Thread by @SoorajKSaju

Recently, #Algorand has become a hot topic among the #CardanoCommunity

The curiosity peaked, especially after @JohnAlanWoods left @InputOutputHK

To become the new CTO of @AlgoFoundation

So, here is a thread on #Algorand & its Pure Proof of Stake(PPoS) algorithm🧵👇

@JohnAlanWoods @InputOutputHK @AlgoFoundation The purpose of this thread is to focus on👇

• Nodes & Network

• Accounting model

• The team behind #Algorand

• Launch & Initial token distribution

• Consensus & Pure proof of stake(PPoS) sybil protection

To provide a basic understanding of #Algorand

@JohnAlanWoods @InputOutputHK @AlgoFoundation Team👇

Algorand is a L1 Blockchain

Founded in June 2019 by computer scientist & MIT professor Silvio Micali

Who co-invented many breakthroughs at the heart of modern cryptography

such as VRFs & zero-knowledge proofs (ZKPs)

& won the 2012 Turing Award for his contributions

@JohnAlanWoods @InputOutputHK @AlgoFoundation The core development of the Algorand protocol is overseen by

Algorand Inc. is a private corporation based in Boston

The Algorand test network was launched to the public in April 2019

And the main network was launched in June 2019.

@JohnAlanWoods @InputOutputHK @AlgoFoundation Initial token distribution👇

Private sale:

Algorand did not conduct a private token sale

Algorand, Inc. conducted equity raises of $4 million USD in Feb 2018

& $62 million USD in Oct 2018 to fund protocol development

Equity investors own a portion of Algorand, Inc.

@JohnAlanWoods @InputOutputHK @AlgoFoundation Public sale:

Algo tokens are distributed by the Algorand Foundation via a series of dutch auctions

The first auction was conducted on June 19th, 2019

With 25,000,000 tokens sold at a clearing price of $2.40 for a total capital raise of $60 million USD

@JohnAlanWoods @InputOutputHK @AlgoFoundation Algorand’s mainnet launch created 10 billion ALGOs at the genesis

A total of 2.5 billion ALGO (25% of the initial supply)

Were granted to the founders & Algorand Foundation

The rest of the ALGO will be distributed through rewards, grants, & auctions

@JohnAlanWoods @InputOutputHK @AlgoFoundation Algorand uses a 2-tiered blockchain design

The layer 1 tier allows for creating Algorand Standard Assets (ASA)👇

• New or existing tokens on the blockchain

• Atomic swaps & simple Algorand smart contracts

Layer-2 tier is for more complicated SCs & dApps that run off-chain

@JohnAlanWoods @InputOutputHK @AlgoFoundation Nodes & Network:

Algorand networks employs two types of nodes

• Relay nodes &

• Particpation nodes

They serve two different functions in the networks

The participation nodes helps to participate in the consensus

To validate transactions

@JohnAlanWoods @InputOutputHK @AlgoFoundation Whereas,

Relay nodes are the communication backbone of the Algorand network

It creates efficient communication

By finding the efficient path between the messages & the nodes

So as to reduce communication loops between the participation node

Node requirements 👇

@JohnAlanWoods @InputOutputHK @AlgoFoundation As of now you cannot just start running a relay node

Because it's permissioned by Algorand foundation

According to the information by algorand foundation

Currently, there are just under 120 relay nodes on the Algorand network

And around 1600-1700 participation nodes

@JohnAlanWoods @InputOutputHK @AlgoFoundation Simply said,

The participation nodes run the show

But they cannot run the show without the networking backbone

Provided by the relay nodes

Which as of now is a geographically distributed & permissioned network of nodes

@JohnAlanWoods @InputOutputHK @AlgoFoundation Consensus & Pure proof of stake(PPoS) sybil protection:

Algorand uses Byzantine agreement (BA) protocol paired with PPoS

To reach decentralized consensus

So what is PPoS?

PPoS is a mechanism used by #Algorand to prevent sybil attacks

@JohnAlanWoods @InputOutputHK @AlgoFoundation PPoS also known as proof of weight

Meaning,

Your percentage of tokens owned in the network represents

Your probability of discovering the next block

Participants in BA are randomly selected based on a PPoS mechanism that relies on "cryptographic sortition"

@JohnAlanWoods @InputOutputHK @AlgoFoundation BA achieves scalability by assigning each step of its protocol to a committee

BA uses VRFs to randomly choose users in a private & non-interactive manner

If the user is chosen

The function produces a short string

That proves user's membership in the committee to other users

@JohnAlanWoods @InputOutputHK @AlgoFoundation For example,

An adversary does not know which user to target

Until that user starts participating in BA since membership selection is non-interactive

The steps during the cryptographic sortition process are listed as follows:

@JohnAlanWoods @InputOutputHK @AlgoFoundation The agreed-upon block is then confirmed & transmitted via the network

Using various digital signatures from the proper verifiers

Because only one block can have the required threshold of committee votes on Algorand

Two blocks can never be added to the chain at the same time

@JohnAlanWoods @InputOutputHK @AlgoFoundation Which prevents forking in the networks during the process of block creation

This means that in a properly decentralized network

All transactions are completed within seconds

Which assures fast finality

@JohnAlanWoods @InputOutputHK @AlgoFoundation Accounting model:

Algorand has an account-based model similar to Ethereum

But it offers two layer-1 smart contract types

• Stateless contracts

• Stateful contracts similar to #Ethereum

Stateless contracts embody the idea of stateless transactions

Similar to the UTXO model

@JohnAlanWoods @InputOutputHK @AlgoFoundation On Algorand you can develop stateful & stateless contracts

through a programming language called Transaction Execution Approval language (TEAL)

which is non-Turing-complete

Algorand also enables programming with Reach, Java, PyTeal, Python, GO & Rust

@JohnAlanWoods @InputOutputHK @AlgoFoundation Like in #Ethereum

Stateful Smart Contracts implement application logic and can store & update on-chain values

basically,

The stateful Smart contracts form the backbone

For building dApps (eg: AMMs, borrow/Lending platforms) on the Algorand blockchain

@JohnAlanWoods @InputOutputHK @AlgoFoundation Whereas,

stateless SCs are used to approve spending or asset transfer transactions

& often govern all transactions from a specific account

Meaning,

Stateless contracts are used to approve certain transactions

where logic is not on-chain but is submitted with the transaction

@JohnAlanWoods @InputOutputHK @AlgoFoundation It is possible to link stateful smart contracts with payment transactions

Using Atomic transfers (a feature that allows up to 16 transactions to be submitted simultaneously)

Many different types of transactions can be grouped including both stateful & stateless SCs

@JohnAlanWoods @InputOutputHK @AlgoFoundation Current state of DeFi:

#Algorand boasts a TVL of 212 million USD

With many active dApps

Where @algofiorg, a decentralized lending protocol ranks first

Among the dApps with most TVL

Credit: @DefiLlama

@JohnAlanWoods @InputOutputHK @AlgoFoundation @algofiorg @DefiLlama TL;DR -

• Algorand is a L1 blockchain backed by heavy weights in cryptography like @silviomicali

• Which uses Byzantine agreement (BA) protocol paired with PPoS to reach decentralized consensus

• And a ledger model that allows for flexibility

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