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What is Elrond (EGLD)?DownloadSubscribe
What is Elrond (EGLD)?

What is Elrond (EGLD)?

Elrond incorporates cutting-edge features for scaling, interoperability and Proof of Stake security. This article will explain how Elrond works, who’s using the project and how the EGLD token has performed in the last twelve months.


    What is Elrond

    Similar to Ethereum or Cardano, Elrond is a smart contract platform that supports dApps, NFTs and various other types of transactions. However, what sets Elrond apart from the competition is its scalability.

    Elrond cleverly refers to itself as an internet-scale blockchain. This terminology draws attention to Elrond’s ability to scale to tens of thousands of transactions per second, enough to make it a competitor to traditional internet platforms like Visa or Facebook. Other more popular blockchains, like Bitcoin and Ethereum, can currently only process 10 or 20 transactions per second on the base layer.

    The team behind Elrond consists of CEO Beniamin Mincu, COO Lucian Todea, and more than a dozen highly qualified engineers and blockchain researchers. The project was founded in 2018 and raised $5 million via an ICO. Elrond uses the EGLD token for transactions, staking, governance decisions and more. More information about Elrond is available on their blog.


    Elrond Adoption


    Elrond is setting itself up for mass adoption by integrating all of the features that make other smart contract platforms so popular. For example, earlier this year the Elrond development team announced their plans to bring NFT (Non Fungible Token) technology to the platform. NFTs have become wildly popular on Ethereum, and any blockchain that wants to compete with the larger protocols needs to have this functionality.

    The Elrond Twitter page is the best place to stay up to date with everything that’s happening behind the scenes. According to this Tweet, there are now 831,000 account holders on Elrond. Stakers have locked up 1.8 million EGLD and there’s been a cumulative total of nine million transactions on the network. That may sound like a lot, but to put it into perspective, Ethereum, the leading smart contracts platform, is currently averaging around 1.3 million transactions per day.

    But that’s not to say that Elrond doesn't have some real-world adoption. The Lucian Blaga University of Sibiu, Romania, has announced a new crypto payments system that lets students pay admission fees using the EGLD token. Elrond has also partnered with Shopping.io, and this partnership will give EGLD hodlers a chance to spend their tokens at some of the world’s largest merchants like Walmart and eBay.

    Elrond EGLD price prediction
    EGLD hodlers can now spend their tokens at Shopping.io - IMG source 

    Elrond Technical Specs

    Here’s a brief summary of how the Elrond blockchain works.

    Programming Language

    Elrond developers can choose between several programming languages when they’re writing smart contracts, including Rust, C and C++.

    Scaling

    Elrond uses sharding to achieve scalability on the network. Sharding is a scaling technology that splits the blockchain into multiple shards that run parallel to each other. Transactions are processed separately on the shards, and periodically the results from all the shards are synced and written to the blockchain.

    According to the development team, Elrond has already achieved 15,000 transactions per second (TPS) with sharding, and speeds as high as 263,000 TPS have been achieved on testnet.

    Other smart contract platforms also use sharding to scale. Polkadot has parachains, and Ethereum plans to introduce sharding in 2022 or 2023.

    Consensus Mechanism - how to stake Elrond EGLD

    Similar to most smart contract platforms, Elrond uses a Proof of Stake (POS) consensus mechanism. In Elrond’s case, the only difference is that their POS mechanism has a slight variation, making it more suited to the blockchain.

    As mentioned earlier, Elrond scales via shards. Rather than being forced to validate all transactions on all shards, Elrond validators only run nodes that verify transactions within a specific shard.  

    Eventually the transactions from all of the shards are synced and validated, and then that batch of transactions is written to the blockchain. Only at that point do Elrond stakers receive a reward via the EGLD token.

    The current staking reward on Elrond is 12.8% per year. Users can stake directly on the blockchain, or they can deposit their EGLD with the Binance staking service.

    How to stake Elrond EGLD
    The staking yield on Elrond - IMG source 

    The EGLD Token


    EGLD is the primary token on the Elrond blockchain. It’s used for transacting, paying transaction fees, governance decisions and incentivizing stakers. Initially there was a maximum supply of 20 billion tokens, however, later on that supply was radically reduced to 22 million via a token exchange.

    The EGLD token is up 3,400% in the last year, very impressive growth even by cryptocurrency standards. And it hasn’t only increased in value against the dollar; EGLD is also up 268% on Ethereum. This suggests that the project is quickly gaining adoption.

    One of Elrond’s most unique features is the royalty distribution mechanism, where 30% of the gas spent on smart contract calls go to its author (the person who writes it) at no extra cost for the caller (the person who chooses to interact with the smart contract).
    As Charlie Munger said, “show me the incentive and I’ll show you the outcome.” In this case, the incentive is for developers to create smart contracts that lots of people want to use.

    Currently there are only a handful of dApps built on Elrond, compared to over 2800 built on Ethereum, so hopefully this incentive will attract developers to the platform, and result in Elrond becoming a flourishing dApp ecosystem.

    This content is for informational purposes only and is not investment advice. You should consult a qualified licensed advisor before engaging in any transaction.

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