Hi, I recently joined the Algorand community and I’m an economist without a technical background.
I think that Algorand technological approach is great but from an investor point of view I have lots of doubts after reviewing the Algorand’s webpages (Inc, Foundation and Community).
I’m going to post them in separate posts.
Here goes the first ones:
The Algorand foundation will keep 2.5b Algos “to participate in consensus”. Isn’t that go against decentralization?
“In the future we will introduce additional incentive mechanisms to ensure long term infrastructure support and health." Same question…Isn’t that go against decentralization?
I just stumbled onto these (good) questions by accident; sorry for the late response.
To answer your questions and assuming that I fully understand them, I would say, no.
First of all, the sortition method, i.e. choosing a leader and a verification set out of all participants, is by default decentralized. What Algorand is saying is that they want to reward those who are selected to participate in consensus. Note that there is no way, you, Algorand, or anybody else can influence this process. In other words it is a selection Algorithm that chooses Randomly the consensus participants — hence the name Algorand — and those selected will get awarded (obviously not done by someone sitting behind a desk pressing a button, but all done via an algorithm). You can read it all here: https://allquantor.at/blockchainbib/pdf/gilad2017algorand.pdf
I don’t know why “introducing additional incentive mechanisms to ensure long term infrastructure support and health,” would go against decentralization.
My two cents. Don’t take this as an official response, but I hope this is useful.
[EDIT: Please find the official Algorand explanation in the links given below]
Thanks for the feedback.
My question is that since AlgoRand is keeping a big share of the Algos in stake they will probably have more chances to be selected to participate in the consensus. So that could be seen like non decentralize.
I understand that this is because they want to prevent a malicious partner to take over the Network before it gains volume but in my opinion they should define when sufficient decentralization would be consider to have been obtained and what are they going to do with their stake ones they reach it.
Hmm…interesting thought. I assumed (actually never thought of it) that the 2.5b Algorand pool would not be part of the set of participants. Let’s find out.
If I look at the supply status of the last block of round 972766, I get this (the dots are inserted by me for readability):
I take it that these are micro Algos. Thus, as far as I can see — and I can be wrong — the 2.5b Algos are not in there as total money is 1.496b and online money is 1.25b or thereabout.
Please find below three excellent articles explaining Algorand intents. If you have time, please read them. They are very well written and it’s no rocket science.
Particularly, the last link will answer your questions.
First, the 2.5bln Algos (originally 3bln) are NOT participating in the consensus protocol.
Second, an amount of 500mln stake keys held by the Foundation DOES participate in the consensus protocol. This is (taking again block 972766 as an example) 0.5/1.5 is about 33% of the total. Algorand states that this will never be more than 49%.
Third, the way Algorand moves forward toward total decentralization is given in the first article.