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Elrond: Flight to the Moon or Journey to Valinor?

Bogdan Vinogradov

Elrond (eGLD) is another attempt to solve the age-old problems of bitcoin in the form of low transaction speed and excessive energy consumption. What interesting do the Romanian developers offer, and what does the elven lord Elrond, a character from the legend of J.R.R.Tolkien have to do with it? Let's try to figure it out.

Adaptability is the key to survival

Work on Elrond began in 2017, and a working prototype in Java appeared the following year. The 2019 IEO on the Binance exchange platform allowed developers to raise more than $3 mln. However, the full launch of the project took place only in 2020. Now the Elrond code is open, and the project itself is written in the Go language. After the commissioning of the ERC-20 mainnet, the ERD tokens were replaced by the eGLD token at a rate of 1 in 1000.

The original price of eGLD was much higher than that of the old token even in its best moments, which is completely unsurprising considering the denomination mentioned above. If the absolute peak of the ERD was only 43 cents, then eGLD started at $17.6. But this currency reached its absolute peak on February 10, breaking the $197 mark – more than tenfold growth. True, this was followed by a rather serious correction, now about $140 is offered for one token.

As the main "points" of the project, the developers proudly present the scaling architecture called Adaptive State Sharding and the Secure Proof of Stake consensus algorithm. These technologies combine the advantages of conventional sharding and PoS with certain innovations. So, adaptive sharding allows you to divide data into segments, focusing on the number of nodes in the network. Moreover, each node processes its part of the data simultaneously with other nodes, making the network as a whole work faster. Scaling occurs at three levels at once – not only individual nodes are grouped into shards, but also transactions and states processed in parallel.

Elrond's Secure Proof of Stake algorithm resembles a conventional PoS algorithm, and additional security is largely achieved due to the element of randomness and the introduction of a validator rating. Receiving a reward is quite standard — coins can be obtained for regular staking or launching a validator node.

Thanks to all of the above, Elrond's throughput reaches 15,000 transactions per second, which is significantly higher than the corresponding figures for bitcoin and ether. And the developers do not intend to stop — on the contrary, they declare that with the growth of demand, their brainchild will be able to process hundreds of thousands of transactions per second!

Also, Elrond's functionality includes the Arwen virtual machine (named after Elrond's daughter), which allows you to use more programming languages when developing smart contracts. Maiar (a spirit like Sauron or Gandalf), an interactive application that allows users to exchange funds almost instantly, can also be added to the piggy bank of interesting-sounding components of the project. Its distinguishing feature is its intuitive interface and overall ease of use.

Dependence on demand

One of the most interesting parts of Elrond is the names. In terms of "The Lord of the Rings" it is hardly worth looking for a special meaning – it seems that the developers just love these books! In addition, familiar names attract attention and can help the project stand out in search engines, although this is unlikely to play any significant role in the case of cryptocurrency.

As you know, Tolkien's elves lived for a very long time. But how long the Elrond project will live is an open question. It should be noted that the developers quite correctly noticed the current trends: sharding (a technology of Ethereum 2.0) and the struggle for scalability. Indeed, the recent DeFi boom has shown that successful projects can often suffer from their success by not being able to maintain the speed and commission size during the influx of users. An attempt to make the use of cryptocurrency simple and fast is also justified – a system designed for scaling requires very wide audiences.

The problem is that without this audience, Elrond risks getting lost among the competition. The struggle to increase the speed and maximum number of transactions is a commonplace of the modern crypto industry. And if a more advanced project still manages to take away the laurels of Ethereum, then Elrond, with all its scalability and bandwidth, risks being left out of business.

Of course, there is still a factor of large partnerships and investments, but here Elrond has not seen much success so far — Orion Protocol is still not Google or the government of Shanghai. That is why long-term investment in this project does not seem to be as profitable as it might seem. As for short-term deals, they largely depend on market conditions.

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