blockchainalgorand

Does Algorand have a clear-cut distinction between ALGO and ASA tokens?

In Ethereum, the only native asset is Ether (ETH). It's the only asset that gets first-class treatment in terms of cost and ability to be pushed and pulled through contract calls.

Is there a similarly clear-cut distinction between ALGO and all other tokens on Algorand?

For instance, are the ALGO balances stored in a different place in go-algorand compared to ASA tokens?

Solution

  • On Algorand, the ALGO Token and other ASAs do enjoy the same security, compatibility, and speed provided by Algorand's Layer-1.

    I'll directly cite from the Algorand Developer Documentation: "The Algorand protocol supports the creation of on-chain assets that benefit from the same security, compatibility, speed and ease of use as the Algo. The official name for assets on Algorand is Algorand Standard Assets (ASA)."

    ALGO and ASA Tokens also use the same SLIP-044 Number(here: https://github.com/satoshilabs/slips/blob/master/slip-0044.md ), which is SLIP-044 283 , which shows that ALGOs and ASAs are perceived and treated equally outside the Algorand network.

    In my humble view, the Algorand Team made a really smart technical consideration here, as opposed to Ethereum, because it means that issuing an ASA on Algorand over building your own chain makes more sense if you are looking for battle-tested application security, stability and performance at almost zero-rated costs! Generally, ASAs are as secure and compatible as ALGOs, but ERC-20s are not as secure, and compatible as ETH, for ERC-20s you need more mercy and effort from the developer(Protocol and Application) to ensure it is as secure and compatible. Note that to date, Algorand's Layer-1 has never been compromised!

    The only difference between ALGOs, and ASAs, is that ALGO is made so that

    1. Users, apps and developers pay for network fees in ALGO
    2. ALGO is also used by the community and the foundation for governance.
    3. If you want, you can also, as a developer, use ALGO in your app.

    ASAs, on the other hand, are more application-specific, it depends on what use-case you want for your ASA, could be loyalty points, a security token, a commodity token etc. ASAs are the definitely what ERC-20 is to Ethereum, but on Algorand.

    So, back to your question: Is there a similarly clear-cut distinction between ALGO and all other tokens on Algorand? - Not like what we have on Ethereum, ALGO and ASA Tokens have the same guaranteed security, compatibility, speed, and use of use. None of them receive preferential treatment, but of course you can't use ASAs or smart contracts without holding ALGOs in your account, which is only 1 ALGO or less(sometimes down to 0.01 ALGOs, which is like really cheap when you account for the ALGO-USD price, and network congestion which is many times really low).

    Will quote from the documentation on the minimum balance as well: "For every asset an account creates or owns, its minimum balance is increased by 0.1 Algos (100,000 microAlgos). This minimum balance requirement will be placed on the original creator as long as the asset has not been destroyed. Transferring the asset does not alleviate the creator's minimum balance requirement."

    I hope that explanation helps your question.

    Please feel free to read more from the Algorand Documentation here: https://developer.algorand.org/ , updates are regularly made. Also hop on to Algorand Discord, where you can ask any question, no matter how complex and get an answer, speaking from my personal experience how supportive the Algorand Developer Community is!