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"Collaboration always wins over competition... and is more fun, too."
- Silvio Micali (Algorand Founder) |
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In today's issue: Algorand's technology is top-notch, but how is the traction?
Our investing thesis is that the top Layer 1 protocols will be the biggest long-term performers. They're like the operating systems for crypto.
Finding the top Layer 1 protocols is the challenge.
Algorand has a fast, cheap, scalable blockchain platform built on a new technology called Pure Proof of Stake (PPoS), but the best technology usually doesn't win. The most popular one does.
To see how Algorand is faring in the L1 wars, we put together this report on top projects building on Algorand. Read on and see whether ALGO should have a place in your portfolio. |
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| | | Must Read Today's most important story for crypto investors. |
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Dotted line = what he spent; green line = value today.
Reddit user jamespunk has been taking €500 from his monthly paycheck and putting it into bitcoin every month for the last 60 months. Some months, it buys more. Some months, it buys less, but even in a crypto bear market he has more than doubled the amount he's invested.
We'll say it again. In just five years, he's doubled his money.
Although his approach of putting it all into bitcoin is not as diversified as we would like, we do like his steady-drip approach (see our article on how to set it up).
Can't afford to put away that much? He says, "I'm being pretty damn frugal to do it, and you can get the same 'effect' with less if you live in a cheaper country. Do what you can!" |
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| | | Top Projects Building on Algorand by Danielle Greving |
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Algorand (ALGO) is a Layer 1 blockchain designed to process transactions quickly and cheaply, similar to major payment processors like Visa or Mastercard. While Ethereum is currently the world’s largest L1 blockchain, Algorand is a fierce competitor as it’s a scalable, highly efficient platform that can immediately finalize transactions.
Algorand implements a technology called Pure Proof of Stake (PPoS) to validate transactions, which helps it maintain speed and energy efficiency. Many blockchain projects have chosen to build on Algorand because of these benefits, but is it a serious competitor for the Layer 1 throne?
In this article, we’ll discuss some of the top projects building on Algorand in 2022 so you can decide whether to add ALGO to your portfolio. |
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Tinyman Category: Lending Daily Users: 1.4k Daily Transaction Value: $552,000 Total Value Locked (TVL): $13.73M
Tinyman is a decentralized exchange (DEX) that supports all tokens on Algorand's blockchain.
The Tinyman platform allows users to create liquidity pools between Algorand and different Algorand Standard Assets (ASAs) similar to how Uniswap allows liquidity pools between Ethereum ERC-20 tokens.
This allows other users to easily buy, sell, and trade Algorand-compliant tokens, even when they're relatively new. So long as there's liquidity, Tinyman permits trading.
As they see demand, developers and users can set up their own liquidity pools for token pairs that previously didn't exist. All this is possible due to Algorand's fast, cheap, and secure protocol.
Thanks to Algorand's solution, Tinyman has overcome the usability and scalability challenges of other decentralized exchanges. These are big hurdles for many emerging DeFi ecosystems. Algorand's PPoS ledger allows platforms like Tinyman to scale to millions of users while maintaining a high transaction rate and not incurring significant costs for participants. It also does all of this while remaining energy efficient and environmentally friendly. |
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Algofi Category: DEX Daily Users: 575 Daily Transaction Value: $200,000 Total Value Locked (TVL): $88.49M
AlgoFi was the first lending platform on Algorand. It facilitates lending and borrowing and offers STBL, an Algorand-native stablecoin.
AlgoFi offers lending for five different tokens on the Algorand blockchain: ALGO, goBTC (a wrapped version of bitcoin for trading on Algorand), goETH (the same for Ethereum), STBL, and USDC.
In addition to lending and borrowing services, AlgoFi also offers staking. Participants that stake STBL can earn annual yield.
In the future, AlgoFi plans to offer more traditional banking services like savings accounts and credit cards, which would be powered through Algorand’s rapidly growing ecosystem. |
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Folks Finance Category: Lending Daily Users: 172 Daily Transaction Value: $62,800 Total Value Locked (TVL): $79.65M
Folks Finance is a capital markets protocol built and operated on Algorand that offers both lending and borrowing.
Folks lenders can deposit liquidity and start to earn continued returns instantly. Borrowers can request crypto loans by locking up deposited funds as collateral.
Folks Finance is inspired by the company’s mission to bring decentralized financial services to the masses. It welcomes wallets of all sizes and plans to make the protocol globally accessible. The protocol offers a friendly and straightforward user interface, allowing beginner crypto investors to benefit.
Folks Finance takes advantage of Algorand’s fixed, low-cost, high-speed transaction capabilities. It also leverages the Algorand Virtual Machine (AVM) to create a financial business model that helps ensure the economic viability of the protocol. |
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Pact Category: DEX Daily Users: Not available Daily Transaction Value: $206,000 Total Value Locked (TVL): $7.3M
Pact describes itself as a mobile-first trading experience. It offers low transaction fees, deep liquidity, and access to smart contract functionality. Through the platform's smart contract functionality, Pact transactions are available to participants on all levels of experience and wealth.
Pact is backed by key strategic partnerships. It’s been able to build a technically sophisticated platform in relatively short order thanks to Algorand’s PPoS mechanism. Block verification is selected randomly. This ensures the integrity of every user transaction occurring on the platform.
Pact is also committed to creating an environmentally friendly platform. It fully endorses Algorand’s environmental initiatives, which aim to create a carbon-negative footprint. |
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Humble DeFi Category: DEX Daily Users: 394 Daily Transaction Value: $327,800 Total Value Locked (TVL): $4.74M
Humble DeFi describes itself as a one-stop DeFi suite. Its first product, HumbleSwap, is an exchange in the style of an Automated Market Maker (AMM) that allows users to swap, pool, and earn on Algorand-staked assets. In the future, users can earn yield by participating in Humble DeFi’s yield farms.
Once Humble is fully operational, it claims it will offer a wide range of features including yield farming, liquidity mining, a DEX, derivatives, stablecoin pools, cross-chain functionality, a customer support help desk, and more.
Recently, Humble was awarded 2 million ALGOs by the Aeneas Fund to assist in the growth of its total value locked by rewarding early adopters. These ALGOs will be distributed through farming and liquidity mining of ALGO/USDC ALGO/ASA liquidity pools. Thus, there should be many ways to earn via Humble in the future. |
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GARD Protocol Category: Liquid Staking Daily Users: Not available Daily Transaction Value: Not available Total Value Locked (TVL): $1.76M
GARD Protocol is a lending platform on Algorand that utilizes collateralized debt positions (CDP) to mint the protocol’s native stablecoin GARD. Users known as "GARDians" will need to lock their ALGOs in smart contracts to earn GARD. GARDians can also vote directly on GARD Protocol.
GARD is an over-collateralized algorithmic stablecoin. This means $1.40 worth of ALGO is needed to back 1 GARD or 140% of the value.
Once the ALGO is locked, users can mint GARD and the CDP will automatically set a 115% liquidation threshold. If a user falls below this threshold, part of their position will be liquidated and entered into an auction. This is how GARD hopes to stay pegged to the U.S. dollar.
GARD Protocol is working to implement a DAO structure where GARDians can leverage governance tokens known as GAIN. GAIN holders can vote on various items like feature updates and fee revisions while also receiving portions of the protocol’s earnings. |
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Yieldly Category: Yield Daily Users: 615 Daily Transaction Value: $0.45 Total Value Locked (TVL): $433K
Yieldly was the world’s first interconnected and borderless DeFi platform developed and designed on Algorand. Yieldly also built the first DeFi smart contracts native to Algorand. By bringing the power of DeFi to Algorand, Yieldly allows users to pool, swap, and stake ASA assets.
Yieldly introduced cross-chain bridges so ASA tokens can move easily between all major protocols. This includes Algorand. The first use case of this is an Algorand-to-Ethereum bridge that enables nearly instantaneous, low-cost token swaps between the two ecosystems.
Yieldly can also be a powerful developer tool that serves as a platform where ASA-based projects can access users and liquidity, bootstrap adoption, and expedite development. |
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Investor Takeaway
There are presently around 700 companies building projects on Algorand. The company has distinguished itself from other blockchains through its PPoS model by offering low fees, robust security, and fast transaction speeds.
That said, the top Algorand projects are essentially clones of similar services on Ethereum. For Algorand to become a Layer 1 contender, it must look for one-of-a-kind "killer apps" that leverage Algorand's technology; apps that couldn't be copied on Ethereum.
Our thesis is that investing in ALGO is like buying "stock" in the Algorand "company." We do not currently hold ALGO in any of our Future Winners portfolios. |
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