Elrond – The Internet-Scale Blockchain Running on Average Computers
Elrond is one of the few blockchain projects that stole headlines from the DeFi craze in 2020, the biggest year for decentralized finance so far. The platform is less than two-years-old, but it has already met all the deadlines in its roadmap, launched its mainnet successfully, and saw its native token increase by 5,000% over the summer.
There are several projects out there aiming to become the most scalable network for DApps in the industry, but Elrond is special.
With a unique solution to sharding, a Secure Proof of Stake consensus mechanism, and an exceptionally fast virtual machine for executing smart contracts, Elrond is every blockchain developer’s wet dream.
This review of the Elrond blockchain will show you what a highly-experienced team working on regular computers can achieve in just a few months.
What is Elrond?
The Elrond Network is a blockchain platform that aims to provide better-distributed apps (DApps), faster, and more profitable operations than centralized networks. Contrary to most blockchains that function on high-performance hardware, this network runs on average computers.
Elrond shares its name with a popular fictional character in J. R. R. Tolkien’s fantastic universe. However, that is where the similarities end between the legendary Half-Elven and the technology ecosystem that aspires to deliver real and functioning blockchain services
To reach its own legendary fame in the crypto industry, the Elrond Network brings new and unique technology to the table, called Adaptive State Sharding. The platform also employs the Secure Proof of Stake (SPoS) consensus mechanism to ensure network governance and ease of use.
Elrond may be a young project, but behind it is an experienced team that understands the changes that the crypto space is going through at the moment. The platform wants to play a significant part in the new internet economy, and constantly building support for both DApps and DeFi protocols is proof of its ambitions.
Elrond promises a secure and efficient decentralized network that will be massively scalable and developer-friendly while providing a high level of protection for user data and privacy. Its mission is to reach “more than 100.000 transactions per second while growing increasingly decentralized.”
What is the EGLD token?
EGLD is the native token of the Elrond Network. It is the old ERD token that powered the network, but with a new hat and a fancier name, both earned through the redenomination process that took place at the beginning of September 2020.
EGLD is short for eGold, and in the new economic model imposed by Elrond, 1000 ERD: 1 eGLD. The new eGLD is 1000x larger than the old ERD, but there is no difference between eGLD and ERD except for their name and denomination.
Participants on the Elrond Network can use EGLD tokens to make payments, to deploy applications, and to execute smart contracts. The tokens also serve as rewards for validators on the platform. Transaction fees are divided between the validators and the Elrond Community Fund.
The original ERD token was the first asset released on the Binance Launchpad. The event took place on July 1, 2019, through an Initial Exchange Offering (IEO) that raised $3.25 million after selling 25% of the total 20 billion token supplies.
During the IEO, the investors who won tickets through the Binance lottery system could purchase ERD tokens for $0.00065 each. Following the event, the price of an ERD jumped to $0.007, and it remained in that area until March 2020.
As 2020 forged ahead, and the hype around DeFi exploded, so did the price of ERD, which witnessed an increase of 5,100% by the mainnet launch on July 30, 2020.
On the 3rd of September, the ERD token became the EGLD token, and its price skyrocketed to $0.25, its all-time high (ATH) so far. As a result of the 1000:1 ERD to EGLD denomination, the price of one token enhanced and topped the charts at $20.43.
Following the denomination process, the Elrond Network team announced that ERD token holders could swap them for EGLD through Binance or through the Elrond Swap Bridge, which went live on September 4, 2020.
After the release of its mainnet, Elrond has made the headlines with several consecutive steps in the expansion of its roadmap. Many of them saw EGLD listed on various crypto exchanges and the token’s integration on digital wallets.
Who is behind Elrond?
Before the mid-summer release of its mainnet in 2020, the Elrond Network was a project moving more on paper than on the blockchain. A comprehensive guide to its architecture, goals, and roadmap came in July 2019 with the release of the Elrond whitepaper.
The success of Elrond relies on a highly-experienced team in fintech and entrepreneurship. The company’s CEO is Benjamin Mincu, who was part of the NEM core team for 1.5 years. He shares co-founding honors and responsibilities with Lucian Todea (COO) and Lucian Mincu (CIO), both experienced entrepreneurs and tech engineers.
The rest of the team is composed of 24 technology and business professionals, all of whom provide their solid expertise and skills in blockchain, IT, and core programming. Additionally, Elrond benefits from the advising support of computer science professors and Ethereum and developers for sharding implementation on the network.
How does Elrond work?
The Elrond Network has managed to provide a viable solution to the old sharding issue of maintaining a high level of security while ensuring infinite scalability. Elrond does so through its Adaptive State Sharding technology that integrates all three aspects of sharding – state, network, and transactions.
The project redesigns blockchain architecture to increase scalability and achieve almost instant transaction speed. The Elrond blockchain structure includes three fundamental elements:
1. Adaptive State Sharding
Sharding is a database optimization technique that Elrond has managed to implement on blockchain uniquely by parallelizing data & transaction processing.
The method is called Adaptive State Sharding, and Elrond uses it to record updates independently of how many shards are present at the same time. Thanks to this sharding solution, the network can make easy calculations and determine the destination of transactions almost instantly.
The network takes into consideration both the number of available validators and also network usage. It divides its blockchain timeline into epochs and rounds.
Epochs have a predetermined duration, but they are subject to change. When an epoch ends, the shards are pruned and reorganized across the network.
On the other hand, when a round ends, a new consensus group of validators is randomly picked to commit another block.
Additionally, the security of the Elrond Network is not at risk no matter how many demand changes appear concomitantly.
2. Secure Proof of Stake Consensus
Elrond uses an alternative form of the Proof of Stake (PoS) consensus mechanism that asks for multi-signatures from the validators of a consensus group.
The Secure Proof of Stake Consensus (SPoS) on Elrond uses the Boneh–Lynn–Shacham signature scheme, which is a high-security cryptography protocol that reduces the number of necessary communication rounds and ensures the authenticity of all signatures from a consensus group.
This solution should reduce latency, and diminish the time required to elect a consensus group to less than 100ms.
3. The Arwen WASM VM
The Elrond Network has designed a fast and secure virtual machine for the execution of smart contracts on the blockchain. The solution is named after another character of the J.R.R. Tolkien fantasy world, Arwen. It “can execute smart contracts written in any programming language that can compile with WASM bytecode, such as C, C++, C#, Rust, Go, TypeScript, and many others.”
The users that develop DApps on Elrond can earn 30% of the smart contract fees as royalties at no extra cost for the user.
Elrond also ensures high resiliency to malicious attacks and a fast finality for cross-shard transactions. Besides the EGLD tokens, the network hosts three types of entities:
Nodes and Users
The two pillars of the Elrond network are in constant collaboration to keep the network functioning. Users upload transactions through smart contracts on the network. Next, the nodes process them both actively and passively.
The validators are the nodes that deliver block generation and consensus building in return for rewards. Any node can apply for the role of validators as long as it stakes a specific number of tokens.
The shards are tiny units of data that come together to compose the sharding system of the Elrond Network. The validating nods get access to shards through an automatic process that guarantees the equal and transparent distribution of shards among all the participating nodes.
Elrond Network Performance
According to the Elrond website, the network can currently perform 15.000 TPS at a speed of 6s for block time creation, and a cost of $0.001 tx. The developers claim that the network can scale beyond 100k TPS as it managed to reach 263k TPS in a recent testnet.
The Maiar DApp
On the Elrond roadmap lays the integration of the DeFi module, which is part of the network’s plan to become a major player in the up-and-coming digital economy. One of the ways in which it can achieve its goal is the deployment of decentralized applications (DApps).
The first DApp launched on Elrond is Maiar, a mobile money application that works both as a digital wallet and as a fiat on-ramp platform.
Maiar was launched at the same time with the Elrond mainnet, and it is supposed to offer access to financial services for those who are isolated from the centralized banking system.
Maiar users can store, stake, send, and receive EGLD tokens. They can also use over 150 different fiat currencies to purchase Elrond tokens directly through the Maiar wallet on the app.
The Maiar DApp focuses on ease of use and privacy. It employs a high-security protocol, and it offers a user-friendly interface that is easy to navigate even by beginners.
The Bottom Line – Elrond Blockchain Review
The Elrond Network is an ambitious project that has been making confident leaps ahead on its roadmap, so far. It brings an interesting set of innovations to the crypto ecosystem, and its promise of massive scalability is encouraging, to say the least.
The company’s recent partnership with BiDao Cryptocurrency (BID) for issuing the multi-asset backed stablecoin BAI on the Elrond mainnet shows that the project is considering a broad expansion into the DeFi landscape.
The next step in its evolution should see Elrond provide cross-chain interoperability, which will deliver full decentralization and automatic enhancement of its role and reputation in the industry.