How to Sign Up for Algorand's Governance Period
Welcome to the club, gov!
If you’re reading this article, you’ve no doubt heard that registration for Algorand’s Governance period #2 is set to end on January 7th 2022. You may have even heard about the ~15% APY received during the first Governance period and the FOMO is setting in. You want to secure those sweet, free ALGOs too, but you might think setting up your official Algorand wallet in order to register for governance is daunting without proper instructions.
That’s why your pals at the Algorand Governor’s Club have put this easy to understand guide together for all you new governors. We promise that by the time you finish reading this article you will be on your way to becoming a full fledged Algorand governor!
What is the Governance period anyway?
Let's take a step back and discuss what the Governance period is and what expectations are for Algorand’s governors. While other protocols reward users for simply staking the blockchain’s native token, holders of Algorand (ALGO) earn rewards by participating in the ecosystem’s development by committing ALGO for three-month intervals as well as voting on key issues with their fellow governors. It is a bit more work than other blockchain protocols, but the rewards are a lot higher. While most staking rewards hover around 5%, Governance rewards are likely to range between 10 - 20%. Now that’s what we call passive income, gov!
In order to earn rewards, each governor has the honor of doing two things:
1. Lock up an amount of ALGOs to Governance for a three-month period: If you commit 100 ALGOs to Governance Period #2, the balance in your wallet cannot dip below 100 ALGOs to remain eligible to receive rewards. It's recommended you keep one extra ALGO in your wallet to ensure you can pay for any transaction fees that may pop up during the three-month lock-in period. This governor keeps an extra handful of ALGO in his governance wallet just to be safe.
2. Vote on key issues during the Governance period: In addition to maintaining a balance, you must participate in all voting sessions during the governance period to remain eligible to receive rewards. All voting session dates are announced by the Algorand Foundation with a list of the topics that are to be voted on during each session. The foundation provides information on each topic and choices to ensure all governors are informed before they cast their vote. Each voting session is open for around two weeks, so you will have more than enough time to review each topic and cast an informed vote. Governors without a clear preference for either choice can elect to vote with the Foundation to ensure they participate in the voting session.
Once the Governance period ends, governors are rewarded with ‘Governance rewards’ if they participated in all voting opportunities and maintained the ALGO balance they committed to at the start of the period.
The rewards scale depending on the amount of ALGOs locked up by the community, and you can learn more about how the rewards are calculated and divied up per user here.
Great! So, what is the best Algorand wallet?
While deciding on the ‘best’ wallet is subjective, my personal preference is the official Algorand wallet which you can download here. To put it simply, I like how easy and intuitive it is for users as well as its sleek design. One drawback to the official wallet is that it is a mobile only app; however, you can pair it with a desktop wallet such as My Algo Wallet if you prefer to use your desktop. To go that route, you will need to recover your private keys from the official wallet on My Algo Wallet in order to access your wallet on both mobile and desktop. It’s a simple process, so let us know if you would like a guide on that as well!
For the purposes of this guide, we will be showcasing how to get up and running with the official Algorand wallet:
Step 1: Download the Algorand Official Wallet
Make sure you are downloading the official wallet. There are a lot of scams in the crypto space so make sure you’re downloading the below:
Step 2: Open the wallet and click ‘Add Account’
Step 3: (Yes, again) Select ‘Add Account’
Step 4: Select ‘Create New Account’
Step 5: Back-Up your account & secure your private keys
In the next few steps you will be provided with your private keys which act as your wallet / account password. It’s important that you write down this string of 25 words, in order, somewhere safe. Please don’t screenshot it or save it on your phone / drive as you don’t want to provide any opportunities for it to be stolen/hacked. Instead, I recommend you write it down the old-fashion way on pen and paper and store it somewhere safe.
Step 6: Name your account ‘Governance’
Name this new account ‘Governance’ so you always know without a shadow of a doubt which account is locked into Governance.
Step 7: Transfer ALGOs into your Governance account
Click the QR Code Button highlighted below to see your wallet address. It will provide both a QR code and the string which you can copy and paste. Once you have your address handy, you can go to the exchange you used to buy your ALGOs and send them to your newly created wallet!
Step 8: Determine the amount of ALGOs you want to commit to Governance vs. DeFi
If you’re not interested in investing in the Algorand DeFi ecosystem at this time, feel free to skip to Step 11.
If you want to experiment in the DeFi ecosystem, you should decide how many ALGOs you will commit to Governance vs. DeFi. This is a personal decision that I can’t advise you on, gov as everyone is different. With that being said, I’ve committed between 75 - 80% of my ALGOs to Governance and the remaining to the DeFi ecosystem. You can decide how you want to adjust from there based on your own risk tolerance.
Step 9: Create a DeFi Wallet
Once you decide on what that split will be, it is best practice to create a separate DeFi account to keep your Governance account safe and secure. To do that, you will want to click the ‘+’ button in the top right corner of the home screen.
You’ll go through the same process as the first account and at the end you should name the account ‘DeFi’. Think of this as your checking account and your Governance as your savings account.
Step 10: Send the ALGOs you don’t plan to commit to Governance to your new DeFi account
Click your Governance account from the home screen, and then hit the ‘Send’ button:
Enter the amount of ALGOs you’d like to transfer in the ‘Amount’ section. Then select the ‘Account’ button and select ‘DeFi’:
Now you’re set-up to explore the Algorand DeFi ecosystem! But first, let’s commit to Governance.
Step 11: Commit to Governance
Click the ‘Get Started’ button within the banner at the top of the screen:
Connect your wallet to the Governance period #2 site by clicking the ‘Connect Wallet’ button:
Select ‘Algorand Wallet’:
Finalize the wallet connection process by clicking ‘Connect’:
Confirm your wallet has been connected by navigating back to the Governance period site and then click the ‘Commit ALGOs’ button at the bottom of the page:
Enter the amount of ALGO in the ‘Commit your Algos” section on the next screen and click ‘Commit Algos’. Don’t forget to keep at least 1 ALGO uncommitted for transaction fees!
You will then be prompted to sign some transactions in the next following steps. Continue to click the green button (some variation of ‘Got it’ ‘Confirm’ and ‘Accept’). Be patient, gov. Almost done.
You will know your done signing transactions when you see this screen:
Follow the prompt to go back to the Governance period site and be patient while the site loads. It may seem like it’s stuck, so again just give it some time to finalize the transaction.
You will then see this screen to let you know you’re done!
When you hit ‘Close’ it will navigate you back to the home screen. On the bottom you can see how many ALGOs you’ve committed and adjust your commitment by hitting ‘Change’:
Congratulations and welcome to the club, gov!
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