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There are more and more interesting projects in the world of cryptocurrencies. One of them is Elrond. If you don’t know what this project is about and you are interested in learning more about it, this article is for you. We tell you all about what Elrond is and how it works.
Elrond is a project in which the main goal is to achieve a blockchain so fast and scalable that it can be used for finance, business use, among others. The team will try to make this possible through its adaptive state fragmentation system. This system allows transactions to be handled quickly by multiple validators.
The blockchain of this project stands out for its speed, as while Bitcoin can only confirm a maximum of seven transactions per second, Elrond claims to be able to perform 15,000 transactions per second with a fee of just $0.001 per transaction with instant completion. To top it off, Elrond also claims to have the ability to scale to hundreds of thousands of transactions per second as demand grows.
The network’s high scalability and speed make it one of the first choice of decentralized finance developers. They use the blockchain to run their applications as well as other types of decentralized applications (dapps).
Benjamin Mincu is the CEO of this project. Benjamin started his blockchain experience as part of NEM‘s core team for a year and a half. In addition, he was the main leader of the marketing, business and community building efforts to succeed in turning NEM into a global blockchain product.
Lucian Mincu, is the CIO of Elrond. Mincu is an engineer with 8 years of experience in designing complex network infrastructures and solutions for high-end customers such as the German government.
On the other hand we have Elrond’s COO, Lucian Todea who is a successful entrepreneur who has over 15 years of investment experience in fintech. He is currently active in both the startup and blockchain space.
The operation of this project is mainly based on the use of sharding or fragmentation. This is a technique that fragments data into smaller parts and distributes them in various networks or block chains. Each of these parts contains a number of nodes that process each transaction.
This operation is not only employed by Elrond, as it is also applied by other projects such as Ethereum 2.0. However, Elrond differs from Ethereum due to the fact that it implements three types of fragmentation. These are states, transactions and network. In addition, it employs parallel processing to speed up transaction times and handle a larger number simultaneously.
Elrond uses a consensus protocol different from those we usually see as Proof of Work or Proof of Stake. The mechanism used by this network is known as Secure Proof of Stake Consensus (SPoS). This mechanism was developed to improve existing Proof of Stake solutions. Among the benefits of this system is a reduction in network latency by allowing any node in the shard to decide which members will be part of the consensus group at the beginning of each round.
This mechanism provides some randomness through the aggregated signature of the last block. Therefore, it is estimated that this process reduces the time required to choose a consensus group to less than 100 ms.
A weighting factor has also been introduced in the operation of this network, which has the main objective of promoting meritocracy among the nodes while taking into account the stakes. This blockchain introduces Bellare and Neven’s multi-signature scheme. This multi-signature scheme was designed to decrease the number of communication rounds required in the signature algorithm.
With this consensus mechanism, the project aims to ensure that the distribution of fragments is carried out fairly, thus increasing energy and computational demands as well as security.
All this operation depends on certain vital factors for everything to run smoothly. Below we will see what these factors are and what role they play in its operation.
The Elrond network offers interoperability between blockchains. The team in charge of developing the network seeks to offer total decentralization with the idea of decreasing the possibility of malicious users exploiting a single point of failure. In addition, it also seeks to dispense with exchanges as the main point of interoperability between blockchains. This network also has plans to achieve full communication between various external services. Among its plans is the implementation of the Elrond Virtual Machine (EVM).
Elrond uses the eGld token (EGLD) in every space on the network. Before the launch of the mainnet in July 2020 brought EGLD to life, the Elrond network used the ERD token, which is currently not operational. At the launch of the new token, the Elrond network allowed its users to exchange 1000 ERD for 1 EGLD after the launch of the mainnet.
Following the launch, the development team decided to significantly reduce the total supply of ERD tokens from 20 billion to a figure of only 20 million. In addition to this large reduction, it was also announced that a maximum of 11,415,927 new tokens would be issued over the next ten years. As a result, the maximum total supply is currently 31,415,927 tokens. This was a significant improvement over the old model, as it is now capped. After ten years, no more tokens will be issued.