Algorand (ALGO) guide

Algorand: built for scalability 

Algorand is a core blockchain like Ethereum and Solana- known as a Layer 1 in the crypto community- which uses a variation of the proof of stake (PoS) consensus mechanism called ‘pure’ PoS to process transactions and secure the network. The protocol is built for scalability, capable of handling up to 10K transactions per second (TPS) while charging low fees. 

Key figures

• Launch date: 2019

• Total value locked (TVL): $50M (as of December 2025)

• Daily active users: 19.9K (as of December 2025)

Algorand at a glance

Consensus mechanism: Algorand’s pure PoS encourages participation by allowing holders with as little as one ALGO (the protocol’s native token) to earn block rewards. What’s more, it doesn’t require you to lock up your stake.     

Scalability: Algorand claims it can process up to 10K TPS, although its highest recorded volume according to Chainspect is 5,716 (as of December 2025). The network’s finality, the time it takes for a transaction to be recorded on the blockchain and become irreversible, is nearly instant.  

Low cost: Algorand’s transaction fee is 0.001 ALGO (a fraction of a cent as of December 2025), ranking it among the most cost-efficient blockchains. That said, fees may rise during periods of network congestion. 

Sustainable: Algorand claims to be more environmentally friendly than other PoS networks thanks to the lottery system it uses to select validators and the fact that they don’t have to compete to process transactions. Its carbon footprint was seven times lower than Ethereum as of June 2024.

Protocol mechanism

PoS requires participants known as validators to deposit or ‘stake’ a certain amount of the blockchain’s native token for the right to process transactions. In return for this service, they receive block rewards in the form of freshly minted tokens.  

The minimum stake to become a validator in Algorand’s pure PoS is 30K ALGO, worth just under $4k as of December 2025. For context, Ethereum’s validators must stake 32 ETH, amounting to over $100K as of the same date. However, even if you just hold one ALGO, you can participate by joining a staking pool. Staking pools combine your funds with others who can’t afford the minimum stake and run a validator on your behalf, sharing a portion of the block rewards.

You remain in control of your stake at all times, so you can use your tokens elsewhere, for instance to earn a return on a decentralised finance (DeFi) application. Another unique feature of pure PoS is it doesn’t penalise validators who underperform or behave dishonestly. Instead, they’re simply removed from the network and forgo rewards.

Key figures

• Market cap: $1.2B (as of December 2025)

History

Algorand was launched by Massachusetts Institute of Technology professor Silvio Micali in 2019. Micali has extensive experience in the world of cryptography, having invented several ground-breaking tools including zero-knowledge proofs (ZKP), which allow someone to verify something without revealing sensitive information (like proving you’re old enough to enter a club without having to show ID).

Key milestones

• February 2018: Algorand’s first investment round raised $4M.

• October 2018: It raised a further $62M.

• June 2019: The Algorand Foundation launched the Global University Program to advance blockchain research.

• December 2021: Algorand Community Governance launched, allowing ALGO holders to vote on network upgrades.

• March 2022: Algorand’s smart contracts (programmes that automatically execute when preconditions are met, a bit like a vending machine) became composable, meaning they can interact with each other, enabling more complex use cases. 

• June 2023: A network upgrade increased Algorand’s maximum TPS to 10K and decreased the block time (the average time it takes to produce a new block of transactions) to 3.3 seconds.

• January 2024: The block time dropped below three seconds.

• December 2024: TVL, a metric used to measure the value of user funds deposited on a protocol, hit a record high of nearly $417M, primarily driven by activity on DeFi platform Folks Finance.

• January 2025: After the latest upgrade, block rewards went live on the network to boost security and decentralisation (replacing governance rewards).  

• July 2025: The xGov Council launched, an elected group of Algorand experts responsible for evaluating and funding projects proposed by the community.

• Algorand was also the first non-EVM blockchain to be chosen by Midas to issue its tokenised US Treasury certificate, mTBILL. 

What's next

Algorand’s roadmap, published in July 2025, focuses on adoption now that the network has established its efficiency. The roadmap consists of four pillars, which will guide the next stage of Algorand’s growth:

• Blockchain core values: Algorand will build on the launch of block rewards (to encourage decentralisation) and the Xgov Council (to support on-chain governance) and revise the network’s transaction fees (to promote economic sustainability).   

• Mainstream adoption: It will improve the user experience by launching a straightforward self-custody digital wallet called Rocca and introduce various measures to make it easier for developers to build new projects.   

• High leverage use cases: The protocol has identified several use cases where it feels it can secure market share: the tokenisation of real-world assets (RWAs)- a sector potentially worth $30T by some estimates- payment tools powered by AI agents, and self-sovereign identity, which gives you complete control over your personal data.

• The ‘bleeding edge’: The team will future proof the network by improving privacy, building on its ZKP toolkit, and exploring ways to further boost transaction volume. 

CoinShares’ analysis

Algorand’s scalability is its greatest strength, and the roadmap outlined above is designed to address its biggest challenge- real-world adoption. Tokenised RWAs could prove to be a particularly lucrative use case.

Strengths

• The number of transactions Algorand can handle, its quick finality and low fees make it a highly scalable network.

• Silvio Micali, Algorand’s founder, has strong credentials in the crypto sphere and a reputation for innovation, which should bode well for the network’s evolution.

Weaknesses

• Algorand has experienced relatively low adoption in terms of TVL ($50M as of December 2025), ranking 55^th overall.  

• Daily active users (DAUs) peaked at 223K in June 2025, coinciding with TravelX issuing its last batch of plane tickets as NFTs. But without a similar catalyst, DAUs have settled into a range between 13K and 20K.   

Opportunities

• The focus on tokenisation of RWAs, primarily investments like shares and bonds to date, should drive adoption by financial institutions such as asset managers.

• Likewise, the launch of the accessible Rocca wallet should attract new users, especially those less familiar with crypto.

Threats

• Algorand faces competition from rival blockchains offering high scalability and low fees like Solana, and it may struggle to stand out from the crowd.

• Lack of network effects due to slow adoption could impede Algorand’s growth.