Validators process transactions and receive fees from users (supply-side fees).

Algorand is a smart contract platform for decentralized applications (a blockchain). Algorand was founded by Silvio Micali and launched in 2018.

ALGO holders own and govern the protocol. They currently take a cut of the transaction fees paid by users (revenue). Algorand's investors include Union Square Ventures, Multicoin Capital, Pillar, etc.

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Algorand

# Algorand Token incentives Methodology

## 1. Overview

Token incentives measures the value of native assets distributed by Algorand to its users, governors, and consensus participants. These incentives are utilized to encourage network participation, secure the blockchain, and reward governance activities. Historical participation rewards, governance rewards distributed by the Algorand Foundation, and consensus rewards paid to block proposers are captured. This metric is analogous to stock-based compensation in traditional finance and is used to evaluate the economic sustainability of the network.

## 2. Data sources

- **Blockchain events**: `pay` transactions from Algorand Foundation governance pool addresses, and block-level reward data (including participation rewards and consensus proposer payouts), covering Algorand
- **External data**: End-of-day price feeds for the native ALGO asset

## 3. Step-by-step calculation

### Component A: Governance rewards tracking

- **Purpose**: Capture quarterly governance rewards distributed to governors by the Algorand Foundation
- **Logic**: Payment transactions of type `pay` are filtered where the sender address matches one of the 14 designated Algorand Foundation governance pool addresses. Transactions are restricted to a specific time window around each period's distribution date, spanning from one day prior to three days after the scheduled date. The payment amounts are normalized by decimal precision to convert microAlgos to ALGO.
- **Key fields**: `amount`, `sender`, `receiver`, `block_timestamp`

### Component B: Block-level rewards tracking

- **Purpose**: Capture protocol-level incentives distributed directly through block production
- **Logic**: Block-level data is parsed to extract participation rewards and consensus rewards. For the historical era spanning from 2019 to approximately April 2022, participation rewards are extracted from the `rewards_rate` field. For the consensus rewards era starting in 2025, proposer payouts are extracted from the `proposer_payout` field. These fields are coalesced to zero and summed for each block. The resulting values are normalized by decimal precision to convert microAlgos to ALGO.
- **Key fields**: `rewards_rate`, `proposer_payout`, `timestamp`

### Component C: Aggregation and USD conversion

- **Purpose**: Combine all incentive types and convert the total value to USD
- **Logic**: Governance rewards and block-level rewards are combined and aggregated to daily UTC totals. The daily ALGO incentive amounts are multiplied by the end-of-day price of the native asset to determine the daily USD value.
- **Key fields**: `token_incentives`, `timestamp`, `price_usd`

*This methodology was automatically generated by Token Terminal's methodology analyzer.*

Value of native tokens distributed as incentives.

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Token incentives

Token incentives

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