ALGO

Algorand (ALGO) 

Most recent update: [June 23, 2023] 

What is ALGO? 

ALGO is a cryptocurrency that operates on a decentralized blockchain platform designed to offer scalability, security, and fast transaction processing. Through its unique consensus mechanism called Pure Proof-of-Stake (PPoS), it aims to address the limitations of existing blockchain systems and provide a strong foundation for decentralized applications (dApps) and financial services.

The project has gained attention for its focus on real-world adoption and practical use-cases. It aims to bridge the world of traditional finance and blockchain technology by providing a platform for the development of decentralized financial applications. ALGO’s ecosystem allows for the creation of smart contracts and decentralized exchanges, which help facilitate secure and transparent financial transactions. The project also been actively engaged in partnerships and collaborations, such as with governments and institutions.

Overall, ALGO aims to provide a reliable and efficient blockchain infrastructure that can empower individuals and businesses to participate in the novel concept of decentralized economies.

Who is behind ALGO? 

ALGO was founded by a team of developers under the supervision of Turing Award winner Silvio Micali, a renowned computer scientist and professor at MIT. Micali, along with his team, developed a combination of cutting-edge technology and cryptographic principles, all of which led to the creation of the Algorand protocol and the launch of the ALGO cryptocurrency in 2019.

Micali has made significant contributions to cryptography and is recognized for his work on zero-knowledge proofs and the development of the Algorand blockchain protocol.

How does it work? 

One of the key features of the ALGO blockchain is its Pure Proof-of-Stake (PPoS) consensus mechanism, which ensures the security and efficiency of the network. PPoS eliminates the need for mining that is resource-intensive, instead allowing users to participate in the consensus process by staking their ALGO tokens. This approach ameliorates the scalability of the network, thereby enabling it to swiftly handle many transactions with minimal fees.

ALGO also incorporates cryptographic techniques that ensure the integrity of transactions while also protecting user privacy. Through a process known as cryptographic sortition, a random selection of token holders become validators and block proposers, thereby ensuring a decentralized and secured network. The aim of this block proposal mechanism is to enable equal participation and representation among users, therefore limiting the concentration of power and encouraging network decentralization.

The ALGO Token and Tokenomics 

ALGO tokens are currently available for sale on multiple exchanges. The maximum supply is capped at 10,000,000,000 tokens, and as of June 23^rd 2023, the market cap for ALGO amounted to US$959,823,860. The current supply of ALGO tokens is 7,635,716,196, which is approximately 73% of the maximum supply.

The initial allocation for ALGO is broken down as follows:

• Team, Foundation, and Investors: 25.0%
• Public Sale: 30.0%
• Node Running Grant: 25.0%
• Participation Rewards: 17.5%
• End User Grant: 2.5%

The ALGO token is purported to serve as a utility token for activities related to governance, rewards and incentives, but also to pay for transactions on the network or to create and manage digital assets on the platform

Security 

The ALGO blockchain is secured through a validation mechanism that is inherent to Pure Proof-of-Stake blockchains. It ensures the network moves in a direction that best serves the interests of its stakeholders trough a consensus mechanism. By relying on a committee of randomly selected token holders to validate and approve transactions, the risk of centralization and malicious undertakings are diminished.

Furthermore, by attaching a fee to the governance model (the ALGO token), spamming attacks are heavily discouraged since large sums of money would be required to perform them.

Drawbacks and risks 

The initial token distribution of ALGO faced criticism for being relatively centralized. Some have argued that the large token holdings of strategic partners and early investors could lead to a concentration of power and influence within the ecosystem, thereby running the risk of potentially affecting the decentralized nature of the network. Related to this criticism is its governance model, which dictates that those with the largest ALGO holdings will have the largest sway in the network’s direction, which can raise concerns of decentralization and power concentration. 

Another drawback is the PPoS mechanism it relies on, which is still a relatively new consensus mechanism that has yet to be extensively tested in real-world applications. As such, there is an ongoing debate about potential vulnerabilities and the long-term viability of this mechanism.

Due Diligence  

Before listing ALGO on the VirgoCX Platform, VirgoCX performed due diligence on ALGO and determined that ALGO is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis includes reviewing publicly available information on the following:  

• The creation, governance, and location of ALGO and/or its primary development team; 
• The supply, demand, maturity and liquidity of ALGO; and 
• Legal and regulatory risks associated with ALGO.  

Statutory Rights under Securities Legislation 

VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30th 2022 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario) and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision. 

Further Reading 

To learn more about the technology behind ALGO, check out these in-depth resources here: 

• The official site of ALGO
• Coinmarketcap’s overview of ALGO
• Coingecko’s tokenomics overview of ALGO
• Coinbase’s overview of ALGO, along with the relevant news and blogs related to ALGO.