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Algorand’s Proof of Rights Protocol Suffers from a High Number of Losses and Low Performance

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According to reports, according to data from the encryption analysis platform IntoTheBlock, the Layer 1 Proof of Rights Protocol Algorand (ALGO) currently has m

Algorands Proof of Rights Protocol Suffers from a High Number of Losses and Low Performance

According to reports, according to data from the encryption analysis platform IntoTheBlock, the Layer 1 Proof of Rights Protocol Algorand (ALGO) currently has more than 16.4 million addresses in a loss state, accounting for more than 98% of the total registered addresses on the Algorand chain, and its performance also lags behind peers such as Ethereum, Cardano, Solana, and Avalanche. （u.today）

Data: More than 98% of Algorand’s addresses are in a loss state

Analysis based on this information:


Recent reports have revealed that Algorand’s Proof of Rights Protocol is significantly struggling with losses and performance issues. The analysis platform IntoTheBlock’s latest data indicates that the Layer 1 protocol, ALGO, has over 16.4 million addresses in a loss state, which constitutes more than 98% of the total registered addresses on the Algorand chain. Additionally, the protocol’s performance lags behind its peers, who are already well-established, such as Ethereum, Cardano, Solana, and Avalanche.

A “loss state” in blockchain refers to an address with a diminished balance or a zero balance, meaning that these addresses are inactive and do not contribute to the network. This state can result from several reasons such as lost private keys, involuntary account closure, or even a decline in the price of the token. A high number of addresses in a loss state is a significant concern for the Algorand protocol, as it implies that a substantial amount of circulating tokens is stagnant, and the network could be missing out on potential usage cases.

Moreover, the protocol’s performance compared to its peers is also questionable. Ethereum is the market leader for decentralized applications (dApps) and boasts of a vast network effect with over 1 million active addresses, which is a 600% increase from Algorand’s peak. Similarly, Cardano, Solana, and Avalanche have made significant progress in terms of their user base, applications, and market capitalization. With a low user base and weak network effects, Algorand might find it challenging to bring new developers and applications on board.

Algorand is a proof of rights protocol that aims to solve critical issues surrounding scalability, security, and decentralization. The network’s native token, ALGO, has performed moderately well in the cryptocurrency market, with a current market cap of $3.7 billion. However, the recent negative revelations around protocol’s low performance and stagnation could negatively impact investor sentiment, causing a decline in the token’s price.

In conclusion, the Algorand network’s high number of inactive accounts is a worrying sign for the protocol, highlighting the need for greater engagement and adoption. Furthermore, the protocol’s weak performance compared to its peers raises concerns about its ability to compete in the already well-established blockchain market. It will require considerable effort and resources to attract developers and applications to the platform and build the necessary network effects to propel the protocol into the limelight.

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