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Learn about Algorand Staking
There are several ways to earn a return on your ALGO, including lending them out to custodial providers or through decentralized lending protocols, running your own validator, or delegating your tokens to validators of your choosing.
For the best security and control over your funds, we recommend using a Ledger Hardware Wallet. To delegate your tokens, you should ensure they are stored on your Ledger or Pera Wallet, and then follow these steps below:
Step 1: Go to the Algorand Governance Portal and connect to your wallet. Please note that to participate in governance, you must sign up during the sign up phase. If the sign up phase is closed for the current period, you must wait for the next period’s sign up phase to open.
Step 2: Commit your Algos by clicking the “Commit Algos” button. Enter the number of ALGOs you would like to commit.
Note that it is NOT RECOMMENDED to commit the entire Algo balance in this address, because the governors are expected to send a few zero-Algo transactions from the governing address, and will have to pay the transaction fees for them. We recommend committing at most 1 Algo less than the balance in the governing address.
Step 3: Finalize by clicking ‘Commit Algos’ and sign the transaction .
Step 4: After committing your desired amount of Algo, visit the Governor’s page to verify your eligibility. Go to the Governance Portal page for the current period, click on the ‘Show All’ link at the top.
After signing up your ALGO tokens during the signup phase, there are a few things to keep in mind:
- Governance works in cycles. Each cycle lasts three months and contains a sign up phase, a voting phase and a rewards phase. Governors who register and stake Algos for a three month period during the sign up phase will be entitled to vote on the voting measures put forward by the Foundation in the voting phase, and will then receive rewards in the rewards phase. You must both keep your balance above the committed Algo amount and vote to be eligible for rewards.
- Each governance period includes one or more voting sessions, and governors must participate in voting on all measures during the governance period to be eligible for rewards. Periods start at each calendar quarter (Jan, April, July and September) and details are announced on the governance portal and the Algorand Foundation’s website a few days before their start date. A governor can vote by accessing the governance system dashboard here.
- We recommend that you leave at least 1 uncommitted Algo in your wallet. You need to maintain the committed Algo throughout the governance period and ensure you have sufficient Algo tokens in reserve in the participating wallet to cover transaction fees that will be required during the period.
- The Algorand governance system comprises quarterly governance periods, and governors need to sign up anew to each period during the signup window.
- Use our Algorand Staking Calculator to calculate your expected rewards over your holding period.
The Staking Rewards on ALGO come from:
Governance Rewards on the Algorand Network (Block Rewards): The amount of distributed Governance Rewards is decided before the beginning of each period (3 months). In prior periods, ~ 70,500,000 ALGO were distributed to Governors, which is ~ 0.705% of the total supply. Governance is the only way to earn rewards for holding Algo, with an APY of 10.02% – 14.05% seen in previous periods. An overview of examples on how reward rates would be calculated is available here.
Governors who miss a vote, or fail to maintain their committed number of Algo during any point of time in the relevant governance period, will not be entitled to their rewards for that governance period. Governance reward distribution will be distributed automatically within a week of the period ending.
We strive to make staking as safe and transparent as possible, however, it’s important to consider factors that may influence whether a particular staking option is appropriate for you.
Slashing risk: There is no slashing on the Algorand network.
Unbonding risk: When staking ALGO tokens, there is a soft lockup period of 90 days. Investors can uncommit their ALGO during this period, but then forfeit their rewards. This is something to keep in mind when deciding to stake, as crypto markets are highly volatile. Consider keeping funds liquid if you do not intend to hold ALGO long-term.
Protocol security risks: There is an inherent risk that the protocol could contain unknown bugs, this risk applies not only to staking but also the investment in ALGO.
This list is not exhaustive and other risks may apply.
ALGO is the native token of the Algorand network that is used to carry out the key functions of the platform as detailed below:
Staking: Users can temporarily lock up ALGO to help secure consensus among participation nodes.
Governance: Governance is a decentralized program which allows Algo holders to vote on the future of Algorand. Committing Algos to governance for a three-month period allows you to vote on measures proposed by the Foundation and earn rewards for doing so. Governance replaces the former participation system where rewards were automatically added to your Algo wallet.
Gas token: ALGO is used to pay for transactions fees on the Algorand network.
Algorand utilizes a pure proof-of-stake (PPoS) protocol that is based on Byzantine consensus. The system’s users’ influence on the selection of a new block is proportional to their stake (number of tokens) in the network. Users are randomly and anonymously chosen to propose blocks and vote on block proposals. All online users have an equal chance to be selected to propose and vote. The probability of a user being chosen and the weight of their proposals and votes are directly proportional to their stake.
Algorand’s PPoS approach links the security of the entire economy to the integrity of the majority of the economy, instead of a small subset of the economy. The system is secure when the majority of the money is in honest hands. With other methods, a small subset of the economy determines the security of the entire economy, which means that just a few users can prevent others from transacting. In Algorand, it is not possible for the owners of a small fraction of the money to harm the entire system. Additionally, it would be detrimental for the owners of the majority of the money to misbehave, as it would decrease the currency’s purchasing power and ultimately devalue their own assets.
ALGO has a maximum supply of 10 billion (minus the 20.5 million burned ALGOs from the inaugural auction early redemption program in August 2019 as well as the 5 million burned Algos from the final auction redemption window in July 2020). Even though the entirety of the supply was minted at the launch of the network, thus giving Algorand a fixed outstanding supply, the liquid supply will increase as pre-minted tokens unlock and are distributed.
Initial Token Distribution
The initial distribution of ALGO is:
- 25% is estimated to be injected into circulation (initially via auction, distributed over time)
- 19% is allocated to participation rewards(distributed over time)
- 31% is allocated to early relay node runners (distributed over time)
- 20% is allocated to Algorand Inc.
- 5% is allocated to the Algorand Foundation
- $4M was raised in the Seed round in February 2018.
- $62M was raised in a Venture round in October 2018.
- $60.40M was raised in the ICO in June 2019 at an average price of $2.40.