18 Sep Algorand
The goal of the project is the development of a borderless economy where everyone can create and exchange value efficiently, transparently, and securely. Thanks to our unique consensus mechanism, the Pure Proof of Stake algorithm, Algorand protocol is the first blockchain able to solve the so-called blockchain trilemma ensuring full participation, protection, and speed within a truly decentralized network. With blocks finalized in seconds, Algorand’s transaction throughput is on par with large payment and financial networks and at the same time is the first blockchain to provide immediate transaction finality, without any forking possibility, a fundamental feature for financial transactions. At the same time, a governance with widespread participation of all the actors can ensure efficient and timely adaptation to different market scenarios, while preserving its decentralized nature.
The transaction throughput, together with instantaneous finality, represents a key metric to be monitored for measuring the success in the trilemma resolution, while the relevant metrics useful to efficiently measure adoption are related to the increase in the number of active wallets, together with volume induced by transactions related with Algorand Standard Assets (ASA).
The main entities in the Algorand ecosystem are Algorand Foundation, Algorand Inc and, in a broader sense, all the stakeholders who participate in the Governance process. Algorand Inc is the chosen partner for implementing the Algorand Protocol and its evolution while Algorand Foundation is responsible for supporting the ecosystem, driving adoption and promoting broad participation and decentralization of the network. The most fundamental entity of the entire ecosystem is constituted by all the stakeholders who participate in the Governance process: they are responsible for choosing and voting on the most important aspects of blockchain evolution, such as future projects, rewards and Governance itself.
Participants and users of the project are identified by holding Algo tokens in their wallet, which is associated with a public/private keypair.There are no restrictions on who can participate in the Governance process.
Currently three distinct groups can be identified by looking at their peculiar contribution within Algorand ecosystem:
- Users who run participation nodes and express their will to participate in consensus mechanism, and therefore can be selected to actively contribute with their actions to the block proposal and approval;
- Users who run Relay Nodes - which help running the network infrastructure;
- Users who participate actively in the Governance process (Governors).
Relay nodes make up the communication backbone of the network, routing blocks to all connected non-relay nodes, and also routing consensus-protocol messages between consensus participation nodes. Recently the Relay Node runner pilot program has started: this pilot is the first step on the path to bring Relay Nodes to the same level of full decentralisation as the Algorand blockchain’s consensus participation nodes. The winners of the Pilot Program receive a compensation of the running costs tied to relay node performance, measured through monitoring tools. These Relay Nodes are being run across 6 continents in order to provide robustness of the network and will enable the continued high performance of the Algorand blockchain.
On the research and development side, the Algorand Foundation's Global University Program includes leading scientific universities from China, Europe, Middle East, Canada, and the United States. The program is devoted to building a community of influential experts in the world of Computer Science involved in suggesting technical research efforts, and supporting the decentralized Algorand platform.
Goals and Implementation
Primary goal of the project is to create a borderless economy by encouraging broad participation. In particular Governance framework incentives are created in order to keep governors engaged, through their efforts and their stakes, during the whole Voting period, thus demonstrating their skin in the game; and at the same time premature exiting is discouraged by means of rewards cancellation.
Moreover, thanks to the dramatic efficiency improvement of the underlying consensus protocol from an energy consumption perspective, it is also possible to integrate a fourth point to the three pillars of the trilemma: the strive for sustainability. With its virtuous behaviour Algorand is actually one of the few blockchains that is fully carbon neutral as a result of working closely with ClimateTrade, which helps companies and entities meet their sustainability goals by offsetting CO2 emissions and sponsoring climate change projects.
Governance rewards are acknowledged only to active participants in the governance voting system, therefore the most natural metrics which are implemented are the participation ratio, that is the fraction of voters, independently from their stake, and measures of active participation in the debate phase, which happens through various social channels and Community events. Together with the above measures, the temporal decay of governors constitutes an interesting metric: governors that started the commitment phase but then renounced to express their vote and consequently receive the rewards. This decay could be due to both technical issues as well as lack of interest in the topic, hence it constitutes precious feedback. It is understood that final effectiveness of the governance can be inferred from the consequences of the choices to the long range global success of Algorand as a universal platform for the future borderless economy.
The Governance framework delegates to the Governors the decision-making power over the Algorand Ecosystem Resource Pool (AERP), which represents the resources devoted to the long term goal of building a robust, decentralized and public blockchain network, namely the Innovation Funds, the Research & Social Good Program and Algo Grant Program. The Governance framework plays a central role in the scheduling and allocation of these funds, allowing governors to express their strategic views with their votes. This ongoing involvement process enables the ecosystem to evolve and adapt to tackle unforeseen strategic opportunities in the future.
The current Governance Framework, approved by a referendum in July 2021, prescribes that project legitimacy is decided through a votation open to all stakeholders. The algorithmic nature of the public vote, which leverages the Algorand infrastructure, ensures that final response is legitimated by the majority of the voters weighted by their stakes.
Currently, Algorand Foundation engages in a proficuous dialogue with the community, which can interact through different participation platforms, being forums, Q&A sessions, Community All-Hands sessions and public debates. The role of the Algorand Foundation is then to collect the instances and devise a coherent governance proposal, which needs to be approved by the majority of the community through the Governance voting process. Once the initial phase has demonstrated the solidity of the framework, a robust mechanism may be devised in order to allow Governors themselves to actively propose relevant topics, which will be subsequently submitted to the voting process.
At the beginning of the Voting period, currently on a quarterly basis, Governors express their will to vote first with a committed quantity in Algo, which must be kept in the wallet for the entire duration of the Voting period, and then they participate in the voting sessions expressing their preferences. If they have shown commitment through participation in voting sessions and keeping the staked amount, at the end of the Voting period they are eligible to receive participation rewards. Otherwise failing to show commitment results, in addition to losing participation rewards, in the elimination of the governor vote in the final computation.
Based on Governors’ decision, Algorand Foundation will execute proposals responsibly, enabling open access during all the phases of the implementation process, thus ensuring accountability also thanks to the regular Foundation Transparency reporting.
Governance framework definition is still an ongoing process: Governors, together with Algorand Foundation, will develop a dispute resolution mechanism based on the premises of independence and arbitration.
The Foundation is a non profit organization and its commitment to transparency ensures publication of all the formal processes that lead to the final proposal submitted to the voting process, therefore a full accountability is ensured. Besides the voting process, a regular transparency report summarizes all the Foundation activities, open to public scrutiny.Finally, as in all decentralized systems, the last step for accountability relies on the judgement of the Governors, since they can opt-out as soon as they do not trust the Foundation behaviour anymore.
The community of all Governors communicates by means of different social media platforms and this is the place where non-binding signals emerge, either as concrete project proposals or more broadly as interest in different aspects of the ecosystem.The Foundation collects these proposal and, once they are properly formalized, they are subject to the binding voting process.
We can envision taking extraordinary actions in emergency situations. For example, we could shut out misbehaving nodes, or accelerate upgrades that fix bugs. On the other side, critical proposals will be subject to a supermajority threshold. Currently, our Governance Framework does not specify the scope of these actions, which will be properly defined in the next iterations of the process.
The total number of Algo is a fixed quantity and will never change, together with the fundamental blocks of the protocol itself. Except this, any other aspect of the Algorand Blockchain can be subject to Governors vote.
The Governance framework prescribes that, for proposals which impact in a significant manner the ecosystem, a supermajority vote is required, respecting a principle of proportionality.
The current Governance Framework has been approved by a referendum in July 2021. The first vote has decided on the Governance Rewards mechanism itself, and in particular Governors expressed their will to keep the current rewards without any slashing mechanism. In its first iteration the main directions are identified, with the understanding that, once the process has burned in, further refinements of the overall framework will be proposed and subject to governance vote for definitive approval.