Does a user need to set up and operate a participation node to earn rewards?
While anyone can run a participation node, not all users will have the technical ability to participate in the consensus protocol. For users who are not able to run a participation node, the Algorand blockchain offers an offline mode. When a user declares themselves offline, their account’s stake is not taken into consideration for the sortition process. This allows any user to have a stake in Algorand without requiring them to operate a participation node.
Currently, the system treats all users equally. In the future, the Algorand Foundation may propose an upgrade to increase the rewards given to online users—incentivizing them for their participation in the cryptographic sortition protocol—and decrease the rewards given to offline users.
If currently rewards for running a participant node and staking offline are the same, then what’s the point in running a participant node?
From the FAQ:
“Currently, the system treats all users equally. In the future, the Algorand Foundation may propose an upgrade to increase the rewards given to online users—incentivizing them for their participation in the cryptographic sortition protocol—and decrease the rewards given to offline users.”
You are correct unless you want to build an application on top Algorand. Having a node serves as the REST endpoints for your app and access to the network.
You can have accounts online and offline. Online accounts are accounts that have tokens and have generated a participation key, the account has been taken online on a specific node(which could be your own) using the generated participation key and is now participating in consensus. Offline accounts are accounts with tokens but have not taken the account online on a specific node. If a node has one or more accounts online then it is a participating node.
From the FAQ
While anyone can run a participation node, not all users will have the technical ability to participate in the consensus protocol. For users who are not able to run a participation node, the Algorand blockchain offers an offline mode. When a user declares themselves offline, their account’s stake is not taken into consideration for the sortition process. This allows any user to have a stake in Algorand without requiring them to operate a participation node.
Currently, the system treats all users equally. In the future, the Algorand Foundation may propose an upgrade to increase the rewards given to online users—incentivizing them for their participation in the cryptographic sortition protocol—and decrease the rewards given to offline users.
As a clarification - if you want to run an application that uses the blockchain through the API, you will need a server running Algorand software.
You 100% do not want that server you expose the API of to also be hosting your participation keys. Keep these functions apart. It is also likely that the server will need the full ledger, not the snapshot a participation node has and should have an optimized index.
Currently, rewards are proportional to how many Algos you hold. Nowhere is mentioned that running a participating node is required to get those rewards. That’s why you’d get Algos just holding the tokens in your mobile wallet.