Question 1

What is ALGO?

Accepted Answer

ALGO is the native token of the Algorand blockchain. Users pay on-chain transaction fees in ALGO; it can also serve as the stake through which an account participates in Algorand consensus, and as the native settlement asset required for asset transfers and application calls on the chain. Therefore, holding ALGO and “using Algorand” are not the same thing: an ordinary transfer or application call consumes a small amount of ALGO as a fee; setting an account online and operating a participation node brings that account's stake into the consensus process.

Question 2

Why is ALGO needed when using Algorand?

Accepted Answer

Sending ALGO, transferring an Algorand Standard Asset, or calling an application requires paying transaction fees in ALGO. The fee is the cost of submitting a transaction to the network's processing flow, and it makes mass submission of transactions at no cost impractical. Fees are paid by the originating account; even if another on-chain asset is being transferred, fees are denominated in ALGO. An application itself may also set additional asset-swap, collateral, or service costs, but those costs differ from protocol-layer transaction fees.

Question 3

How are ALGO transaction fees calculated?

Accepted Answer

Algorand's minimum transaction fee is 1,000 microAlgo, or 0.001 ALGO. 1 ALGO equals 1,000,000 microAlgo; this is the protocol's minimum fee unit, not an amount that every transaction necessarily charges. When charged per byte, the required fee is the greater of the “minimum fee” and “transaction byte size × per-byte fee rate”; the sender may also set a flat fee. Transactions containing more fields, signatures, or application-call data are usually larger and may therefore require higher fees. Before submission, the account balance should also be sufficient to cover the amount sent and the fee.

Question 4

Is ALGO's supply limited?

Accepted Answer

ALGO has a total supply cap of 10 billion tokens. The cap describes the total amount the protocol can supply; it is not equivalent to the circulating supply tradable in the market at a particular time. Some ALGO held by the Algorand Foundation enters circulation gradually according to its arrangements, so circulating supply can change with allocations, spending, or transfers; this is different from minting more than 10 billion tokens. To assess circulating supply at a particular time, use official or on-chain data for that time rather than treating the total cap as circulating supply directly.

Question 5

How does ALGO relate to network consensus?

Accepted Answer

Algorand uses Pure Proof-of-Stake (PPoS): ALGO stake that has been set online affects an account's probability of being selected as a block proposer or verification committee member; the more stake, the higher the probability of selection. In each round, participants are selected privately through verifiable random functions and cryptographic sortition, rather than from a pre-announced fixed group of validators. The selected proposer proposes a block, and committees verify and vote on it; once agreement is reached, the network confirms the block. The design focuses on online stake participating in random selection, rather than handing tokens to a centralized operator.

Question 6

Is ALGO locked when participating in Algorand consensus?

Accepted Answer

Under Algorand's PPoS design, participating in consensus does not require locking ALGO or transferring it to a node operator; an independent participant's ALGO remains in that participant's own account. A participation key can be separated from the main spending key that controls the balance, so a node need not expose the main spending key when performing consensus. “Not locked” does not mean there are no operating requirements. An account must be registered online and represented in consensus by a properly operating participation node; if a node fails to perform participation duties for an extended period, the protocol may suspend it, affecting reward eligibility.

Question 7

Where do Algorand consensus rewards come from, and why does it matter?

Accepted Answer

Following a protocol upgrade in 2025, Algorand introduced native consensus participation rewards, changing the earlier situation in which consensus participation was generally not directly compensated by the protocol. Rewards are for accounts that actually participate, successfully propose blocks, and meet eligibility requirements, rather than being passively distributed to all token-holding accounts. Rewards for an individual block have two components: 50% of that block's transaction fees, plus additional ALGO provided by the Algorand Foundation during an approximately 24-month subsidy period. The additional subsidy starts at 10 ALGO per block and decreases by 1% every 1 million blocks; after the subsidy ends or parameters change, future reward levels cannot be inferred from this.

Question 8

What conditions must be met to earn ALGO rewards from consensus participation?

Accepted Answer

An independent account can participate in consensus with at least 1 ALGO, but native consensus rewards require additional conditions: the account must be online, opt into rewards, not be suspended for poor performance, and have at least 30,000 ALGO of online stake when proposing a block. Accounts with balances exceeding 70,000,000 ALGO do not receive these rewards. The first registration of a participation key into an online, reward-eligible status requires a 2 ALGO transaction fee; going back online after a normal offline period or renewing does not reset eligibility. If the protocol removes the account from consensus due to non-participation, eligibility resets, and the corresponding registration must be performed again to regain eligibility. Rewards are not a fixed annual yield: whether the account is selected to propose a block, block fees, and the declining subsidy all affect the outcome.

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