Algorand is the first blockchain platform to solve the trilemma of decentralization, scalability, and security. Therefore, it must be run on a network that does not compromise on these foundational qualities. From a network design perspective, the combination of these three attributes presents some unique challenges.
The first challenge to overcome is the tradeoff between decentralization and scalability. Intuitively, it is much faster and more efficient to write and maintain a single database than it is to keep many distributed databases. The problem becomes more pronounced as you expand to a global distribution as the Algorand protocol does. In order to achieve transaction throughput and time to finality that enables this global adoption, the protocol needs to propagate information rapidly throughout the network to ensure all participants have the most recent blockchain. There is a direct relationship between how fast a message propagates and the throughput of the network. A decrease in propagation speed will either require a reduction in block size or result in an increase in latency between blocks, which translates to a longer time to transaction finality.
To solve this problem, the Algorand network has two types of nodes to simultaneously optimize decentralization and high transaction throughput: relay nodes and participation nodes.
Relay nodes serve as central network hubs and maintain connections to many other nodes. Relay nodes have high-bandwidth network connections which allow for highly efficient communication paths, ultimately reducing the number of hops in communication. They do this by accumulating protocol messages from participation nodes and other relay nodes connected to them, performing deduplication, signature checks, and other validation steps and then re-propagating the valid messages. Relay nodes are also often located at internet exchange points to decrease propagation time. Anyone may (and is encouraged to) run a relay node.
Participation nodes are connected to much fewer nodes, most of which are relay nodes. They represent an address’ stake and hold participation keys for proposing and voting on blocks within the consensus algorithm. Anyone may host participation nodes.
To ensure the security of the network, it is necessary to have relay nodes be both diverse and decentralized. Centralization can occur on a number of axes so when launching the network it is critical to avoid concentration in a singular dimension. A number of organizations have volunteered to run relay nodes from network launch. In an effort to ensure true decentralization, these organizations represent a wide array of geographical, technical and political backgrounds, while also offering unique strengths and expertise.
Geographical distribution is the easiest axis to picture and arguably the most important. Relay nodes must exist in many different countries across different continents. Within these boundaries, they should be located at key internet exchange points in close proximity to most of the world's population and financial centers.
The node operators also bring their respective strengths, resources, and perspectives to the network. The organizations running nodes from network launch include universities, nonprofits, members of the cryptocurrency ecosystem, and traditional financial and internet infrastructure providers. These organizations believe that every single human being should be able to both freely and fairly participate in the borderless economy. This contingency of relay node operators results in a highly resilient distributed network from network genesis.