Algorand Blockchain

Algorand is a decentralized open-source blockchain network, which leverages a two-tier structure and a variation of proof of stake (POS) consensus mechanism which helps in achieving the fastest transaction speed and irreversability.

Algorand is an open-source blockchain network that was built to overcome the “blockchain trilemma”, which is achieving high-speed transaction, security, and decentralization at the same time also it was designed in such a way that anyone can build Dapps on Algorand blockchain.

The project was launched in June 2019 by computer scientist and MIT professor Silvio Micali. Algorand is molded to be a payment-focused platform with rapid transactions and achieving instant finality- that means processing over 1,000 transactions per second (TPS) and achieving transaction irreversibility in less than five seconds.

Algorand is the first blockchain network that overcomes issues such as decentralization, security, and transaction throughput. Thus its architecture is a unique two-tiered blockchain structure, which contains two layers-

1 Layer-1: It is the base layer where all the smart contracts, asset creations, and atomic swaps between assets take place. Layer-1 helps in maintaining security and compatibility. On the first layer, users can create ASAs which represent new or existing tokens on the Algorand blockchain that’s is similar to ERC-20 functions on Ethereum.

2 Layer-2: This layer is used for more complex smart contracts and DApp development. The bifurcation of the network between layer 1 and layer 2 leads to faster and efficient transactions on the algorand blockchain. However, having complex smart contracts off-chain simple transactions can be processed easily on layer-1.

Algorand follows a unique variation of the Proof of Stake (POS) mechanism that is Pure Proof Of Stake(PPOS). PPOS is a highly standardize proof of stake mechanism with a low staking requirement for participating and securing the network. Only 1 Algo coin is required to stake into the network whereas Ethereum 2.0 requires a minimum of 32 Eth to stake into the network, which becomes a barrier for users to enter into the network due to the large amount.

ALGO is the native cryptocurrency of the algorand network and it’s the cornerstone because of algorand’s unique design the reward paid to the validators for producing blocks is split and distributed among all ALGO coin holders rather than being given to the block producer. In addition to this, all ALGO coin holders can earn about 7.5% annual percentage yield (APY).

It’s not mandatory for users to stake coins to be part of the network. However, they can simply hold ALGO coins into a non-custodial wallet or an exchange to access earned rewards. Due to this Algorand has achieved near automation, as stakers can passively hold ALGO while also supporting the network simultaneously.

Organizations comprised of fintech, startups, financial services, institutions, and Defi are currently building on Algorand. The goal of the Algorand community is to provide a healthy ecosystem for organizations to excel in the field of finance.

Some use-cases of Algorand are:

1 Circle: Circle is one of the leading firms which harness the power of stablecoins and public blockchains for payments, commerce, and financial applications worldwide.

2 IDEX: It is the world’s leading decentralized smart contracts exchange to support real-time trading.

3 Tether: It uses blockchain technology and allows users to store, send and receive stable coins.

4 Yieldly: Yieldly is a Defi platform build on Algorand and it allows crypto users to exchange digital value — without friction, gas inefficiency, or security risk.

5 StakerDAO: It is a platform where we can govern our financial assets in a decentralized, secure, and amenable manner.

To conclude, Algorand is a newcomer into the blockchain space and has proven to be a powerful platform because of its use cases. In addition to this, It is an open-source blockchain network that was built to overcome the blockchain trilemma. Moreover, it is built on a unique two-layer architecture that consists of layer-1 (base layer) and layer-2. Algorand uses a unique variation of the Proof of Stake (POS) mechanism that is known as Pure Proof of Stake (PPOS).

Source: https://medium.com/@lakshitmadaan/algorand-blockchain-1e5d003fd1c7?source=rss——cryptocurrency-5