Algorand and the blockchain trilemma - Crypto Academy / S5W4 - Homework post for nane15
It is another privilege to be part of your student that is participating in this fourth-week lessons and in connection with last week, the lecture presented by professor @nane15 is centered on 'Algorand and the blockchain trilemma' and to that effect, I will be submitting answers to the questions that have been given in the homework.
WHAT IS ALGORAND BLOCKCHAIN?
Just as the issue of blockchain trilemma was addressed last week and it was discovered that some developers have programmed blockchains that will aid to provide solutions to the blockchain trilemma and from this week we understood that Algorand blockchain is one of such blockchain, but then, what's Algorand blockchain?
Algorand blockchain is a cryptocurrency blockchain that has been created with a target of providing a cryptocurrency platform with the ability to be decentralized, secured, and is built with high-level scalability. Algorand blockchain is known to be a public blockchain that has its functionalities based on smart contracts. The presence of the Algorand blockchain has enabled the possibility of a large number of transactions within the network to be processed within a matter of seconds.
Silvio Micali is known to be the brain behind the creation of the Algorand blockchain in the year 2017. Silvio Micali does work as a professor and a computer scientist in a private university in Cambridge known as Massachusetts Institute Of Technology (MIT) and thereafter brought the rights to launch Algorand in the year 2019.
As earlier mentioned, Algorand is programmed to process swift transactions and for better implementation and solutions to decentralization, security, and scalability, the Algorand blockchain developed its consensus algorithm based on Pure proof-of-stake. To create a way for the algorithm to be fully utilized, Algorand programmed their native token known as ALGO. Therefore, only users within the network that possess any amount of the ALGO Token can engage in the Pure proof-of-stake and also gain the privilege of being selected randomly as the next validator of blocks.
Algorand blockchain is already on the move in fulfilling the target that is behind blockchain trilemma by the implementation of the Pure proof-of-stake participation and random selection and rewards offered to token holders thereby bringing to life the decentralization, scalability that every blockchain requires of which is backed by the contract that it operates on.
WHAT IS PPOS?
The acronym for the consensus protocol of the blockchain algorand is known as Pure proof of stake, this protocol was established to abolish the omissions of the earlier agreement protocols while giving a powerful and more understandable decentralization, accomplishing considerable security, and also attempting to protect high scalability
In Algorand, the use of Pure proof of stake is solidly based on the number of tokens that a user possess and stake in the network of which would offer the opportunity to be selected for the creation and votes of blocks as well as the rewards that come from the block, although such selections are done randomly in other to maintain the anonymity of the next validator within the blockchain.
The Pure proof of stake protocols has made it possible that token holders can completely stake their token in safe hands and partake invalidation without the fear of loss or the amount of token that are been held by the user. The Pure proof of stake protocols has aided to improve the security and the continuous undertaking of the blockchain.
EXPLAIN THE ADVANTAGES AND DISADVANTAGES OF PPOS?
There are numerous advantages of utilizing Pure proof-of-stake as well as the disadvantages that have been attached to it, and to that, I will outline a few of them below:
ADVANTAGES OF PPOS
Increased Transaction Speed: PPoS consensus protocol is programmed with a swift processing speed as a result of such, up to 2,000 transactions can be rapidly processed within a few seconds without an interruption.
Limited Power Consulting: PPoS does not require any professional skills or energy exhaustion unlike PoW that impose mathematical calculation, it requires minimum skills and less energy of which can be obtained by any user.
Low Requirement for Staking: PPOS staking requirement is solidly based on staking of a low or minimum amount of the native tokens for as low as 1 ALGO of which is not comparable to the Pos that requires a huge amount of tokens before partaking.
DISADVANTAGES OF PPOS
None Punishment of Bad Proposal: there is no punishment for bad block proposals unlike other consensus mechanisms whereby when blocks are proposed with bad results there is a penalty, there is nothing like that in PPoS, which will make the defaulters of such blocks not to be punished.
Safety effect: The security of the blockchain that utilizes PPOS in the mechanism tends to be open to predators because of the open opportunity offered to users who might make way with tokens that have been staked by other token holders thereby leading to loss of funds in the network.
DO YOU THINK ALGORAND SOLVED THE BLOCKCHAIN TRILEMMA? EXPLAIN YOUR ANSWER
My answer to the question is Yes, and below are the reasons:
The solution has been offered to an extent, Firstly the Algorand has implemented the use of a consensus mechanism known as PPoS and through such implementation, users within the blockchain can participate in the role of validators thereby validating and creating blocks.
The mechanism has also aided users irrespective of the token they are holding to stake their tokens and qualify in the random selection of validators that do take place. In such a way, a decentralized format has been designed for users in the sense that users of which are been selected are not known to the public but are done erratically.
Secondly, based on the security issues in the blockchain trilemma, the random selection has also done its part in the Algorand blockchain thereby creating anonymity of the next validators and keeping the tokens that have been staked in safe hands.
And lastly, the scalability of the blockchain has an increased speed rate of transactions that can be accomplished within a few seconds of which is tremendous. The blockchain trilemma can be said to be fully solved although it's seen not possible, in Algorand blockchain, the security, decentralization, and scalability of the blockchain is moving towards what the future holds at hand.
DO YOU THINK PPOS IS BETTER THAN POW? EXPLAIN YOUR ANSWER
My answer to the question is Yes, and below are the reasons:
There are tremendous reasons to value Pure proof-of-stake and the first reason is that validation of blocks or participation in the role of validators does not require any special skills from any user and does not require a user to stake a huge amount of tokens or even use heavy equipment just like POW rather PPOS allows the available users to partake of the staking protocol irrespective of the token held and with little or no knowledge.
Another reason PPOS is more valuable is that it takes seconds to validate or create a block, unlike PoW that spends time to perform such a process even to the extent of 10 minutes to validate a block meanwhile the scalability in PPOS has been modified and keep each process at a swift speed with zero slow processes.
The third is that transactions within the PPOS can be trusted because users can see the result of the process and are assured of the safety of their tokens of which do disappear in PoW because of the derivation found in the mechanism. Finally, PPOS is efficient when it comes to energy consumption and other points mentioned above.
DO YOU THINK PPOS IS BETTER THAN POS? EXPLAIN YOUR ANSWER
My answer to the question is Yes, and below are the reasons:
Unlike Proof-of-stake, the first reason is that PPoS do not require users to delegate their tokens to a particular set of individuals within the network and PPOS do not assign the role of block creation or validation to a particular set of users but requires all users who are active in the blockchain to partake of the staking protocol thereby emerging as a validator is selected.
Another reason is that users who partake of the staking protocol do not require to place a particular amount of tokens aside in a pool or lock it and been controlled by a particular user rather users in the Pure Proof-of-Stake have full access to their tokens and can utilize the tokens at their convenient for other financial activities without any restriction.
EXPLORE AND EXPLAIN AN ALGO TRANSACTION USING ALGOEXPLORER.IO (SCREENSHOTS REQUIRED)
To explore the algoeplorer.io, I will be visiting the website and also providing some analysis from the tour process, let's begin:
- I opened algoeplorer.io and the first interference is the landing page that has amazing features which include the Latest block, Circulating supply, Total supply, Online stake, ALGO PRICE, Block speed, Transaction history, latest blocks, and latest transactions. see screenshots below:
- The next feature found in algoeplorer.io is the Latest Blocks and Latest Transactions. The sections are designed in a format it continuously uploads current Blocks and Transactions that has been executed. from the screenshot below, we can other necessary data that has been attached to each block or transaction process.
- To explore the transaction section of algoeplorer.io, I will be opening one of the current transactions on the page and looking at the image below, we can see that there are two sections - Transaction Overview and Transaction Details, Under the Transaction Overview it contains a Transaction ID, Block, Timestamp and Type and the Transaction Details contains Group ID, Sender, Amount, Receiver.
The details found in the above transaction sections are designed in a format that can be copied easily and keep track of any activity done.
- To gain access to more details about a transaction, I opened the More information that is found below in the page, and from the image, we can see other needful information like First Round, Sender Balance, Receivers Balance, Fee, Last Round, Senders Reward, Receiver Reward
CARRY OUT AN ANALYSIS OF THE PRICE OF ALGO FROM THE BEGINNING OF THE YEAR TO THE PRESENT. VIA GRAPHICS (SCREENSHOTS REQUIRED)
To begin with, I have a current data price of ALGO from coinmarketcap and based on statistics, ALGO is current at the price rate of $1.50 but in the check of one year, ALGO has had an all-time high of $2.83 and has also had an all-time low of $0.2696 within a year. see the screenshot below:
To expand the analysis, I evaluated algoexplorer and from the chart below, we can understand that on February 09th, 2021, there is a bullish trend in the market price of which resulted in the price increase of $1.73 and was followed by a bearish trend but in 05th September a bullish appeared again which increased to $2.46 and after that, we notice that the market is not balanced in the chart.
From the chart above, we notice that whatever happens to the price chart reflects on the Tradable supply, token velocity, and the On-chain Volume of which might reflect as a bullish or bearish signal.
The below chart shows that at the beginning of the year 2021, the market chart of ALGO began with a bearish trend, and to prove that, as of 01/01/2021 the token price was $0.4081 but was followed by a bullish period although the market had a massive bullish trend in September 2021 of which was when the ATH took place but since the market has not been stable just as I mentioned earlier.
CONCLUSION
The presence of Algorand blockchain has brought an ongoing solution to users who needs an ecosystem that will implement decentralization, scalability, and security to blockchain. The decision of working under a smart contract and the pure proof-of-stake mechanism has modified the network and will aid the blockchain to be free from restrictions or centralization.
The creation of the blockchain native token ALGO has also enabled users to partake of the staking protocol without the need of holding a particular amount of the token and gain an opportunity to be a validator. Conclusively, Blockchain developers are expected to join this movement of bringing an end to the trilemma in blockchain. Thank you very much professor @nane15 for this comprehensive study on Algorand blockchain and the native token ALGO, I hope to learn more educative lessons from you next time.