Algorand Q2 2025 Brief | Messari

Key Insights

• Algorand’s circulating market cap increased by 4% quarter-over-quarter (QoQ), rising from $1.54 billion at the end of Q1 2025 to $1.60 billion at the end of Q2 2025.
• DeFi total value locked (TVL) declined 22.6% QoQ to $59.8 million in Q2.
• Staked ALGO grew 28.7% QoQ to 1.95 billion in Q2, with the community-held stake increasing 51.1% to 1.54 billion, representing 78.9% of total staked ALGO.
• Total fees on Algorand decreased by 46.9% QoQ, falling to $59,500 in Q2. Average daily transaction fees declined 47.5% QoQ to $650.
• Algorand expanded real-world utility in Q2 with the launch of MiCA-compliant stablecoins EURQ and USDQ, Pera Mastercard debit card, Midas’s mTBILL token, AEON’s payments integration, and partnership with Paycode.

Primer

Algorand (ALGO) is a smart contract platform using a Pure Proof-of-Stake (PPoS) consensus mechanism. The protocol was founded by Turing award-winning computer scientist Silvio Micali, also known for co-inventing zero-knowledge proofs, Verifiable Random Functions (VRF), and probabilistic encryption. Since the Algorand 4.0 upgrade in January 2025, validators holding at least 30,000 ALGO earn staking rewards. Algorand does not include a staking lockup or slashing mechanism. Similar to relying on stake weight in consensus, Algorand PPoS randomly selects consensus nodes based on their ALGO balances using a Verifiable Random Function (VRF), where having a larger balance increases the holder’s chance of selection. Algorand’s smart contract execution layer is powered by the Algorand Virtual Machine (AVM). Algorand supports smart contract development in Python, TypeScript, as well as other community-developed languages. Algorand Technologies leads development, while the Algorand Foundation, a not-for-profit, supports governance, ecosystem funding, and community-driven development.

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Key Metrics

Performance Analysis

Market Cap

Algorand’s circulating market cap increased by 4% QoQ, rising from $1.54 billion at the end of Q1 2025 to $1.60 billion at the end of Q2 2025. ALGO’s price mirrored the rise, moving from $0.18 to $0.19. Circulating supply also ticked higher, up 1.0% QoQ, from 8.54 billion to 8.63 billion ALGO, as scheduled emissions and staking rewards continued.

Network Transactions

Total fees on Algorand, collected from network transactions, decreased by 46.9% QoQ, falling from $112,000 in Q1 to $59,500 in Q2. Over the same period, average daily transaction fees declined 47.5%, from $1,250 to $650. Additionally, average daily transactions declined 7.5% QoQ, from 1.3 million to 1.2 million, while total transactions fell from 232.0 million to 217.1 million.

In Q2, daily fees and daily transactions peaked on April 3, 2025, with transactions reaching 12.6 million and fees $2,500. The spike was driven by activity from a liquidation contract, which filled a large volume of orders over a sustained period, exceeding 5,000 transactions per second for more than 40 minutes and highlighting the performance capacity of Algorand. Fees and transactions also reached a secondary peak on June 12, with transactions reaching 9.2 million and fees $1,800. This spike was driven by TravelX, which completed its final onchain ticket minting batches before suspending onchain activity due to compliance requirements.

The number of average daily new addresses on Algorand decreased 31.5% QoQ from 31,000 in Q1 to 21,000 in Q2. Similarly, total new addresses created over the quarter decreased 30.7% QoQ, declining from 2.8 million in Q1 to 1.9 million in Q2.

Staked ALGO

Staking ALGO centers on network security rewards. Since the Algorand 4.0 upgrade, any account that keeps at least 30,000 ALGO online through a validator node is eligible to earn block rewards: 10 ALGO plus 50.0% of the block’s transaction fees. The 10 ALGO subsidy decays by 1.0% every million blocks and is underwritten by the Algorand Foundation for roughly two years. Rewards arrive instantly onchain, there is no lock-up or unbinding period, and the protocol still avoids slashing. Offline or malicious nodes are excluded from future committees.

In Q2, staked ALGO increased to 1.95 billion, up 28.7% QoQ. With the phase-out of Governance Rewards in Q1 and the shift to continuous staking incentives, the sharp quarter-end uncommit cycles that previously drew down the staked supply have largely dissipated. The new model encourages sustained participation, gradually reducing Foundation dominance and broadening community representation.

By the end of Q2, community-held stake rose to 1.54 billion ALGO, a 51.1% QoQ increase. Concurrently, the Algorand Foundation’s stake fell 17.1% to 412.0 million ALGO. This shift aligns with Algorand’s pursuit of decentralization: while the Foundation once held nearly twice as much as the community, the community stake now accounts for 78.9% of all staked ALGO.

Total eligible supply staked, the percentage of circulating ALGO staked, rose to 17.8% in Q2, up 49.4% from 11.7% in Q1. The increase suggests that block-level incentives introduced in the Algorand 4.0.1 upgrade are beginning to take effect. As more node operators complete the upgrade path and staking rewards accrue continuously, participation appears to be stabilizing around these incentives rather than the legacy governance cycle.

Stablecoins

The total stablecoin market cap on Algorand fell 51.1% QoQ in Q2, dropping from $135.4 million to $66.2 million by quarter’s end. The decline was almost entirely driven by USDC, which dropped from $159.8 million market cap on May 26, 2025, to $64.7 million on May 27 and $39.6 million on May 28, a 75.2% decrease in two days. USDC eventually recovered to $63.9 million by June 30, but was still down 52.1% from the end of Q1. The drop was attributed to Binance reallocating funds between chains, a practice Circle described as operationally routine.

Other stablecoin results varied in Q2: EURD inched down 3.1% QoQ to $956,000, USDT remained unchanged as Tether wound down Algorand support, while smaller tokens such as STBL increased 0.5% QoQ. By quarter-end, USDC made up 96.5% of Algorand’s stablecoin supply, leaving EURD and USDT with around 1.0% share each.

DeFi

DeFi total value locked (TVL) declined 22.6% QoQ to $59.8 million in Q2. Algorand DeFi products in the top six by TVL decreased, with Folks Finance dropping 13.3% QoQ to $39.2 million, Tinyman to $12.1 million (-26.4% QoQ), Pact to $3.8 million (-14.3% QoQ), CompX to $1.9 million (-13.8% QoQ), AlgoRai Finance to $1.1 million (-67.6% QoQ), and Algomint to $380,600 (-30.9% QoQ). Alpha Arcade and Tardly were launched in Q2 and held $218,100 and $136,600 in TVL, respectively.

Qualitative Analysis

Governance

The Algorand Foundation concluded its incentivized Governance Rewards program at the end of Q1 2025, following 14 rounds across 3.5 years that distributed 687.5 million ALGO. Of this, 526.8 million ALGO went to governors, while 160.7 million supported ecosystem initiatives, including DeFi rewards, NFT rewards, and the xGov pilot grants.

With the end of reward-driven governance, Algorand now centers its governance model on three pillars: node decentralization with staking for rewards, xGov for expert-driven decisions, and non-incentivized Community Governance for referendum-style input. Future governance votes will occur through shorter, event-driven cycles.

The first xGov council will be elected in Q3, via a referendum, with voting beginning on July 7, 2025, and ending on July 15. Any ALGO holder with onchain governance experience may run. Councilors will be lightly compensated and held publicly accountable. The coming quarters will test two conditions: whether staking can retain more ALGO online compared to quarterly lockups, and whether an expert, vote-approved council can independently manage the xGov program grants with minimal Foundation oversight.

Developments and Highlights

Technical Advancements

• Algorand 4.1.1 improved P2P networking and streamlines API performance. The 4.1.1 release introduced stateless vote compression, peer metainfo support, and bandwidth optimizations to strengthen consensus reliability and network efficiency. New features included gzip-enabled APIs, preliminary RISC-V support, and command-line wallet management tools, alongside infrastructure fixes and telemetry upgrades.

Partnerships and Ecosystem Initiatives

• MiCA-compliant stablecoins EURQ and USDQ launched on Algorand: Powered by Quantoz, the euro- and dollar-denominated assets surpassed $50 million in trading volume since their late 2024 debut. They launched on Algorand on April 3, with trading pairs available on Folks Finance.
• FIFA sold $1.4 million NFTickets on Algorand in under three hours. The Mega Glory bundle included access rights to matches in the 2025 Club World Cup and 2026 World Cup, combining real-world ticketing with onchain ownership.
• Algorand and World Chess unveiled the Universal Chess Passport. Announced on April 24, the initiative introduced decentralized identity and verifiable credentials to unify chess player records, rankings, and reputations across platforms and tournaments. In 30 days, World Chess generated nearly 6 million transactions on Algorand.
• Pera Wallet launched a non-custodial Mastercard debit card on Algorand. On May 15, Pera unveiled the Pera Card in partnership with Immersve, enabling users to spend Algorand USDC (USDCa) at any Mastercard-accepted merchant in supported jurisdictions.
• Midas launched mTBILL on Algorand, expanding access to tokenized U.S. Treasuries. mTBILL is a permissionless tokenized certificate referencing short-term U.S. Treasury ETFs, available to retail investors across Europe with no minimum investment. The May 27 launch marked mTBILL’s first non-EVM deployment, executing a $2M atomic swap in 2 seconds at near-zero cost.
• AEON integrated Algorand to enable crypto payments at 20 million merchants. Through its AEON Pay platform, the payment provider started supporting ALGO and Algorand USDC on June 12 for real-world purchases across Southeast Asia, with plans to expand into Africa and Latin America.
• Algorand partnered with Paycode to bring blockchain-powered payments to underserved communities. With a footprint spanning Afghanistan, Ghana, Zambia, Mozambique, and the DRC, Paycode has reached over 6 million people and disbursed $250 million in aid. The integration with Algorand enhanced transparency, supported digital ID systems, and expanded access to secure, inclusive financial infrastructure.
• Algorand Foundation joined the Blockchain Association to influence U.S. crypto policy. Amid accelerating legislative activity in Washington, the Foundation is engaging directly with lawmakers to promote open, permissionless innovation. Membership ensured Algorand’s participation in key debates on decentralization, stablecoins, market structure, and the future of digital public infrastructure.
• Lavazza scaled onchain traceability with Algorand. By May 13, over 1.2 million kilograms of Robusta coffee cherries were recorded onchain. During the week of June 13, Lavazza logged more than 14,000 kilograms of roasted beans in just over 24 hours.
• Algorand staking and USDC on Algorand support expanded across platforms. Algorand staking went live on Binance, Bitrue, and P2P.org, while support for USDCa went live on Crypto.com and Bitrue.

Developer Engagement

• AlgoPlonk brought zero-knowledge proofs to developers. The tool lets Algorand developers create zk-powered applications by generating smart contract verifiers from Plonk-based circuits. While still early-stage, AlgoPlonk expanded Algorand’s programmability with new privacy and proof capabilities.
• Algorand joined Bolt’s global hackathon with a $25,000 challenge track. As the exclusive blockchain partner, Algorand invited builders to integrate trustless payments, verifiable data, and digital assets into their Bolt apps. The month-long event kicked off May 30, 2025, and featured over $1 million in prizes.
• Algorand hosted its inaugural Developer Retreat, gathering open-source contributors. In early April, Algorand hosted its first Developer Retreat, bringing together 56 developers for a week-long, unconference-style working session focused on open-source collaboration. The retreat emphasized knowledge sharing and direct contributions to the Algorand ecosystem. By the end of the week, participants had produced nearly half a million lines of code across 40 new open-source projects, spanning AI integrations, developer tooling, and core protocol enhancements, including a global asset freeze capability.

Developer Engagement

• AlgoPlonk brings zero-knowledge proofs to developers. The tool lets Algorand developers create zk-powered applications by generating smart contract verifiers from Plonk-based circuits. While still early-stage, AlgoPlonk expands Algorand’s programmability with new privacy and proof capabilities.
• Algorand joins Bolt’s global hackathon with a $25,000 challenge track. As the exclusive blockchain partner, Algorand invited builders to integrate trustless payments, verifiable data, and digital assets into their Bolt apps. The month-long event kicked off May 30, 2025, and featured over $1 million in prizes.
• Algorand hosts inaugural Developer Retreat, gathering open-source contributors. In early April, Algorand hosted its first Developer Retreat, bringing together 56 developers for a week-long, unconference-style working session focused on open-source collaboration. The retreat emphasized knowledge sharing and direct contributions to the Algorand ecosystem. By the end of the week, participants had produced nearly half a million lines of code across 40 new open-source projects, spanning AI integrations, developer tooling, and core protocol enhancements, including a global asset freeze capability.

• Token2049 Dubai: A Night in Dubai with Algorand + Friends. On April 30, Algorand, XBTO, and Fabric welcomed guests for a night of live music and networking, connecting global builders offstage at Token2049.
• ETHcc Cannes: AlgoCan[nes]. On July 1, Algorand hosted a full-day event focused on interoperability, zero-knowledge apps, and onboarding EVM developers, capped with rooftop networking and cocktails alongside Wormhole, Folks Finance, and Valar.

Closing Summary

Algorand ended Q2 2025 with a broader staking base, greater community participation, and continued real-world integrations. Total staked ALGO rose 28.7% QoQ to 1.95 billion, with community-held stake increasing 51.1% and reaching 78.9% of the total. The transition from governance rewards to continuous staking incentives contributed to more consistent participation and a reduced share of Foundation-controlled stake.

DeFi TVL declined 22.6% QoQ to $59.8 million, while the stablecoin market cap declined 51.1%, primarily due to volatility in USDC balances. Transaction activity and fee revenue declined across the board, with daily fees down 47.5% and new address creation falling 30.7% QoQ. Despite these declines, development continued with the release of Algorand 4.1.1, which introduced network and API optimizations. The launch of MiCA-compliant stablecoins, mTBILL’s first non-EVM deployment, and integrations with AEON, Paycode, and Pera’s non-custodial Mastercard debit card supported ecosystem expansion.

Governance entered a new phase as the network prepared to elect its first xGov Council. With new tools for developers, expanded staking access, and policy engagement through the Blockchain Association, Algorand closed the quarter with a more decentralized infrastructure and a growing base of ecosystem participants.

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