Algorand Governance Proposal: A Pathway To Better Decentralized Ecosystem

The Algorand blockchain's goal has always been to achieve a fully decentralized finance platform that will enjoy all the benefits of a complete decentralized environment.

To make sure this is possible, Algorand keeps introducing new and innovative designs and solutions to place the network more and more in the users' hands.

Only recently, Algorand took another step towards decentralization through its governance proposal proposed by its founder, Silvio Micali. When implemented, this proposal will make sure that governance of the network is solely in the hands of the users, the same way participation in consensus is in the hands of the users.

Governance is the force behind making decisions for tasks that are non-consensus, an example of which is grant proposal funding. Currently, the network allows any account to participate in consensus but not in governance. However, this proposal would make it possible for an account to participate in the network's governance.

To better understand the differences between consensus and governance, this article will first look into each of them's basics before delving into the new governance proposal's mechanics.


Consensus is an algorithmic process that chooses the next block in the blockchain and verifies that the transactions carried out in each block are valid.

In contrast to other blockchains, consensus participation is easy on Algorand because just any account can participate. It doesn't require significant computational resources and can even be run in the background with just a laptop.

Due to the minimal resources needed for consensus participation, it doesn't require a separate compensation and is thus, uncompensated.

Meanwhile, Participation in the consensus protocol of Algorand is entirely voluntary. Accounts can decide whether or not they would participate. It is also unmonitored since there are no remunerations attached to it.

These principles continue to guide the consensus mechanism on the Algorand blockchain regardless of whatever upgrades are made on the network.

Governance Overview

Governance involves tasks that cannot be performed with consensus. Governing requires personal attention and time. It is not an algorithmic process like consensus

For an account to participate in governing, that account must lock its tokens for a specified period. The time currently being proposed is one year. This is done because governors make decisions that would affect the growth of the ecosystem. Hence their tokens should be locked, and they should serve for one year to ensure that they are also affected by the votes they cast. Although governors can prematurely withdraw up to 90% of their tokens, this comes with its associated penalty.

As a result of the remuneration, governing accounts would be compensated with governing rewards. These rewards are not locked and will be deposited into unlocked accounts specified by the governors themselves. The rewards will be much higher than the current network rewards available on the blockchain, which these governing rewards will replace.

Meanwhile, participating in governance is voluntary, and any account could sign up for it. Governing accounts would also be monitored to ensure that they are participating efficiently in the network's governance.

Governing Mechanics

These mechanics provides specifications for the voting process and how governing decisions are jointly made. It involves only the Algorand foundation and the governors having very distinct roles: the foundation facilitates, the governors decide. This is the binding principle that will guide the exploration of different governing mechanics.

Voting Sessions: This is a call on the governors to vote on a specified set of items. The foundation specifies these items, and they could be a set of grant proposals submitted to the foundation. The foundation should provide details of the items such as its name/ID, a summary of the article, a link to its elements, and a Yes or No selection option for the governors to choose from.

Voting Deadlines: The proposal suggests a voting deadline should be set for 30 days for each item to be voted on. This will provide the governors with adequate time to consider where their votes would go.

Transparency: Any community member can propose session items, but first, they have to paste them on the blockchain. Afterwards, the foundation should conduct thorough research before putting up the item in a voting session, vote first, and publish its vote. This enables the transparency of the system.

No Spamming: To avoid spamming the blockchain with excessive proposed session items, fees must be required before a community member can paste any proposal on the blockchain. This should be more than the milli Algos needed for an ordinary algorithmic transaction.

No Censoring: The governors can force a voting session on an item if the item has been posted on the blockchain for some time without being put up by the foundation for a vote. If at least 25% of the governors support the move, they can paste transactions on the blockchain showing it and thus force a session.

Voting Options: A vote with the foundation (VWF) option should be set up alongside other voting options. A governor can decide to vote with the foundation or ignore the option and cast his vote.

Vote Validity, Weight, and Outcomes: Each voting session should provide details of what makes a vote valid, how valid it translates into an outcome, and the weight of a governor's vote should be proportional to his amount of locked tokens.

Monitoring: Governors earn rewards which are sent to separate unlocked accounts. To ensure that governors are governing, they will be monitored and rewarded according to how active they have been. A governor may earn the full rewards for a month when he participates in all voting sessions for that month or half the rewards if he engages in half of the voting sessions. The prizes withheld are transferred to a particular foundation account to be used to reward future governors.

Convenience and Special Governance Keys: For the sake of convenience, governance should be made available to mobile wallets. Also, governance keys for signing votes should be distinct from spending and consensus participation keys. This would enable the keys to be ephemeral and expire after each voting session. Moreso, a user can keep his locked governing account with a custody provider while retaining his voting power on his wireless wallet.

The foundation, therefore, facilitates governance but cannot control the outcome—decentralization.

Final Words

True decentralization does not come with the twinkle of an eye; it takes time and learning. More importantly, it begins when we begin somewhere.

Algorand is taking another step towards decentralization, this time, it's in the area of governance, starting with the decentralization of funding of grant proposals sent to the Algorand foundation.

Awarding development grants has been crucial to Algorand's continuous rise to the summit of decentralized finance. Many projects and innovations have since been introduced through these grants, including AlgoSigner, REACH, and ORE ID. However, it has not been easy to identify the right proposals to be funded; hence, the governance proposal.

Therefore, this governing proposal should help pave the pathway to complete decentralization. Soon enough, other aspects of governance will be identified and fully decentralized.

Indeed, a better-decentralized ecosystem is possible with Algorand.