Algorand Review

What is Algorand

Algorand is a blockchain-based smart contracts platform with a hard focus on fast transaction throughput and fast finality. In its current state, the network is able to process over 1000 transactions per second while each of them is finalized almost instantly in just a 4 seconds time frame. To achieve that, the network uses a pure proof-of-stake (PPoS) protocol built on Byzantine consensus. Its energy efficiency also lets the platform brand itself as “the greenest crypto” around. 

Algorand was developed in 2019 by a computer scientist and MIT professor Silvio Micali whose work in the fields of cryptography and end-to-end computing brought him a prestigious Turing Award in 2013. Given its roots, Algorand has a strong academic backing and numerous partnerships in education and research.

The network is also known for collaborations with governments and nonprofits around the world whereas the blockchain is used as an infrastructure layer for providing services. For instance, Algorand is helping the Marshall Islands to develop its digital currency, while according to the recent news it will be used as a base layer in the future El Salvador’s blockchain infrastructure. 

Algorand Foundation is a non-profit organization that oversees the development of the network. It is also responsible for many incentives and educational programs that inspire developers to build on Algorand.

How does Algorand work

Perhaps, the main distinctive feature of Algorand is its rewards distribution system - fees received by nodes are split between all ALGO token holders proportionally, not just block producers.

Algorand uses a so-called pure proof-of-stake consensus algorithm. The algorithm works in rounds, and each round consists of two separate phases. At first, blocks are proposed by nodes, and the second phase is when selected blocks get finalized by the committee of nodes. Each of these phases employs a different approach in terms of security. In the first phase, a pure proof-of-stake model is implemented, while in the second phase a Byzantine Agreement protocol is used by nodes who vote on the proposed blocks.

Algorand deals with blockchain trilemma by employing randomness in its consensus algorithm. To ensure decentralization, scalability, and security of the network each of the nodes eligible to participate in the consensus process locally executes a Verifiable Random Function (VRF) which defines who will join the committee in the next phase. The weight of each node’s vote as well as the likelihood that this particular node will be selected on the committee are directly proportional to its stake.

How to use Algorand

Algorand can be used to tokenize, transfer, and assert conditions on instruments of value. The network can be used for the creation of crypto coins as well as NFTs through a single transaction with no smart contract coding knowledge required. Algorand supports smart contract functionalities and is often used for hosting dApps, as it has four SDKs using Python, JavaScript, Golang, and Java respectively. The network’s code is open-source.

Algorand wallets represent users’ accounts on the network. Each Algorand account must hold a minimum balance of 100,000 microAlgos (0.1 ALGO). User accounts are set to offline by default, however users wishing to participate in the Algorand consensus can generate a participation key and send a special key registration transaction, and register their account as online. 

The Algorand fees per transaction are less than a fraction of a penny which is a clear benefit when compared with ever-growing gas fees on Ethereum. The network employs its own Algorand Standard Asset that allows developers to create new tokens on its blockchain or integrate the existing ones into the ecosystem. 

The ALGO token

ALGO is a native token used for payments and fees on the Algorand network. It has a limited supply of 10 billion tokens minted at launch in June 2019. A quarter of this amount is controlled by Algorand Inc. and Algorand Foundation.

Algorand Foundation extended a period during which additional tokens will be distributed to the community to 10 years from 4 that were planned initially. The token distribution process is transparent and processed according to the long-term ALGO dynamics, published by Algorand Foundation.

ALGO token is also used for governance on the network, enabling holders to stake their assets in order to gain voting power and control over the distribution of the ecosystem grants.

How to buy Algorand ALGO token

Algorand ALGO token can be purchased on centralized exchanges like Binance and Coinbase Pro.

Disclaimer

To understand if Algorand is a good investment and try to make an ALGO price prediction, you need to do your own research on the project.

All the data for research is available on the project page on our website: check out the technical features of the project in this review, try to use the app, see if the information about the team is available and the team is open for communication, and using the project dashboard and the ALGO price chart, assess the project usage rates as well as the token price movement and the number of its holders.

Is Algorand safe

Algorand Foundation is a legal entity registered in Singapore that oversees the further development of the Algorand network and facilitates the decisions made by its community. 

The project has a strong academic backing since its founder Silvio Micali is a renowned cryptographer and professor at the Massachusetts Institute of Technology. 

The CEO of Algorand is Steve Kokinos, a serial entrepreneur, most recently known as the co-founder and Executive Chairman of Fuze.

W. Sean Ford is the COO of Algorand, responsible for a wide range of executive decisions and operations. Prior to Algorand, he was in charge of marketing at LogMeIn.

The whole Algorand team is introduced on its website.

Algorand was audited by Trail of Bits in March 2019, NCC in 2019, InCodeWeTrust in May 2019, and Runtime Verification in September 2021.

Ecosystem and Partners 

There are a number of useful tools to navigate Algorand and its solutions. Users can check Algorand Explorer or Metrics Dashboard to stay in touch with the network. There is a native Algorand Wallet launched by the Algorand team.

In an effort to incentivize the development of its ecosystem, Algorand Foundation launched a $300M DeFi Fund called Viridis in September 2021. This fund is focused on developing DeFi opportunities on Algorand’s network.

For DeFi-focused users, there’s the Yieldly platform that offers cross-chain bridging allowing to stake assets from other networks to earn yield. Users are also encouraged to use AlgoFi, a crypto-lending market, TinyMan, a decentralized trading protocol, and Hummingbot, a platform for algorithmic trading.

In January 2021, both Tether and Circle launched their stablecoins on Algorand, making USDT and USDC available for the growing network’s audience. 

Algorand gained favor from some governments as well as its network was chosen as a base layer to host the Marshall Islands’ central bank digital currency and the upcoming blockchain infrastructure of El Salvador. Besides that, the network partners with major universities around the world. 

Some of the partnerships are not directly connected to DeFi. For instance, Olivicola, the largest Italian consortium of olive oil producers will power up its supply chain solution with Algorand tech. And there’s a collaboration with SIAE, one of the biggest copyright watchdogs which launched 4 Million NFTs on Algorand representing the rights of nearly 100,000 creators.

The full map of Algorand’s ecosystem is published on its website.

What's next

From the technical point of view, the developers aim to further improve the speed of the network in terms of reducing the time required to finalize each block from the current 4.5 seconds to just 2.5 seconds. Another goal is to grow the number of transactions per second from 1,000 to 46,000.

Besides that, Algorand is on its way to decentralization, in accordance with its founder’s proposal from November 2020. 

Links

https://developer.algorand.org/docs/

https://forum.algorand.org/

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