The world of cryptocurrencies and decentralised finance can be intimidating and overwhelming. It’s hard to know where to start, given that not every cryptocurrency looks to serve the same needs or solve the same problems.

The first part of this article covered some of the biggest names in decentralised finance, including Cardano, Solana and Avalanche. Now, the second takes a look at some of the more unusual and creative applications of the blockchain.

The next bitcoin is out there waiting to be found. It might even be on this list.

Algorand (ALGO)

The pitch for Algorand is that it’s a modernised, two-layer blockchain that’s poised to solve a lot of the scalability issues facing older networks like ethereum and bitcoin.

By drawing from the entire user base and dividing the work across two layers, Algorand promises to offer faster transactions, better security and lower fees than other networks.

The battle to deliver this is fought on multiple fronts. To start with, Algorand uses a “pure proof-of-stake” mechanism with a much lower barrier to entry when it comes to staking. As opposed to other proof-of-stake blockchains, even those who don’t formally stake ALGO tokens can earn rewards.

The other half of the story is Algorand’s use of a two-layer blockchain.

Transactions made using the network are put on the first layer if they are relatively simple and can be hosted entirely on the blockchain. More complicated smart contracts, such as those that rely on off-chain data, are housed on the second layer.

Algorand also promises to allow for the easy creation of co-chains – which can then integrate back into the main Algorand network. 

Aave (AAVE) 

Aave is a decentralised finance protocol based on the ethereum blockchain. It’s basically a system built using ethereum’s smart contracts that allow users to lend and borrow using cryptocurrencies.

Lenders using Aave are able to earn interest on their investment by depositing their digital assets into a shared resource, known as a liquidity pool. Likewise, borrowers can draw on this liquidity by putting their own crypto up as collateral.

Functionally, Aave is not all that different from how a traditional bank works.

Loans made using Aave can be hitched to either fixed or variable interest rates, with rates rising as liquidity becomes more scarce.

At the time of writing, Aave supports borrowing and lending in around 20 major cryptocurrencies.

Beyond this variety, Aave’s major drawcard is flash loans. This allows savvy traders to borrow crypto without collateral, use that to buy another asset, sell that and pocket the return – all of which takes place in a single transaction. 

Near (NEAR)

The simple version is that NEAR is a version of ethereum that’s more user-friendly, community-driven and efficient.

To that end, the NEAR protocol relies on a proof-of-stake consensus mechanism. This means that it doesn’t have the carbon footprint of something like bitcoin, which uses a proof-of-work system instead.

The other way in which the NEAR Protocol differs from other blockchains is that it emphasises user-friendliness as much as it does the interests of developers. Users on the NEAR Protocol aren’t just wallet numbers. They’ve got names.

If you’re more privacy-conscious when it comes to cryptocurrencies, that’s not necessarily something you want. However, if you’re looking to push decentralised apps into the mainstream, that additional accessibility is worth considering.

As opposed to ethereum, the NEAR Protocol relies on a sharded structure that promises to help with network scalability over time. In the short and long term, the promise being made to decentralised app developers is one of faster and cheaper transactions.

Last but not least, the NEAR blockchain also boasts interoperability with the ethereum blockchain via a trustless layer connecting the two networks called the Rainbow Bridge. 

Harmony (ONE)

Akin to ethereum, Harmony is a decentralised blockchain platform that promises to support decentralised applications and smart contracts.

Unlike its biggest competitor, Harmony is based on a proof-of-stake protocol rather than a proof-of-work one. In practice, this means Harmony is significantly more energy-efficient.

That detail aside, the overall pitch here isn’t all that different to other ethereum alternatives.

Harmony promises to scale better and process transactions faster than the current top-dog for smart contract blockchain networks has. The team behind the project claims that Harmony transaction fees are around 1,000 times lower than ethereum, with finalisation times of around two seconds.

According to the white paper for the project, existing blockchains solutions cannot make significant performance without compromising on either security or decentralisation.

In contrast, “Harmony addresses the problems of existing blockchains by combining the best research results and engineering practice in an optimally tuned system.”

In practice, Harmony achieves this through a unique sharding process, which then is secured through a distributed randomness process that promises to keep the network as unpredictable as it is verifiable.

The other big drawcard for Harmony is the emphasis on interoperability. The Harmony team is looking to develop a cross-chain ecosystem around the ONE token and has already deployed a bridge between the ethereum and Harmony networks called Horizon.

Basic Attention Token (BAT)

The Basic Attention Token is a platform that uses the blockchain to reinvent the way that digital advertising works.

The infrastructure of the network itself is modelled on the ethereum blockchain, but the implementation is vastly different and more consumer-focused.

The Basic Attention Token is intertwined with Brave web browser. A privacy-first alternative to Google Chrome, Apple Safari and Microsoft Edge, Brave is a web browser with a built-in ad blocker.

However, that’s not to say that Brave is a web browser that entirely eliminates ads. Instead, it puts consumers in the driver’s seat. The more ads they consent to see, the more BAT tokens they’ll earn as compensation.

On the other side of the table, those looking to get around Brave’s ad-blocking are able to pay publishers who have signed on to the Brave platform in BAT tokens in order to show those ads to their users, and specifically, those with high engagement.

The idea here is that advertisers are able to do so more efficiently while consumers and publishers are able to profit from allowing them to do so.

For investors considering the BAT token, the primary driver of price is the popularity and size of the Brave ecosystem. Unlike many other cryptocurrencies, the BAT is a non-inflationary token. There is a capped amount of BAT in circulation. This means that the price and value of the token will rise and fall with the number of advertisers and consumers who use the Brave web browser. 

Stellar (XLM)

Stellar is attempting, in many ways, what feels like an echo of what bitcoin was originally looking to achieve before it became a speculative asset.

Rather than replace fiat currencies, Stellar looks to recontextualise them in a decentralised and open-source ecosystem. It’s an open-source twist on the idea of moving money across international borders.

Stellar is designed to help consumers, businesses, and organisations circumvent the middle-men associated with wire transfers and other international transactions by allowing users to send and receive fiat currencies of all kinds with almost zero fees at near-instant speeds.

Transactions made via Stellar are finalised in three to five seconds, which is significantly faster than bitcoin or ethereum. The blockchain also promises to support approximately 1,000 times more transactions at a time than bitcoin can.

Transaction fees are also significantly cheaper on Stellar than market-leading cryptocurrencies. Rather than scale upwards with usage, Stellar transaction fees are fixed at 0.00001 XLM per transaction.

Stellar’s “Anchor” infrastructure allows for almost any kind of asset to be tokenised. This means that it could, theoretically, support transactions of not just mainstays like the US dollar or euro, but more obscure currencies like Ukraine’s hryvnia and even shares. 

Chia (XCH)

Launched in May 2021, Chia is a blockchain network that’s gaining notoriety over claims that it is more sustainable and environmentally friendly than major blockchains like bitcoin and ethereum.

Rather than use proof-of-work or proof-of-stake, Chia uses a unique “proof-of-space” system. 

This system is described as “a cryptographic technique where provers show that they allocate unused hard drive space for storage space”.

Unfortunately, Chia’s “proof-of-space” system has been criticised for prioritising those who commit the greatest amount of hard drive space to the network. If you factor in the carbon costs of manufacturing, shipping and consuming those hard drives, the sustainability of the Chia blockchain becomes murky, and its advantages over ethereum aren’t as clear-cut.

Amp (AMP)

AMP is the native token of the Flexa Network, a payments processing platform that is built atop ethereum.

The main idea here is that the AMP token can be used as quick and easy collateral for transactions that involve the blockchain.

In return for helping these platforms provide faster payments processing, token-holders are rewarded in the form of incentive mechanisms like micro-distributions and continuous compounding.

Celsius (CEL)

Launched back in 2017, Celsius aims to put a crypto-based spin on traditional banking products like savings accounts and asset-backed loans.

According to the website, Celsius provides “a platform of curated services that have been abandoned by big banks – things like fair interest, zero fees, and lightning quick transactions”.

“Our goal is to disrupt the financial industry, one happy user at a time, and introduce financial freedom through crypto,” the website said.

Built around an app for web browsers and smartphones, Celsius offers savings accounts, low interest-rate loans and instant crypto-based payments. They’re even working on a credit card.

CEL is the primary token of the blockchain infrastructure behind the app. 

Neo (NEO)

Originally launched under the name Antshares in 2014, Neo is a cryptocurrency that’s sometimes described as the Chinese counterpart to ethereum.

Like ethereum, Neo is a blockchain network that can be used not just for decentralised payment processing but also as a platform through which developers can deploy decentralised apps.

There are a few big differences between Neo and ethereum. The first is that Neo uses a dual-token system. The second is that it relies on a proof-of-stake mining model.

Neo is also distinguished by the way its smart contracts work. Where ethereum smart contracts are written in a native programming language called Solidity, Neo uses mainstream programming languages like Java and C#.

This promises to lower the barriers to developing apps for the platform – since businesses might not necessarily need a dedicated developer to do so.

Another difference here is that Neo features a digital identity system, which Neo hopes will make it more palatable to government regulators and inspire more confidence in the market by users.

While the developers behind Neo designed it with Chinese authorities in mind, they built it to adapt to any form of regulation and restriction in a way that many other cryptocurrencies cannot.

Return to nestegg next week for Part 3.