Blockchains are achieving greater heights in the crypto industry trying to solve issues with traditional blockchains. Among the greatest fears of crypto users are scalability issues that hike transaction costs, and blockchain security. These issues are not the only ones blockchains have to keep in mind while developing their ecosystems.
It is common knowledge that processes such as crypto mining are energy draining. Furthermore, most blockchains are not environmentally sustainable. Algorand hopes to change this narrative by projecting itself as a green, carbon-negative chain. Moreover, it aims to solve the decentralisation, security and scalability issues that traditional blockchains suffer from.
Algorand is still gaining significant interest from the crypto community, which hopes to venture into something new. As it stands, Algorand is a promising project that could change the entire outlook of digital currencies and their underlying technology. This article will look deeper into the project and discuss how you can stake its tokens for staking rewards.
Understanding the Algorand Ecosystem
Algorand is an open-source project launched in 2017 by the Algorand Foundation to enhance the convenience that blockchains present to users. It keeps in mind the sacrifices other platforms make to ensure a scalable network, mostly privacy and decentralisation.
The Algorand team, led by Silvio Micali, pointed out stress points on the two most significant blockchains, Ethereum and Bitcoin. Both networks have been subject to criticism because of their poor handling of congestion and their transaction fees. Algorand hopes to achieve widespread adoption of digital currencies by revamping its blockchain.
Additionally, as a green blockchain, Algorand has a strong focus on reducing carbon emissions. It also hopes to bring energy-efficient gateways to transaction verification. The blockchain comes with various Layer 1 solutions, including smart contracts, multi-signature verifications, Algorand Virtual Machines (AVMs) and rekeying.
Nonetheless, these elements are not all Algorand has to offer. Stick around to learn more.
A Unique Consensus Algorithm
The Algorand ecosystem uses a unique proof-of-stake (PoS) consensus algorithm that does not depend on who holds the most coins. The pure proof-of-stake algorithm aims to include all enthusiasts on its platform while providing the security and speed they require.
Additionally, Algorand maintains the same functionality with major blockchains while allowing instant transactions. Algorand wishes to achieve its goals of providing efficient cross-border exchange without dependence on forks, which have become a popular scalability option.
The platform’s consensus algorithm sets itself apart from the traditional PoS in that it allows users to vote for a new block. Once there is a block proposal, a committee votes for one block. The block is only approved if most votes are from genuine actors.
A different committee votes on whether to certify the block or not. The platform then issues a certificate to every node to add the block on the chain. The process repeats itself for the next round.
The Byzantine Agreement Protocol
The Byzantine agreement protocol prevents security breaches caused by nodes ganging up against the minority. It also prevents stronger parties in the ecosystem from recruiting other nodes and taking over the network. As such, any voters’ and certifiers’ selections are kept anonymous and random.
Algorand’s native token is ALGO, with a maximum supply of 10 billion tokens. At the time of writing, ALGO is trading $1.93 and is ranked as the 18th coin out of the 13,000+ digital assets in the market today. Its ecosystem supports the staking of its coin, where any wallet holding 1 ALGO or more can earn rewards automatically.
The Algorand Foundation is responsible for setting the staking reward system. In 2019, the foundation set aside 200 million ALGOs dedicated purely to its staking reward program. However, you had to meet some conditions to be eligible. The reward program started in March 2020 and ended in September 2021.
Currently, you can stake ALGO using the Algorand wallet, Ledger, Atomic Wallet, Exodus wallet and so on. According to the Algorand Foundation, you can earn up to 7% annually from staking ALGO. However, factors like ALGO’s total supply changes, reward period and changes in transaction fees will determine the reward rate.
Keep in mind that you will only earn returns if you have the minimum amount of 1 ALGO. Algorand ensures that your rewards are sent directly to your wallet at the appointed time. To claim your rewards, your wallet needs to participate in a transaction.
The easiest way to claim the returns is to send 0 ALGO to your address. If you are using a custodial wallet, ensure that you understand the terms and conditions of that platform to know when and how to get your staking rewards.
Improving Decentralised Finance (DeFi) Platforms
Algorand defines itself as FutureFi, believing in its ecosystem’s use cases as eye-opening progress in the future of finance. Furthermore, it recognises the significant steps DeFi is taking in reshaping the financial sector today while offering an array of services to the crypto world.
Non-fungible tokens (NFTs) play a significant role in the progression of the DeFi industry. Additionally, they offer a pathway to earning rare items in the crypto sector in the form of artworks and more. It hopes to raise NFT popularity in the crypto market using its blockchain capabilities while maintaining environmental sustainability during NFT minting.
DeFi platforms can use their ecosystem to improve the quality of their services and explore their potential. Moreover, Algorand is incorporating DeFi services into its protocol, boosting the mainstream adoption of a growing industry.
Some DeFi-related platforms on or leveraging the Algorand blockchain include AlgoFi, Venue One, Tinyman, Algomint and Smilecoin. Furthermore, well-known platforms such as IDEX and Republic have integrated with Algorand to achieve its vision of improving the sector. Overall, the Algorand blockchain is starting a new age in payment and real-world use cases on a tangible scale.
Algorand is not selling itself short of spectacular, considering its extensive outlook and performance. Although some might still be sceptical about what it has to offer, it is, without question, gaining popularity.
Algorand’s projection as the greenest blockchain is still difficult for some crypto enthusiasts to grasp. However, the blockchain hopes to alleviate that concern through its low electricity consumption rates. Achieving carbon neutrality and leaving an almost zero carbon print are among Algorand’s primary goals. Currently, some environmentally focused platforms such as Global Carbon Holding and PlanetWatch are using its ecosystem.
Last, Algorand’s use cases are worth investigating further as the blockchain hopes to derive the true meaning of blockchain values. Its long-term goals are to bridge traditional and digital finance, improve DeFi, provide government use cases, and so on. It is safe to say that the blockchain has more to offer the crypto world as it develops.