Algorand (ALGO) טוקנומיקה

The Algorand token (ALGO) is central to the network's operation, serving as the utility token for transaction fees, consensus participation, and decentralized governance. The token economics are structured around a fixed maximum supply and a dynamic allocation and incentive model focused on community participation.

Issuance Mechanism

Algorand operates with a fixed maximum supply of 10 billion ALGO tokens. The issuance mechanism is not inflationary; rather, the tokens are distributed from this fixed pool according to a predetermined schedule.

Allocation Mechanism

The initial allocation of the 10 billion ALGO supply was designated across several key groups and functions, designed to support the network's development, operation, and community growth.

Note: The total allocation percentages may overlap or reflect historical changes in how the funds are categorized and distributed over time.

Usage and Incentive Mechanism

The ALGO token has three primary uses within the Algorand ecosystem: transaction fees, consensus participation, and protocol governance.

1. Transaction Fees

ALGO is required to pay transaction fees on the network for all operations, including sending tokens and executing smart contracts. The minimum transaction fee is set at 0.001 ALGO, with the final fee determined by network traffic and transaction size.

2. Governance and Incentives (Live Mechanism)

The primary incentive mechanism is the Governance Rewards program, which replaced the previous Participation Rewards mechanism in May 2022.

• Governance Participation: Tokenholders, known as "governors," commit a specific amount of ALGO for a predetermined period, typically a three-month cycle, to participate in decentralized governance.
• Governance Cycles: Each cycle includes a sign-up, voting, and rewards phase. Governors must register and commit their ALGO during the sign-up phase.
• Eligibility for Rewards: To receive rewards, governors must meet two conditions:
  1. Maintain a balance above the committed ALGO amount for the entire three-month period.
  2. Cast votes on the measures proposed by the Algorand Foundation.
• Reward Source and Rate: Rewards are sourced from the ~1.75 billion ALGO allocated to "Community & Governance Rewards." The reward rate is variable, with Annual Percentage Yields (APYs) in past cycles ranging between 10.02% and 14.05%. Rewards are calculated based on the ratio of a user's staked ALGO compared to the total ALGO staked for governance.

3. xGov Program

A parallel governance program, xGov, is being implemented to foster the development of early-stage projects, enhance community engagement, and address community needs. Proposals for xGov can be submitted by any community member on GitHub.

4. Staking Rewards (New Mechanism)

Algorand is rolling out a new staking rewards program where "block rewards" are paid in real-time to validators successfully proposing blocks to the Layer-1 blockchain. This mechanism is designed to be inclusive, avoiding punitive slashing and token lockups, and maintaining low costs for node runners.

Locking Mechanism and Unlocking Time

Locking Mechanism

The current governance model requires tokenholders to commit ALGO for the three-month governance cycle, but this mechanism does not require users to lock their assets in the traditional sense. Users must simply maintain a balance above the committed amount to remain eligible for rewards.

Unlocking Schedule

While the governance mechanism does not enforce a lockup on user-committed tokens, certain initial allocations of ALGO are subject to vesting schedules.

Historical data shows a continuous, linear unlocking schedule for the Participation Rewards allocation, which was originally intended to distribute until 2030. This linear unlocking is scheduled to continue daily, with each daily unlock event releasing approximately 527,395 ALGO to the "Participation Rewards" recipient.

The most recent recorded daily linear unlock events for this allocation are scheduled through at least June 16, 2028.