Elrond is a blockchain network combining Adaptive State Sharding and its unique Secure Proof of Stake (SPoS) consensus mechanism to offer an “internet-scale” blockchain with utmost scalability, efficiency, security, and interoperability for enterprises.
There is no denying that blockchain can take the world of finance to the next level while positively impacting several other industries worldwide. However, whether or not blockchain can scale to meet the high demands in a short period is still a concern.
Even Bitcoin, the world’s largest cryptocurrency by market capitalization, is not immune to the scalability issue of its blockchain network. On the other hand, Ethereum is developing to address the scalability issues with their recent upgrade to ETH 2.0.
Many emerging projects in the crypto ecosystem nowadays are trying to solve this problem and improve blockchain scalability.
One such project is Elrond that aims to make mainstream adoption of blockchain and cryptocurrency a reality.
In this article, Liquid has covered everything you need to know about the Elrond network, its native digital currency, EGLD, how it works, its benefits, and more.
What is Elrond?
Elrond is a blockchain network, which enables multiple validators to process transactions faster, thereby enhancing the network scalability and transaction throughput. Unlike Bitcoin, which can only handle seven transactions per second, Elrond claims to process more than 10,000 transactions per second with low transaction fees of $0.001 each and fast finality.
Thanks to a combination of an adaptive state sharding system and a secure proof-of-stake consensus mechanism, it has been made possible.
As demand grows, Elrond has also promised to help process hundreds of transactions per second.
Elrond can be an ideal blockchain for decentralized finance (DeFi) developers to benefit from its speed and scalability.
DeFi developers can effectively use Elrond’s enterprise solutions for their decentralized apps (dApps).
How does Elrond work?
To understand how Elrond works, we first need to understand what sharding is all about.
Sharding involves breaking up data into smaller chunks and distributing them across multiple network chunks, each holding multiple nodes that process transactions.
The concept is not limited to Elrond per se. There are quite a few other sharded blockchains aiming for what Elrond is trying to achieve. For example, Zilliqa is a sharded blockchain type. Other than Zilliqa, ETH 2.0 is also implementing sharding techniques.
Hence the question arises, what keeps the Elrond network apart from other sharded blockchain networks? What’s so special about Elrond?
What makes Elrond unique?
What keeps Elrond apart from other sharded blockchains is its implementation of Adaptive State Sharding.
What is Adaptive State Sharding, you ask? Adaptive State Sharding combines three sharding types (state, transactions, and network) to speed up transactions through parallel processing.
In a nutshell, Elrond’s Secure Proof-of-Stake consensus mechanism combines eligibility through the amount of EGLD tokens staked by validators with a network rating for each node, thereby creating meritocracy and eliminating Proof of Work (PoW) computational waste. This mechanism is considered a secure and low-latency solution for consensus.
Should you invest in EGLD?
Elrond handles higher volumes of transactions and is also considered one of the most consumer-friendly blockchain platforms.
The Elrond blockchain has its native coin known as eGold or EGLD, which is used to pay network fees, staking and rewarding validators.
Currently trading at $101.40, there is a maximum supply of 31,415,926 EGLD.
Elrond is a technology ecosystem focused on new internet applications, including fintech, DeFi, and IoT.
In addition to enhancing staking capabilities, Elrond has plans to expand DeFi functionality and launch a decentralized exchange. In short, it will be interesting to see how the network grows this year.