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Everything you should know about Algorand protocol

algorand protocol

Acknowledging the efficacy of blockchain platforms, they are known for the mechanism of recording information in an unalterable manner eliminating the scope of the fraud. Blockchain platforms are programmable, secure, unanimous, immutable, time-stamped, distributed and is anonymous or pseudonymous in terms of participants’ identities. Generally, the blockchain network revolves around three fundamental concepts such as security, decentralization and scalability.

Amongst all these benefits there is one major challenge that the blockchain developers face while creating a blockchain platform is the Blockchain Trilemma. The blockchain trilemma is about the scalability, security, and decentralization of a blockchain ecosystem. It is important to understand that the concept of a Trilemma.

It is simply a reference model to decode the challenges of blockchain technology and there is no universal statement stating that these factors cannot be achieved.

To address this blockchain trilemma issue, the robust Algorand protocol is the appropriate solution. Let’s understand what Algorand protocol is, and what problem does the Algorand protocol solve within the blockchain ecosystem.

What is Algorand Protocol?

The Algorand blockchain ecosystem uses a decentralized agreement protocol called Byzantine which is based on the pure proof-of-stake (PPoS). It can tackle an arbitrary number concerning the malicious users till the honest users following the norms of the protocol have more than two-thirds of the entire stake in the system.

  • Protocol Participation
    All the online users in the Algorand protocol who have algos can take active participation in the consensus protocol. To minimize exposure, users avoid using their spending keys which they use to spend the stake for the consensus. Alternatively, any user who wishes to participate in the protocol curates and registers a participation key. With the help of this key, accounts can take part in the voting and proposing on the blocks of the blockchain ecosystem. Utilizing the participation keys makes the user’s algos safe even in the situation where the participating node is being compromised.
  • Self-Selection via Verifiable Random Function
    Every single block in the Algorand blockchain reflects a new random selection seed that is unpredictable in nature. This random selection seed predicts which user should participate in the coming round of the consensus protocol. While getting committed to the blockchain, every user becomes cautious of this particular seed (viewing the similar seed). A user privately verifies whether they are allowed to participate by running a Verifiable Random Function (VRF) with the help of their private participation key and the selection seed. This computation process is minimal. The computation process of the verifiable random function gives a  pseudorandom output with proof that is cryptographic in nature and can be used to check the result. After sending the proof, the user can validate their selection status in the participation process to anyone.
  • Pure Proof-of-Stake
    The fact that the users are selected to participate in the protocol depending upon the stake (total number of algos) that they own, makes this protocol a pure proof-of-stake. The verifiable random function acts in a similar way to a weighted lottery; just the way every algo present in an account receives its private lottery ticket. There are better chances of an account being chosen to participate when an online account contains more algos.
  • Replaceability of the Users
    Talking about the participation of the users in the blocks certification using VRF, they are chosen randomly and privately without any public communication among the users on the platform. As this procedure and its execution needs the private key of the user, nobody except for the user has the information of their selection. It is not known by an adversary about who is of importance in the generation of the next block till the point it becomes too late for them to leverage from an attack. The user by then has already sent out their messages and completed their responsibility in the consensus protocol. After all this, for every step of the protocol, a distinctive subset of participants is randomly and secretly chosen, which is not related to earlier subsets.
  • Achieving Consensus
    Consensus defines the manner in which blocks are chosen and written targeting the blockchain. Algorand takes the assistance of VRF to choose accounts while proposing for blocks in a given round. When the block is being proposed to a blockchain, there is a committee of voters who get selected to cast their votes on a block proposal. If the maximum number of votes are from the loyal participants, the block gets its certification. The process of consensus needs three fundamental steps to propose, confirm and then write a block associating it to the blockchain:
    • Propose
    • Soft Vote
    • Certify Vote

These three steps are described below, with an assumption that an ideal case would be when there are users who are not malicious in nature and there is no partition in the network due to technical issues.

  • Block Proposal
    The block proposal process selects accounts to submit new blocks to the network. The step begins with each node in the network looping through all of the accounts it administers. Also, it executes Algorand’s VRF on each account that is online and participating to see if it is picked to propose the block. After selecting an account, each node propagates the proposed block together with the VRF output, demonstrating that the account is a genuine proposer. Each node in the network will receive block proposals from other nodes and then validate the resulting VRF output.
  • Soft Vote
    Following that each node will execute the VRF for every participating account, it administers to determine whether or not that account has been selected to participate in the soft vote committee. If a certain account is selected, it will receive a weighted vote depending on the number of algorithms it possesses. Each account will vote to ratify the block, reducing the number of ideas to a single final choice. When the timeout expires, these votes will be cast in favor of the lowest VRF block proposal that has been computed and will be sent to other nodes together with the VRF proof. Each node will verify the VRF evidence of committee membership before adding it to the vote tally for the whole network. Following the attainment of a quorum for the soft vote, the process goes on to the certify vote stage.
  • Certify Vote
    After that, a new committee is formed to examine the block plan that was approved during the soft vote phase for overspending, double-spending, or any other issues that may have arisen. If the block is found to be genuine, the committee votes once more to certify it. It is accomplished in a way similar to the soft vote, in which each node iterates over its managed accounts to choose a committee and transmit votes. These votes are validated by each node till they get the quorum. This is when the round comes to a conclusion. After this the node is prompted to generate a certificate for the block, adding it to the ledger. The round comes to an end after the certificate generation. Upon reaching this stage, a new round is begins, and the procedure is repeated once again.

Who is behind Algorand Protocol?

Founded by Silvio Micali in 2017, Algorand is a blockchain platform that is completely decentralized, safe, and scalable, and serves as a common platform for developing products and services for a borderless economy. Silvio is in charge of all research at Algorand, including theoretical, security, and crypto-financial studies.

Micali has been a member of the Electrical Engineering and Computer Science Department of the Massachusetts Institute of Technology (MIT) since 1983. His research interests are in cryptography, zero-knowledge, pseudorandom generation, secure protocols, mechanism design and blockchain, among other technologies.

He is particularly well-known as the co-inventor of probabilistic encryption, Zero-Knowledge Proofs, Verifiable Random Functions, and a slew of other protocols that are considered to be the cornerstones of modern cryptography.

The Algorand team, which combines technical expertise with professional experience, is comprised of globally known researchers, mathematicians, cryptographers, and economists, and established business executives from global technology firms.


    • Silvio Micali (Founder)
    • Steve Kokinos (CEO)
    • W.Sean Ford (COO)


What are the core features of Algorand protocol in Layer1?


  • Smart Contracts
    The propagation of smart contracts is expensive, and the technology does not scale to meet the needs of real-world applications. These barriers must be eliminated for widespread adoption to be feasible. These hurdles are removed by Algorand’s smart contracts (ASC1), which are a trusted, seamless solution with proven performance. Smart contracts (ASC1) are not only quicker, scalable, and cost-effective, but they are also functionally advanced, enabling sophisticated and complicated applications. Users may be certain that the programme was executed without error and that the results were not changed when they utilize Algorand’s Smart Contracts (ASC1s), which are trustless programs that operate on the Ethereum blockchain.

    They are incorporated into Algorand’s Layer-1, where they inherit the same powerful speed, scale, finality, and security as the 111Algorand platform itself. They are also cost-effective and error-free, thanks to their integration into the Algorand platform.

    ASC1s have the capability of automatically enforcing custom rules and logic, ranging from simply stating how assets may be moved to more complicated logic and flow in application logic.

    They are developed in the Transaction Execution Approval Language (TEAL), which is a novel programming language, and PyTeal, a Python language binding, which is used to communicate with the ASC1.

    Because smart contracts are efficient and automated, they allow for the disruption of economies and the establishment of new business models across a wide range of sectors. They also allow for the execution of agreements without the need for third parties to be involved.

  • Algorand Standard Assets (ASA)
    On the Algorand blockchain, Algorand Standard Assets (ASA) provide a standardized, Layer-1 mechanism for representing any form of asset on the network. Assets that are fungible, non-fungible, restricted fungible and restricted non-fungible might be included in this category. When it comes to the digitization of assets in today’s economy, there are still a number of challenges to be resolved. The following are some of the difficulties:
    1. Achieving access to global and digital markets.
    2. Transferability is available around the clock.
    3. Settlement is completed in real time.
    4. Asset restrictions should be simple to implement and enforce.5. Administration efficiency, such as compliance and reporting, is important.
  • Enabled by the ASA
    Role-Based Asset Control (RBAC) is a type of asset control that is optional and adaptable for issuers and managers to meet business, compliance, and regulatory needs. This includes the following:
    1. Asset accounts should be analyzed individually for investigation purposes.
    2. When legal or other restrictions necessitate the transfer of an asset, the item must be forced to be       transferred.
    3. For privileged asset transactions, a whitelist mechanism is used, which allows only particular addresses that have been allowed to trade inside a specific asset to be used (all others will be restricted)4. Asset reserve models that are adaptable to specific business requirements.

    5. Off-chain asset documentation is included in the definition of on-chain assets.

    Protective measures for users include asset spam prevention, which prohibits unknown assets that may be subject to taxation, legal liability, or reputational damage from being delivered to users without their explicit consent (users must opt-in to accept new assets).

What problem does Algorand protocol target?

A number of different methods have been suggested like the Proof-of-Work (PoW), Proof of Stake (PoS), Proof-of-Burn (PoB), and Proof of Elapsed Time (PoET); to improve the democratic, efficient, and scalable nature of the consensus process employed by blockchain technology.
These methods, however, have a number of drawbacks, for example, the PoW technique necessitates a large amount of computing power, scales poorly, and consumes a significant amount of electrical energy.

Recently, an innovative technique known as Algorand has been developed as a means of overcoming these constraints. Algorand not only seeks to solve the “blockchain trilemma” of decentralization, scalability, and security by guaranteeing linearity in the blockchain. But, it also wants to address the “blockchain trinity” of decentralization, scalability, and security.

In this article, we offer a study of Algorand’s security posture. According to our research, this is the first security analysis of Algorand, as well as the first official test of the country’s economic situation. Algorand developed an attack scenario in which a group of malevolent users attempt to disrupt the protocol, or at the very least limit its application to a smaller subset of network users, by exploiting a security weakness in the Byzantine Agreement’s message validation process (BA).

Given that, neither the source code nor an official simulator for Algorand was accessible at the time of our study, they developed their own simulator (which is available upon request) to implement the protocol and analyzed the viability of our attack scenario. Algorand’s approach to solve the blockchain trilemma necessitates just the simple capacity of establishing numerous connections with targeted nodes on the part of the attacker, and it incurs almost no cost on the part of the attacker. It is possible to slow down the message validation process on honest nodes – which finally compels them to pick default values on the consensus. This leaves targeted nodes trailing behind in the chain after comparing it to nodes that have not been attacked.


What opportunities does Algorand provide?

  • Tokens
    The Algorand network has its native cryptocurrency named Algo. Currency like Algo has been created to assist in the development of a borderless economy allowing open participation. This token can be transferred in only 4.5 seconds to the receiver’s wallet. With high scalability and trust, Algo gives assurance to fork-free transactions.
  • Wallet 
    The Algorand network has its own wallet to channelize all the funds and the transactions on the Algorand ecosystem. This wallet works with robust offerings for several partners. The Algorand wallet integration supports all different platforms and browsers. Algorand wallet uses the Algorand Wallet Plus which is a Wallet Connect protocol to bridge the gap between the dApp and the wallet for safe communication.

What Algorand development services does LeewayHertz provide?

LeewayHertz provides various Algorand development services as mentioned below:

  • Smart Contract Development
    We have skilled developers who provide smart contract development services for the Algorand blockchain network to assist various dApps. We create architecture, provide auditing services, and deliver optimized smart contracts to clients with the design and development.
  • dApp Development
    We have blockchain developers who are skilled enough to build enterprise-grade decentralized applications on the Algorand platform for various clients and assist them in accelerating the time to market and increase ROI.
  • Nodes Creation
    Our skilled developers of blockchain platforms create completely optimized and efficient nodes for the Algorand network and ensure their compliance with the consensus mechanism that is implemented.
  • Support and Maintenance
    We provide maintenance and support services for your Algorand network. LeewayHertz offers lifetime support services to clients with the existing decentralized application and the ones who want us to develop their dApps.


Algorand eliminates the technical issues that for a long time are undermined in common blockchain adoption: decentralization, scalability, and security. With Algorand you can develop on a stable platform with assured privacy. Algorand’s consensus mechanism is permission-less and pure Proof-of-Stake. It guarantees complete participation, security, and speed within a truly decentralized blockchain ecosystem.

The blocks in Algorand are finalized within seconds, and Algorand’s transaction throughput is on the same level with huge payment and financial networks. As researched, Algorand is the first blockchain to provide quick transaction finality with no forking and no uncertainty.

With experience in developing robust blockchain applications, we assure to build and deliver scalable blockchain solutions to clients. If you are looking for a skilled blockchain development company to develop a dApp on the Algorand platform, we are here to assist you throughout the development process.

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Author’s Bio

Akash Takyar
Akash Takyar
CEO LeewayHertz
Akash Takyar is the founder and CEO of LeewayHertz. With a proven track record of conceptualizing and architecting 100+ user-centric and scalable solutions for startups and enterprises, he brings a deep understanding of both technical and user experience aspects.
Akash's ability to build enterprise-grade technology solutions has garnered the trust of over 30 Fortune 500 companies, including Siemens, 3M, P&G, and Hershey's. Akash is an early adopter of new technology, a passionate technology enthusiast, and an investor in AI and IoT startups.

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