Serious lack of transparency and engagement of Algorand foundation

I tried to send an email for Silvio Micali about Algorand consensus algorithm and I got this:

Please be informed that I will not be at MIT through 2021 and that I will not read this message.

All the Best, Silvio Micali

This needs to be answered. Also, is there a list of the exact node structure ? (I.E. relay nodes operators that earn rewards, who are they ?)

Hi @stephenfoundation, was wondering if you already know more?

Hi @petew, should have these back to you today. Have tried to prepare some detailed answers for you so hopefully will be helpful - just getting some facts checked.

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Can’t wait to hear this, thanks.

Hi @petew.

Answers to your questions below.

Question: What will be the long term incentives for relay nodes?

Answer: The group sometimes referred to as the Relay Node Runners group, came into existence at mainnet launch and should correctly be referred to as Early Backers and Node Runners. This group consists of early investors, commercial entities and non-profits (Universities) who made commitments to support the project and to also run relay nodes to provide the decentralized infrastructure of the blockchain in the early life of the protocol. This group is committed to support the required Relay Node infrastructure of the Algorand blockchain up to 2024. At this point, some of the current participants may decide to discontinue running Relay Nodes. For now, the Foundation has not yet agreed a long term incentive plan to encourage new Relay Node runners to participate, if required, in 2024. The Foundation will engage with the Algorand community, nearer to that date, to evaluate what potential incentive programs are required to onboard new Relay Node Runners. See also technical question below.

Question: There is only a limited amount of relay nodes at the moment maintained by VC’s and some Universities. The Algorand foundation maintains this list, basically making Algorand a permissioned, centralized blockchain. I have read Silivo Micali’s proposal on decentralizing the governance of the Foundation, but nothing about decentralizing the node structure. This means Algorand will at best be a permissioned consortium blockchain like Hashgraph. What is your plan to actually decentralize the technology?

Answer: To clarify, consensus on the Algorand blockchain is run by Participation Nodes, not the Relay Nodes. Participation Nodes on the Algorand network are both public and permissionless. Therefore consensus participation on the Algorand blockchain is public, permissionless and decentralized. While relay nodes do not participate in consensus, having highly reliable relays is critical to the performance of the Algorand blockchain. That is why, currently, the Algorand Foundation maintains the list of relays to ensure relay nodes satisfy the necessary performance requirements and do not slow down the blockchain. As part of our current roadmap, we plan to further the ability to run Relay Nodes on the Algorand Network. One approach being evaluated is to start by using two lists of relays: the current one fully vetted by the Algorand Foundation to keep the network high performance and a second one that is permissionless. Nodes would then connect to relays on both lists allowing best of best world: decentralization + performance. As we move to a permissionless mechanism for Relay Node Running, the Foundation will work with the community to agree an incentive program to support running this infrastructure.

Question: What will be the incentive for staking when the rewards pool runs out in 2030?

Answer: The existing participation rewards program is under community review as part of the discussion around decentralization of governance. Given that this program to bring us to 2030 is not finalized, it is too early to say what the program will be after 2030.

Question: What happens with the money that ends up in the fee sink? Who controls it?

Answer: At the moment, the Algo wallet receiving Algorand blockchain transaction fees is held by the Algorand Foundation. For the near term, the amount of Algo accumulating in this wallet is and will continue to be modest, based on the 0.001Algo/transaction fee. Once the daily transaction level reaches a threshold, where the amount of Algo held in the wallet is material, the Foundation will engage with the community on how best these accumulating fees can be leveraged to support the ecosystem. As it currently stands, Algos in a fee sink can only be sent as participation rewards. A consensus upgrade has the possibility to change this should the community elect to do so.

Question: How will you keep transaction fees low and stable in the long term?

Answer: The Algorand Foundation has no plans to review the transaction fee levels of the Algorand blockchain currently. As the steward of the Algorand ecosystem, the role of the Foundation would be to facilitate the wider Algorand community and ecosystem making that decision, if there is a proposal to examine that, from within the community, at any point in the future.

Question: Why is there only one full stack developer mentioned on the website?

Answer: The ongoing development of layer-1 features of the Algorand protocol is performed by Algorand Inc, under contract to the Algorand Foundation and as such, the teams of developers who build the Algorand layer-1 protocol are in the Algorand Inc. organization.

I hope this is helpful. In addition, we are also looking to expand further on these answers in our FAQs page, in an effort to further improve transparency wherever possible.

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@stephenfoundation Thank you for the detailed answers, much appreciated!

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Please how can i contact you. There are some questions i need to ask you

I’m on the Algorand Discord as SteveAlgorandFn - feel free to DM me there. I try to get jump on Discord a few times a day, so you should get a reply quickest that way. @petew if there are any follow-up questions, feel free to reach out also that way.

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Hi @stephenfoundation, thank you for your answers. I couldn’t find the time to properly respond earlier.

I have a couple of additional questions and remarks:

If I understand correctly, a permissioned list of relay nodes is necessary for the performance of the Algorand blockchain. So while the consensus mechanism itself may be permissionless, the blocks on which consensus can be reached are all routed by permissioned relay nodes. I don’t think that is very decentralized. What would happen if the relay nodes stopped functioning today?

Also, a big part of the economic distribution (fees and rewards) within the protocol is in the hands of one single entity that developers, stakers and users have to trust. What was the reasoning behind this design? Why not at least allocate the proceeds from the fee sink algorithmically to the people that stake Algo?

And in view of the above, how can Algorand make the claim that it has solved the trilemma?

To me this claim seems misleading. Algorand markets itself as a unique blockchain being entirely decentralized, permissionless and transparent. Furthermore the website states that ‘control is distributed among all individual network participants’.

I don’t see this in practice. It seems to me that Algorand has simply prioritized scalability and security over decentralization, which is perfectly fine by itself, but not what Algorand promises to be.

Also, I could not find any additional developers on the Algorand Inc website. Could you give some more insight on how many people are working/have worked on coding the Algorand blockchain?

Hi Peter,

As noted, the need for supporting network performance was an initial step as the protocol launched. Unlike other protocols that have come from existing ecosystems or are forks of an existing chain, the Algorand blockchain launched from a genesis point. The early life support around that new chain was the critical early task and has been successful - the Algorand blockchain is now supporting over 700,000 transactions a day, with zero downtime since genesis and a number of significant protocol upgrades that have occurred along the way.

The existing relay nodes are run by a disparate, decentralized and independent group and because of that, the scenario you describe is extremely unlikely, if not virtually impossible. Also, as pointed out before, consensus takes place via participation nodes which are permission-less and fully decentralized - so the trilemma is solved. Today, we have over 1400 total nodes and growing ( https://metrics.algorand.org/ ).

As we move forward, there are areas where we can accelerate our trajectory towards full decentralization of the project (relay nodes, governance, token diffusion) and that is a priority for the Foundation right now (there have been discussions in the last weeks with the community on discord, telegram and via individual outreach on governance approaches for example).

I think you will see proposals coming to the community that will address the areas you have highlighted - as I noted in my earlier reply, we are already, for example, technically evaluating the 2 list approach to enable permission-less relay node running.

As I work for the Foundation, I don’t have insight into the developer team numbers at Algorand Inc. Maybe Jason could update you on that.

Steve

Thank you for your quick answer @stephenfoundation

Looking at consensus alone is a very narrow interpretation of the trilemma. If the network would only consist of participation nodes, would it be secure? Would it be as scalable as without the relay nodes?

Even though relay nodes are not necessary for consensus, they are apparently indispensable for the protocol to function properly.

If Algorand had really solved the trilemma, the protocol would not be dependent on a permissioned group of relay nodes to achieve scalability and security.

If Algorand had really solved the trilemma, the protocol would not be dependent on one single entity managing fees, rewards and incentives.

Don’t get me wrong, I’m a big supporter of the project and confident you will succeed, but I think not being transparent about this could eventually backfire to the project.

I’m looking forward to upcoming proposals towards full decentralization!

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I am also big fan of Algorand project and everything around it. You have put lots of effort in the ecosystem itself, it is clearly visible for us and we appreciate i.

But I strongly agree with @petew and would appreciate more explanation.

The point is super clear here - the relay nodes are required for achieving high performance and there is no decentralized incentive to run it.
We don’t need to have that incentive right now but at least we need to see a plan how to achieve it. @stephenfoundation you mentioned 2 list approach, could you elaborate?

Thanks!

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Hi @petew,

I’d like to try and address these two points that you’ve brought up:

  1. regarding the permissioned relays - this issue is a technological issue that can be resolved. Regretfully, when you look on the Algorand solution as a whole, there is almost always “something” better and/or more important to do than to eliminate that limitation. And it’s not a trivial issue to tackle, as the liveness of the protocol depends on it. If you think this is the upmost important feature that you’d like to see on Algorand, please raise your hand.

  2. The fees, rewards and incentives are more of a business decision. As such, they would likely to fall into the Governance program suggested by Silvio. I don’t foresee any changes to the current plan until the decision on the adaptation ( or not ) of Silvio’s proposal comes into fruition.

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Hey @tsachi

Thank you for your response. I understand that these are not trivial issues to solve. I myself -for one- would not have a solution at hand. I am merely bothered by the fact that Algorand is not transparent and honest about these issues. This is extremely important if you want to build an organic (developer) community.

Algorand propagates having solved the trilemma and being fully decentralized and permissionless. That’s a huge claim to make but it is clearly not true as it stands right now.

Every blockchain can have permissionless consensus, but does that make your blockchain secure? Does that make it scalable? That’s what the trilemma is all about.

Algorand clearly turned to centralizing measures to overcome these issues, nothing wrong with that, but they should be honest about it and provide a clear path towards full decentralization to the community if they want to live up to their claims.

Guys,

To move this discussion to a more forward view. The need to build a strong roadmap for governance (inspired by Silvio’s blog) and further acceleration on decentralization is something we are all aligned on - and your views are heard. I’d expect to see something more substantial from the team on this topic, in the near future. This will then be a more substantial platform for discussion on actual proposals rather than hypotheticals.

Steve

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I really don’t think that the relay nodes are indispensable. I’m almost sure that Algorand consensus could be run on a peer-to-peer gossip network very efficiently. Peer to peer networks are really capable networks and they can achieve stunning performance. They just need to be implemented well.

I don’t know what is the reasoning behind using these relay nodes. Maybe the developers were unable to use UDP correctly so they decided to use TCP. But you can’t use TCP in a peer to peer network because routers block TCP connections, so they had to use relay nodes to be able to communicate in a client-server style instead of peer-to-peer style.

In my opinion, existence of relay nodes does not make Algorand a centralized system. Because nodes do not need to trust relay nodes and anyone can theoretically build a relay node. Again I don’t know why there is a permissioned list of relay nodes and they don’t let normal users to make relay nodes.

I totally agree that we should have a peer to peer network instead of this strange client-multipleserver architecture.

Anyone can run a relay now, and any node can specify the peers (relays) it connects to, either via DNS, json phonebook file, or delimited list of peers to -p argument.

Given enough shared stake, people could setup a completely independent relay chain with an agreed upon seed list (via whatever means they want - including their own dns records or just a web page - like cosmos and their seed lists) and everything would work just fine. They could take over the relay network in a sense (but this isn’t possible right now obviously because the stake isn’t there). The key is - it’s all open - and all possible as part of the design.

I think the relay argument is way overblown. There are definitely other chains that quite explicitly don’t allow anything but pre-arranged permission to join, in any form. Algorand is definitely not that, in any form, including relays. Right now, ALGO is centralized, because it’s a proof of stake chain, genesis minted, that still has to be released. This is pretty much a given.

Them, all that’s actually ‘centralized’ right now is control of a default configuration bootstrapping mechanism - a DNS record. That same record, is a configurable option in the node config. It’s just not a big issue IMO.

The argument that relays could censor transactions is legitimate though, so the planned mention of allowing explicit dual lists for the node config is a good start. I’d like to see, as part of a roadmap to decentralization, information about how this could be handled so that relay discovery is baked in. There are a number of approaches that could work here.

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Hi @stephenfoundation , curious whether there have been updates on a plan to provide long-term sustainable incentives for relay nodes. Perhaps you could point me to a thread/article.

Separately, if anyone can participate with 1 Algo, why there are just 1,000 - 2,000 participation nodes active? What are the incentives for running a participation node?

  • If there are no incentives, how might this be kept sustainable and not just altruistic?
  • If there are incentives, what stops a LIDO type protocol from emerging that would swap your Algo (and use it for a participation node) and give you a liquid pAlgo token (as well as a rewards token) in return?

Also, I found this reference saying that all Algo gets rewards, regardless of whether they are staking or not. Is this true? [Odd this isn’t clear from the official Algorand documentation, or maybe I’m missing it]

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