The Beginner’s Handbook
Elrond is a piece of software that intends to motivate a distributed network of computers to run a smart contract platform with a focus on scalability and low transaction fees.
Elrond is thus intended to compete with major blockchains such as Ethereum and Zilliqa, to grow an ecosystem of decentralized applications and coins.
source: GadgetsNDTV.com
Elrond does this through the use of two distinct features:
Adaptive State Sharding — The process of dividing the Elrond infrastructure to accommodate more transactions and programs.
SPoS (Secure Proof-of-Stake) – The mechanism designed to sync disparate network components to a shared ledger. Furthermore, the Elrond Integrated Development Environment will be used by developers to design and launch customizable applications that mimic goods and services on its platform.
Elrond is powered by its own cryptocurrency, EGLD coin, which is used to interface with applications, send transactions, and encourage network actors. Elrond’s Blog, which releases segmented updates for technologically or economically curious readers, is a good place to get more regular updates from their team.
Who Invented the Elrond EGLD Coin?
Elrond was founded in 2017 by Lucian Todea, Beniamin, and Lucian Mincu and is sponsored by Elrond Network, a Malta-based corporation dedicated to the project’s growth.
The startup held private funding round in June 2019, receiving $1.9 million from multiple angel investors. Elrond held an Initial Exchange Offering (IEO) in the same month, raising $3.25 million in exchange for 25% of its total token supply.
Elrond distributed its cryptocurrency as ERD coin at the time, however, after the project’s mainnet debut in July 2020, Elrond changed its cryptocurrency to EGLD coin. The project then conducted a transitory event in which investors could exchange ERD for Elrond’s new EGLD cryptocurrency.
How Does Elrond Operate?
Smart contracts, transaction settlement, and token issuance are just a few of the capabilities available on the Elrond network, which is similar to other cryptocurrency networks.
Programming languages (such as Rust, C, and C++) can be used by developers to run bespoke programming logic (smart contracts) and create new programs (decentralized applications) to offer a variety of products and services.
Elrond is distinguished by its design variations of sharding and proof-of-stake, which aid in the processing of around 12,500 transactions per second.
Sharding
Sharding works by dividing the network into parts, or shards, that allow nodes to process only a subset of the network’s transactions. This method is also used in competing blockchains like Zilliqa and Polkadot.
Elrond’s transaction processing mechanism is known as ‘Adaptive State Sharding,’ and it divides nodes into subsets to verify transactions. When transactions are completed, the shards broadcast them to the metachain (Elrond’s central blockchain), where they are settled.
To prevent collusion among validators in each shard, one-third of the nodes validating transactions in each shard are reshuffled to a new shard every 24 hours.
Securing Stake Proof (SPoS)
The Secure Proof of Stake (SPoS) governance system, which keeps the distributed network of computers running its blockchain in sync, is crucial to Elrond. SPoS, like regular PoS, is used to protect the network, validate transactions, and distribute freshly created EGLD coins by machines running the Elrond software.
However, because Elrond’s network is made up of shards rather than a single chain, the SPoS consensus method is utilized to choose validating nodes to produce blocks within a shard rather than the entire network.
Validators must check the work of block producers and sync with other shards in the network to achieve a final settlement. These contributors are rewarded with EGLD tokens once a batch of transactions is successfully added to the Elrond blockchain.
Why is EGLD valuable?
Elrond’s cryptocurrency, EGLD, is essential to the network’s upkeep and may be used for sending, rewarding network contributors, and conducting smart contracts.
Users who possess and stake EGLD acquire the right to vote on network enhancements and are rewarded with newly minted EGL in proportion to the amount staked.
Elrond pays smart contract authors 30 percent of transaction fees in what they call “smart contract royalties.” Elrond additionally keeps 10% of all transaction costs to reward community members that participate in special events, bounty initiatives, and network development.
EGLD, like many other cryptocurrencies, has a limited supply, which means that according to the software’s rules, there will only ever be 20 million EGLD.
VM Elrond
The Elrond Virtual Machine is a specialized smart contract execution engine based on WebAssembly (WASM). It adds Rust, C/C++, C#, and Typescript to the list of languages available to smart contract developers. Developers can develop smart contracts in any language they know, compile them on WASM, and debug them in the WAT human-readable format.
Meta chain
A Metachain is a blockchain that operates in a distinct shard. The tasks here are not to process transactions, but to notarize and finalize the processed shard block headers.
- Other responsibilities include facilitating communication amongst shards.
- Creating and maintaining a validator registry.
- Creating new epochs.
- Processing fisherman difficulties
- Cutting and gratifying.
Nodes
A node can be anything from a computer, smartphone, or server that runs the Elrond client and relays messages from its peers. Nodes can take on the roles of Validator, Observer, or Fisherman, offering varying amounts of help to the network and reaping corresponding benefits.
Validators are Elrond network nodes that have put up collateral (or stake) in the form of EGLD tokens in order to be eligible to process transactions and participate in the consensus mechanism. They are compensated through protocol and transaction fees, but they risk losing their stake if they collaborate to damage the network.
Observers are nodes that do not have a stake in the system. They are network members who can operate as a read-and-relay interface. Observers are either full, which keeps the whole blockchain history, or Light, which keeps only two epochs of blockchain history. Observers are not compensated for their time.
A Fisherman is a node that validates blocks after they have been presented. They are rewarded in EGLD for challenging invalid blocks (fake transactions) made by hostile actors. Fishermen can be validators or observers who are not part of the current consensus round.
EGLD Token
Elrond’s native currency is the EGLD (“Electronic Gold”) token. It fuels Elrond’s network by acting as a medium of exchange between users and developers (who pay transaction fees to utilize the network) and validators (who accept those payments as payment for the services they offer).
The Elrond network serves as a framework for the deployment of smart contracts, decentralized apps (dApps), and even complete blockchain protocols. The EGLD coin, on the other hand, is the monetary unit that facilitates these activities. Through staking and validator awards, as well as payment for transactions and smart contracts, EGLD administers the network.
Prior to Elrond, the brothers co-founded MetaChain Capital, a digital asset investment company, and ICO Market Data, which collects data on initial coin offerings. Todea is the founder and CEO of Soft32, a software review and download site, as well as a partner of mobilPay, a mobile payments app.
Elrond’s team currently consists of 27 developers, designers, and engineers from Intel, Microsoft, ITNT, and Soft32 as of June 2021. It also includes seven advisors from well-known firms such as Google, NASA, and Ethereum, as well as specialists from George Mason University (GMU) and the University of Illinois (UI). Fabio Canesin and Ethan Fast, the founders of City of Zion and NEX, are among these consultants.
Elrond isn’t the only network attempting to address the scalability conundrum. More popular initiatives with a view on the future of secure, scalable currency include Ethereum and Algorand.
Here’s how Elrond stacks up.
Algorand vs. Elrond
The first and most noticeable distinction between Algorand and Elrond is the lack of sharding. The Algorand blockchain does not use sharding and is based solely on the Proof of Stake (PPoS) consensus method.
Transactions in Algorand are accepted and confirmed by node committees that are chosen at random. This is supported by a unique verification mechanism known as Verifiable Random Function (VRF). VRF ensures that the committee selection process is public but private by operating similarly to a lottery – selecting ‘leaders’ at random to propose a block and committee members to vote on that block.
Consensus messages must be transmitted to the entire network to inform each selected validator of the other validators with whom they will be performing consensus, resulting in a slower consensus.
As a result, selecting validators in Algorand can take up to 12 seconds. In Elrond, on the other hand, a given shard will attain selection and consensus in 4 seconds. Even though Algorand’s throughput peaks at 926 TPS, these variances mean that it is still far behind Elrond’s current top of 263,000 TPS.
As previously stated, Elrond’s throughput scales linearly with the number of shards on the network. This throughput can only decline as the number of nodes increases in Algorand – without sharding technologies, nodes will soon exceed storage and communication restrictions.
Ethereum 2.0 vs. Elrond (Serenity)
Serenity, Ethereum’s 2.0 upgrade, is now in Phase 1 testing and promises to enhance throughput by including a PoS consensus method and sharding technology. Transactions per second (TPS), sharding technology, scaling capability, and security are the primary distinctions between these two networks.
Serenity will debut with a fixed set of 1024 shards, which poses security concerns (described below) if nodes quit the system. Shards must have a minimum number of nodes. This protects them from harmful actors’ attacks. If nodes are quite the Ethereum 2.0 network, some shards will be forced to drop below the minimum number of nodes required to maintain the 1024 shard count.
Elrond’s adaptive state sharding, on the other hand, allows shards to merge or split to maintain the optimal number of nodes in a shard. This protects them from harmful actors’ attacks. If nodes are quite the Ethereum 2.0 network, some shards will be forced to drop below the minimum number of nodes required to maintain the 1024 shard count.
Elrond’s adaptive state sharding, on the other hand, allows shards to merge or split to maintain the optimal number of nodes in a shard. As a result, the network’s shard count decreases as shards leave – or increases as more nodes join. Another distinction to be made is the transaction speed. Ethereum now has a transaction speed of 20 TPS, but with the Serenity upgrade, it will be able to conduct up to 10,000 transactions per second.
What to look forward to next
Elrond plans to implement an on-chain governance system that will allow network participants to vote on critical protocol modifications and influence the protocol’s future direction in Q1 2021, and to release DeFi2.0 soon after.
