Algorand

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.

The Algorand Foundation funded an article which claims Algorand's overall protocol framework 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).

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 network 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.

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).

Usage

In 2019, Algorand became 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 to attempt to address olive oil adulteration. 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 January 2023, Fideiussioni Digitali, Italy's initiative to reduce fraud in bank and insurance guarantees, selected the Algorand blockchain for a project to address fraudulent bank guarantees. In February 2023, the Algorand Foundation urged users to withdraw funds from the cryptocurrency wallet MyAlgo, as it had been hacked for $9.6 million the week prior.

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.