The Algorand Foundation, the association behind the blockchain of the same name, has announced the launch of new smart contracts that will be highly performing in the field of decentralized finance (DeFi).
Today, together with the @AlgoFoundation, we announce the launch of Algorand’s comprehensive smart contract capabilities that join our existing suite of features to power a new wave of sophisticated applications across #DeFi & beyond! Read more: https://t.co/5guiYTqqjf pic.twitter.com/2rm0K70iI0
— Algorand (@Algorand) August 19, 2020
The announcement states that one of the key points of Algorand’s blockchain is the very low fees and that tools are on layer 1 in order to have more security and speed compared to other blockchains.
Thanks to smart contracts and ASAs (Algorand Standard Tokens), which are simple and cheap to create, all the various dApps in the DeFi sector will now be able to take full advantage of this blockchain.
Algorand vs Ethereum
It is important that decentralized finance does not stagnate on the other blockchains, remarked Algorand’s founder, Silvio Micali:
“DeFi gives the world access to an essentially unlimited number of financial products and services. It’s important for the new generation of dApps not to be stalled by the shortcomings of the first-generation blockchains. Algorand’s protocol serves as a solid foundation to power truly frictionless applications, and our approach to smart contracts makes them high-performing and functionally advanced enough to rival today’s existing financial services.”
The reference is clear: Ethereum. Vitalik Buterin’s blockchain is the most widely used in DeFi and that’s also why network fees are reaching record levels. This prevents particularly small users from using these dApps because of the prohibitive costs.
Algorand and DeFi
Algorand uses the consensus protocol PPoS (Pure Proof of Stake) which ensures a strong relationship between decentralization, scalability and security.
With the update and introduction of Steful TEAL and Atomic Transfers, it will be even easier to develop products in the field of decentralized finance.
Let’s not forget that on this blockchain we can already find some of the most popular stablecoins like Tether (USDT), and recently also USDC has been added.
This means that some of the major DeFi players are already operating on Algorand, so they could be implemented in different systems such as lending and borrowing. In addition, it might also be possible to consider the creation of a decentralized exchange for all those tokens that still need financial support.
A Liquidity Pool dApp could be an initial solution for this blockchain, because it would allow to provide liquidity to all tokens and to collect fees from trades, a system that TRON has chosen with the launch of JustSwap.