Algorand, an open source public blockchain based on a pure proof-of-stake consensus protocol that supports the scalability and transaction finality for billions has taken the next step in enabling the simple and sophisticated exchange of meaningful value at scale, securely and with finality, bringing to life advanced smart contract capabilities. This upgrade by Algorand paves the way for sophisticated applications across Defi and traditional sectors.
WHAT IS DEFI AND WHY DO WE NEED IT?
Defi is an abbreviation for decentralized finance which generally refers to the digital assets and financial smart contracts, protocols, and decentralized applications built on a blockchain. Defi offers you control of your own assets, outside of companies and governments control through decentralization and blockchain technology. The goal of Defi is to reconstruct the banking system for the whole world in this open, permisionless way.
Decentralized financial services have the potential to:
- Broaden financial inclusion
- Facilitate open access
- Encourage permissionless innovation
- Eliminate the need for intermediaries
- Facilitate peer-to-peer transactions
- Create new opportunities for entrepreneurs and innovators
- Allows borderless and transparent financial system
- Produces distributed trust
- Give room for relatively speedy and low-cost transactions and settlement
Decentralized finance although promising, has to overcome a number of challenges and limits to achieve its full potential. This includes restrictions around scale, transaction speeds and high fees, vulnerability to fraud, regulatory uncertainty and usability which has been a barrier to mainstream blockchain adoption. To succeed, decentralized finance needs to cultivate a healthy ecosystem that encourages responsible innovation.
WHAT ARE SMART CONTRACTS?
Smart contracts is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. Smart contract are one of the most beautiful gifts of the blockchain to the world. Smart contracts help you exchange money, property, shares or anything of value in a transparent, conflict-free way while avoiding the services of a middleman.
Smart contract has the potential to give:
- Autonomy
- Trust
- Savings
- Safety
- Efficiency
However, traditional smart contracts are solely implemented at layer 2 and are slow, expensive and fragile. They are technically very challenging.
ALGORAND’S STATEFUL TEAL CONTRACTS
Algorand has unveiled a fresh set of smart contract capabilities aimed at facilitating the seamless adoption of decentralized finance projects on the Algorand blockchain. According to Silvio Micali founder of Algorand, these stateful smart contracts increase efficiency by storing certain information in user accounts, rather than its own code. Algorand’s smart contracts are very much non-traditional, efficient, secure and are implemented both at layer 1 and at layer 2.
The Algorand smart contacts are also called TEAL contract. They are written in a special language(programming language) which is an assembly like language that is interpreted by each Algorand node, the Transaction Execution Approval Language. Algorand’s layer-1 smart contracts are executed at the most secure layer in any blockchain, the very consensus layer.
STATEFUL SMART CONTRACTS
Stateful smart contracts are contracts that live on the chain and are used to keep track of some form of global and or local state for the contract. They form the backbone of applications that intend to run on the Algorand blockchain. Stateful smart contracts can be combined with all the other Algorand layer-1 features to produce even more complex application types. The stateful smart contracts act similar to Algorand ASAs in that they have specific global values and per-user values. They differ from ASAs in that the smart contract controls the logic of how these values are modified.
Algorand’s smart contracts provides significant benefits that includes:
- Ability to build seamless complex applications
- Scalable, fast, and secure execution
- Low cost to execute
- Reduced risk
- Increased speed to market with comprehensive development resources
- Flexibility
- Frictionless application
The Algorand’s latest upgrade removes the barriers in mainstream blockchain adoption and short comings of the first-generation blockchains, it enables DeFi and DAPP developers to build more sophisticated solutions, scale their applications, and make the promise of a borderless economy a reality.
Developers who wish to bring their vision into the mainstream choose Algorand platform. Kendrick Nguyen, co-founder of and CEO of Republic said he is impressed by the performance, scalability and strategic value Algorand blockchain has brought since the launching of Republic’s digital asset on the Algorand blockchain. According to Rand labs, Algorand will be as scalable, fast, and secure in 10 years as it is today. Unfortunately, that cannot be said of any other blockchain network today. There are nearly 400 other companies that have joined the fast growing Algorand ecosystem.
From credit and lending to market places and decentralized exchanges, Algorand’s smart contracts provide an elegant solution to power a new wave of DeFi applications that can scale to billions of users, tens of millions of daily transactions, with negligible transaction fees.
Kindly check out the following links to learn more about the Algorand ecosystem;
https://twitter.com/AlgoFoundation
https://www.facebook.com/AlgorandFoundation/
https://www.linkedin.com/company/algorandfoundation/
https://t.me/AlgorandFoundation
https://medium.com/algorand-foundation
