Since going mainstream, the potentials of blockchain technology have become utterly unpredictable, in addition to being unlimited.
While the unpredictability of blockchain technology became prominent only in recent times, it is evident in a lot of diverse applications ranging from decentralised exchanges (DEXes), to yield farming, and more recently NFTs among several other initiatives.
Interestingly, Elrond – a scalable, fast and secure blockchain platform – thinks the world is barely on the cusp of unlocking massive generational opportunities. Notably, Elrond foresees a rapid financial transition from the deprecated financial technology to what it described as a state-of-the-art blockchain-enabled realm where transactions are executed at the speed and scale of the internet.
To this end, Elrond exists with an overarching goal of creating the backbone for high bandwidth, transparent financial system, extending universal access to anyone, anywhere.
Just before we go on further to define Elrond, let’s see what birthed the network in the first place…
Brief history of Elrond
Co-founded by Lucian Todea, and Beniamin Mincu in 2017, Elrond is backed by the Elrond Network – a for-profit company based in Malta and dedicated to expanding the blockchain project.
Just like most projects of its nature, Elrond kicked off on a small-to-medium scale by leveraging a private investment fund worth $1.9 million in June 2019.
While the initial funding was backed by several angel investors, Elrond, later in the same year, was able to raise another round of $3.24 million. This time through an initial coin offering (ICO) where it sold about 25% of its total token supply of 20 million EGLD.
Prior to the launch of the mainnet in July 2020, Elrond had earlier distributed its cryptocurrency as ERD coin, however, it has since changed the name to eGLD Coin. Consequently, it allowed holders of the old token to swap their ERD coin for the new eGLD coin in a transitory program. That said, what is Elrond?
What is Elrond?
Elrond is a proprietary blockchain protocol that aims to provide a decentralised, secure, and scalable network for distributed apps, enterprises, and the wider internet economy.
Specifically, Elrond prioritises scalability and low transaction fee which automatically puts it up to compete with other major blockchain networks like Ethereum, and Zilliqa to mention a few.
In addressing the industry-wide scalability dilemma, Elrond supports a blockchain speed that is at least 1000X faster than the majority of its counterpart as mentioned earlier.
Not only that, but the network also offers great improvement with respect to throughput rate, transaction cost, and the overall user experience. For perspective, the current throughput rate supported on the Elrond platform seats at a high relatively high 15,000 transactions per second (TPS).
Likewise, by enabling interoperability among various blockchains, in addition to general upgrades, Elrond is able to live up to its status as an internet-scale blockchain.
How does Elrond work?
At the heart of the Elrond operation is a combination of bespoke technology including a secure proof-of-stake consensus mechanism, advanced sharding technology, a validator network, and a native Elrond coin eGold (eGLD).
Starting with its proprietary technology, Elrond uses a native variation of the proof-of-stake (PoS) consensus mechanism dubbed ‘Secure PoS’, adding quite a number of innovative upgrades to it.
To understand the role of SPoS in the Elrond network operation, one must first understand the role of the advanced sharding technology (AST) employed by the network.
Notably, the AST technology refers to the process by which Elrond’s infrastructure is split into multiple parts so as to accommodate more transactions and programs. In other words, the AST technology facilitates the way network nodes are allocated transactions and mapped into specific shards. You can learn more about sharding technology in this article or this.
That said, the secured PoS is designed to sync separate network components including the validating nodes to a single ledger, leveraging its native Elrond virtual machine (EVM) which was purposely designed to facilitate smart contracts.
In this context, a node can be a smartphone or computer that is running the Elrond node client software in order to relay or process data across the network.
Unlike the regular PoS consensus mechanism that uses a system of nodes to transact data as well as to establish consensus, SPoS, on the other hand, leverages three specific types of nodes; ‘Validators,’ ‘Observers,’ and ‘Fisherman.’
The first is responsible for processing transactions on the network in exchange for native tokens; the second – ‘observers’ just like the name implies monitor on-chain activity, as well as read, and relay information within the network.
Fisherman nodes, on the other hand, are tasked to verify data that are being processed within the network. Likewise, they can challenge block data in the event that an error occurs or perhaps, upon the discovery of any malicious act. Interestingly, this category of nodes are rewarded proportionally for their effectiveness in spotting malicious actors.
SPoS additionally employs Boneh–Lynn–Shacham (BLS) multi-signature technology to randomly choose nodes inside each shard in order to complete validator selection in 100 milliseconds, or 0.1 second. Elrond’s capacity to accomplish this speed in its validator selection process distinguishes it as a true internet-scale blockchain.
Elrond token and governance
eGLD is the native token of the Elrond blockchain platform, and it is primarily used as the network’s utility token. Notably, eGLD is used as a medium of exchange between users & developers who pay to use the network and validators who take the fees as payment for the services they provide.
In addition, eGLD is used in the administration of the network; specifically, by staking the token, a member can automatically participate in the decision-making processes. Likewise, the token is awarded as an incentive to validators. Although eGLD is native to the Elrond platform, it is also available in ERC-20 format.
Ultimately, Elrond offers some of the best features for an enterprise-centric blockchain and it is strategically positioned to edge out the majority of its peers.
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.