Algorand Smart Contract Upgrades Push The Network Into the DeFi Space; ALGO Jumps Over 20%
- Algorand introduces new upgrades on its protocol to boost the development of DeFi applications on the platform.
- Critical changes on Algorand include rekeying, fast catch up, and additional stateful smart contracts to speed up transactions on the platform.
- The move to DeFi markets has since boosted ALGO token price over 20% in the past 24 hours.
Algorand Foundation, a non-profit organization developing the Algorand blockchain, is dipping its toes in the decentralized finance (DeFi) ecosystem through the launch of upgraded smart contract functionalities. The developers aim at reducing the cost of transactions, enabling scaling to billions of transactions a day, and secure transactions across the DeFi space. Silvio Micali, founder of Algorand said,
“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.”
According to a statement shared with BEG, the Algorand smart contract capabilities will focus on adding a stateful smart contract functionality onto layer one protocols, which expands features such as Atomic Transfers and Algorand's Standard Assets (ASA1s).
These stateful smart contracts interact solely with the Layer 1 platforms, which store crucial information on users' accounts, rather than on the blockchain itself. This enhances the speed of transaction – up to thousands of transactions per second – allowing them to run super-fast, a key property that DeFi needs.
The stateful contracts also enable developers to start creating decentralized applications (dApps) on to the platform without the whole blockchain syncing, which at times takes days to complete.
Notwithstanding, these stateful smart contracts will lower the cost of transactions – about 0.001 ALGO. This helps Algorand attract DeFi platforms onto its blockchain from well-established competitors such as Ethereum, which is experiencing ever-rising gas costs.
The “rekeying” feature aims at increasing security while easing the bureaucracy of having multisig wallets. This feature aims at making the life of digital asset custodian services easier, allowing users to change the authorization and spending ability of each key through stateless smart contracts.
These new smart contract upgrades will provide a new gateway for DeFi apps to build faster, more secure platforms and enable cross-chain transactions across the DeFi ecosystem.
A 20% Reward for ALGO
ALGO, the platform's native token, is on a surge since the Foundation announced its plans to enter the DeFi space. In the past 24 hours, ALGO is up 20.63% after rising from $0.542 on Aug 19 at 14.05 GMT +3 to over $0.655, as at the time of writing.
The sharp rise translates to $90 million growth in its market cap to $526 million, placing the token at #35 on the Coingecko listings.