FAQs

How does the Algorand Foundation define decentralization?

Decentralization is a property of a system that describes who is ultimately in control. It operates on a spectrum from centrally controlled by one to fully decentralized with all members sharing ownership of the system. In a decentralized system the responsibility to run and maintain the system falls to ordinary users, the only kind of user. Trust in a centralized system comes from authority, while trust in a decentralized system typically comes from reconstructing the truth from provable evidence.

What is the refund policy?

The refund policy is an Algorand Foundation policy that minimizes risk for users who purchase algos by allowing them to sell their algos back to the foundation. If the original auction clearing price is $1 or above, the refund amount per algo will be 90 percent of the original purchase price per algo. If the original auction clearing price is below $1 per algo, the refund amount will be the original purchase price per algo minus $0.10. Purchasers can sell their algos back to the foundation after one year of holding them (the lock-up period), and this guarantee expires 7 days after the lock-up period ends.

What are rewards on the Algorand platform?

Rewards in the form of algos are granted to Algorand users for a variety of purposes. Initially, for every block that is minted, every user in Algorand receives an amount of rewards proportional to their stake in order to establish a large user base and distribute stake among many parties. As the network evolves, the Algorand Foundation will introduce additional rewards in order to promote behavior that strengthens the network, such as running nodes and proposing blocks.

Does a user need to set up and operate a participation node to earn rewards?

While anyone can run a participation node, not all users will have the technical ability to participate in the consensus protocol. For users who are not able to run a participation node, the Algorand blockchain offers an offline mode. When a user declares themselves offline, their account’s stake is not taken into consideration for the sortition process. This allows any user to have a stake in Algorand without requiring them to operate a participation node.

Currently, the system treats all users equally. In the future, the Algorand Foundation may propose an upgrade to increase the rewards given to online users—incentivizing them for their participation in the cryptographic sortition protocol—and decrease the rewards given to offline users.

How are Algorand’s rewards as a pure proof-of-stake protocol different from rewards in proof or work?

Algorand’s rewards design for its pure proof-of-stake is deliberately different from proof-of-work systems. In a proof-of-work system, rewards go to the miners who validate new blocks. Because Algorand is a pure proof-of-stake blockchain where validation of new blocks depends on having enough stake in the system, rewards are paid to all users in proportion to their stake every block.

What role do node runner participation grants have?

Node runner rewards have vesting schedules that range from 2-5 years. Unvested grants will not participate.

What is the Borderless Economy™?

Algorand and the Algorand Foundation have a vision for the borderless economy. At its most basic level, this is a digital economy where anything of value can be traded between two or more parties without the friction of current financial networks.