A consensus protocol is a set of rules that govern the operation of a blockchain and allows participants (validators) to agree on the veracity of information to execute transactions.
Algorand uses a unique and innovative consensus algorithm called Pure Proof of Stake, or PPoS.
The PPoS used by Algorand is a variant of the traditional Proof of Stake (PoS), used in particular by Ethereum and also by other protocols.
PoS requires those supporting the network to lock a number of tokens as collateral to verify and process transactions. With PPoS, consensus tokens remain in users’ wallets at all times and are chosen randomly to verify the transaction.
PPoS is more sustainable than PoS because it requires much fewer computational resources, therefore it is more energy efficient. It is considered more secure because since users are selected randomly, it is very difficult for malicious actors to take control of the network.
PPoS also offers more decentralization than other consensus methods because the technical and financial requirements to support the network are very low and the tokens never leave the validator’s wallet.
The PPoS consensus mechanism requires 3 stages to propose, confirm and register the block on the blockchain. This mechanism is very fast and requires minimal computing power per node, allowing it to efficiently complete transactions in 3.3 seconds.
The advantage of Algorand lies in that, by using the appropriate tools, including the Verifiable Random Functions (VRF) invented by Silvio himself, we manage to reach consensus while maintaining the processing of information efficiently and individually, avoiding communications. unnecessary interactions between participants and obtaining efficiency and security.
Briefly, Algorand has three main steps during its consensus.
Step 1: Block Proposal
Each validator in the network runs a cryptographic lottery that allows them, if they are a winner, to send the block proposal to the network.
Step 2: Block Verification
Each network validator performs a new cryptographic draw and 1,000 ALGO tokens are randomly selected among all network participants, to verify the cryptographic transactions and signatures proposed in step #1.
Step 3: Block Confirmation
Again, each network validator performs a new crypto draw that randomly selects another 1,000 participating ALGO tokens to confirm the previous stages and confirm the writing of a new block to the blockchain.
When a new block is written, a new seed will randomly and unpredictably determine which users will participate in the next consensus round.
It must be taken into account that the users who participate in the protocol are chosen according to the number of ALGO tokens they own. Using a metaphor, it is as if each SOMETHING is equivalent to a lottery ticket. The more tickets a user has, the higher the probability of participating in the creation and validation of a new block.
The selection to participate in the proposal of new blocks using the VRF is done stealthily, without any communication with the other participants.
This way, a malicious user will never know who to attack to try to compromise security. And when he discovers the user has been chosen, it will be too late, since the latter will have completed his task within the protocol and will have propagated the information to the rest of the network.
This efficient mechanism allows any user to participate in the security of the network with a simple computer, and does not require the possession of large amounts, since you can become a validator of the network with a minimum of 0.1 ALGO in your wallet.
To learn more about the advantages of PPoS over PoS and PoW
Due to the architecture of its PPoS consensus mechanism and its virtual machine, the AVM – Algorand Virtual Machine, Algorand has technological advantages that directly impact the experience of the developer and the end user.
The main advantages are:
Accuracy: AVM has a computational resolution of 512 bits, much higher than the 256 bits of other virtual machines
Speed: Block processing time is 3.3 seconds with instant finality
Consistency: The network does not fork or split, so each transaction is final as soon as it appears on the blockchain.
The instant finality feature is very important as it improves the user experience by not having to wait for confirmation of multiple blocks before being able to use their resources. It also makes the developer’s life much easier as they do not need to create complex code infrastructure to handle failed and rolled back transactions, because all transactions on Algorand are final as soon as they appear on the blockchain.
And in addition to a robust, efficient and secure protocol, Algorand also cares a lot about the developer experience.
This is why in 2023 it launched AlgoKit, which is a complete tool that greatly simplifies the development process.
AlgoKit reduces the time needed by the developer and, above all, reduces the risks of logic execution.
Quantum security
There is a lot of talk about quantum computers today, and due to their computational properties, when they become a reality, they could compromise modern cryptography and information security systems.
The impact of this on a blockchain is that a quantum computer could simply rewrite transaction history, recreating signatures of past transactions.
Looking to the future, Algorand, through its Director of Cryptography, Chris Peikert (one of the main references worldwide on the subject), has already implemented FALCON key technology, which are cryptographic signatures resistant to quantum computing.
With FALCON keys, the Algorand protocol creates a State Proof every 256 blocks, securing the entire history of the blockchain using this signature.
Therefore, even if a quantum computer becomes operational tomorrow, Algorand’s history is protected against these attacks.
Learn more about post-quantum security in this article!
Governance
Algorand has a Governance Program that transfers responsibility for decision-making about the future of the protocol to its participants.
The Governance Program consists of two categories: Governors and xGovs.
Each Governance period lasts 3 months. At the beginning of each period, participants record how many ALGO tokens they wish to allocate as voting power.
During the 3-month period, they participate in the program and vote on measures to make decisions about the evolution of the protocol.
During this period, the user must maintain the amount of ALGO registered in their wallet. Otherwise, you lose eligibility in the program.
At the end of the quarter, the Governor who meets all requirements is rewarded.
The second category is xGovs, who have even more voting responsibility and the ability to propose their own measures to be voted on, plus a longer time horizon. xGovs register their participation for a duration of 12 months.
Learn more about the Algorand Governance Program
