Ethereum vs Algorand

Published in

SMUB Research

23 min readNov 1, 2022

by Shawncky, Jian Hao Lim, Desmondtyc & Lau Bao Jie

Nothing following this constitutes financial advice, please do your own research!
All data presented henceforth are accurate as of 25 October 2022.

1. Summary (TLDR)
Ethereum will remain the dominant Layer 1 blockchain as:

Data seems to show that users prefer Ethereum due to its battle-tested blockchain technology and its competitive economic moat
It is a well-established ecosystem comprising of multiple famous projects and communities including a 400-member global community

Algorand is an up-and-coming Layer 1 blockchain due to:

Algorand provides builders with a conducive environment for building dApps, whereas Ethereum seems to lack in the said areas
Strong partnerships with governments and well-known organizations
Greater interest and fund allocations from VCs

2. Brief Introduction to Ethereum and Algorand
Ethereum and Algorand are both Layer 1 blockchain networks that have seen increased popularity and use cases over the years. These blockchains are far from similar and yet, in depth comparison between these 2 blockchains are relatively hard to find on the web. Today, we will investigate the difference between these two L1s, study its users’ behaviors, as well as some comparable metrics on these distinct blockchains. We hope that our insights would be of value to your research!

Introduction to Ethereum
Ethereum is a decentralized, open-source blockchain system and the pioneer of smart contracts. Since September 2022, it has transitioned from a Proof-of-Work to a Proof-of-Stake network, also known as The Merge. Since then, it has reduced its energy consumption by ~99.95%.

Proof-of-Stake is a consensus mechanism that verifies new cryptocurrency transactions with the use of validators. Validators explicitly stake capital in the form of ETH into a smart contract on Ethereum. This staked ETH then acts as collateral that can be destroyed if the validator behaves dishonestly or lazily. The validator is then responsible for checking that new blocks propagated over the network are valid and occasionally creating and propagating new blocks themselves.

Introduction to Algorand
Algorand is an open-source, decentralized blockchain network that leverages a two-tiered structure and a unique variation of the Proof-of-Stake (PoS) consensus mechanism, known as Pure Proof-of-Stake (PPoS).

Algorand has a unique two-tiered blockchain structure. The base layer supports smart contracts, asset creation, and atomic swaps between assets. The second layer of Algorand is reserved for more complex smart contracts and dApp development. Read more about them here.

PPoS is a highly democratized PoS consensus mechanism with a low minimum staking requirement for participating in and securing the network — only one ALGO coin is needed to participate. Find out more about it here.

3. Comparison between Ethereum and Algorand
Ethereum and Algorand and both strong blockchains, in this section, we seek to understand their unique features.

Decentralization
Decentralization is a core concept of the trilemma in blockchain and it refers to the degree of diversification in ownership, influence and value on a blockchain.

Ethereum’s Decentralization
Ethereum has always advocated for decentralization and a democratic network based on a deflationary currency, however, decentralization of ethereum is skewed towards a few major entities that help validate the network. According to data from Glassnode, over 85% of Ethereum’s supply is held by entities with 100 ETH or more. Around 30% of its supply lies in the hands of entities with over 100,000 ETH.

Ethereum network users frequently host their nodes using cloud computing services. Nearly 62% of all nodes on the Ethereum network use hosting services like Amazon, according to data from Ethernodes.org. However, although there is concentration risk from Amazon, but it does not pose a decentralization problem as it is merely a platform and does not mean that all users of that platform will exploit Ethereum’s network.

Validators for Ethereum have been increasing to 462,362 as of October 2022, and this is much due to the fact that ETH 2.0 has made the barrier to validating lower than before. Now, participants need 32 ETH to become a validator, and physical hardware with lesser computational power.

Currently, participants can rely on execution clients to run the validation process. Clients such as Geth, Erigon, Nethermind, Besu and Akula to name a few. Geth captures 70.7% of the total client execution market share, with Erigon trailing behind with a comparatively lower 12.4%. Despite Geth controlling such high market share in client execution, it is merely a tool to help validate transactions and has low probability of interfering with the integrity of the Ethereum’s blockchain.

Algorand’s Decentralization
Algorand has comparatively lesser nodes to Ethereum, however, Algorand’s decentralization may in fact be much better than Ethereum due to its PPoS which randomly selects a small set of block proposers and verifiers. This random selection does not allow majority stakers to have more authority, but instead makes it fair by giving all validators a fair chance of verifying the blockchain. The size of the validation committee is independent of the number of nodes. Even if Algorand has millions of nodes, the committee will only be a couple thousand nodes.

Besides decentralizing its ownership, Algorand also aims to decentralize its consensus. It does so by having one of the lowest requirements to host a node. Hosting a node can often be energy intensive and consume a significant amount of storage. In Algorand’s case, it currently takes only 100 gigabytes of space and 4 of RAM to host a node, requirements satisfied by any remotely capable computer.

Scalability
Blockchain scalability is arguably the holy grail and bottleneck of the cryptocurrency world and mainly refers to transaction speed. At the moment, the transaction time of crypto doesn’t compare to other payment methods. However, crypto communities are consistently working toward near-instant transaction speed.

Scalability determines the network’s capacity, including the number of nodes in the network, the number of transactions that the network can process, how fast the network can process. Scalability is broken down into throughput, finality, and confirmation time. Throughput is the number of transactions that the blockchain can handle in a second. Finality refers to the amount of time taken for a transaction to run from start to finish. Lastly, confirmation time, takes into account the average first block waiting time and finality. In instances of a network congestion, throughput won’t decrease, but the confirmation time will deteriorate because of the longer average first block waiting time.

Ethereum’s Scalability

Scalability — Sharding upgrades will spread the data storage requirements across the entire network, no longer requiring every node to hold 100% of the data. Although this doesn’t directly address scaling the execution of transactions, this problem is being addressed directly by layer 2 rollup solutions. Rollups need cheap storage on layer 1 though to be most effective. Sharding will give Ethereum room to breathe by maximizing the efficiency on rollups, enabling exponential improvements beyond the current 15–45 transactions per second limit.
Finality — today Ethereum blocks take approximately 15 minutes to finalize.

Algorand’s Scalability
Algorand protocol uses PPoS to randomly select a small set of block proposers and verifiers, users only need to receive a fixed number of messages in order to reach consensus on the next block. Algorand’s consensus protocol is able to scale to millions of users and sustain a high transaction rate, without incurring significant cost to participating users.

Scalability — the PPoS algorithm empowers a scalable ecosystem that is built for the future of finance. As of today, Algorand can process approximately 1150 transactions per second (tps) soon to become 3,000 tps with instant finality. On top of that, it’s introducing a feature known as block pipelining to boost the tps performance to more than 45,000, which will make it more scalable than Visa.
Finality — Algorand’s instant finality is essential for financial applications that handle millions of transactions and thousands of assets. On Algorand, the block creation takes less than five seconds, and all transactions reach immediate finality, which prevents counterparty risks.

Security
Security is the level of defensibility blockchain has against attacks from external sources and the resistance of the system to tampering. There are many attack vectors in a blockchain system, including double spending, sybil, DDoS, and 51% attacks.

Ethereum’s Security
In ETH 2.0, additional security comes from greater crypto-economic disincentives against attack. This is because, in proof-of-stake, the validators who secure the network must stake significant amounts of ETH into the protocol. If they try to attack the network, the protocol can automatically destroy their ETH. Through ETH 2.0, validators will be responsible for asserting that all data has been made available, but individual nodes will no longer be required to hold the entire history of the chain.

Algorand’s Security
Algorand’s PPoS protocol selects block validators randomly and secretly for every new block added to the chain. Thus, all users have an equal chance to be chosen by the system. In this way, the network stays fully secure, and becomes an unforkable blockchain.

Algorand uses cryptographic sortition in its PPoS. To prevent an adversary from targeting committee members, Algorand selects committee members in a private and non-interactive way. This means that every user in the system can independently determine if they are chosen to be on the committee, by computing a function (a VRF [38]) of their private key and public information from the blockchain. If the function indicates that the user is chosen, it returns a short string that proves this user’s committee membership to other users, which the user can include in his network messages. Since membership selection is non-interactive, an adversary does not know which user to target until that user starts participating in the validation process.

Sustainability of Blockchain

Ethereum’s Sustainability
Before ETH 2.0, Ethereum used 99.6 Terawatt-hours of electricity annually, according to CNBC. This is more power than required by the Philippines or Belgium. The numbers also suggested that a “single Ethereum block required 220 kilowatt-hours of electricity, which is the same amount of power that an average US household consumes in 7.44 days. The move towards PoS means the energy expended by the Ethereum network is relatively small — on the order of 0.01 TWh/yr.

The figure below shows the estimated annual energy consumption in TWh/yr for various industries in June 2022.

To put Ethereum’s energy consumption in context, we can compare annualized estimates for other industries. Taking Ethereum to be a platform for securely holding digital assets as investments, perhaps we can compare to mining gold, which has been estimated to expend about 240 TWh/yr. As a digital payments platform we could perhaps compare to PayPal (estimated to consume about 0.26 TWh/yr). As an entertainment platform we could perhaps compare to the gaming industry which has been estimated to expend about 34 TW/yr in the United States alone. Estimates of energy consumption by Netflix range dramatically between about 0.45TWhr/yr (their own estimates reported in 2019) up to about 94 TWh/yr (as estimated by Shift Project) — there is some discussion about the assumptions underlying these estimates available on Carbon Brief. Alternatively, Ethereum could be compared to Youtube which has been estimated to expend about 244 TWh/yr, although these values depend a lot on the type of device videos are streamed on and the energy-efficiency of underlying infrastructure such as data centers.

Carbon Ratings has examined the impact of Ethereum’s merge from PoW to PoS; the annualized electricity consumption was reduced from 22,900,320 MWh to 2,601 MWh and thus by more than 99.988 %. Likewise, Ethereum’s carbon footprint was decreased by approximately 99.992%, from 11,016,000 to 870 tonnes CO2 (estimated).

Algorand’s Sustainability
Algorand is sustainable and has a low carbon footprint — since there is no mining process involved in Algorand’s block creation, the network’s carbon emissions are invisible. Algorand went even further and pledged to become carbon negative by reducing its carbon footprint through meaningful partnerships to set the standard for blockchain sustainability.

Ease of Building dApps

Ethereum’s ease of building dApps
Ethereum is known to be by far the easiest blockchain to build dApps. From its large array of developer tools, and multitude of protocols available on the blockchain, it has built itself a knowledge bank that will enable an easier transition towards being a Ethereum blockchain developer. Ethereum is also coded in the solidity programming language which drew inspiration from C++, Javascript, and Python. Ethereum is an ideal blockchain for decentralized finance (DeFi) applications as Ethereum has the largest pool of assets which could be used for lending and borrowing.

Algorand’s ease of building dApps
Being one of the upcoming blockchains, Algorand allows developers the flexibility of choosing between Java, JavaScript, Go, and Python SDKs, to build on their blockchain. Such flexibility allows new developers to utilize programming languages that they are already comfortable with, which could attract newer developers into the blockchain ecosystem. Algorand is a suitable blockchain for building decentralized finance applications due to its secure and scalable blockchain. Algorand is also ideal for tokenization, NFT creation, stablecoins and payments. Tokenization is one of the most important trends within the crypto world. With the Algorand Standard Assets (ASA) framework, traditional assets can be easily converted to digital tokens by retaining their main features. This makes the assets more liquid, secure, and accessible to a broader range of investors worldwide. In addition, the ASA framework supports NFTs, including fractional NFTs, which opens the door to some great use cases. For example, fractional NFTs can bring more liquidity to real estate, art, or luxury goods. Algorand provides the ideal infrastructure for stablecoins. USDC — the fastest-growing stablecoin used Algorand as their first blockchain implementation. Circle, the company behind USDC, cited that Algorand’s scalability potential enables USDC to reach every corner of the world at high speed. With Algorand’s high throughput, it is ideal for payments. The technology empowers all forms of financial transactions, including cross-border payments and micropayments.

4. User Analysis / Macro trends
In this section, we will be looking into the demographics and trend of users and key players of the L1 blockchains. This insight will give us a better overall picture of the risks that each blockchain is undertaking with regards to the different local and global regulations in place.

Geography
With the increase in global adoption in blockchain technology, the number of users has also increased correspondingly. Many new users have sprung up to leverage on this new technology, be it for businesses or retail investing.

Regulations
As with the increasing demand and attractiveness of blockchain projects, more and more people are getting involved in scams. To prevent that, governments worldwide have been implementing different policies to mitigate this and gain more control over the crypto industry.

For simplicity’s sake, we will discuss the regulations of countries containing the greatest number of Ethereum nodes in the world, namely the United States, Germany and Singapore. Together they make up nearly 62% of the total number of nodes in the world.

Crypto regulations in Germany
An amendment to the German Banking Act introduced in 2020 brought crypto assets in line with traditional securities. The move provided clear direction to the market and meant that service providers needed to be licensed, a requirement that elevated crypto providers and created parity with traditional financial players.

This approach by The Federal Financial Supervisory Authority (BaFin) has delivered meaningful benefits to the German financial sector. By nailing its colors to the mast and classifying crypto as a financial instrument, BaFin has offered innovators the clarity and confidence needed to build projects. It’s the reason Germany is leading the way in crypto and blockchain technology in terms of progressive tax laws and forward-leaning fiscal policy.

German authorities have also been consistently working towards the goal of legitimizing the digital asset landscape and integrating it into the financial markets. Today, BaFin has become a world leader in applying existing financial market law to crypto–and Germany has been propelled to the forefront of industrial nations embracing crypto and DeFi.

However, Germany still does impose a tax on retail investors who are holding cryptocurrency. Below is a simplified guide on how to know if you would be taxed or tax free if you held on to crypto in Germany:

Taxed: short-term profits (exceeding €600) when you sell, swap or spend crypto you’ve held less than one year, as well as earning crypto through things like mining or staking.

Tax free: long-term profits from selling, swapping or spending crypto you’ve held more than one year, short-term profits under €600 and additional income less than €256, as well as a variety of other crypto transactions like buying crypto, holding crypto and gifting crypto.

Crypto regulations in USA
The US Treasury has emphasized an urgent need for crypto regulations to combat global and domestic criminal activities. In December 2020, FINCEN proposed a new cryptocurrency regulation to impose data collection requirements on cryptocurrency exchanges and wallets. The rule is expected to be implemented by Fall 2022, and would require exchanges to submit suspicious activity reports (SAR) for transactions over $10,000 and require wallet owners to identify themselves when sending more than $3,000 in a single transaction.

The Justice Department continues to coordinate with the SEC and CFTC over future cryptocurrency regulations to ensure effective consumer protection and more streamlined regulatory oversight. In 2021, the Biden administration turned its attention to stablecoins, with the intention to address the danger of the tokens’ growth in value. Later that year, the President’s Working Group on Financial Markets released a series of recommendations which included a need for new legislation. Congress also debated the status of cryptocurrency service providers in 2021, with new rules included in the Biden administration’s infrastructure bill. Under the new rules, cryptocurrency exchanges are regarded as brokers and must comply with the relevant AML/CFT reporting and record-keeping obligations.

With regards to taxation rules in the United States, crypto can be taxed as ordinary income or capital gains, depending on which taxable event produced the earnings. Mining, staking, lending, or payments for goods or services are considered ordinary income. They receive the tax rate that corresponds to an investor’s gross income. These rates range from 0–45%. Crypto trades, sales, or swaps are taxed as capital gains, the exact rate depends on the length of time the asset was held and your overall income, but ranges between 0 and 37%.

Short-term capital gains: If you hold a digital asset for a year or less, your proceeds will be considered short-term capital gains. They will be taxed at your ordinary income rate, which is determined by your overall income.

Long-term capital gains: If you hold cryptocurrency for more than a year, your proceeds will be taxed at the advantageous long-term gains rate. These rates also depend on your overall income but are generally lower than the short-term gains rates.

Crypto regulations in Singapore
Singapore is the most crypto friendly country compared to the other 2 nations and does not impose a tax on crypto purchases or sales.

Cryptocurrency exchanges and trading are legal, and the city-state has taken a friendlier position on the issue than some of its regional neighbors. Although cryptocurrencies are not considered a legal tender, Singapore’s tax authority treats Bitcoins as “goods” and so applies Goods and Services Tax (Singapore’s version of Value Added Tax). In 2017, the Monetary Authority of Singapore (MAS) clarified that, while its position was not to regulate virtual currencies, it would regulate the issue of digital tokens if those tokens were classified as “securities”.

MAS has generally taken an accommodating approach to cryptocurrency exchange regulation, applying existing legal frameworks where possible. The Payment Services Act 2019 (PSA) brought exchanges and other cryptocurrency businesses under the regulatory authority of MAS from January 2020, and imposed a requirement for them to obtain a MAS operating license. Since then, MAS has issued licenses to several high-profile crypto service providers, including DBS Vickers (DBS Bank’s brokerage arm) and the Australian crypto exchange, Independent Reserve.

With the PSA in effect, crypto businesses in Singapore are largely in alignment with FATF’s most recent recommendations. However, MAS is likely to follow up with additional regulations to further align its position. These regulations may include new financial sector regulations with stronger AML/CFT standards for cryptocurrency service providers, and higher technology risk management requirements in financial institutions.

Singapore’s recent regulatory efforts reflect a renewed international interest in its crypto industry. In 2021, China’s crackdown on cryptocurrencies prompted many high-profile Chinese service providers, including ByBit, Huobi, Cobo, and OKCoin, and their customers, to migrate to Singapore.

Though we only gave examples of these 3 countries and what their governments are doing in terms of regulation, many other countries have different stances on crypto. The friendliest of them being El Salvador, Singapore and Portugal, and the least friendly being China, Japan and The Netherlands. However, with an increasingly global world all connected and leveraging on crypto, we expect that many more countries would adopt blockchain into their economies, and thus soften their stance.

Adoption of Technology in Real Life Cases

Ethereum
In Chile, the National Energy Commission launched the use of blockchain in energy. Using Ethereum blockchain, the government tracks data and finances to ensure accountability in the sector. This greatly improves public confidence in the Ministry of Energy. Through their energy minister, the Chilean Government has seen significant growth in the adoption of blockchain. The results from the energy blockchain project ‘Energy Abierta’ will be studied and the results shared to other sectors with the prospect of exploiting blockchain further.

Singapore is no exception in exploring the possible uses of blockchain. On the 13th of October 2017, Interbank payments were made in Singapore using the blockchain concept, through a partnership between the Monetary Authority of Singapore (MAS) and a consortium of financial institutions. Project Ubin is a collaborative project with the industry to explore the use of Blockchain and Distributed Ledger Technology (DLT) for clearing and settlement of payments and securities. The government plans to tokenize the state’s currency on the Ethereum network. The authority also announced an allocation of over $225 million dollars to blockchain research and development.

Algorand

Bermuda: Efficient Healthcare Payment Systems
MAPay, a global healthcare technology firm with a focus on decentralized payment networks, will introduce its own stablecoin on Algorand to improve the efficiency of the healthcare system. Through this collaboration, MAPay will provide Bermuda with a country-wide deployment plan to lower transaction costs of healthcare encounters through the MAPay network which will run on Algorand. Together, MAPay and Algorand have the capacity to transform Bermuda’s healthcare system and move $800 million in traditional healthcare payments to the blockchain.

Italy: Immutable Copyright for Millions of Creative Works
SIAE, the Italian Society of Authors and Publishers, is a public economic institution and membership base for the management of copyright, representing nearly 100,000 authors and each year releasing more than 1.2 million licenses for the use of their works. Working closely with Algorand, they announced the first major milestone of a project to create a blockchain-based open platform that allows transparent and efficient management of authors’ rights. Copyrights are now represented as digital assets, and more than 4 million NFTs were created that will digitally represent the rights of the more than 95,000 SIAE members authors. SIAE’s Algorand-based copyright management system ensures that authors’ rights will be protected end-to-end.

Overall, there’s no doubt that the world is moving toward a more digital format. While it is still quite early in the adoption phase, blockchain is almost guaranteed to play a vital role in technological innovation for years to come. Both Ethereum and Algorand have proved themselves to be reliable networks which can support governments and businesses looking to build onto the blockchain. For the adoption process to truly accelerate, regulations need to be stricter to prevent cases of potential fraud, and to maximize societal benefits.

Social

Ethereum

Algorand

With the statistics above, we conclude that Ethereum still has a strong retail presence and would most likely remain as it is for the next few years. We believe this is likely due to having the First Mover Advantage, whereby Ethereum has essentially captured not just the likes of loyal and pro-decentralisation users but also their wealth that has been locked in for years on the blockchain. This flywheel effect would most probably carry on as incoming developers and founders choose to build their projects on the battle-tested and pioneer blockchain, Ethereum.

We believe that Algorand would have to compete with Ethereum in terms of dApps superiority as well as decentralization of the network, through its PPoS. Furthermore, in a crypto winter, although we might not see much growth in these lesser known L1s, it is an opportune time to research on them and figure if they are a worthwhile investment.

Trends

Developer Activity

Ethereum

Algorand

Active wallet addresses

Ethereum

Algorand

Network Transactions

Ethereum

Ethereum Transactions Per Day is at a current level of 1.048M on the 25th of October, up from 1.039M yesterday and down from 1.299M one year ago. This is a change of 0.84% from yesterday and -19.35% from one year ago.

Algorand

Algorand Transactions Per Day have been at an average of around 800–900k, but recently have seen a spike in numbers, with the highest being at 2.32M transactions. This could be due to FIFA launching their NFT platform for soccer-themed digital collectibles on FIFA+ Collect. FIFA+ Collect will run on the Algorand blockchain, and we expect the number of transactions to remain higher than usual throughout the World Cup period.

5. Projects on Ethereum and Algorand
Projects and partnerships of each chain play an equally important role in its success as it expands the use cases and reels in users onto the ecosystem. In this section, we will explore some of the significant partnerships and projects on both chains.

Ethereum
One of the oldest and most established blockchain platforms, Ethereum has over 2900 projects built on it and a global community known as the Enterprise Ethereum Alliance (EEA). In the following section, we will take a deeper look at the EEA and some of the notable projects on Ethereum.

Enterprise Ethereum Alliance (EEA)
The EEA is the world’s largest open source blockchain initiative with over 400 member companies, such as JP Morgan, UBS, Santander, Credit Suisse, and Microsoft amongst many others. It is a member-led industry organization whose objective is to drive the use of Enterprise Ethereum and Mainnet Ethereum blockchain technology as an open standard to empower all enterprises.

The EEA will develop open industry standards and encourage collaboration among its members to develop new business models that address specific challenges faced by any particular industry. The EEA ultimately enables mass adoption of the Ethereum blockchain technology at a faster and greater scale.

Star Projects

Uniswap
Founded in 2018, Uniswap is the first decentralized exchange (DEX) on the Ethereum network, originally designed to allow users to swap any ERC-20 token on the Ethereum blockchain. Currently, in v3, Uniswap has a TVL of ~US$3.5B, Transaction volume of ~US$655.8M, and Daily Users of ~45.4k.

MakerDAO
MakerDAO is the developer of the popular stablecoin Dai. The company offers stable and decentralized digital money that can be used by anyone, anywhere, anytime, enabling users to take advantage of a price-stable currency and have access to financial services. The company has a TVL of ~US$7.8B, Transaction volume of ~US$32.8M.

Algorand
As a blockchain that prides itself as the first and only to achieve decentralization, scalability, and security without compromises and while being environmentally sustainable, Algorand is the technology of choice for over 2000 global organizations such as FIFA and The Nigerian Government. The preference for Algorand is also shared by many individuals globally as projects such as Tinyman, Algofi, and Folks Finance have also gained significant traction.

Partnership Deals

FIFA Partnership
In early May 2022, it was announced that Algorand scored a partnership deal with FIFA to be the official blockchain platform of the largest sporting governing body in the world.

With this deal, Algorand will gain huge marketing and promotional exposure by being a FIFA World Cup Qatar 2022™ Regional Supporter in North America and Europe, and a FIFA Women’s World Cup Australia and New Zealand 2023™ Official Sponsor.

Algorand will also provide the official blockchain-supported wallet for FIFA and assist FIFA in further developing its digital assets strategy. Ultimately, as shared by Silvio Micali, this partnership with FIFA will showcase the potential that Algorand has to transform the way we all experience the world’s game.

The Nigerian Government
Koibanx has been selected to implement Nigeria’s nationwide digital wallet that will allow for international commercialization of intellectual property (IP) forms and, Algorand the protocol where all tokens will be launched on top of.

This agreement is significant as the wallet will serve as a marketplace for IP assets such as trademarks, patents, music, videos, etc. for Nigeria — Africa’s largest economy with a population of over 200M.

Star Projects

Tinyman
Tinyman is a decentralized trading protocol that utilizes the fast and secure framework of Algorand, creating an open and safe marketplace for traders, liquidity providers, and developers. The project has a TVL of ~US$11.88M, Transaction Volume of ~US$184k, and ~1.4k daily users.

Algofi
Algofi is a decentralized exchange, lending market and stablecoin built on Algorand. It has a TVL of ~US$113.66M, Transaction volume of ~US$145.1k, and ~400 daily users.

Folks Finance
Folks Finance is a capital markets protocol built and operated on Algorand that offers both lending and borrowing. The project has a TVL of ~US$103.27M, Transaction volume of ~US$51.54k.

Analyzing the partnerships and star projects on both chains, while Ethereum has a much-developed user base in terms of users and corporate interest, one can expect Algorand’s traction to pick up rapidly if the partnerships with FIFA and the government become successful.

6. Venture Capital Funding into Ethereum and Algorand
Venture capital (VC) is a form of private equity and a type of financing that investors provide to startups and small businesses that are believed to have long-term growth potential. Apart from the additional capital, VC funding can have a big impact on blockchain projects as the stamp of big-name funds carries credibility and other value-adds such as mentoring and networking services.

In the following section, we will highlight the notable backers of each blockchain and funds that have been created specifically for projects in each ecosystem.

Ethereum
Founded in 2013, Ethereum has raised a total of US$15M from its initial crowdfunding in 2014. Subsequently, it has raised a few more rounds of funding at an undisclosed amount from investors such as Blockchain Capital, Outlier Ventures, and Breyer Capital.

Ethereum-Focused Funds

ConsenSys Ventures Fund
ConsenSys Venture created a US$50M ConsenSys Ventures fund in 2017 to invest in companies that are developing applications on Ethereum using ConsenSys Systems. The fund has active investments in companies such as Alkemi Network, Atomic.Finance, and Lawcoin.

Algorand
Founded in 2017, Algorand has successfully raised ~US$66M in funding across 2 fundraising rounds from investors including notable traditional VCs and crypto VCs such as Union Square Ventures, Arrington Capital, Coinbase Ventures, Continue Capital, and NGC Ventures.

Algorand-Focused Funds

Borderless ALGO Fund II
Borderless Capital successfully closed its US$500M Borderless ALGO Fund II in Dec 2021. The fund will help develop projects built on Algorand with a focus on digital assets powering the next generation of dApps on top of the Algorand blockchain network, projects that disrupt the creator economy with NFTS, and initiatives that can increase capital in the ALGO ecosystem through liquidity mining, lending, borrowing and yield farming.

Arrington Algo Growth Fund (AAGF)
Arrington Capital has announced that it will be launching the Arrington Algo Growth Fund (AAGF), a US$100M fund that will invest in tokens and equity of projects building on the Algorand blockchain. This is the VC’s second crypto-focused fund after the flagship Arrington XRP Capital Fund which focuses on Ripple’s ecosystem.

Looking at the funding Algorand received from VCs and the various Algorand-focused funds, VCs are bullish on the Algorand ecosystem. This is favorable for Algorand as it makes it more attractive for new projects and provides fuel for existing projects to scale.

7. Conclusion
Both blockchains have their unique strong points, which allow them to function well in certain segments. Ethereum has long been the go-to blockchain for dApps, while also engaging the greatest number of users in blockchain. We foresee that its dominance will continue indefinitely, because of the sheer number of users that are part of its ecosystem. Algorand, the rising blockchain, still lacks strong user growth, but it has enhanced its features to make it a more competitive blockchain. Not only does it tackle the trilemma issue well with all-round capabilities, its comprehensive infrastructure allows for greater institutional adoption. That’s all folks, stay tuned for the next one!

Appendix:

https://www.fifa.com/about-fifa/president/media-releases/fifa-announces-partnership-with-blockchain-innovator-algorand

https://hackernoon.com/the-algorand-and-fifa-partnership-will-gain-importance-during-the-world-cup-heres-why

https://thenewscrypto.com/nigerian-government-partners-with-algorand-to-launch-major-crypto-initiative/

https://cryptosrus.com/breaking-government-of-nigeria-adopts-algorand-for-ip/

https://alphagrowth.io/tinyman

https://www.coindesk.com/business/2021/11/30/borderless-capital-launches-500m-algorand-focused-fund/

https://www.coindesk.com/business/2021/06/10/arrington-capital-launches-100m-algorand-ecosystem-fund/

https://singulardtv.medium.com/the-possibilities-and-the-enterprise-ethereum-alliance-3a11693399d2

https://entethalliance.org/participate/groups/

https://ycharts.com/indicators/ethereum_daily_active_addresses

https://app.intotheblock.com/coin/ALGO/deep-dive?group=network&chart=addressStats