HomeBlockchainAlgorand: how do the blockchain rewards work

Algorand: how do the blockchain rewards work

The Algorand blockchain is one of the few blockchains that allows obtaining rewards simply by holding ALGO tokens on a wallet and without requiring a special procedure to obtain them.

As is well known, the Algorand blockchain uses the PPoS (Pure Proof of Stake) protocol, which guarantees speed, safety and very low fees, about 0.001 ALGO, which is a really low cost when compared to other blockchains.

Every blockchain has a form of incentive or reward that is given to the participants, for example in PoW (Proof of Work) miners get a reward for the work done, as well as for PoS (Proof of Stake) users get a reward for staking their crypto. Likewise, Algorand also offers a reward and the staking is done automatically, with the only requirement being to have a dedicated wallet, like the official one.

These rewards come from arranged pools that, for each block generated, release an amount of ALGO to distribute to the network: considering that a new block is created on average every 4 seconds, the reward is also paid quickly and the balance is updated after about 20 minutes.

How much is earned with Algorand’s rewards?

This question can be answered by using the tool provided to quickly calculate the investment and its return in a year. Keep in mind that to get a reward it is necessary to have at least 1 ALGO.

If we invested 1000 ALGO, or $176 at the current exchange rate of 0.17 cents, we would get about 54 ALGO in a year, which currently amounts to just under $10. 

This is a rate of 5.45%, so it is certainly envious of the traditional banking system, but also very competitive with the various protocols of decentralized finance (DeFi), with the advantage that the cryptos remain within your wallet.

However, one detail that not everyone knows is that these rewards are not immediately transferred to the users’ addresses, which means that the system works differently than Compound, i.e. the rewards are added to form the basis of the staking, this is because the rewards are “suspended” until a transaction is made.

This transaction will consume 0.001 ALGO in fees, so it is a good idea to move the wallet to have rewards added to your address and increase the staking base.

Is it worth investing in Algorand?

As for every crypto and asset, the rule “invest only what you’re willing to lose” applies, but it can be pointed out that if one aims at a passive return from the different protocols, the interest rate is very interesting in this case.


Alfredo de Candia
Alfredo de Candia
Android developer for over 8 years with a dozen of developed apps, Alfredo at age 21 has climbed Mount Fuji following the saying: "He who climbs Mount Fuji once in his life is a wise man, who climbs him twice is a Crazy". Among his app we find a Japanese database, a spam and virus database, the most complete database on Anime and Manga series birthdays and a shitcoin database. Sunday Miner, Alfredo has a passion for crypto and is a fan of EOS.