Blockchains such as Algorand, Solana, and Near have a feature where users cannot spend all of their native currency balances (e.g., $ALGO, $SOL, etc.). A portion of the coins will be locked and frozen in the balance.

In this article, we will reveal the reasons behind this design of "freezing part of the balance" on different blockchains to better understand its impact on users.

The commonality among these blockchains with this design is to balance user freedom with network security. By requiring users to lock a portion of their funds, these networks can prevent spam and malicious activity, ensure efficient resource allocation, and maintain the high performance of the chain. However, this approach means users need to understand these requirements to effectively manage their account balances.

On the Algorand chain, accounts must maintain a minimum balance to exist on the blockchain. This requirement is in place to prevent malicious attacks and ensure the network remains efficient. The minimum balance is calculated based on the account's size, which increases with the number of Algorand Standard Assets (ASAs) or smart contracts the account chooses to opt into or creates. This means a portion of the balance is always "locked" to satisfy this requirement.

The Near chain has the concept of storage staking (sometimes referred to as "rent"). Users need to stake a certain amount of $NEAR to cover the storage space used by their accounts and smart contracts on the blockchain. This ensures efficient allocation of network resources and prevents malicious attacks. The staked $NEAR for storage cannot be spent unless the data occupying the space is deleted or the account is deleted.

Solana introduces a novel concept called "rent." To maintain an account on Solana, it must hold enough $SOL to cover rent fees. This is because Solana aims to maintain high performance and efficient state by incentivizing users to clean up unused accounts. Accounts can become rent-exempt by depositing a larger amount of $SOL, which essentially locks a portion of the balance to ensure the account remains active without incurring ongoing rent fees.

The XRP Ledger requires a minimum reserve to create and maintain accounts. This reserve requirement is designed to prevent malicious attacks and activities by increasing the cost of creating a large number of accounts or transactions. The minimum reserve can change based on network governance decisions, but it acts as a "locked" balance that users cannot spend unless they delete their accounts (which is not a common practice).

When you stake in the Cardano (ADA) network, your assets are divided into two parts:

Therefore, the "Total Balance" displayed in your wallet will be greater than the amount you can actually send. If you want to use the frozen portion, you need to: Claim Staking Rewards First
After claiming, this portion of rewards will be added to your available balance, and you can then transfer it normally.

The Bitcoin Ordinals protocol has led to most Bitcoin wallets currently on the market locking UTXOs (Unspent Transaction Outputs). This is primarily because the Ordinals protocol assigns a sequential number to each satoshi, enabling tracking and inscribing metadata onto individual sats.

The frozen balance mechanism on the Dynex chain is designed to protect the network and its users by ensuring transaction integrity, enhancing security, and complying with regulatory requirements.