Algorand: What to expect in 2021?

Looking back at 2020 highlights

2020 was an eventful year for Algorand with more than 0.5 million daily transactions and more than 500 companies starting to use/build using the Algorand blockchain. Joining the BSN alliance, getting multiple stablecoin issuance done on the Algorand blockchain, strengthening the team with high achieving academics and establishing strategic global partnerships to explore different industries as well as geographies.

What lies in store for 2021

Let’s take a sneak peek at what lies in store for the year 2021 in terms of enhancements to be provided on the chain. Adding functionalities without compromising on the features of decentralization and security to keep up the network performance is at the top of the list. The major changes in the features expected are listed below:


  • Block finalization time, the time taken to add a new block permanently to the chain, reduction from 4.5 sec to 2.5 sec

  • Finalized TPS (transactions per second) to grow from 1,000 to 46,000

  • Block Proposal time, time it takes observers to become aware of which block is a candidate to be permanently added to the chain,  not to grow from 0.5 seconds with growth in the number of transaction from 5,000 to 25,000


Taking a Closer Look

Finalized Performance: Throughput is neither measured on how soon the transactions are committed to be executed on the chain nor is block proposition a correct measure of the performance of the chain. Transaction finality matters - when is the block permanently added to the blockchain and the data becomes immutable. The finalized performance goals projected are:
- Finalized Latency to be reduced to 2.5 seconds from 4.5 seconds
- Finalized Throughput to be enhanced to 46,000 TPS from 10,000 TPS

Envisioned Finalized Latency: In 2021 it is proposed that the block size will increase from 5,000 to 25,000 transactions but there will be no impact on the finalized latency. To achieve this, a faster block proposition and finalization mechanism has been devised. To improve the performance usage of hex transaction headers rather than specific names has been envisioned - the specific way the Algorand communication network operates- message exchange via Relay nodes. (Elaborate Relay nodes)

Envisioned Finalized Throughput: Going beyond the proposition via pipelining - a powerful tool for block generation. Block pipelining scenarios are elaborated below:

Ideal scenario wished: In an ideal scenario all the blocks proposed will be successfully finalized and the block proposal time of 0.5 seconds (2021 goal) will be the block finalization time. But there is a catch, this scenario does not take into consideration that all proposed blocks may not be finalized.

On ground reality expected: There are different stages before block finalization which potentially involve cases that cause deviation from the ideal scenarios in block finalization. These stages are:

  • Block proposal → How long does the block proposal stage take? 0.5 seconds

  • Success Check → How often is the block proposal unsuccessful? 1%

  • Recovery time from an unsuccessful block → How long does it take to recover from an unsuccessful block? 4.5 seconds

Taking these points into account, Algorand is aiming to achieve 46,000 finalized TPS in 2021.


Concluding Insights

Setting bigger goals, challenging the team to think outside the box and still not compromising on its core features of decentralization and security - I feel is a great message for constructive development to satiate innovative development moving towards 2021. From a technology and business perspective, building an ecosystem with the right partners and the right technology aligns with a long-term vision.