What is Algorand?
Algorand is a smart contract platform that utilizes a two-tier structure and a unique variant of the Proof-of-Stake (PoS) consensus mechanism to enhance transaction speed and attain finality. The network has a vision for a borderless economy, where any valuable item can be exchanged between multiple parties without the hindrance of current financial systems. Algorand was designed as a Layer 1 network with the aim of addressing the blockchain trilemma of decentralization, security, and scalability. The token that powers the Algorand network is ALGO and it is exclusively used for trading, staking, delegating, paying transaction fees, and governance votes on the network. This tutorial will show you how to stake Algorand (ALGO) tokens on the Algorand network.
TL;DR
- View the current ALGO staking APR here
- Use the ALGO Staking Calculator to estimate your rewards
- Lockup: 90 days (Soft lockup)
- Minimum amount required for staking: No minimum
- Estimated time needed to stake your ALGO in your wallet: 5 minutes
- Recommended Algorand staking wallets: Ledger, Pera wallet
- Steps to stake:
- Go to the Algorand Governance Portal and connect to your wallet. Please note that to participate in governance, you must sign up during the sign up phase. If the sign up phase is closed for the current period, you must wait for the next period’s sign up phase to open.
- Commit your Algos by clicking the ‘Commit Algos’ button. Enter the number of ALGOs you would like to commit. Note that it is NOT RECOMMENDED to commit the entire Algo balance in this address, because the governors are expected to send a few zero-Algo transactions from the governing address, and will have to pay the transaction fees for them. We recommend committing at most 1 Algo less than the balance in the governing address.
- Finalize by clicking ‘Commit Algos’ and sign the transaction .
- After committing your desired amount of Algo, visit the Governor’s page to verify your eligibility. Go to the Governance Portal page for the current period, click on the ‘Show All’ link at the top.
Prerequisites
Where to buy ALGO
You can get ALGO tokens at a cryptocurrency exchange, at a DEX, or within select wallets. You should always do your own research when selecting a reputable cryptocurrency exchange. For best security, it is not recommended to leave your tokens on an exchange, but transfer them to your non-custodial or cold/hardware wallet after procuring them.
Algorand (ALGO) wallets
Algorand has a variety of non-custodial wallets for you to choose from. We recommend that you use a hardware wallet such as Ledger otherwise we suggest using Pera wallet. Compatible wallets include:
How to connect Algorand (ALGO) to Pera wallet
When setting up your account using the official Pera wallet, it will automatically create an account for you which will be connected to the network.
Selecting Algorand validators
You do not need to select validators on the Algorand network. You do not need to run a node in order to participate in governance.
How Staking Rewards for Algorand (ALGO) are Generated
Learn how rewards are generated in the FAQ section titled ‘How are the rewards generated’’ here.
How to stake Algorand (ALGO)
The Algorand governance system comprises quarterly governance periods, and governors need to sign up anew to each period during the signup window. A would-be governor needs to have an Algorand address that they control, using a wallet or a custodian. Before we start let us clarify some of the terminology:
What is a governor?
As currently defined, Governors are Algo holders who commit a governance stake for a 3 month governance period and vote as required during the governance period.
Step 1: Make sure you have a Pera wallet
Stake your ALGO tokens using Ledger, Pera wallet, Trust wallet, amongst others. We will use the Pera wallet in this staking tutorial.
As a popular wallet in the Algorand ecosystem, Pera wallet offers users the ability to stake tokens, access blockchain apps, and manage multiple tokens in one wallet. Simply connect your Ledger to Pera wallet or use Pera wallet directly to stake ALGO. Install the Pera browser extension or download the wallet onto your device and deposit your tokens into this wallet before continuing onto step 2.
Step 2: Go to the Algorand governance portal
Open up the Pera wallet and follow the steps below:
- Go to the Algorand Governance Portal and connect to your wallet. Please note that to participate in governance, you must sign up during the sign up phase. If the sign up phase is closed for the current period, you must wait for the next period’s sign up phase to open.
- Commit your ALGO by clicking the “Commit Algos” button.
Note that it is NOT RECOMMENDED to commit the entire Algo balance in this address, because the governors are expected to send a few zero-Algo transactions from the governing address, and will have to pay the transaction fees for them. We recommend committing at most 1 Algo less than the balance in the governing address.
After committing your desired amount of ALGO, visit the Governor’s page to verify your eligibility. Go to the Governance Portal page for the current period, click on the “Show All” link at the top. Then, paste your wallet address in the search box and press enter to search. You should see your address in the search results and the status will be: Eligible. If any issues occurred, the search function will not find your address. If that happens, we recommend that you start the process over.
Please note:
- Governors who withdraw Algo causing the number of Algo to drop below the committed amount of Algo at any point of time of the relevant governance period will not be entitled to claim the rewards of that governance period. Please do not withdraw your Algo during this period if you are looking to earn rewards!
- You also need to take part in Community Governance to earn rewards for the period, please review that in step 4.
Step 3: Finalize the transaction
- Enter the amount of ALGO you want to stake
- Click ‘Make commitment’
- Sign the transaction
Congratulations! You have now staked your ALGO tokens and will start earning those juicy staking rewards.
Step 4: Vote in a voting session
Each governance period includes one or more voting sessions, and governors must participate in voting on all measures during the governance period to be eligible for rewards. Periods start at each calendar quarter (Jan, April, July and September) and details are announced on the governance portal and the Algorand Foundation’s website a few days before their start date.
Similarly to sign-up, voting is done by sending a ZERO-Algo pay transaction to the governance target address for that period, which can be done using one of the three supporting wallets (the Algorand wallet on a mobile device, the web-based MyAlgo Wallet, or the AlgoSigner Chrome extension), using any wallet that supports WalletConnect, or using any other wallet that support sending Algo transactions with a notes field.
How to vote in a voting session on Algorand (ALGO)
A governor can vote by accessing the governance system dashboard and performing the following three steps:
Step 1: Connecting your wallet
This step is identical to the first step of the sign-up process, and governors must use the same address that they signed up with.
Step 2: Selecting Options for Ballot Measures
Governors need to choose one option for each voting measure. To access the voting page governors, click the voting measure that says “Open to Vote”.
On the voting page governors will see a description of the measures and the different options for each measure, and radio buttons that let them choose one option for each measure. Alternatively, at the top of the list of measures there is a button that allows governors to “Vote with the foundation on all topics”. Clicking that button will automatically select for each measure the radio button corresponding to the option that the foundation recommends.
After selecting the options that they want to vote for, governors must click the button at the bottom of the page to submit their vote.
Step 3: Submitting the Vote
After governors click the button to submit their vote, they need to sign the voting transactions. This is similar to committing the Algos during sign-up, and varies depending on which wallet they are using. The steps using the three supported wallets are nearly identical to before.
Step 4: Track staking portfolio
- Track your ALGO staking rewards on the staking dashboard.
- Track the current and historical reward rates, validator count, number of unique ALGO staking wallets, and staking ratio of the ALGO network by visiting the Algorand asset page. To make better staking decisions, it’s essential to understand these relevant data points. To learn how these data points could impact your staking rewards, please read more in the FAQ sections named “How do I choose Algorand (ALGO) validators” and “How are the rewards generated” on the Algorand asset page.
Step 5: How to Unstake ALGO
You can withdraw your ALGO at any point in time, there is no lockup. However, please that if Governors fail to maintain the required balance ‘”committed Algo” at any point of time during the governance period they will not be entitled to claim their rewards.
- Send your ALGO to its destination address
- You do not need to wait for anything, just send it as you would a normal transaction
Maximizing Staked ALGO
Now that you have staked your ALGO, you have four options which can be used to change your position. These options appear on the Algorand governance portal. The options are:
Commit more
Governers can commit more Algo into their participating account before the end of the governance period. Please ensure you maintain your committed balance and ensure you vote during the voting window. Algo deposited after the beginning of a governing period, however, will not provide additional votes nor any additional rewards.
Claim reward
Users do not need to claim rewards, the Governance Rewards due for each period will be automatically delivered into eligible wallets during each Governance rewards distribution period.
Withdraw
Governers are free to withdraw at any point in time. However, governors who withdraw Algo causing the number of Algo to drop below the committed amount of Algo at any point of time of the relevant governance period will not be entitled to claim the rewards of that governance period.
Conclusion
Staking is essential to Proof-of-Stake blockchains and comes with many benefits for investors and the network:
- Investors earn yield from token emissions and/or transaction fees.
- Stakers become eligible for airdrops as many networks prioritize granting these benefits to them.
- Staking helps to secure the network
- Staking from multiple participants helps decentralize the network
- Stakers can participate in governance, as many PoS networks allocate governance rights based on the amount of tokens staked.
Congratulations! You are now not only getting the most out of your investment with compounded returns. YOU are also (in-)directly contributing to the decentralization, and the network security of Algorand and thus contributing to the long-term success of your investment! Algorand needs active stakers like you to become successful long-term. Now share the tutorial with your friends so they can get to start staking as well!
Lastly, don’t forget to check out the Algorand (ALGO) asset page for more insights into staking ALGO, and drop us a message if you found this tutorial useful. Happy staking!