TLDR
AlgoKit 2.0 has been released, supporting the Python native language and creating a developer-friendly development environment. The Algorand developer community is rapidly expanding.
The consensus incentive mechanism has been upgraded to reward consensus nodes with ALGO for participating in consensus, increasing the application scenarios for ALGO and further ensuring network security and decentralization.
Full support for RWA projects on Algorand, tokenizing real-world assets such as agricultural products, physical assets, airline tickets, and mutual funds, bringing traditional assets into the blockchain.
The leading RWA project on the Algorand blockchain, Lofty, allows users to invest in properties worldwide with a minimum investment of only $50 and immediately receive rental income.
The "Change the Game" global hackathon will be held to help high-quality projects participate in upcoming incubation and acceleration programs and obtain financing opportunities.
1. Background
Algorand was founded in 2017 as a pure proof-of-stake Layer1 blockchain protocol designed to connect the blockchain with the real world. Its founder is Silvio Micali, a distinguished professor at MIT and a pioneer in cryptography. Silvio Micali was awarded the Turing Award in 2012 for his groundbreaking contributions to verifiable random functions (VRF) and zero-knowledge proofs, which are now widely used in the encryption industry. Silvio Micali's deep expertise in cryptography played a crucial role in building Algorand's strong technical foundation. Algorand and Silvio Micali have been praised and recognized by Gary Gensler, the chairman of the U.S. Securities and Exchange Commission, in 2018 and 2019, making it a star project with a halo.
Due to the high threshold for building on-chain using Algorand's own state machine, AVM (Algorand Virtual Machine), ASA (Algorand Standard Assets), and the unique programming language TEAL, the ecosystem's performance did not meet expectations despite the significant price increase during the previous DeFi-led bull market. The value of ALGO was not supported by the ecosystem.
In the new cycle, Algorand is making comprehensive efforts in terms of technological innovation, marketing strategies, ecosystem construction, and developer support to promote the mass adoption of blockchain by linking it with the real world.
2. Technological upgrades driving adoption
2.1 Release of AlgoKit 2.0, supporting the Python language
To further support developers, Algorand has released AlgoKit 2.0. AlgoKit is a unique developer tool for Algorand that solves complex issues in Web3 by simplifying setup processes and providing various libraries and templates for easily building Algorand dApps.
AlgoKit also simplifies development, testing, and deployment processes in Web3. Compared to other mainnets, deploying a dApp requires developing contracts, testing them on the testnet, and then deploying them to the mainnet for final testing. AlgoKit provides a more efficient method. Developers can directly test and deploy on the Algorand mainnet by temporarily opening an isolated space called the "local network." In other words, AlgoKit simplifies the complex testing process on the testnet and mainnet.
AlgoKit 2.0 provides developers with a complete set of development tools and resources, including smart contract templates, debugging tools, and performance optimization tools. The release of AlgoKit 2.0 allows developers to develop more efficiently on Algorand, improving the quality and performance of applications. The majority of developers are not familiar with the TEAL language used for building on Algorand, which has hindered development on the platform to a large extent.
The simplicity and ease of use of Python allow developers to quickly get started and develop efficient decentralized applications. With approximately 10 million Python developers worldwide, this is a significant community. After introducing native Python language support in AlgoKit 2.0, the size of the Algorand developer community has rapidly expanded. More than 400 teams have registered for the Algorand Global Hackathon, and in the past month alone, over 3,000 Python developers have received technical support from Algorand. This demonstrates great interest and enthusiasm among developers for building applications on Algorand using Python. Developers can now easily build any ecosystem application on-chain, including RWA, DeFi, GameFi, etc., laying the foundation for the prosperity of the Algorand ecosystem.
2.2 Dynamic round time
In January 2024, dynamic rounds, also known as dynamic lambda, will be incorporated into the Algorand network and officially take effect. Dynamic rounds increase the block creation time by 20%, significantly improving network performance. The TPS of the Algorand network will increase to 10,000 transactions per second, with an average block time of less than three seconds.
Dynamic round time is a flexible mechanism where the algorithm adjusts the block finality based on network congestion and other factors, thereby shortening the average round time. Builders will benefit from the flexibility of dynamic rounds as it improves the efficiency and scalability of the Algorand network. End users will experience faster confirmations, enabling seamless and timely interaction with the blockchain.
2.3 Upgrade of consensus incentives
Unlike other PoS public chains, Algorand currently does not reward nodes participating in consensus and does not have staking lockups or deflation mechanisms. In Algorand's PPoS staking mechanism, users retain control of their ownership while providing ALGO to secure the network. In terms of governance, users must commit a certain amount of governance funds. If their ALGO balance falls below the committed amount, their entire commitment is considered invalid.
In 2024, Algorand will undergo a significant upgrade to the consensus mechanism, directly incentivizing this participation. In other words, Algorand will soon change L1 behavior to reward block producers. The upgrade of the consensus mechanism will drive a significant increase in staked ALGO and the number of consensus nodes in the network, thereby enhancing network security and decentralization.
Part of the consensus incentives will come from transaction fees. In the short to medium term, the Algorand Foundation will also contribute to increasing incentive rewards. Over time, as Algorand's adoption rate increases and fee structure modifications are implemented, transaction fees will become more meaningful and should be able to sustain network security on their own.
2.4 P2P gossip network
To further increase network stability, security, and decentralization, Algorand is transitioning from the current relay network structure to a P2P gossip network.
The current relay network produces blocks in a permissionless manner and transmits data across the network through relay nodes forming a loop, enabling efficient data propagation. Although highly efficient, it is not the most decentralized approach.
In the P2P gossip network model, data flows directly between consensus nodes, forming a decentralized spiderweb-like structure. This reduces reliance on relay nodes, allowing the network to operate even without relays. Combined with the upgrade of consensus incentives, more nodes are expected to join, taking an important step towards a more decentralized direction for the Algorand network. The network becomes more resilient, stable, and secure, aligning better with the decentralized technical core and attracting more ecosystem projects to build on Algorand.
3. Marketing and ecosystem development
3.1 Appointment of a new Chief Marketing Officer
In March 2024, the Algorand Foundation announced the appointment of Marc Vanlerberghe as Chief Marketing Officer. Marc Vanlerberghe has over 20 years of executive marketing experience and was responsible for creating the Android brand and developer ecosystem at Google. Recently, he served as the Chief Marketing Officer of customer experience software company Medallia and the Chief Executive Officer of an early-stage AI company, Rulai.
Marc will lead the global marketing efforts of the Algorand Foundation, overseeing teams in communication, branding, content, marketing activities, social media, and events. The new Chief Marketing Officer is expected to bring new market strategies and innovative thinking to further develop Algorand in the blockchain field.
3.2 "Change the Game" Global Hackathon
Algorand officially launched the "Change the Game" global hackathon in April, with a registration deadline of June 3rd. The Algorand Global Hackathon is aimed at developers and entrepreneurs who want to gain deep technical knowledge and experience to build functional solutions and expand the Algorand ecosystem. The Algorand Foundation will support winning teams beyond the product development stage, giving them priority access to upcoming incubation and acceleration programs and financing opportunities.
The hackathon offers multiple awards, including the Master Award, AI Award, Best Female Leadership Team Award, and AWS credits. It has also received support and sponsorship from well-known projects, with the leading cross-chain project Wormhole and decentralized oracle GoraNetwork sponsoring a prize pool of 16,000 USDCa for the hackathon.
The hackathon will bring more high-quality ecosystem projects to Algorand, attracting more users and funding, marking the first step towards the prosperity of the Algorand ecosystem.
3.3 Linking the real world
Algorand focuses on supporting RWA-focused ecosystem applications and has been at the forefront of tokenizing real-world assets in the entire crypto market.
The Lofty ecosystem project has made groundbreaking attempts in the tokenization of real estate assets, allowing users to invest in properties worldwide. With a minimum investment of only $50, users can immediately receive rental income. As of Q1 2024, Lofty has launched over 120 properties with a total value exceeding $30 million and introduced instant liquidity through a new real estate token AMM.
TravelX has created a new application scenario by transforming airline inventory from static to dynamic, resulting in increased revenue and improved customer experience. Over 5 million customers have used their NFT tickets.
Agrotoken tokenizes agricultural products such as soybeans, corn, wheat, and coffee to provide loans to farmers, helping the development of physical agriculture. The soybean recorded on the blockchain increased from 1,000 tons to 230,000 tons in a short period.
The well-known crypto wallet Exodus is the first U.S. company to receive authorization for listing on the New York Stock Exchange (NYSE). Exodus stocks will be tokenized on Algorand and have received full validation from the SEC.
By tokenizing real-world assets such as agricultural products, physical assets, airline tickets, and mutual funds, these traditional assets are brought into the blockchain ecosystem, improving asset liquidity, transparency, efficiency, and security.
Building the leading RWA public chain
With the new Chief Marketing Officer, the global hackathon, and the Decipher 2024 event held in Barcelona, inviting active developers on-chain to participate and help projects with their construction and operation through workshops and master classes, Algorand demonstrates its commitment and dedication to the development and prosperity of the ecosystem.
Through technological upgrades, adopting the developer-friendly Python language, providing an easy-to-use development toolkit like AlgoKit 2.0, upgrading the consensus mechanism to enhance network security, and adopting a P2P gossip network to increase decentralization, Algorand has comprehensively prepared to fully embrace the ecosystem's takeoff. Whether it is the widely anticipated new fields of AI, RWA, and DePIN, or the continuously innovating DeFi, GameFi, SocialFi, and other various sub-sectors, they can be easily built on Algorand. RWA technology has had a profound impact on Web3 by bringing real-world assets into the ecosystem. It not only improves asset liquidity and transaction efficiency but also promotes the development of decentralized finance and global financial inclusivity.
With continuous technological progress and a mature market, RWA will play an increasingly important role in driving the widespread application and innovation of Web3. Algorand has already been at the forefront of the RWA track in the entire crypto market and may become the representative ecosystem application of Algorand, making it the leading RWA public chain.