While blockchain holds tremendous potential to disrupt incumbent industries and alter the face of finance entirely, the nascent technology isn’t without its drawbacks. Scalability remains one of the bottlenecks curbing mainstream adoption. Throttled transactions speeds, low throughput, and excessive fees are just some of the issues facing major blockchains today. But Elrond, and its native EGLD token, aims to fix that.
What is Elrond?
Dubbed the “internet-scale blockchain,” the Elrond network harnesses unique technology to provide high throughput, interoperability, and scalability. The aim is to rival the performance of centralized payment networks while remaining decentralised and thus preserve security and privacy.
At present, the throughput of BTC and ETH is capped at just 7 and 15 transactions per second (TPS) respectively. Though developers are actively working on separate scaling solutions, Elrond managed to surmount the scaling issue at conception. According to current estimates, the Elrond network can achieve upwards of 15,000 TPS, putting it in a similar league as centralized payment network Visa, which delivers a max throughput of 24,000 TPS.
However, unlike centralized payment systems, with their 3-day settlement periods and lofty fees, EGLD transactions are near-instantaneous and cost as little as one-thousandth of a cent.
Much like Ethereum, Elrond is a programmable blockchain capable of hosting smart contracts and decentralised apps (dapps). The network also champions interoperability to enable borderless connections between disparate blockchains.
How does Elrond work?
Elrond manages to pull off the seemingly impossible task of scaling via a technique known as “Adaptive State sharding.” In its most basic form, sharding partitions cumbersome network data into fragments—or shards—easing the network’s load, improving latency, and providing scope to scale.
In addition to scaling through sharding, the network also employs a secure proof-of-stake (SPoS) consensus mechanism to verify network transactions. Proof-of-Stake eradicates the need for energy-sapping mining machines. This makes it a much more efficient method than its Proof-of-Work (PoW) counterpart and allows for quicker transactions, higher throughput, and infinitely greater scalability.
Similarly to standard PoS protocols, Elrond’s novel SPoS method selects validators based on the amount of EGLD staked by network participants. However, SPoS ups the ante by introducing a rating element that takes validators’ past behaviour into account during selection.
With multiple scaling solutions in play, Elrond aims to raise its throughput to a ceiling of 100,000 TPS.
What does the EGLD token do?
From transaction fees and smart contract execution to validators rewards, dApp deployment, and eventually governance, EGLD serves as the currency of the entire Elrond ecosystem.
In line with its mainnet launch in July 2020, Elrond introduced a new economic model. The scheme swapped out Elrond’s previous token, ELD, for the EGLD token at a rate of 1000:1—reducing the circulating supply from approximately 20 billion to 20 million.
The idea was to create verifiable scarcity and transform the token into a hard currency that could become “a global reserve for the digital economy.”
Each EGLD token was valued at around $18 when the token swap occurred on September 4, 2020. As of writing, one EGLD equals $136—marking an impressive 655% increase.
The future of Elrond
In early 2021, Elrond kicked off it’s “100 days of Hypergrowth” campaign with a mission statement to initialise its mainnet, expand upon interoperability, improve its staking and DeFi functionality, and launch a decentralised exchange.
Alongside its mainnet launch, Elrond deployed its first decentralised app. Dubbed Maiar, the mobile app acts as both a wallet and a fiat onramp into the Elrond ecosystem.
Since launching the 100 days of Hypergrowth campaign, Elrond has stuck to the brief, delivering upgrades to it’s staking process and announcing strategic cross-chain partnerships. And with 28 days left, there’s still plenty for investors to get excited about.
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