What is Elrond (EGLD)? Fast blockchain platform overview

Main

• Elrond is a blockchain platform with sharding architecture. Uses the Secure Proof-of-Stake (SPoS) consensus algorithm.
• Depending on the load, the Elrond Elrond blockchain can be split into several parts or shards. Each shard is a separate network, for the operation of which a separate group of validators is responsible.
• For interaction between shards, each block is divided into three parts. The transaction can also be split into parts between different shards, the confirmation of each of them occurs in parallel. Synchronization of network segments takes place in several stages, after which the elements of all chains are included in the so-called metablockchain.
• Elrond’s mainnet went live in July 2020, with a reported maximum speed of 263,000 transactions per second.

Who founded Elrond and when?

The creators of the blockchain project are the brothers Beniamin and Lucian Minciu, together with Lucian Todea. The development of the blockchain platform began in 2017. Elrond Token Sale held on Binance Launchpad in 2019. The main network was launched in July 2020.

Elrond is led by Beniamin Minchu, who worked on the team behind another blockchain platform, NEM. From 2014 to 2015, he led its marketing department and community development.

In addition, the Minchu brothers developed their own investment fund MetaChain Capital. Todea previously led the Soft32 project.

What problem does Elrond solve?

The project offers its own solution to the blockchain trilemma. To do this, it is necessary to simultaneously provide significant bandwidth, decentralization and security in the blockchain architecture. High performance under heavy load conditions is achieved due to the special structure blockchain.

IN white paper Elrond it is noted that the project network should achieve a throughput comparable to centralized payment systems. At the same time, the developers plan to guarantee a high level of decentralization, as well as protection from various attacks.

The solutions used in Elrond are aimed at reducing computational costs and minimizing the amount of data. The development is compatible with modern smart contract platforms. As the saying goes on Elrond websiteall this allows you to increase productivity a thousand times compared to analogues.

The creators of Elrond claim that their blockchain platform is highly scalable. After testing, the developers launched the mainnet with a declared maximum speed of 263,000 transactions per second.

How does the Elrond blockchain work?

To process transactions, the network is divided into fragments – shards, each of which is responsible for a set of validators. Elrond features three types of fragmentation: networks, transaction groups, and states.

Sharding involves the formation of groups of validators to reach consensus. Fragmentation of a group of transactions involves their distribution among the validator committees. State sharding is the processing and storage of part of the data on the results of transactions performed by network fragments. Completion of operations requires synchronization between segments, which is performed at regular intervals.

The Elrond blockchain uses adaptive sharding. The network is divided into fragments, the number of which may vary depending on the current load. This flexibility ensures optimal throughput and security.

Sharding also involves placing network segments in nodes binary treewith no descendants. First, all nodes are divided into two groups. If necessary, the network is divided into four, six or more shards.

In each segment of the network, transactions are performed in parallel. Shards create blocks independently, which eliminates external delays. Fragmentation greatly increases the throughput of the blockchain.

How are Elrond shards connected into a single network?

The network operation algorithm assumes the division of the consensus cycle into rounds and epochs. The latter last 24 hours. The round lasts for several seconds, and after it ends, the composition of the group of shard validators changes randomly.

Throughout the epoch, the number of nodes and fragments remains stable. After its completion, the number of shards may change to ensure optimal performance. Also, the new epoch is used to add new nodes. The new validator starts processing transactions after 24 hours.

Each shard includes a certain number of user addresses, but transactions can also be made between different network fragments. Elrond solves this problem by grouping transactions into three types of “mini-blocks”:

• the first includes transfers between addresses belonging to the same fragment;
• the second contains transactions directed to a user from another shard;
• a third includes transfers from recipients from another fragment of the network.

The interaction between shards takes place in several stages. The algorithm allows you to synchronize fragments and form a “metablockchain” – the main chain, the blocks of which finalize transactions received from all shards. Metablockchain elements include block headers received from segments, which excludes the possibility of changing confirmed transfers. The structure of the network and its main elements are available in blockchain explorer Elrond.

Does Elrond support smart contracts?

The Elrond platform allows you to use smart contracts and create decentralized applications. For this, an EVM-compatible Elrond virtual machine built on WebAssembly (WASM) is used. Smart contracts are programmed in Solidity, C, C++ and Rust and then compiled into WASM. The virtual machine uses a special adapter to process transactions by various shards.

How does the Secure Proof-of-Stake consensus mechanism work in Elrond?

The algorithm for creating new blocks is based on Proof-of-Stake. The validator nodes that contributed funds to the staking are involved in processing transactions.

For each shard, there is a separate group of validators that reach a “local” consensus. The composition of the shards is determined randomly, which avoids malicious attacks. The aggregated signature of the last block is used as an argument to the function that determines the members of the group.

From a group of validators, one is randomly selected to form a block, and the rest confirm its validity. The probability of a validator being selected depends on their stake and rating. The validator rating also depends on the duration of work and the results of previous activity. If this indicator drops to a certain limit, the node is penalized and may be excluded from the list of candidates for the search for a new block. If the validator breaks the network, then it can be slashed.

The Elrond node can be deployed on a computer, smartphone or server, depending on what role it will play:

• Observer – a node that provides network data storage and does not have an EGLD stake. An observer node is full if it stores the entire blockchain or light if it stores information about the last two epochs. Nodes can relay messages, but are not rewarded for doing so.
• Validator is the node that contributed funds to staking. Participates in reaching the consensus of the network, as well as confirms transfers and is responsible for generating blocks. Receives network commissions for his work.
• fisherman (English) fisherman) – a node that checks the correctness of the blocks presented by the validators. These nodes reject invalid blocks and receive rewards for that. Fishermen cannot be part of consensus groups.

How has Elrond tokenomics changed?

Initially, Elrond’s native cryptocurrency was the ERD token issued on the BNB Chain. Its emission amounted to 20 billion tokens. Early investors purchased 19% of ERD’s total turnover, and as part of the token sale on Binance Launchpad, investors bought another 5 billion tokens.

In September 2020, ERD was transformed into the EGLD cryptocurrency, which was already issued on the Elrond network and became the native coin of the project. The developers carried out a “denomination”, exchanging 1000 ERD for 1 EGLD.

The main purpose of EGLD is to calculate and pay transaction fees. The coin is also used for staking. At the time of writing, the emission of the Elrond cryptocurrency is over 22 million coins.

How is the Elrond ecosystem evolving?

The creators claim that the performance of the blockchain exceeds that of centralized systems. The throughput of Elrond is linearly dependent on the number of fragments. This allows you to increase performance by dividing the network into more shards, however, the operation of the mainnet requires synchronization between segments, which increases the transaction confirmation time.

The main application on the platform is a wallet Maiar, which allows you to make transfers and staking cryptocurrencies. In December 2021, the Maiar DEX decentralized exchange was launched on the Elrond network. Later for her announced a massive $1.29 billion liquidity stimulus program designed to attract users and funds to the ecosystem. Rewards were paid in Maiar DEX (MEX) tokens.

In June 2022, an attacker kidnapped $113 million worth of cryptocurrency from Maiar DEX, using a bug in the exchange code. After the Maiar event, DEX was temporarily disabled and the vulnerability was fixed.

The Elrond team plans to issue regulated stablecoins in the European Union. Therefore, in early 2022, it acquired the payment service provider Twispay, which has a license to issue virtual assets.

In April 2022, to develop the Elrond ecosystem, they created the Skynet EGLD Capital crypto fund, which managed to raise over $40 million for its work.

In the summer of 2022, the Romanian Research Institute ICI announced on the creation of an NFT marketplace and a decentralized domain name system based on Elrond.