The digital asset industry is currently one of the most profitable industries, hosting numerous projects centered around blockchain. Since Bitcoin’s sudden success, many people have leveraged crypto technology to create unique ecosystems to benefit the growing industry. These networks come with unique use cases, algorithms, and purposes. Similarly, many of these chains also have a native token, helping them with affairs. In this article, we will be looking into everything concerning Algorand.
Algorand’s background
Algorand is a relatively new blockchain, hoping to prioritize security, scalability, and decentralization. With the growing interest in the digital assets space, there has been a widespread need for a scalable and fast platform. This, in turn, may enable faster transaction settlement.
Similarly, Algorand seeks to increase cryptocurrency utility by helping users finalize transactions within a short time. In settling transactions, time is vital. Users want a quick implementation of commands, saving time and energy. However, because of the traffic on blockchains, most ecosystems, such as Bitcoin and Ethereum, suffer from slow and high-cost implementation.
Indeed, this platform plans to change the status quo, particularly in the digital asset space. Algorand hopes to bring certain changes to optimize security and speed. One of the ways it plans to achieve this is by distributing its native token to each block for people who own some portion of the token in the wallet.
Also, the platform allows everyone to create or build smart contracts. They can also create new assets with this feature. Further, the unique feature attracted numerous investors. In 2018, the project received $62 million from an investment group, enabling it to work on the protocol. With that said, Silvio Micali—a computer scientist and professor, created the unique network in 2019. Micali is an academician, and this could have helped the platform’s development.
Focus
Algorand’s primary focus is to optimize speed so that users can finalize transactions within seconds. For blockchain technology to compete with mainstream platforms, the former has to find a suitable way to speed up transactions. Indeed, the open-source network prioritizes payments settlement. It aims to make faster settlement accessible for users.
It’s safe to state that this ecosystem leverages a proof-of-stake. Proof-of-stake prioritizes mining based on the number of coins a miner has. So, people with more cryptocurrencies can mine more assets. Following the problems associated with proof-of-work (PoW), this mechanism hopes to resolve scalability issues. Also, PoS consumes lesser power, making it theoretically more affordable and efficient.
In the digital asset industry, miners use lots of power in the mining process. Similarly, for miners to get new cryptocurrencies, they need to solve some mathematical equations—consuming power before giving rewards. This made it necessary to find a better way to mine assets without compromising security, which birthed a proof-of-stake mechanism.
Algorand is a blockchain that allows users to stake assets. Also, it can accommodate a series of decentralized applications while maintaining speed. Decentralized applications are crucial for many blockchains as they assist with a quick settlement. These applications are programs run on blockchains for special additions, such as gaming and finance applications. Depending on the blockchain’s purpose, decentralized applications can have numerous uses. Additionally, dApps are also decentralized, which means the community has control of the application and not a single entity.
What Is Scalability?
Scalability is the ability of a blockchain to handle a larger workload or demand efficiently and readily. Today, many blockchains have scalability problems, which means that they cannot handle or process the influx of new transactions at record time. This led to the creation of new ecosystems that are highly scaled.
Ethereum, for example, suffers from scalability issues. Unfortunately, the growing projects on the blockchain have skyrocketed the gas fee. Also, the network is quite slow, which means that you may have to wait for some minutes to finalize payments.
Special features
Programmers and developers may benefit from the network’s Algorand standard asset (ASA). This protocol enables the making of new assets or the transfer of existing ones to the network. Indeed, the blockchain can accommodate others assets through the protocol—making it easier for users to access prompt payments. Because this network prioritizes speed, users may enjoy noticeably faster settlement.
How Does Algorand Work?
Algorand optimizes operations by leveraging two layers on the network. One of the layers enables asset creation, atomic swap, and decentralized applications. The network wants to strengthen security, and it does this by taking up these features in layer one, which is the network. It’s not surprising to find that many chains have valuable and vulnerable processes in layer-1.
Also, the main layer can make Algorand standard assets, and they can be either new or old assets, depending on your choice. It’s safe to state that smart contracts on the platform are also one layer-1, which should strengthen security. Security is vital on many platforms, particularly with blockchain-based assets. Without sufficient security, systems may become compromised, thereby endangering the network.
The layer-2 is for larger and more complicated dApps and smart contracts. The separation prevents applications from slowing the system—making it reasonable to process some of these tools in the second layer. Ideally, simple processes are on layer-1, helping it maximize security while enabling the smooth running of the network.
Staking
Algorand’s staking is unique when you compare it with other protocols in the industry. For instance, the network leverages a new category of PPoS, which is pure proof-of-stake. This is a slight variant of the usual protocol.
For instance, this consensus allows users to participate in staking with just one ALGO token. However, for popular assets like Ethereum, the requirements are stricter. With this new consensus, the project hopes to achieve inclusivity, protection, and speed. Also, it claimed that the throughput ensures fasts finality.
Ethereum, for instance, requires 32 ether for user participation. Because of Ethereum’s price today, users may find it challenging to take part in affairs. Still, this may also cause a lot of unwanted behavior or actions, especially since the staking requirement is quite low. Indeed, both situations have their merits and demerits. Algorand, on the other hand, may improve inclusivity due to the lower requirements.
Governance
Users holding ALGO can propose or vote on proposals. Before the system allows users to make proposals, they need to stake their ALGO, the platform’s native currency.
C3 Receives $3.6 million Funding For DeFi Project
C3 protocol, a project associated with Algorand network, recently raised $3.6 million for a new DeFi project. Rand Labs, which made some Algorand projects, such as My ALGO wallet, also built C3. The project hopes to create a layer with cross-chain functionality. This would permit collateral and margin across multiple chains.
It seems the project focuses on bridging gaps between TradeFi and DeFi. The decentralized finance industry is also one of the biggest communities making waves due to the demand for finance-based products. This makes it necessary to have a platform that can explore different chains.
Conclusion
Algorand is a blockchain, prioritizing speed and security. It’s safe to state that these features are crucial in a public chain to ensure efficiency. Especially with the scalability issues in this growing industry, this network may be an alternative for users who seek a platform with faster transaction implementation.
