Folks Finance showcases the best of Algorand technology
Folks Finance is a DApp running on Algorand. It offers a very complete suite of simple or more advanced features such as Lending, Borrowing, Swapping through a DEX aggregator, Leveraged Trading, Flash Loans, Liquidity Pools of Lent Assets . Users can find a complete overview of the protocols in the Folks Academy. In this sligthly more technical article, I want to highlight how the choice of Algorand has supported their organic growth and has allowed them to quickly develop usable and safe features.
Short Technical Review of Algorand
Some notable technical points about Algorand:
- It claims to solve the Blockchain Trilemma.
- It has less than 4secs block latency, instant block finality, and can process up to 10k TPS.
- It has an unprecedented Smart Contract Throughput.
- It implements Atomic Swaps at the blockchain level.
- The blockchain cannot fork.
- Transactions are inexpensive.
- Check this intro to Algorand, the official FAQ, the community FAQ, or this page for more details or unique features of Algorand.
How Algorand technology impacts development
Improved Security
For developers, Algorand greatly facilitates their job, since, by design, the blockchain mitigates most of the common vector of attacks in DeFi. Developers can thus focus more on what they want to achieve and less on the securities concerns raised by using another blockchains.
MEV Attacks. Since, in Algorand consensus, block proposers are selected randomly each round, MEV or front-running attacks are rendered extremely difficult.
Re-entrancy Attacks. Since transferring an asset on Algorand does not go through calling a Smart Contract and does not execute any code, most re-etrancy attacks are not possible.
Flash Loans. Since transactions on Algorand can be validated by groups in the same block, with all of them succeeding or failing, Flash Loan attacks are much more unlikely as it is possible to verify the validity of the resulting state.
Warning. Even if Algorand is safer by design users should still be careful regarding what they sign, what protocols they use, and which smart contracts they interact with. As every other market, markets on Algorand can also be subject to price manipulation.
Composability
Smart Contract. Smart contracts are fully composable. Meaning smart contracts can easily call each other. This adds functional value to the chain and allows different DApps to communicate seamlessly.
State Proofs. Algorand implements State Proofs, which allow to Algorand Consensus to verify states outside of the blockchain. Opening the door to reliable price oracle or cross-chain interoperability.
Concrete examples for Folks Finance
Ultraswap
Ultraswap is Folks Finance’s approach to leveraged trading. See my other blog post for a non-technical review. At the technical level, Ultraswap combines most of the above advantages of Algorand to provide a powerful and safe tool for traders.
Folks Router. It is the DEX aggregator that ensures the best price during the borrow loops. Such an aggregator is a great illustration of Algorand Smart Contract Composability: the Folks smart contract simply “asks”, in a verifiable way, contracts on various DEX about the current price and selects the best route.
Borrow Loops. During those loops users are conducting, in a semi-blind way, numerous swapping transactions. If front-running was possible, an attacker could bride his block in order to take advantage of those swaps.
Flash Loans. Flash Loans are at the hearth of the Ultraswap product, since they allow to complete the loops and gain leverage within one block. As explained above they
Lending Pools
Lending Pools on Folks means Liquidity Pools between pairs of assets supplied for Lending. They do not directly take place on Folks but on DEX showing again the power of Smart Contract Composability.
