What is Elrond (EGLD) and how does it work? An in-depth look at its scalable blockchain technology

What is Elrond (EGLD)?

Elrond is a blockchain-based platform designed to enable the creation and development of decentralized applications and cryptocurrencies, aiming to foster a new internet economy. The project addresses the issue of traffic congestion on blockchain networks by offering scalable solutions. Elrond provides fast transactions and a scalable environment for developers, enterprises, and users, featuring a user-friendly experience and low transaction fees.

The network can reportedly handle up to 15,000 transactions per second, making it one of the fastest blockchain networks available. Its native token, eGold (EGLD), is a versatile cryptocurrency used for staking, voting, and transactions on the network. EGLD plays a central role in the incentivization system, rewarding network participants. Elrond boasts a latency of six seconds, utilizes sharding for scalability, and offers low transaction fees of $0.001.

In essence, Elrond is blockchain-based software that rewards network participants for their computational power, supporting a system of smart contracts that developers can use to create decentralized applications and assets.

How does Elrond work?

Elrond is a sophisticated software platform designed for creating Dapps and digital assets supported by smart contracts. To enhance scalability for developers and users, Elrond employs Adaptive State Sharding, which divides the network's infrastructure to handle the growing number of applications and transactions.

Elrond utilizes the Secure Proof of Stake (SPoS) consensus mechanism, an improved version of the traditional PoS protocol, ensuring that all network partitions created through sharding remain interconnected and functional. Developers can leverage the Elrond Integrated Development Environment (IDE) to build decentralized applications that replicate various products and services.

Users can execute smart contracts using various programming languages, such as C, C++, and Rust, and can also develop decentralized applications with these languages. Nodes operate the network to facilitate transactions and ensure platform security. Sharding is implemented by dividing the network into smaller segments, allowing nodes to handle portions of transactions sequentially, which helps prevent congestion and improves scalability.

The Secure Proof of Stake consensus mechanism coordinates the nodes to integrate the segments created by sharding. As a result of this sharding approach, Elrond can handle at least 12,500 transactions per second.

Who established Elrond? (History of Elrond)

Elrond was established and launched in 2017 by Lucian Todea, Beniamin Mincu, and Lucian Mincu. The Mincu brothers are also known for co-founding ICO Market Data, an aggregator of initial coin offering information, and MetaChain Capital, a digital asset investment fund. The Elrond team conducted a private investment round that secured nearly $2 million for the project.

In July 2019, Elrond conducted an ICO that raised over $3.2 million by selling 25% of its total supply. Initially, Elrond traded under the ticker ERD, but the ticker was changed to EGLD (eGold) after the mainnet was launched.

What makes Elrond unique?

Elrond stands out for its implementation of sharding, known as Adaptive State Sharding, which divides the network into smaller parts. This allows nodes to validate transactions and network operations by handling one segment at a time. This approach enables the network to process thousands of transactions per second with minimal fees.

The Elrond project's goal is to establish a new digital economy where decentralization and scalability are fundamental features of its blockchain infrastructure. Elrond enables users to create new assets, decentralized applications, and conduct transactions at a low cost. The project is distinctive in its support for enterprise-grade decentralized applications (Dapps), scalability, and offering compatibility with three programming languages.

What gives Elrond value?

Elrond's value is derived from its technical capabilities, scalability, provision of enterprise-grade solutions for decentralized applications (Dapps) and digital assets, and its overall use cases. These aspects collectively determine the intrinsic value of Elrond. However, this intrinsic value often differs from the market value of its native token EGLD, leading to situations where EGLD may be either overbought or underbought.

The market value of Elrond is reflected in its fluctuating market price, which is subject to frequent changes and trend reversals. This value is influenced by volatility and is shaped by various specific factors that can drive the price up or down. Ultimately, the value of Elrond is tied to its level of adoption, with the number of active users serving as an indicator of its utility and overall worth as a blockchain project.

How many EGLD coins are currently in circulation for Elrond?

There are currently 26,963,027 EGLD coins in circulation. Elrond was launched with a supply cap of 31,415,926 tokens, a target approached through a gradually decreasing inflation rate that provides staking rewards over the first decade. However, fees also contribute to staking rewards, and as fees increase, inflation decreases. If fees exceed the minimum guaranteed rewards, inflation reaches zero, paving the way for a shift to a deflationary monetary system.

The circulating supply of EGLD coins multiplied by the current price of EGLD equals the market cap. The market cap determines EGLD's ranking among other cryptocurrencies, as well as its market share and dominance.

Other technical data

Elrond's Adaptive State Sharding process involves a rotating selection of one-third of the network's nodes to validate transactions before they are settled on the main chain. Nodes are reassigned to new shards every 24 hours, preventing collusion among validators. Unlike traditional single-chain systems, Elrond divides its network into shards, each governed by the Secure Proof of Stake protocol.

Validators monitor block producers to ensure the validity of transactions. After validation, validators synchronize with other shards to finalize transaction settlements in batches. Participants in the network are rewarded with EGLD tokens to incentivize them to help secure the network and validate transactions.

How does the Elrond Network ensure its security?

The Elrond network employs staking, supported by the Secure Proof of Stake (SPoS) consensus mechanism, to secure the network. Nodes must stake EGLD to participate in the validation process, where they serve as validators.

Validators secure the network by utilizing the SPoS consensus mechanism, which involves synchronizing with shards and verifying block producers. Transactions undergo validation before being settled in bulk to maintain network security and prevent double-spending. Validators are randomly chosen and regularly reassigned between shards to prevent collusion. Validators' performance is rated based on their activity; if their score falls too low, they may lose their role and incur fines.

How to use Elrond?

The Elrond network offers rapid transaction capabilities using its native token EGLD, with a capacity of up to 15,000 transactions per second. Beyond transaction speed, Elrond serves as a platform for developing decentralized applications (Dapps), aiming to establish a new internet economy supported by a diverse ecosystem of cryptocurrencies and Dapps.

EGLD, also known as eGold, serves multiple purposes within the Elrond ecosystem. It can be staked for network governance, used to cover transaction fees, and serves as the primary method of payment. Additionally, EGLD can be traded in the cryptocurrency market, allowing users to profit from differences in buying and selling prices. Elrond's key strength lies in its scalability, offering developers and users flexibility along with high transaction speeds.

How to choose an Elrond wallet?

You can securely store your eGold tokens in any mainnet wallet, such as the Elrond Wallet, which has significantly lower transaction fees and provides full custody over your funds. Maiar is another official eGold wallet supported by the Elrond blockchain. Registering your phone number with the wallet app allows easy access to your funds and activation of a wallet account. You can use a passphrase to recover access if you lose your wallet. The Frontier wallet for EGLD can also be used in conjunction with the Elrond app to activate the service.

There are various other options for storing your EGLD, and the choice of wallet may depend on your intended use and the amount you plan to store.

Hardware wallets or cold wallets like Ledger or Trezor offer the most secure storage for cryptocurrencies, with offline storage and backup. However, they may require more technical knowledge and are more expensive. They are better suited for storing larger amounts of EGLD for experienced users.

Software wallets provide a free and easy-to-use option. They are available as smartphone or desktop apps and can be custodial or non-custodial. Custodial wallets manage and back up private keys on your behalf, while non-custodial wallets use secure elements on your device. While convenient, software wallets are less secure than hardware wallets and may be better for smaller amounts of EGLD or novice users.

Online wallets or web wallets are also free and easy to use, accessible from multiple devices via a web browser. However, they are considered less secure than hardware or software wallets. Choosing a reputable service with a good security track record is important. Online wallets are best for holding smaller amounts of cryptocurrencies or for frequent trades.

Kriptomat offers a secure storage solution for storing and trading your EGLD tokens hassle-free. Storing your EGLD with Kriptomat provides enterprise-grade security and user-friendly functionality. Buying, selling, or trading EGLD for other cryptocurrencies can be done quickly and securely on the platform.

Elrond proof of stake

The Elrond blockchain utilizes a variant of the PoS protocol known as Secure Proof of Stake. This network relies on nodes and validators that must stake EGLD to participate. This PoS protocol has proven more cost-effective and efficient compared to traditional options like Proof of Work, enabling Elrond to achieve high security and transaction speeds through sharding.

In conclusion, Elrond emphasizes scaling and fast transactions as key aspects of its value proposition, with the network reportedly capable of processing up to 15,000 transactions per second. Its high transaction speeds, scalability, decentralization, and full custody over users’ funds contribute to making Elrond a highly functional ecosystem.

As the project evolves, Elrond aims to become a model for the new internet economy, offering competitive transaction speeds and tools for developing and deploying Dapps for both public and enterprise-grade use cases.

Join the crypto revolution and embark on your Elrond journey today!