Algorand – A New DeFi Leader

Algorand – A New DeFi Leader 1024 500 Crypto Rand Group
Algorand DeFi

Algorand, a Boston based software company launched Algorand cryptocurrency in 2019 to accelerate the transaction speed on blockchain and to enable users to create smart contracts that are programmable by nature, looking to gain a competitive advantage now in DeFi. ALGO token was created by an award-winning professor and computer scientist named Silvio Micali working at Massachusetts Institute of Technology. He himself wrote the whitepaper of the project and it was funded by the Alogorand foundation.

Algorand platform offers a borderless economy through its decentralized, secure, scalable, and permissionless public blockchain. The core philosophy of Algorand is to introduce a democratic kind of network based on user’s participation by introducing an upgraded version of Proof-of-Stake named “Pure PoS” for transaction validation.

Key Characteristics of Algorand

Security, scalability and decentralization are the main features of this project that they are looking to provide to the blockchain industry in its true sense.

The blockchain industry is known for best security but Algorand takes it to the next level. Their Pure PoS network makes sure that the actions of the minority users can be controlled by the users holding the majority of the funds on the platform. The majority of fund owners can block a transaction and keep the network secure. Users holding the majority of funds on the network are discouraged to take part in malicious acts but if they still do that it will destroy the reputation of the network and they themselves will get suffered by that due to its acceptance and economic effect.

There is no sanction mechanism in Delegated PoS, Liquid PoS, and Bonded PoS but this sanction feature gives Algorand a competitive advantage over the others by making it almost impossible for minority users to cheat the network and making it unwise for the majority users to even think about cheating the network.

Key features of the Algorand network

True decentralization: Network is not controlled by few miners but members that are randomly selected.

  • Governance: Token holders can propose changes to the protocol and can adopt it if they agree on it.
  • Delegation: Token holders can delegate their tokens to take part in consensus.
  • Fast agreement: Network’s community agrees on the next block and confirms transactions in seconds rather than waiting for a long time on a network controlled by miners.

Algorand token economics

Alogrand foundation, which funds and works on the development of the network, says that the cap for Alogrand tokens supply is 10 billion units. They have given a schedule of token distribution as well. Three billion tokens will be circulated over a period of the first 5 years time frame while 1.75 billion tokens will be used to give rewards to the users over time. They have fixed 2.5 billion tokens for Algorand foundation and Algorand, Inc. and 0.25 billion tokens will be distrusted over time as end-user grants. Algorand token’s current market cap is around 500 billion USD while its current price is $0.65 per token and their current rank on coinmarketcap is 35.

Smart Contracts on Alogrand Platform

There are many platforms available to build smart contracts but their slow propagation, high cost, and low scalability makes it difficult to use in a real-world application. Scalability is the biggest issue faced by the blockchain industry but Alogorand based smart contracts provide seamless solutions that are not only highly scalable but also provide various advanced functionalities that others lack. Alogrands Layer-1 (ASC1) protocol offers a secure, permissionless, and open-source decentralized platform to build smart contracts. Some of their main features are as follow:

  • Scalable: Scalability is one of the main features that Alogrand provides to build smart contracts. You can customize the way you can think of it in an easy manner.
  • Fast: Their Layer-1 (ASC1) has a speed of over 1,000 TPS and finalizes within 5 seconds.
  • Secure: Their network infrastructure doesn’t allow forks that give a competitive advantage over others while making it extremely secure to run a smart contract.
  • Low cost: There is only a 0.001 Alogs fee for ASC1 transactions which makes it only $0.00065 at the current price.
  • Ability to build complex applications: Their customization features allow them to build complex applications while keeping them seamless and accurate.
  • Flexible: Flexibility is also one of their main features as ASC1s can be applied to a particular transaction or to all the transactions.

Alogrand smart contracts use cases

Alogrand’s flexible and extremely customizable smart contracts allow its adoption and use cases not only in traditional finance but in decentralized finance as well. Let’s take a look at some of the major use cases.

  • Decentralized exchanges
  • Margin Trading
  • Credit and Lending
  • Derivatives
  • Reimbursement validation
  • Cross chain Atomic Transfers
  • Security Token
  • Voting
  • Crowdfunding
  • Banking
  • Loan payments & Fee Executions
  • Payment Solutions
  • Programmatic recurring fees/debts
  • Subscriptions

Latest upgrade to the Algorand network

Alogrand network announced the latest upgrade to the smart contracts’ capabilities to stay at top of the DeFi application developments. Stateful smart contract is one of the main features they have added while the other one is fast catchup and rekeying.

Stateful smart contracts

Traditional smart contracts are stateless which stores information in the code but stateful smart contracts store certain information in the users’ accounts to make its use more efficient and effective. This efficiency addition gives advantages of charging static network transaction fees at low cost and higher scalability than other smart contract chains providing DeFi services. This allows decreasing the fees and increasing the speed at the same time.

Fast Catchup

Fast catchup is another competitive feature added by Algorand to their network that allows developers to start working on DApps without waiting for synchronization of the entire blockchain network. Synchronization can take from hours to days but on Algorand you don’t have to wait for it to start working on DApps.

Rekeying

The addition of the “rekeying” feature gives Algorand another competitive advantage. There is a private spending key attached to every public address which cannot be changed on other networks but Alogrand’s smart contract gives you this feature to change the private spending key while keeping the public address the same.

The addition of all these new features makes Alogrand standout in the market and new DeFi projects will certainly like to join their network to enjoy these competitive features. The addition of these features has helped in increasing the price by 85% in one week. The future looks bright for DeFi and the same for the Alogrand network as well.