Algorand Community Governance is the way by which ALGO holders can have a say in the future of the Algorand ecosystem. Participants (called ‘Governors’) receive rewards in the form of more ALGOs.
If it’s your first time taking part in Governance and/or you’re not very familiar with ‘decentralised finance’ (DeFi), I strongly suggest you start off by becoming a Governor in the normal way – referred to here as ‘vanilla’ Governance.
The reason for this is simple. If you follow the instructions for vanilla Governance, and make sure you remain eligible throughout the Governance period, you will definitely have more ALGOs at the end than you committed. Read on for a step-by-step guide to this process.
Taking part in Governance using any other method brings far greater risk. Yes, you could make more ALGOs – but you could also come out of a Governance period with fewer ALGOs than you put in, especially if you’re less experienced with DeFi.
Quick links:
How do I participate in Algorand Governance?
Step-by-step guide to the vanilla Algorand Governance process
How do I remain eligible?
Should I create a separate Algorand wallet for Governance?
Are there other ways to take part?
How do I participate in Algorand Governance?
First things first: you can only sign up during a ‘registration window’. These windows open up a couple of weeks before each Governance period begins. If you’re too late, you’ll need to wait until the current Governance period ends and a new registration window opens for the next Governance period. Timelines are clearly stated on the website.
Once the registration window is open, you just need to follow a simple process on the Algorand Governance website, which I’ve outlined in steps below. As part of this process, you will ‘commit’ a certain amount of your ALGOs to Governance for a set period of time – currently 3 months.
These ALGOs never leave your wallet, and you’re still free to use them as you wish – but to remain eligible for Governance rewards, there are strict rules you must follow. These are outlined in the ‘How do I remain eligible?’ section.
Before you start, you’ll just need an Algorand wallet with some ALGOs in it. There are no minimum or maximum amounts required for committing to Governance, but it’s recommended to have 1 ALGO more in your wallet than the amount you plan to commit, to cover fees (this is just a precaution, however – these fees won’t cost anywhere near 1 ALGO).
You should also consider whether you want to create a separate wallet specifically for Governance – there’s a section below with more on this.
Step-by-step guide to the vanilla Algorand Governance process
- Go to this link: https://governance.algorand.foundation/
- Click the Connect Wallet button.
- Select the Algorand wallet that you use from the list of available options.
- Follow the prompts in your chosen Algorand wallet to connect it to the Governance website.
- Once your wallet is connected, go back to the website and select Use.
- Select Commit ALGOs.
- In the ‘Commit your Algos’ section, select Change, then enter the amount of ALGOs you’d like to commit.
- Note: you’ll see an option further down to ‘Commit LP’ and ‘Select from Eligible LPs’. For the purposes of vanilla Governance, you can ignore this section.
- When you’re ready, click Commit Algos.
- This action will send a transaction request to your Algorand wallet. Sign this request to confirm the transaction.
- Note: the transaction cost is tiny – 0.001 ALGO.
- You should now see a message to confirm that you’ve successfully committed your ALGOs to Governance. Hit Close on this message. Your committed amount will be displayed, next to your status, which should read ‘Eligible’.
And that’s it – all done. Nice work, guvnah!
Now, make sure you read the bit below about remaining eligible, to make sure you don’t lose your rewards…
How do I remain eligible?
During a Governance period, the amount of ALGO held in the wallet you’re using for Governance must not drop below the amount you committed. If it does – even by a small amount or for a small amount of time – you will become ineligible for that Governance period, and you will get no rewards. Adding more ALGOs in at this point will not make you eligible again.
There will also be a ‘voting period’ of 2 weeks, during which all Governors must vote on a proposal or proposals set out by the Algorand Foundation. Governors must cast a vote on each proposal during this voting period to remain eligible.
At the end of a Governance period, any Governor who has maintained their committed ALGO amount in their wallet and who voted on all proposals within the voting period timeframe will receive Governance rewards.
Should I create a separate Algorand wallet for Governance?
You don’t have to, but it’s not a bad idea. By creating a dedicated wallet that’s just for Governance, it’s easier to make sure you don’t accidentally use the committed ALGO in that wallet. You can then use your other, non-committed wallet for trading ASAs, buying NFTs, or whatever else you want to do in the Algorand ecosystem.
Remember: if the ALGO balance in the wallet you’re using for Governance drops below the amount you committed, you will become ineligible for that Governance period.
Are there other ways to take part in Algorand Governance, other than the ‘vanilla’ option?
Quite a few, but you may find them pretty confusing if you’re not experienced with DeFi.
If you’re not a numbers or finance-oriented person, be prepared to do a lot of research to make sure you understand exactly what you’re doing before approaching Governance in a non-vanilla way.
I can’t offer guidance here on the various forms of what’s called ‘liquid Governance’. However, if you do want to know more, here’s some information from the DeFi protocols involved:
