Key Insights:
- Algorand has a very efficient blockchain, integrated L2 solution.
- Yet, price keeps falling due to regulations, lack of marketing and tokenomics.
- Very low possibility of survival in future.
Algorand has been continuously losing market share since its inception in 2024. Initially being one of the top 20 cryptocurrencies, it now ranks on position 54 with a market cap of just $1.5 billion.
This article is the result of our investigation on why the efficient blockchain is slowly fading away.
Recommended Reading: What is Algorand?
Algorand's Strong Points
High TPS
The blockchain is one of the few Layer-1 chains with an impressive capacity to handle transactions. It had 6000 TPS when none other blockchain did that securely. This helped the blockchain achieve a very cheap transaction cost.
Eco-Friendly
The Algo blockchain was one of the first blockchains to achieve a full carbon negative status, long before Ethereum's transition with the Merge.
Consensus
The blockchain had a Proof of Stake consensus mechanism which was new when it was introduced.
Easy On-Chain Development
DApps on the blockchain could be developed using PyTeal, a Python-like programming language that is easy to learn and use.
My Experience with Algorand
The first time I experienced Algorand was in 2021 when I was testing new Layer-1 blockchains to check their network congestion and respective transaction costs.
I was surprised to see that a new blockchain supported by the prestigious Massachusets Institute of Technology and its professor Dr. Silvio Micali. The blockchain beat all others in terms of quick finality of transactions. This was in an era when an Ethereum transaction cost was around $35. The same transaction on Algorand cost me a mere 1 cent.
However, despite all success Algorand continued to shed its price and its market share kept falling.
ALGO Token Price Since its Birth
As of February 2024, nearly 100% of its token holders are in loss.
Why Algorand Failed?
We found a few very interesting reasons that resonates well with the fall of Algorand.
Failed At Marketing
Algorand bitterly failed at its marketing. You would see rarely any enthusiastic marketing even in its social media groups (Yes, I am still a part of those).
Popular blockchains like Tron, Polygon and even Shiba Inu did a lot of marketing to drive adoption. Even to the extent that Tron is fighting a long legal case with the US SEC when it paid celebrities to promote its project. Shiba Inu did a lot of giveaways, token burns, etc., to boost user sentiment.
The Algorand Foundation did almost nothing in marketing. Even if something came its way, like the FIFA deal, was not nurtured by the Algo Foundation.
Faulty Tokenomics
As of February 12, 2024, almost 20% of it's total token supply has not been mined yet. Being a limited supply cryptocurrency, having such a huge number of tokens which are essentially not minted, creates an image that any token holder would not like.
It creates excess supply with the project and increases the fear of a market dump.
A reddit user said that the foundation always treated retail buyers like enemies. The crypto always witnessed a high selling pressure. The user added that during rallies, there used to be high inflation caused by token issuance, and during bear markets, there used to be high selling pressure. All of it caused the token to plummet further and further down.
SEC Actions
The SEC also did a considerable job in killing whatever was left of Algorand. The crypto crashed to all time low when the SEC classified it as security.
Even though other cryptocurrencies like Polygon, Solana, and XRP were fighting a similar battle, Algorand was not able to recover from this shock. It fell more than 60% upon announcement of this news as compared to its price in the beginning of 2023.
Our Verdict – Low Survivability
Proof of Stake blockchains need a certain token price to prevent 51% attacks. Algorand has already fallen more than 90% from its issue price of $2.4. Any major fall in the future would make it possible for attackers to take control of the consensus mechanism with a few million dollars.
Further, there has been fruitful no efforts to increase its adoption by the Algorand Foundation.
Due to all these reasons, we suggest everyone to consider avoiding it.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.
