The latest upgrade to the Algorand network shows that the project is eyeing the burgeoning DeFi space.
In a Cointelegraph interview, Algorand’s head of product Paul Riegle emphasized the three key features of this upgrade: the addition of stateful smart contract functionality to the base layer, “fast catchup” and “rekeying”. The Algorand team believes the new features make it a viable competitor in the DeFi space.
He pointed out what makes Algorand’s stateful smart contracts different from its brethren on other platforms is their integration into the base layer, which allows them to run extremely fast:
“They do it at layer one, which means that they're extremely fast. They run at a thousand transactions per second, just like our general transactions. There are no second class transactions on Algorand.”
The fast catchup allows developers on Algorand to start working on their DApps without having to wait for the entire blockchain to sync, which depending on the size, can take hours or days. Developers can choose to download the blockchain starting from a particular block, whereas the previous blocks are hashed. They can still download the full node later on, if they choose to.
Riegle is especially excited about “rekeying." This feature “allows you to keep a single long running public address and actually change out the security or the authorized spending whenever you like. And you could change it from a single key to a multisig key to a stateless smart contract that actually has a spending policy built in.”
This feature could make the life of digital asset custodians easier, but it could also be used in everyday situations. For example, a family may hold their ALGOs in a multisig wallet, where each family member is assigned their own private key. It could be set up in such a way that different keys have different spending limits.
This could also be used to automate crypto inheritance, once Algorand introduces outside oracles that would be able to have access to a data source that tracks official death records. Riegle believes this could be a highly attractive feature for both traditional and decentralized finance:
“Rekeying allows me to rekey an account to a key you control and then I no longer have access to it. So you can actually give this account over to somebody else in a trustless way, which also is impossible right now. And that's pretty powerful in the finance and the DeFi world.”
In today’s blog post, Algorand founder Silvio Micali emphasized the uniqueness of Algorand’s approach to smart contracts:
“Smart contracts are one of the most beautiful and powerful gifts of the blockchain to the world. But they are also technically very challenging. Traditional smart contracts are solely implemented at layer 2 and are slow, expensive, and fragile.”