASA) issuance function for tokenization and Atomic Transfers, which complete multi-party transfers in a single operation.⁠[4][4][4][4][4][4][4][4]

In February 2020, Tether announced that its dollar stablecoin USDT would be the first stablecoin to launch on Algorand. On June 25 of that year, the Centre consortium led by Coinbase and Circle announced that the USDC dollar stablecoin would launch on Algorand; Circle would also support digital dollar stablecoins interoperable with USDC on Algorand and market them to financial institutions together with the foundation.⁠[6][6][6][6][6]

On September 29, 2021, Algorand released the Algorand Virtual Machine (AVM), a back-end upgrade that increased the computing power of on-chain applications and brought smart contract development closer to the model familiar to developers on other blockchains. Chief product officer Paul Riegle said the AVM simplified the handling of escrow payments, contract-initiated transactions, and trade slippage, and that the computing limits smart contracts could call were raised 16-fold without affecting overall chain performance, with the network able to process 1,000 transactions per second.⁠[7][7][7][7][7]

In the final quarter of 2021, under chief executive Sean Lee, the Algorand Foundation launched its Community Governance program; earlier he had completed the Accelerated Vesting program and launched ecosystem funding programs such as the Viridis and Aeneas DeFi funds. On November 30, 2021, Borderless Capital announced the $500 million ALGO Fund II to invest in DeFi and NFT projects on Algorand, saying it was then focusing $400 million in investments on Algorand projects through different funds.⁠[8][5][5]

By the foundation’s design, Algorand’s Pure Proof-of-Stake does not pay participants for consensus, so the foundation used governance rewards to incentivize holders to take part in governance voting.⁠[9][9]

On February 10, 2022, the Algorand Foundation, then headquartered in Singapore, appointed board member Staci Warden as chief executive officer. Warden had served on the foundation’s board since September 2021 and had led global teams at the Milken Institute, JP Morgan, the Nasdaq stock exchange, and the U.S. Treasury Department; Sean Lee, who had been CEO for more than 18 months, departed. Warden said 1.7 billion people in the world do not have access to finance, and that the Algorand protocol has the speed, security, and decentralization to address global financial inclusion at scale.⁠[8][8][8][8][8]

In May 2022, FIFA signed a sponsorship and technical partnership agreement with Algorand: Algorand became a “regional supporter” for North America and Europe at the 2022 World Cup in Qatar and an official sponsor of the 2023 Women’s World Cup in Australia and New Zealand, and would provide FIFA’s official blockchain-supported wallet and help it develop its digital assets strategy. The partnership was announced in Los Angeles by FIFA President Gianni Infantino and Micali; within 24 hours of the announcement, the price of ALGO rose more than 20%.⁠[10][10][10][10][10][10]

Algorand uses the Pure Proof-of-Stake (PPoS) consensus it pioneered: tokens remain in users’ own wallets while they take part in consensus, with no lockup. Using verifiable random functions and cryptographic sortition, the protocol selects a new block proposer and validator committee for each block in less than three seconds, randomly, privately, and non-interactively from all accounts registered online, with probability based on stake; as long as more than two-thirds of the stake is held by honest participants, the network can tolerate malicious actors and avoid forks and double-spending.⁠[11][11][11][11][11][11]

Each block’s randomness seed is tamper-proof and unpredictable, and users who want to participate in consensus must register their participating status 320 blocks in advance so that no malicious user can influence the seed; because membership selection is non-interactive, an adversary does not know whom to target until the selected user has finished its work, and the “speak-once” model also means an attacker cannot know in advance which node to target with a distributed denial-of-service attack.⁠[11][11][11]

ALGO is the native token of Algorand, used for peer-to-peer transfers, paying transaction fees, participating in DeFi, taking part in governance, and securing consensus in participation nodes. Total ALGO minted is capped at 10 billion, circulating supply increases as tokens held by the foundation gradually enter circulation, and the foundation reconciles its holdings each quarter in its Transparency Report.⁠[12][12][12][12][12][12]

Algorand Foundation: Official website: https://algorand.co/ (opens in a new window).⁠[13]