Algorand is one of the latest crypto projects to have their cryptocurrency listed on the Decoin exchange where it is currently available for trading, best of all ALGO trades attract 0% fees. However, understanding the project at a deeper level is essential for traders to decide whether they should trade it or not.
Algorand is the brainchild of MIT professor Silvio Micali who is also famous for creating zero-knowledge proofs. He decided to create the Algorand project after hearing about the blockchain trilemma, a concept created in 2016 by Ethereum founder, Vitalik Buterin.
Micali was determined to overcome the shortcomings of the proof of work and proof of stake consensus mechanisms by creating a unique mechanism called pure proof of stake. The latter can process more than 1,000 transactions per second while upholding a high level of decentralization and security. The unique consensus leverages relay nodes and participant nodes. The latter are involved with all matters regarding consensus on the network while relay nodes are designed to enable participant node communication.
Algorand's unique consensus approach makes it possible for devices such as basic computers and mobile phones to be used as participant nodes. This is unlike the proof of work approach which requires a lot of computing power to solve complex mathematical calculations. One of the major advantages of the pure proof of stake approach is that it facilitates rapid transactions. It helps that there are no block confirmations.
Algorand had more than 10 million accounts registered to its network in May at the peak of the 2021 bull market. It had also managed to attract more than 500 projects being built on its blockchain. The adoption has largely been thanks to the network’s speed and low transaction cost, as well as the support for smart contracts.
It helps that the platform seems to overcome challenges that other major blockchains have been facing, such as Ethereum's scalability issues. Algorand's ability to overcome the blockchain trilemma has significantly contributed to more network adoption. Its pure proof of stake consensus mechanism also provides incentives for user participation through rewards when they stake their ALGO. Staking is an essential part of the participating nodes which means stakers facilitate transactions on the network and the rewards come from the fees generated through those transactions.
ALGO has a maximum token supply of 10 billion coins although only 3.11 billion coins are currently in circulation. It is currently trading at $0.85 and has a market cap of $2.67 billion.
ALGO's price action was slightly bullish after its launch on Decoin although it has been on the decline since then. It peaked at $0.93 on the launch day but has been steadily declining since then, continuing its descent that has prevailed after its 2021 peak price of $$1.71 in April. The poor price performance has been associated with early backer accelerated vesting.
The Algorand Foundation has also been selling some of its coins to fund its developments. While the declining price is a painful pill for ALGO holders to swallow, a bit of patience might pay off. Algorand is a highly promising project that is on a healthy growth trajectory. Its blockchain is appealing to developers and could potentially bring in more investment in the future as more projects are launched on it. Such adoption and growth might play out well for ALGO in the future.
The recent price decline provides an opportunity to purchase at a discounted price. Algorand has all the characteristics of a robust project thanks to its highly skilled development team, an appealing blockchain, good tokenomics, and a strong community. All these advantages make ALGO a good candidate for long-term hodling.