Algorand Is Upgrading Its Infrastructure, but Adoption Still Lags

Both developments address potentially important long-term markets. Quantum-resistant infrastructure may become necessary for financial networks that expect assets to remain secure for decades. Agentic payments could also create a new category of high-frequency, machine-to-machine transactions.

The question is whether better infrastructure can solve Algorand's more immediate problem: low adoption and minimal economic activity.

What Algorand does

Algorand is a Layer 1 blockchain, meaning it runs independently rather than on top of another network, broadly similar to Ethereum or Solana. It provides the base infrastructure on which developers can issue tokens, build applications, transfer stablecoins and settle financial transactions. Its core selling points are speed, low transaction costs and rapid finality, the point at which a transaction becomes permanent and cannot be reversed or altered. Transactions generally settle in under three seconds, while a standard transfer typically costs 0.001 ALGO, Algorand's native token. Algorand also supports native token issuance and atomic transactions, meaning multiple linked actions either all complete together or none of them do. These features make the network well suited to payments and tokenized financial assets: a company could, for example, issue a tokenized bond, transfer ownership to an investor and receive stablecoins in the same transaction, with no risk of one step happening without the other.

The upcoming quantum-resilience roadmap is intended to make that financial infrastructure more secure over the long term. Algorand already uses a quantum-resistant signature scheme called Falcon to protect State Proofs, compact cryptographic summaries that let outside systems verify Algorand's transaction history without needing to trust a third party. The planned upgrades would extend that same quantum protection to individual accounts, wallets, multisignature setups (accounts that require approval from more than one party to move funds) and eventually the process by which the network agrees on which transactions are valid. The roadmap is expected to begin delivering milestones in the third quarter of 2026, with broader quantum resilience targeted by the end of 2027. Sandmark covered the roadmap's technical detail in depth last month. None of this would immediately increase network activity, but it could make Algorand more credible to institutions managing assets over long custody horizons.

The x402 initiative targets a more immediate use case. The standard lets a website, application or programme request a blockchain payment directly, without a human account or subscription. This could allow AI agents to automatically pay for data, computing power or digital services on their own. A payment-processing service built on the standard started operating in July, already supporting USDC, a stablecoin pegged to the US dollar, across Algorand, Base and Solana. Algorand's low fees and rapid settlement make it technically well suited to small, frequent payments. However, developer experiments and hackathon activity are not the same as recurring commercial demand, and the same facilitator already supports two much larger networks, so cheap, fast payments alone won't necessarily pull activity toward Algorand specifically.

Activity remains weak

Algorand still processes a meaningful number of transactions, but its visible user base has collapsed. Weekly active users fell from 65,736 at the start of 2026 to 48,510 by late July, a decline of 26%. Compared with the same period in 2025, average weekly users are down 89%. Most of that deterioration occurred in June 2025: weekly users peaked above 1.34mn in early June that year, then fell below 90,000 within two weeks. The timing followed the end of governance rewards on 31 Mar 2025, payments Algorand made to token holders for participating in network decisions, which had been giving holders and users of decentralized finance (DeFi, financial services run on blockchain rather than through banks) a reason to stay active.

Governance was probably only part of the explanation. The sharp, delayed nature of the drop suggests temporary incentive programmes expired around the same time, though the specific programmes involved aren't detailed here. Either way, the collapse appears to have exposed a much smaller base of recurring users than the headline figures previously proposed. The Algorand Foundation, the non-profit that funds and promotes the network, cut a quarter of its workforce in March as the broader picture worsened, a sign the strain extends beyond user numbers alone.

Source: Token Terminal

Transaction activity has held up much better than user numbers. Contract transactions, individual pieces of code executing on the network, fell only 7.3%, from around 301,700 in the first week of the year to approximately 279,700 in late July. Algorand recorded 9.76mn contract transactions year to date, averaging roughly 325,000 per week. This divergence suggests the remaining users are more active than before. That could be a healthy sign, or it could mean a smaller number of automated accounts or high-frequency applications now account for a larger share of all activity.

Source: Token Terminal

Revenue is the clearest weakness. Weekly network revenue, the fees users pay to transact on Algorand, fell from $1,099 at the start of the year to just $634 by late July. Total revenue reached approximately $25,400 year to date, down 77% from the same period in 2025.

Can AI agents change the story?

Algorand is becoming faster, more secure and potentially resistant to future quantum threats. It may also be well suited to automated AI payments because transactions are cheap, fast and final. But strong technical specifications have not produced strong demand. The network has lost most of its active users, while its fee revenue remains almost nonexistent relative to the scale of its infrastructure.

Agentic payments offer a plausible path to higher transaction activity, but activity alone is not enough, particularly when rivals with far more existing users have access to the same payment standard. Algorand must attract recurring, economically valuable payments that create sustained demand for blockspace, the limited transaction capacity a blockchain can process, and for ALGO itself. The network has built a capable financial railway. The unresolved question is whether AI agents will finally provide enough passengers and cargo to make it economically relevant.