Understanding Elrond: A NextGen Scalable, Value Transfer Blockchain Protocol

Understanding Elrond: A NextGen Scalable, Value Transfer Blockchain Protocol

By CryptoWise | CryptoWise | 17 Jun 2021


Today we will deep dive into the Elrond project: A NextGen Scalable, Value Transfer Blockchain Protocol

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Elrond: A highly scalable, fast, and secure blockchain platform built for internet scalability.

Being a technology leader, I have been quite fascinated by the power of blockchain technology and the project built on top of it. Various cryptocurrency projects with underlying blockchain technology have found a strong use case in the Defi & fintech domain in the recent past. The technology to scale the decentralization platforms to support higher throughput in terms of transactions per second is in huge demand.

Technology like NFT(Non-Fungible Tokens), Defi all has been making waves recently and has been using the power of Ethereum programmable blockchain to make their name in the crypto space, all this have lead to the creation of promising blockchain Projects/Protocols like

  • Polygon
  • Elrond
  • Polkadot
  • Algorand
  • Cardano etc…

They are meant to scale and secure the blockchain transaction and reward their stakeholders with less GAS fee and more returns

I have been tracking these projects recently and I must admit that they have blown me out completely with the underlying innovation they are using to scale, the decentralized network. Today I would be discussing one such gem of the crypto world called “Elrond

What Is Elrond?

Elrond is a high-throughput public blockchain focused on providing security, efficiency, scalability, and interoperability by adopting two key elements: Adaptive State Sharding and a new Secure Proof of Stake (“SPoS”) consensus mechanism.

Elrond is not just a blockchain protocol facilitating high transaction throughput, but it is a complete Defi, Fintech & IoT ecosystem. It provides a scalable & secure platform for building distributed applications called DApp’s.

About Elrond’s Founder:

Elrond was co-founded in late 2017 by brothers Beniamin and Lucian Mincu alongside Lucian Todea as a solution to the problem of blockchain scalability, which they thought to be the most pressing problem facing the industry.

Before Elrond, Beniamin and Lucian Mincu co-founded MetaChain Capital, a digital asset investment fund, with Beniamin Mincu serving as CEO and Lucian Mincu as chief technology officer. The two also co-founded ICO Market Data, an aggregator of information around initial coin offerings.

Why Elrond Blockchain Project?

In the crypto universe, there are some of the popular crypto’s with use cases like

  • Bitcoin: A gold standard digital asset with amazing power to store value due to scarcity.
  • Ethereum: The programmable blockchain
  • Solana: Has got scale & speed to support blockchain innovation

Elrond seems to be the unique crypto project which combines the power of all the three attributes mentioned above, that’s why it is special.

Let’s discuss some of its amazing features which makes Elrond a unique and futuristic project to adopt

1. Amazing Ecosystem:

Elrond offers a powerful ecosystem to Developers, validators, Defi exchanges, and businesses to build a new internet economy.

Refer to this image and you will understand why Elrond is so powerful as a platform:

1*ZNCZmNdbGKEKFIk015Z7Qw.png Source: https://elrond.com/assets/files/elrond-ecosystem.pdf

2. Blazing Speed:

Elrond’s blockchain protocol for smart contracts & DApps can process over >10k transactions per second with low block times (5s), negligible transaction fees, and fast finality for cross-shard transactions in a matter of seconds. This is one of the unique value propositions Elrond has to offer.

3. Alluring Royalties:

One of the key features which Elrond offers is smart-contract royalties, In this 30% of the fees can be reallocated to the smart contract author, isn’t it alluring

4. Scalable, Secure & Developer Friendly Technology:

Elrond stands out because of its underlying technology let’s look into each of this

4.1 Adaptive State Sharding:

The Adaptive State Sharding, works via shard merges & splits for unlimited scalability and uses a fully sharded Architecture, which includes state, transactions, and network
  • Sharding was first used in databases and is a method for distributing data across multiple machine nodes. This makes it a scaling technique and can be used by blockchain networks to partition states and transaction processing so that each node of the network would only need to process a fraction of all the transactions.
  • Sharding facilitates multiple transactions. It splits a blockchain into shards will allow it to process far more transactions by means of parallelization, and thus greatly improving transaction throughput and efficiency.
  • Sharding helps in increasing the throughput of the blockchain network as the number of validators grows which we also know as horizontal scaling in the world of technology

Types Of Sharding :

Elrond uses three main types of sharding:

  • Network sharding
  • Transaction sharding
  • State sharding

To learn about the same, refer to this link:

Adaptive State Sharding · Docs
Sharding was first used in databases and is a method for distributing data across multiple machines. This makes it a…docs.elrond.com

4.2. Highly Secured PoS(Proof Of Stake ):

Elrond validates each transaction by using the highly secured mechanism of Secure-Proof-Of-Stake. This consensus-building approach makes it innovative and futuristic, where validator nodes are selected for consensus out of a shard. It also innovates in the steps taken by the validators to complete the consensus process as efficiently as possible.

  • SPoS selects validator nodes for consensus based on the amount of EGLD tokens staked by their operators. Each validator has an individual rating score that is taken into account. The Rating depicts the historical behavior of the individual validators and is taken into account during consensus.
  • Validators with a higher rating are more likely to be selected. The rating of a validator is recalculated at the end of each epoch cycle, with a few specific exceptions when the rating is adjusted immediately.
  • SPoS: Builds Consensus in two communication rounds with modified Boneh–Lynn–Shacham (BLS) multi-signatures.

Elrond’s latest implementation of Secure Proof of Stake can be viewed in the below-attached GIF:

1*dmg_0E-qHRNWJb8L-2kODQ.gif Source: https://docs.elrond.com/technology/secure-proof-of-stake/

4.3. Powerful Virtual Machine: (Fueling Smart Contract Engine) :

Another technology that makes Elrond tech infra robust and smart is its “Arwen WASM VM”. For any modern blockchain network, the mechanism of creating a smart contract is key to its success. Elrond stands out in this because of the Arwen VM, which executes WebAssembly thereby supporting multiple languages in which developers can execute smart contracts.

Arwen VM is highly secure and fast. It can execute smart contracts written in any programming language that can be compiled to WASM bytecode, such as C, C++, C#, Rust, Go, TypeScript and many other.

Now that we have covered the technology aspect of Elrond, it is imperative to understand its token and economics associated with the Elrond token

Tokenomics of Elrond :(EGLD)

Elrond was first announced in August 2019, and its MainNet went live in July 2020.

Mainnet is the term used to describe when a blockchain protocol is fully developed and deployed, meaning that cryptocurrency transactions are being broadcasted, verified, and recorded on a distributed ledger technology (blockchain).

The Elrond eGold (EGLD) Token is native to the Elrond Network and is supposed to be used for everything from staking, governance, transactions, smart contracts, and validator rewards.

Current Market Stats :(Source: coinmarketcap)

 

Current Price:

At the time of writing: 

  • Elrond price is $87.12 USD.
  • The current CoinMarketCap ranking is #61,
  • Market cap  as of date is $1,536,255,637 USD.

 

Price Trend Chart:

2e22a436339764f4ae469a1cde08cee7a468cbc88c0a283d6ee3b5840dfa4cd2.png

Source: coinmarketcap

How Many Elrond (EGLD) Coins Are There in Circulation?

 

The Elrond economic model has a limited supply that starts at 20,000,000 EGLD, with new tokens minted to reward network validators. The maximum supply can never exceed 31,415,926 EGLD, but this number will decrease as more transactions are processed.

Elrond’s native token was first made available for purchase through a private sale, in which 19% of its initial supply was sold, with 7.5% made available immediately upon token generation and another 15.41% released every three months. Elrond also held an initial exchange offering on Binance, in which 25% was sold and made available immediately.

eGOLD(EGLD) token release schedule & economic metrics :

As discussed eGOLD is a scarce token, eGLD decaying annual issuance rate, will reach 0% in the 11th year, with the max supply of 31,415,926 eGLD that will be further reduced by all accumulated fees.

For details of the incentives and economic values associated with the eGold token: Refer to this image below which has been sourced from the Elrond official website :

1*xq9xS2AKiKVh7Q-AfmMOPw.jpeg 1*3Dv2PFjJkTcb0KT8_-d2PQ.jpeg

What’s in there for Developers & Validators?

For Developer(Smart Contract Executors):

In order to increase the mass adoption of its Elrond platform, the Elrond project allows developers who use it to build a smart contract with the potential to earn 30% of the smart contract fees as royalties.

For Validators:
The Elrond will maintain a supply of EGLD tokens to be staked on the network during its first year, with validator nodes receiving a 36% annual percentage rate. This fee is attractive enough to support validators to be active participants of the Elrond Ecosystem.

How does The Current Returns & Future look Like For Elrond Crypto?

After understanding what & why of this promising blockchain protocol, it becomes imperative to understand how this EGLD token has been performing and what lies in the future ahead

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src

Well if you carefully watch the price trend on coinmarktplace.com you will find that overall it has given a return of 470 % to the investors who purchased this eGLD token at the very early stage. 

Data from Cointelegraph Markets and TradingView shows that since reaching a low of $115 on March 25, the price of EGLD has rallied more than 110% to a new all-time high at $245.80 on April 12, and has been down almost 40 % in the recent market crash, to be bought cheaply 

Past, Current & Future RoadMaps Of Elrond Project:

It becomes extremely important to understand how the Elrond project has fared so far and what are some of the promising developments lying in the future.

As per their official site of Elrond, here is the summarized view of the Elrond Project Roadmap:

Important achievements So far :

  • First, live blockchain architecture with state sharding
  • Mainnet launched in July 2020
  • 15,000 TPS, 6s latency, $0.001/tx
  • 263,000 TPS in public testnet
  • IDE with debugger and Rust framework for SCs
  • Validated through multiple audits from Trial of Bits & others

Q4 2020

  • Elrond Bootstrapping Phase 3:
  • Smart Contracts
  • ESDT token
  • Staking: direct & delegation
  • Elrond Governance: Voting system
  • Development Toolkit

Q1 2021

  • Maiar launch
  • Maiar: staking, Defi
  • Decentralized Exchange
  • Defi 2.0 module
  • Name Service

Q2 2021

  • Digital identity
  • Interoperability

From the roadmap summary, one can clearly see that Team Elrond has a well-defined road to traverse and has been managing the development quite well. In 2021 Q1 they launched one of the most ambitious projects of theirs called Maiar, which claims to change the way one can transact money over the Defi blockchain.

Maiar wallet app is already available on the google & apple store and can be downloaded here

Google Play link: https://play.google.com/store/apps/details?id=com.elrond.maiar.wallet

Apple Store Link: https://apps.apple.com/us/app/maiar/id1519405832

So What Is Maiar?

As per maiar.com:

Maiar is a digital wallet and global payments app that allows you to exchange and securely store money on your mobile phone. You can use Maiar to send and receive money near-instantly, to and from anyone around the world by just using a phone number or herotag.

One of the coolest features which Maiar offers is a digital identity layer that starts with a service mapping the phone number to a wallet address while preserving privacy and allowing users to send money to friends and family via their address book.

Elrond Defi 2.0 Is Slotted To Go Live in the coming quarter 2 of 2021:

0*f5S6J5z8FEIZgegl.png Source

This nextgen Defi 2.0 ecosystem being developed by Elrond will foster the growth of the community as a whole & not just individual enthusiasts and is built to address the existing loopholes of the decentralized ecosystem which are prevalent in the market currently

Elrond Defi will facilitate access to the following key Defi services:

  • Liquidity pools
  • Automated swaps
  • Synthetic assets,
  • Lending
  • Bridges(for interoperability )
  • Maiar Wallet(Which is already available in the market )
  • The launchpad and more...

Elrond’s Defi 2.0 module reimagines the world of banking altogether. By unbundling its components and leveraging blockchain technology, they will be offering a much simpler digital solution for each of the problems lying in the current financial & banking world, which means all these financial services would be near-instant, inexpensive, programmable, and decentralized. Making them accessible to anyone anywhere via a mobile app

Maiar Dex: Maiar Defi exchange is also slated to come alive soon in the coming few months, which will allow Swapping of digital assets instantly, globally, inexpensively, automatically

Summary:

With the kind of decentralized world Elrond is crafting, it is bound to become a holistic blockchain platform where every active participant in the network will be a beneficiary in some or another way. If you are a long-term investor and like to bet on the strong fundamentals of the crypto project, Elrond should be on your radar. Considering that Elrond's all-new avatar of Defi 2.0 is about to change the way the financial world works, one should keep a close eye on how it turns out when it goes live.

What’s Next?

“The strong use case of autonomous banking which DeFI 2.0 version looks very promising to me personally and i will be keeping an eagle eye to share the future updates and progress being made on the same for all you lovely readers out there.”

I will be doing some in-depth analysis of Elrond's Defi 2.0 version and also analyze some of its close competitor crypto projects, to come up with my next piece of Crypto Wisdom. Till then

“Stay Safe, Stay invested and Stay healthy ”

Disclaimer!

Opinions expressed here at CryptoWise are not investment advice and are only for educational purposes. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency, or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility.

 

NOTE! 

This article was originally published on my Medium account, here is the link:

https://medium.com/crypto-wisdom/all-about-elrond-crypto-project-4d61b3ae8d27

 

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