Elrond in focus, is it the future of blockchains?

By Austras | Crypto in focus | 28 Oct 2021


Scalability seems to be the biggest issue for blockchains today. The more its adopted the pressure increases on the chain and higher performance is required. Many blockchains aim to solve this but often sacrifice something in return, be that speed, security or price. Elrond is one of the newer blockchains that aim to tackle this, how does it fair against its competition?

Background

Not to be confused with the character in Lord of the rings, Elrond first saw the light of day in 2018, only known as Elrond/ERD. It stayed in its test-net for almost 2 years while being worked on. The blockchain was meant to tackle and fix the growing scalability issues found in most blockchains. The test-net was successful but the developer team decided to change the coin supply, reducing it 1000x. They did this by allowing a direct swap where 1.000 worth of ERD on the test-net was worth 1 EGD on main-net, this took place in 2019 along with an ICO sale. The blockchain has seen continuous development to make it easier to build on and allow for more robust and advanced features, although this process has been fairly slow. Today, roughly 60% of all EGD is staked on the network.

Network

Elrond is built as a sharded Proof-of-Stake chain. Anyone can become a validator on any of the shards and help verify the network, rewards for running a node is currently ~20% APY in EGD. At the time of writing the network has 4 shards with a total number of 2169 validators. A shard is a different branch of the network that handles transactions, this allows the network to split focus and maintain higher performance by having multiple shards running parallel to each other. Currently, there are 3 execution shards running at a max capacity of 5 400 TPS each along with one shard known as the "Metachain" which keeps the shards updated on the states and ledger history of the other shards. During its test-net in a testing environment the chain was able to support 259 000 TPS on over 50 shards. The network can adjust how many shards there are to adapt to increase or decrease in demand.

Validators are not forced to stay at any specific shard, they can work on verifying transactions over multiple shards, for each round of nomination there are new validators that verify them. On average there are 60 randomly selected validators that vote on a new block for each shard, this works on preventing attacks on the network as each round of voting never shares the same group of validators. Each round of block creation takes roughly 6 seconds, in theory it can be done faster but the development team said they chose this time to not sacrifice security for speed.

Use cases

The main feature of the network is the smart contracts that can be run ontop of them. The smart contracts can be built using different programming languages and runs across all shards on the network. They are powered and paid for in EGD as gas. Each payment is split so that roughly in equal parts so that the gas functions as rewards for validators, burned as fees and 30% are sent to the author of the smart contract as rewards. That last function makes running Dapps on the network very attractive to developers.

Along with the previously mentioned features, you can also use it as payments for very a very low fee. Users can also stake their tokens to a validator and earn rewards and help with security and governance. Lastly they can also use the on-chain smart contract ran apps.

Elrond today

Elrond has very strong potential, one can argue that it's a more centralized blockchain as opposed to its very decentralized competition by only running ~2.000 validators. The barrier for entry as a validator is very low and each block creation has randomly chosen validators, while the network can easily scale it will also achieve a higher level of decentralisation. If you do compare it to similarly performing blockchains Elrond has it beat with the number of validators. As good as the network sounds, the main weakness is that its ecosystem doesn't have as many Dapps on it and it's not as well adopted as its competition. If Elrond can built its ecosystem with some time the potential for this blockchain can be very attractive, but the competition it faces is really strong.

Pros:
  • Really attractive developer environment
  • High scalability
  • Decentralized
Cons:
  • Fairly new amongst strong competition
  • Ecosystem is a bit bare in comparison to competitors
  • High initial inflation

How do you rate this article?

55


Austras
Austras

Product manager & tutor, love learning & teaching others. || https://cointr.ee/dorfel


Crypto in focus
Crypto in focus

A critical look at different coins, wallets & exchanges and what function they fill and what value they hold.

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.