Initially, we had idealistic notions about pure proof-of-stake: everyone was welcome to join in, there were no minimum requirements, no locks, and no chance of slashing. But ultimately, we ended up holding about 70% of all staked tokens. So we changed it up,“ said Vanlerberghe, the Chief Strategy & Marketing Officer at Algorand Foundation, who was a guest at the recent Cointelegraph AMA.

Previously, staking rewards were distributed through Algorand’s onchain governance system. Now, rewards are distributed in real time alongside every block produced.

Users can stake by running a node, participating in liquid staking via liquid tokens that can be used across Algorand’s DeFi protocols, or joining Reti Pools, where they contribute to a pool managed by a node runner and share in the rewards. Users can also delegate their stake to a node of their choice through Valar Staking for passive participation.

The pure proof-of-stake consensus model on which Algorand is based and which aims to bring fairness and decentralization is made possible due to advanced cryptography, particularly a verifiable random function (VRF). Each ALGO token acts as a lottery ticket, and users have a chance to be randomly selected to propose the next block at every round. This makes the consensus model secure because the selection of the block proposer happens privately on each user’s machine. So, no one knows in advance who will be chosen, and there’s no way to target or attack the block proposer.

“It makes us probably the most decentralized of all blockchains out there, apart from Ethereum,“ Vanlerberghe said.

Algorand’s integration of the Wormhole Native Token Transfers (NTT) standard, developed with Folks Finance, has made it easier to transfer tokens, especially for projects that increasingly require interoperability.

It uses a burn-and-mint model, which eliminates the risks associated with bridges. NTT also eliminates the need to lock funds in a smart contract and issue a wrapped version of a token on another chain.

“You’re actually sending your token to another chain where it’s represented natively. For example, it’s now easier for a stablecoin provider to launch a stablecoin on multiple chains, including Algorand,“ Vanlerberghe noted.

Real impact

Vanlerberghe emphasized that Algorand’s architecture stands out because it delivers instant finality. This means that once a transaction is confirmed in a block, it cannot be reversed or questioned.