Algorand and the blockchain trilemma - Crypto Academy / S5W4 - Homework post for @nane15.
Thank you professor @nane15, it's a course with good explanation
1. What is Algorand blockchain?
Algorand is a decentralized Blockchain network that's built to solve the blockchain trilemma of accomplishing speed, security, and decentralization at a time. It was Launched in the month of June 2019 by computer a scientist and MIT professor named Silvio Micali, Algorand works without permission and it's an open-source blockchain network upon which any person can build. Algorand is made to focus on payment, the network with quick transactions and a powerful focus on succeeding near instant endly. It simply means processing thousands of transactions per second (TPS) and achieving transaction endly in very few seconds.
Algorand uses the consensus mechanism of Proof-of-Stake (PoS), and it supply validator rewards to all users that holds its native cryptocurrency called ALGO. By strong etendue capacity and fair community encouragement, Algorand is efficient of managing the high etendue necessity of extensive global usage and a assortment of use cases.
2. What is PPoS?
PPoS means pure proof of stake, but I would call it advanced proof of stake because it does more than what the proof of stake is able to do.
Pure Proof of Stake protocol is built on Byzantine discretion. By this protocol, Algorand users are randomly and selected on secret to suggest blocks and vote on proposals of block. Each user's power on the choice of a new block is magnitude to the user's stake in the system.
Algorand PPoS approach tie the whole economy security to the trust of the majority of the economy as in contrary to other approaches where a small subclass of the economy would be the one to conclude the security of the whole economy.
Unlike the Delegated Proof of Stake protocol, Algorand Pure Proof-of-Stake protocol doesn't make small set of users be in charge of generating blocks and users don't have to delegate their voting power to a choose few. All user can suggest and vote on directly on blocks, so, there is no special group of users that attackers can target.
Not like the Bonded Proof of Stake protocol, Pure Proof of Stake protocol doesn't need users to set part of their stake aside in order to participate in the consensus protocol and participation in the discretion protocol, it doesn't need to reduce the ability of the users to spend their stake. Any moment, all stakes are save in the wallets of the users or in the different financial instruments that the Algorand blockchain subject and users can spend from it when they need to.
3. Explain the advantages and disadvantages of PPoS.
Advantages
Any holder of ALGO are eligible to be a node validator (at the cost of minimum requirement), the process of choosing the validator is random and this makes Algorand look like a dependable system
It's hard for rewards to focus on one sector and it is not hard to participate in the governance, it gives security and comfort for any one that wishes to participate
A highly scalable network, based on the fact that the processing system of its blocks is of rapid agreement, the entire community participates.
Only PPoS is the discretion protocol that Algorand uses to process its blocks and thus keep the network running
Disadvantages
A number of users are taken that will be the committee member to validate the next block, not all token holders, the number of the users would be choosen from 1000 unique tokens and its owners will have a voting power, so, you must have enough ALGO token to take part.
No matter how much the ALGO you have, you may not be chosen to be a validator, even if you have the highest number of ALGO, the system selects randomly.
4. Do you think Algorand really solved the blockchain trilemma? Explain your answer.
The answer is yes because the Algorand chain can handle any requests for high transaction throughput without panic of hindrance. Blocks are engross within seconds, it enable it to make competition with global payment and financial networks in transaction speed terms. unlike other Blockchains that would have weakness in either speed, security or decentralisation, Algorand solved it all without having flaws in any of the three.
According to Silvio Micali, financial transactions are slow and cost. Trillions of dollars are always waste each year on gas fees of all types, although it may be an advantage to the paunch but it doesn't please the end-user. So, with high scalability, and making thousands of transactions within 4 to 5 seconds silthe slow problem is solved, it works without permission and an open source to everyone makes it a decentralized Blockchain
5. Do you think PPoS is better than PoW? Explain your answer.
Of course PPoS is better than PoW (Proof of Work) because Despite the early achievement of Bitcoin, PoW still could not meet the demand for higher data transfer, as later blockchains needs greater scalability and faster transaction rates. But PPoS can transfer up to 2 thousands data in just few seconds, maybe four to five seconds, Very high in scalability
PoW systems end up in need of large amounts of energy for the calculating power used by miners and once it consumes too much energy, the gas fee would be too much, although it would please the corporation but the fee won't please the miners and users. But PPoS don't need much energy due to it's scalability and it focus on the payments, once it's scalable, it doesn't need much energy to make transactions
PoW networks rely on miners but PPoS didn't rely on anything, it doesn't take permission before it works, it is completely decentralized.
6. Do you think PPoS is better than PoS? Explain your answer.
Yes PPoS is better than PoS, PPoS is the advanced level of PoS, PPoS has solution to the problem that PoS have
in terms of the market capitalization of the blockchain networks, after Proof of Works (PoW) then Proof of Stake (PoS) is the second most popular consensus mechanism while deploying it.
PoS came out as other option to PoW, which is the oldest discretion mechanism and it was introduced with Bitcoin first, but now, PPoS is the best option of all; both PoW and PoS in terms of scalability, security and decentralisation.
PoS networks rules change from case to case, but generally, the concept is the same: nodes that want to become validators need to lock up a minimum amount of tokens which will act as collateral PPoS doesn't require that, nodes doesn't need to lock any token to become a governance, any holder of ALGO are eligible to be a node validator
Validators have to conclude on which transactions they have to add into the next block, If their block is chosen by the protocol, they earn reward from the gass fees and with newly minted tokens depending on the size of their stake which makes it look centralised but PPoS selects users randomly, no matter of their stake, so It's hard for rewards to focus on one sector and it is not hard to participate in the governance, it gives security and comfort for any one that wishes to participate.
7. Explore and explain an ALGO transaction using algoexplorer.io ( Screenshots required)
Screenshot from and edited with Imarkup by me
As at 8th day of December 2021 that I made this screenshot shot, this is the main page of algoexplorer.
I noticed that the speed it takes to make a block isn't even up to 5 seconds, it's 4.3 seconds. So fast!
The ALGO price as at that moment is 1.6824
Screenshot Source and edited with Imarkup by me
This screenshot, had the transaction histories with their transaction 🆔 both from where it's transferred to where it's received, so fast and very small gas fee
Screenshot source and edited with Imarkup by me
Screenshot Source and edited with Imarkup by me
This screenshot has the details of the last transaction at the top, it has the date, the time, the type, 🆔 and block number.
8. Carry out an analysis of the price of ALGO from the beginning of the year to the present. Via graphics (screenshots required.)
The price of ALGO was in between 0.31 to 0.60 in January, but in February, it surpass 0.60 and reach $1 and then still accelerated to 1.60 but in sometimes is March, the price came down again to a dollar and bellow and towards the ending of April, the price rose up again, almost 1.60 and still came down massively. The rest months isn't that good for ALGO until sometimes in september and still fell back to bellow $1 and still rose back to its all time high which is 2.40 in sometimes in September.
October and November isn't a pleasing month for ALGO price but it later early this month, I rise to more than $2 but later fell back.
As at 12:24am, 8th day of December Nigeria time, the ALGO price is $1.69
9. Conclusion
Algorand is designed to solve the Blockchain trilemma that couldn't be solved before it's creation, and I can say it solve it in terms of scalability, security and most especially, full decentralisation it is.
By PPoS protocol, Algorand token (ALGO) holders are randomly selected on secret to suggest blocks and vote on proposals of block. Each user's power on the choice of a new block is magnitude to the user's stake in the system.
Algorand chain can handle any requests for high transaction throughput without panic of hindrance
With high scalability, and making thousands of transactions within 4 to 5 seconds silthe slow problem is solved, it works without permission and an open source to everyone makes it a decentralized Blockchain
The gas fee is very low which makes it please for end-user.