Question 1

What is ALEO?

Accepted Answer

ALEO is the native token of the Aleo network. It is used to pay for network resources, incentivize network participants, and can be used for staking. It is not corporate equity and does not represent ownership in Aleo-related entities or a claim to fixed returns. Aleo is designed for verifiable, privacy-focused on-chain computation. When users or developers submit transactions and program execution requests, they consume block space and computing resources; ALEO is the asset the protocol uses to measure and pay for those resources.

Question 2

What is ALEO used for on the network?

Accepted Answer

ALEO is used to pay for the block space and computing resources consumed by submitted transactions. Users do not pay an abstract “usage fee”; they pay the cost of the resources required for a transaction to enter the network and be processed by participants. This arrangement connects network demand with compensation for service: transactions or computation requests need to be processed, and processors receive ALEO through protocol incentives; fees also raise the threshold for large-scale costless requests. The actual amount paid varies with the resources required by the transaction or computation.

Question 3

Why do validators and provers receive ALEO?

Accepted Answer

Aleo divides the work of maintaining the network into validation and proving: validators participate in consensus and produce blocks; provers generate zero-knowledge proofs to demonstrate that transactions or computations are correct without disclosing the associated private data. The two types of work each receive protocol-specified ALEO incentives. Provers must compute and submit valid solutions for the Coinbase Puzzle; the protocol updates this puzzle each epoch, and only valid results applicable to the current puzzle can be accepted. Coinbase here is the name of the protocol reward mechanism, not an exchange. In reward allocation, provers receive two-thirds and validators receive one-third.

Question 4

How does staking ALEO work?

Accepted Answer

Staking ALEO means delegating tokens to a validator to support its participation in block production and network security; stakers may receive the corresponding share of network rewards based on their delegated share. Delegation does not turn a holder into a validator; the validator remains responsible for operating validation infrastructure and fulfilling protocol duties. The amount of rewards received depends on the staked amount as well as the validator's actual performance and distribution rules, rather than a fixed interest rate. Validator selection, delegation proportion, and the network's overall staking situation can all affect the outcome; generating proofs as a prover does not require staking or locking ALEO.

Question 5

How does ALEO enter the supply?

Accepted Answer

ALEO has a genesis supply of 1.5 billion tokens; afterward, the protocol gradually creates new tokens through block rewards and Coinbase rewards. Genesis supply, subsequent issuance, and circulating supply are not the same concept: new rewards enter the scope controlled by the relevant participants only after they are allocated. Block rewards correspond to validators maintaining consensus and producing blocks, while Coinbase rewards correspond to proving work. Therefore, when understanding supply, initial allocation, subsequent protocol rewards, and whether holders have actually received or circulated tokens should all be distinguished, rather than treated as real-time circulating supply.

Question 6

Is there a cap on ALEO's supply?

Accepted Answer

ALEO has a maximum total supply of 5 billion tokens. ARC-0047 provides that, after the relevant block height, both block rewards and Coinbase rewards will fall to zero; at that point, the protocol will no longer mint new ALEO through these two types of rewards. This cap constrains the total number of tokens the protocol can create; it does not equal circulating supply at any particular point in time. Minted tokens may still be held in different addresses, staked, or otherwise held, so the maximum total supply and tradable supply should be understood separately.

Question 7

What is the relationship between ALEO fees and network rewards?

Accepted Answer

Aleo's fees, proving, and rewards form one set of incentive relationships: users pay ALEO for resource use, provers receive Coinbase rewards for generating valid zero-knowledge proofs, and validators receive block rewards for consensus and block production. This does not mean each user fee is transferred directly, on a one-for-one basis, to a particular prover or validator; fee payments and protocol rewards are different parts of a system that jointly serves network resource usage and security incentives.

Question 8

Does holding ALEO mean I can participate in governance?

Accepted Answer

Holding ALEO does not automatically equate to governance rights. Aleo's official description presents token-holder participation in decentralized governance and voting on protocol upgrades and changes as a governance use after mainnet launch; the actual scope of participation depends on the governance rules implemented at that time.

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