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r/algorand
r/algorand
83
Posted by2 months ago
HelpfulWholesome

Will Algorand catch up with the other L1s?

I am super bullish on Algorand and I've been for the last couple of years, but let's face it, it has a lot of problems. One of the biggest problems Imo is the retail adoption, active wallets are an insignificant number compared to other chains (like Solana, Avalanche or Fantom) and most of the wallets are used only once every 3 months to participate in Governance. I believe that in the coming years Algorand will grow exponentially, thanks to tech improvements and big partnerships (like FIFA or Banca d'Italia), but will it be able to catch up with the already huge adoption of other L1s? And will it be able to compete with the new ones coming out (siu and Aptos comes to my mind, which looks great on paper, but we'll see)?

150 comments
87% Upvoted
level 1

I’ve seen a few posts recently from devs who discovered Algorand… and they were thrilled. I’m not 100% positive why it takes as long as it does for this discovery, but it’s only a matter of time.

65
level 2

I got it on coinbase and it had good apr did a little research and decided to really hold three coins btc where I hold most my money eth but I staked all my eth on eth2 and algo. Now I stopped eth buys and go 70/30 btc algo

15
level 2

A lot of the dev tooling, Moocs, and certs are built around the EVM. Personally I think the AVM is easier to dev on (mostly because of PyTEAL) but that's not widely known about even amongst devs.

6
level 2

Slow and steady wins the race I guess

2
level 1

Algorand is going after a different piece of the pie. When regulations happen and mass adoption comes into play algorand will have a huge nitch that it kicks ass at. The financial industry is not going to use Ethereum, algorand will be the future of finance.

94
level 2

What's your motivation for this? Why wouldn't they use ethereum? I guess motivations for why they'd use algorand are obvious, but I'm not 100% sure of benefits vs other chains. Lots of chains now are fast and cheap to use, no?

While I don't know that much about it, from a conceptual point of view I think polkadot makes a lot of sense. A chain of chains. Not sure how fast or cheap it is to use, but it's one common platform with a lot of versatility from what I understand. Seems quite attractive to something like a bank or government agency?

7
level 2

Isn't Fidelity building in Ethereum?

1
level 1

banca italia is the hint here. if this works out anything like i imagine, we're looking at an entirely different scale of adoption than those other chains. patience.

29
level 2

ECB maybe

3
level 1
· 2 mo. ago · edited 2 mo. ago
Wholesome

Not financial advise.

My position is that blockchain, in its current state, is mostly a liquidity extraction scam with little permanent equity. The project founders and early backers pour money into the ecosystem to bait users into investing, and subsequently sell slowly once retail hamsters buy into the projects.

I think this is especially true with Solana and Cardano, where the projects are either entirely VC-backed or backed by early BTC/ETH profits. The majority of these coins are owned by "early adopters" who the founders claim to be unrelated to the project under the guise of a "public auction". If the auction is public, nothing prevents you from buying your own supply. This was a common tactic during the scrypt shitcoin gold rush in 2013.

Consider Cardano, where 25 billion was purchased for under a cent. Why are these early buyers not taking profits? Because all of the coins are owned by the same group of early backers or in the worst case: one person with a lot of wallets. (Look at the top cardano holders for suspicious, repeated fractional, quantities of the coin in sitting cold wallets).

Specifically, the scam comes not from the initial allocation to early backers, but from the tactic of buying a large quantity of the asset from yourself to artificially limit the supply. Then, using a diminished liquidity, retail adopters buy at a much higher slippage and inflate the price and market cap of the asset.

Blockchain is mostly a scam in its current state. Algorand's terrible price action may not be because of it struggling, it might just be one of the only modern L1s that isn't being manipulated by the powers that be. This also means it will take longer to achieve real adoption, but this also means the asset is more fairly priced and may be less likely to tank in a serious downturn.

The current uses cases for blockchain are trading shitcoins, gambling, and scamming people out of their money. There is real room for industry adoption in fintech for blockchain, but we haven't seen it yet, and may not see it for a while.

If you're skeptical, this is very easy to simulate in an Algorand ASA. Create your own shitcoin with 10,000A in liquidity, then buy into the shitcoin with 90,000A before anyone else makes a transaction. There's now 100,000A in the liquidity pool and a history that shows the coin going "to the moon". Now you can remove the 90,000A in liquidity and let people buy the asset. Since you're buying and selling from yourself the risk is zero (the price can only go up if you don't sell, since nobody else has bought but you), and you can slowly profit from unsuspecting buyers at a very high margin. This is blockchain in a nutshell.

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level 2

While I agree that statistically it is mostly "scammy" (more like greater fool) - after all there are like 22k coins out there and growing - there are hundreds of solid projects with real world uses case right now.

If it was a scam governments wouldn't adopt it as legal tender, financial institutions wouldn't be racing to adopt it for banking and capital markets, merchants wouldn't be working towards acceptance of crypto as settlement, and major corporations wouldn't be using the tech. Infrastructure takes a while to build.

Blockchain is only now picking up because we finally have enough internet infrastructure around the world to allow for proper decentralization (a key selling point).

Algorand's terrible price action is the same as every other alt's terrible price action - bear market.

BTC goes, we ALGO

4
level 1

I agree. Algorand doesn’t have a developer problem, it has a user problem. We have plenty of quality projects building, we need the users to use them or else developers will stop coming.

7
level 2

Like what projects? I am not trying to be rude here I just stopped browsing the algorand sub in the past 4 or 5 months so my information is a bit out of date.

1
level 1

They are more focus led with development than they are marketing. SOL exploded by creating hype, yes they go down like once a month. Algo will have its moment. When the world does find out about it, the ecosystem will be in place to not just meet the hype, but exceed it.

6
level 2

Agreed, most good projects have only recently come out of beta and testnet, defi just starting to get built out and gaining participation, nft communities growing and starting to put a lot of money in. A lot has happened in the last 6-9 months but Algo isn't quite ready to moon imo. I think by the end of the year we should see a pretty robust ecosystem. Pretty neat to witness it evolve.

2
level 2

Well put

1
level 1

Algorand is brand new tech and purposefully not EVM compatible. It’s not behind at all, growth takes time.

5
level 1

For as long as Algorand plays its cards right, then things should be great ... In this business, like it or not, the underlying technology matters a lot. We are in the early days and loads of speculation in the market. People are sold dreams, such as Solana. But in the end of the day, the only ones left standing are those with real utility. Hence, BTC and ETH are guaranteed to survive. I strongly believe that the other two will be Algorand and Hedera. These two will potentially overtake BTC and ETH as Algo and Hedera will be the ones used for settlements. Critical things like settlements will never be done on Ethereum. Extremely valuable piece of arts, such as Mona Lisa will never be sold on Ethereum as NFT. Similarly, the future of real estates will not be on Ethereum. And guess what, Real Estates, Fine Arts, Settlements take a large portion of our economy.

5
level 2

What are your thoughts about Hedera? I’ve been wary of DAGs in general because of the alleged “slowing” of the network as transactions become more diverse. I don’t have a strong opinion about this though

1
level 1

I agree that Algo has problems and is struggling to find a good market position and build momentum.

I also think almost everything on chain right now is trash or dexs for trading one shitcoin for another haha.

However I also have a lot of faith in Staci and the team she's building, the people they've hired recently have been really good.

And I think the fifa deal shows the kind of potential the chain has. I think it would be really amazing to become established as "the chain big corporations and banks can put their trust in". And I think that will tend to happen in a snowball, where if fifa is happy that's a big signal that it's ok here.

So yeah I think it will take a while to pickup momentum and I think there is a chance that ETH is just so far ahead it will suck up everything like a black hole.

However if Algo can get some serious real world use cases built out on the network, get state proofs and trustless bridges working and start to onboard some big players then I think we could really go somewhere.

In the long run what really matters are whether the transaction fees are higher than the costs of running the network, if yes then we can continue indefinitely, if not it will go to zero. I think we can hit that sustainable rate and be fine.

11
level 1

Date(s): December, 2022

Re: Algorand gets massive exposure to over approx. 3 billion humans via the FIFA World Cup.

A mere .1% of this population were to enter the crypto realm, it can become an on-boarding tidal wave.

E.g., people who disregarded me 1-3 years ago, are now very interested. ;)

3