Block-chain, a powerful digital technology of the 21st century, has been of immense value to many sectors and industries of the world, ranging from Finance to Housing to Manufacturing (and so on).
Block-chain has helped to break many limits and to achieve many feats in the development of the digital sphere. To put it in a sarcastic but simple way: Block-chain has since its inception 'un-chained' many chains (limitations) that various industries were facing, nonetheless, block-chain itself needs to be 'unchained' (freed) from certain limitations. And the most significant of those limitations is the fact that block-chain cannot offer the 3 features of Scalability, De-centralization & Security all at once, and optimally. This means that wherever block-chain is being applied, we have to forgo certain feature(s) in order to enjoy other features.
Algorand's block-chain is the solution to this limitation.
ALGORAND's NEW TECHNOLOGY
Algorand is a latest technology designed to improve on the traditional block-chains, thereby, bringing about bigger breakthroughs for the global digital sphere.
Today, we really need to totally eradicate intermediaries when making transactions, more than ever before. There are many challenges involved in using centralized systems and they include:
1. Lack of trust
2. Inconsistency in administration (human)
4. High transaction fees
5. Time inefficiency and so on.
Hence, in order to eradicate these challenges to the possible minimum, Algorand was created in 2017.Algorand is a borderless Platform that eradicates the technical constraints that has really limited block-chain, for many years, from experiencing wide-range adoption.
Interestingly, Algorand is the very first block-chain to provide finality (complete certainty of success) of transactions, that is, with Algorand, transactions are bound to be completed, as there's no forking or uncertainty.
ALGORAND LAYER-1 INNOVATION: ALGORAND 2.0 AND USE CASES
Layer-1 innovation of the Algorand Platform is the Algorand 2.0 protocol.
Algorand 2.0 is a very important protocol upgrade that helps to expand to a great extent the scope of D-apps (De-centralized Applications) and various processes, as well as use cases that can be created on or via Algorand Platform.
This latest protocol offers features that are all based on Layer-1. These features include:
- Algorand's Standard Assets (ASA)
- Atomic Transfers (ATs)
- Algorand Smart Contracts at Layer-1 (ASC1)
In the present -day economy, we are being faced with many challenges when it comes to the aspect of assets digitization. These issues include lack of or poor:
- Access to digital, global marketplace
- 24/7 transferability
- Ease & Enforceability of Assets controls
- Instant Settlement
- Administrative Efficiency and so on.
Tokenization of assets will help us address these issues. Assets tokenization will benefit from simplified usage, enhanced security and transactions finality
ASAs require low execution costs; are really fast; and very secure because they are built into Layer-1 (secure block-chain). Also, they allow universal interoperability of all assets that emerge on Algorand.
2. ATOMIC TRANSFERS (ATs)
This is a feature that provides a reliable, de-centralized solution in Layer-1.
Atomic Transfers provide a safe and secure way by which a number of assets can be transferred simultaneously among various parties. Transactions are always grouped altogether for execution, such that none of them can execute independently, that is, either all are executed or none is executed.
This feature executes complex transfers in a smooth and instantaneous way while being inexpensive at the same time.
It supports Algos (Algorand utility token) and other Algorand-standard Assets, as well as multi-party transfers.
These are trustless smart-contracts in Layer-1 with enormous number of potentials and possibilities for governed transactions. They are agreements that automatically establish and enforce general rules and simple logical operations concerning the transfer of assets (Algos or any Algorand-standard assets). They are written in a new language called TEAL (Transactions Execution Approval Language).
This feature helps to have amazing, innovative means to tackle inefficient and complicated financial transactions.
With this trustless functionality, risks and costs are minimized.
SOME USE CASES OF ALGORAND LAYER-1 INNOVATION
Each of the features of the innovation has its own specific use cases:
1. ASA USE CASES
- Tokenization of Assets
- Issuance of 3rd-party asset on Algorand
- Democratization of access to investments
- Dis-intermediate cross border transactions
2. ATOMIC TRANSFERS' USE CASES
- Simplified & expedited settlement of debt
- Effective and productive match funding
- De-centralized Exchanges (with ASA and ASC1)
- Instant Complex multi-party transactions
3. ASC1 USE CASES
- Crosschain Atomic transfer
- Escrow Account
- De-centralized Exchanges
- Re-imbursement Validation
- Collateralized debt
- Delegated/high security account management
- Execution of fees; and so on.
In general, Algorand's Layer-1 Innovation and its features solve the problems of cost, security, speed, complexity and centralization.
HOW ALGORAND IS MORE EFFICIENT COMPARED TO L1/L2 BLOCK-CHAINS: ALGORAND INTRODUCES SMART-CONTRACTS AT LAYER-1
Layer-1 (L1) block-chain technology is that which is based purely on the traditional block-chain but it has issues such as the poor scalability problem while layer-2 (L2) is the 'off-chain' solution to address the scalability issue. Layer-2 technology simply involves connection of a block-chain to another one. One is the base layer or main chain such that transactions could be offloaded to the supporting chain and the base layer can focus more on security and transactions finality. This setting helps to achieve scalability and improved speed.Algorand's improved block-chain has been shown to be more more efficient than L1/L2 block-chains by its introduction of Smart-contracts at Layer-1. This was explained earlier when discussing ASC1 under Algorand Layer-1 innovation.
Hence, without switching to Layer-2, with the implementation of Smart-contracts into Layer-1, and some easy-to-use tools, Algorand ensures and provides:
2. Low cost
3. Avoidance of security risks; etc
Other ways by which Algorand ensured more efficiency is the introduction of Atomic Transfers and Algorand Standard Assets (both have been explained earlier in this discussion). These features help to provide functionalities that make Algorand more efficient than normal L1/L2 block-chains.
ALGORAND'S SMART-CONTRACT ARCHITECTURE: A TWO-TIER ARCHITECTURE
Usually, Smart-contracts help block-chain in becoming programmable by establishing a clearly-defined process for assets transfer and transactions execution and finality.
Algorand possesses a two-tier architecture which includes:
- Layer-1 Smart-contracts
- Layer-2 or offchain contracts
1. LAYER-1 SMART-CONTRACTS
Algorand's layer-1 Smart-contracts are designed for everyday, simple transactions and computations that can be executed in the underlying block-chain itself.
Algorand's Layer-1 Smart-contracts offer a simplified and secure solution to issues of atomic swaps and other related issues. It basically speeds up transactions and ensures finality instead of uncertainties and fragility if transactions.
2. OFF-CHAIN (LAYER-2) CONTRACTS
These are for the 'long tail', complex Smart-contracts that need more customization. They are designed for sophisticated transactor applications which need specialized tools. These contracts help to solve complex computations involving a number of parties or persons. Hence, with this two-tier setting, users can confidently write large computationally complex, idiosyncratic contracts that can handle simple transactions with more efficiency.
This Architecture is:
2. Able to ensure, in the nearest future, multiple contracts-execution committees.
3. Able to support matching languages.
Algorand is really an improvement on the traditional block-chains, and a solution to the block-chain trilemma. Despite the fact that it was created in 2017 for this and since then has made a lot of impact through its many use cases, the Algorand team still keeps introducing new innovations. Over the few years after its creation, Algorand has partnered with many digital platforms in order to solve various problems.
Recently, Algorand introduced the Algorand 2.0 Protocol, which is the Layer-1 innovation that established Smart-contracts on Layer-1 (ASC1). This innovation makes Algorand more efficient than L1 or L2 block-chains. The innovation also includes Atomic Transfers and Algorand-standard Assets.
Lastly, with a Two-tier Architecture (Layer-1 Smart-contracts and Off-chain contracts), Algorand can achieve easy computation of sophisticated transactions, leading to greater transactions finality. The architecture is flexible and supports matching languages.
RESOURCES ON ALGORAND ECOSYSTEM:
Written by Ritabell Anderson- Algorand Ambassador, Sokoto.