Key Takeaways

• Elrond network is a sharding Blockchain focusing on Scaling to handle vast amounts od transactions.
• It currently handles 15,000 transactions per second
• eGLD Token (Elrond eGold) is used to pay network fees, send transactions, smart contracts and governance, to interact with applications, and to incentivize actors supporting the network.

Scalability trilemma

Scaling and throughput are perhaps one of the most pressing concerns facing some of the largest blockchains today. We have all witnessed blockchain bloat and the inevitable frustrations that come with low throughput and slow transactions.

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 Network is a public blockchain designed specifically for the internet scale that can achieve high-level scalability, interoperability, and high throughput, as opposed to the relatively lower throughput associated with other blockchain networks. The goal is to create a decentralized network that can provide the same or better performance when compared with centralized networks, while also providing users with greater privacy. Elrond tends to solve the scalability trilemma with a 1000x improvement in blockchain speed, scale, cost, and user experience, as their smart contracts platform can handle 15,000 transactions per second with a six-second latency and a transaction cost of $0.001.  

Elrond is not only 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 dApps. Elrond network’s developers see it as the future foundation stone of an open, borderless and globally accessible digital economy. This is to be achieved by turning Elrond into a platform with scalable value transfer protocol, paired with the easier deployment of decentralized apps (dApps).

Elrond’s Innovation

As said earlier, Elrond is a blockchain-based platform built for speed, security, and scalability. It utilizes an innovative spin on current technologies to create a network powerful enough to operate at “internet scale.” This is achieved by the combination of adaptive state sharding and a secure proof-of-stake consensus mechanism.

• Adaptative state sharding: the process of splitting the Elrond Infrastructure to support more transactions: Sharding is a technique that breaks data down into smaller pieces and distributes them across multiple chunks of the network, or shards, each comprising a number of nodes that process transactions. As a core concept, it’s not unique to Elrond;  Zilliqa is another sharded blockchain with similar aims, while Ethereum 2.0 will also implement sharding techniques. What Elrond does a bit differently is to implement three different kinds of sharding—state, transactions, and network—and use parallel processing to speed up transaction time and handle more at once.

• Secure Proof-of-Stake (SPoS): The consensus mechanism is divided to sync separate network components to a common ledger: Elrond pairs the weight of a validator’s staked eGLD tokens with a network rating for each node, creating something of a meritocracy, plus it implements random validator selection and regularly reshuffles nodes between shards. It’s said to be a secure, low-latency solution for consensus.

How does Elrond work?

The Elrond network offers many features common to other cryptocurrency networks, like smart contracts, transaction settlement, and token issuance.

Since transactions often involve accounts that exist on different shards, there is a need to exchange messages and update network states across shards. To improve resiliency to a variety of attacks, nodes within network shards are shuffled to maintain security via randomness. The combination of these two factors presents latency challenges when nodes are reassigned and must synchronize to new shards. State sharding requires nodes to only store a portion of the overall network state, rather than the entire state, so that when they are moved to a new shard, they only have to download a portion of the new state — making the synchronization process much quicker.

Further, Elrond utilizes what it calls a Metachain to operate as a coordination mechanism for the network’s various shards. The Metachain operates on its own specialized shard that allows direct communication with all other shards to coordinate the cross-shard operations that enable the entire Elrond crypto ecosystem.

The Elrond project and its linked token eGLD have had a roaring success in the last year and are growing increasingly popular in the crypto market and, more astonishingly, outside of it.

eGLD coin

While the Elrond Network provides a platform for the deployment of smart contracts, decentralized applications (dApps), and even entire blockchain protocols, its native eGLD coin is the unit of value that facilitates the function of the whole network. The utility of the eGLD coin on Elrond is multifold. It is used as part of the platform governance mechanism, for staking and validator rewards, and as payment for transaction and smart contracts. Platform users and developers alike pay for usage of the Elrond Network with the eGLD coin, which serves as gas for the entire ecosystem. The eGLD coin is designed for use with Elrond’s proprietary Maiar Wallet, which enables users to send near-instant transactions over the Elrond Network. Maiar offers borrowing, lending, sending, and receiving features, in addition to staking.

Scarcity

Elrond has a limited supply.  The maximum supply can never pass 31,415,926 eGLD, but this number will decline as more transactions are processed. As Scarcity increases, so does the demand for the coin.

Staking

Proof-of-Stake offers double benefits. The first is minimum energy consumption, and the second is that it removes the high barrier to entry, which benefits many people from the ecosystem instead of a select few. Elrond uses an improvised version of the Proof-of-Stake mechanism, which they call Secure Proof-Of-Stake. It helps Elrond be faster, secure, and fair.

Currently (as of this writing), roughly 55% of the coins distributed by the network are designated for staking. What does it imply? That is, after you transfer your coins for staking, you will profit from an interest rate of up to 29%. As a result, with a weekly recurrence, you will be paid and, from what you delegated, you will make more without putting in any more work! These positions are now filled, as predicted, but you may join up for the waiting list and earn 8% interest while you wait! Another advantage of staking is that when more coins are delegated, the selling offer decreases, which has a favorable influence on the price, which is crucial for every coin owner.

So, what makes Elrond so special?

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.

Elrond, like Cardano and Polkadot, competes with Ethereum. As a result, it faces stiff competition from some of the most prominent blockchain systems, such as Ethereum, Cardano, and Polkadot. Nonetheless, it has the ability to compete with them, and to compete strongly. It offers several features that compete with the top blockchain systems. Elrond has also formed alliances with some of the most prominent brands in the cryptocurrency business, including Ledger, PolyNetwork, BitGo, Coinbase Custody, and others.

Elrond's adaptive stake sharding, protected Proof-of-Stake, and Arwen Machine technologies allow it to process a large number of transactions, putting it in a league of its own. With further development, the Elrond platform will see an increase in transactions. Moreover, the biggest plus point with the Elrond platform is its strong support for blockchain interoperability.

Elrond (eGLD) is one of the promising altcoins this year. So, we feel that if the bullish market continues to favour crypto, crypto might have a good future this year. This is one of the many reasons that we decided to predict it in our SAIΞVE App.

Want to invest in eGLD? You can now do it in the SAIΞVE App!

Disclaimer: All cryptocurrencies are high-risk investments. Not only are they volatile, meaning they could see heavy losses as well as dramatic gains, but it is such a new industry, we don't yet know how it will unfold. As an investor, it is important to think about whether UNISWAP could perform well in the long term and whether you're comfortable with the risks involved.