It's not about storing everyones transactions on everyones computers. It's about distributing it to enough computers in order for transactions to be safe and fast. Algorand seems to handle this on L1 just fine.
Are you specifically answering this about Algorand or are you thinking of other platforms? Algorand seems to be sufficiently decentralized, and I wouldn't describe it as "an inefficient database", but I'm happy to be proven wrong if you have evidence of otherwise.
The challenge of decentralized scaling - https://ethereum.org/en/upgrades/vision/