Elrond: Building for the Global Adoption

The last 12-24 months have seen new innovations in the layer-1 ecosystem, directing the future of blockchain to multi-chain. Now that the multi-chain future seems inevitable, we can expect to see many diverse ecosystems emerge on multiple layer-1s which will be highly interoperable and composable with each other. 

The early layer-1 architecture presented a trilemma – a tricky relationship between decentralization, security, and scalability. The trilemma prevented blockchains from maximizing on all three features, compromising on one to make the most of the other two. 

The last 3-4 years have seen an incredible amount of research and efforts put in to design new technical architectures and consensus algorithms, which can enable scalable, secure, decentralized, and interoperable layer-1 platforms. Owing to these innovations, many blockchains alongside Ethereum are now beginning to find their product-market fit.

However, as blockchain applications are now technologically capable of moving from early adopters to mass global adoption, there’s one big hurdle yet to be addressed – the User Experience (UX).

UX will be a priority

When early incentives dry up, users tend to move to different protocols, and a poor UX acts as a catalyst to shorten the customer life cycle. To ensure a superior experience, Web 3.0 can study user onboarding from Web 2.0. 

The mainstream audience doesn’t concern itself with the ideals of technology, as crypto-natives do. It needs applications that don’t compromise on performance. When being introduced to Web 3.0, users should have an equal, if not superior, experience to Web 2.0. 

As everyday observers of blockchain platforms, we see numerous applications offering exciting incentives like 100%+ yield and millions of dollars through liquidity mining (LM), but very few are working on UX to attract and retain users. 

FOCUSING ON UX FOR MAINSTREAM AUDIENCE

While everyone else fixates on incentives, Elrond is preparing itself to take blockchain technology from a niche group of users to mass adoption across the globe.

With this thought in mind, the Elrond team has built Maiar, an application that unveils and simplifies Decentralized Finance (DeFi) opportunities. Launched in February 2021, the app has already locked in more than 500,000+ users till date.  

Source: Elrond Team

Wondering how did Maiar get here? 

Maiar strives to become the most user-friendly blockchain application and boasts of having the following features –

  • Easy sign-up

Maiar simplifies the sign-up process by allowing users to log in with their phone numbers, much like other Web 2.0 applications. The process is easy and familiar and, therefore, superior to other blockchain applications. 

  • Intuitive interface

The interface is intuitive, enabling ease of navigation. Maiar lets users access their contacts and invite friends. Sending money to these contacts and friends is as easy as messaging. 

It also has seamless integrations with several on and off ramps, allowing the users to move from digital assets to fiat currency and vice versa. 

The app also introduces DeFi to users naturally, by letting them stake their EGLD tokens and earn yields from them. 

  • Native meta-transactions

Maiar leverages native meta-transactions for a smooth UX. One of its most progressive features lets users transact without owning cryptocurrencies to pay for gas fees. 

Users can also claim ‘Herotags’. Herotags associate complex blockchain addresses with simplistic usernames. Using these Herotags, users can send and receive payments without sharing phone numbers. 

  • Transparency and decentralization

In chasing superior UX, Maiar does not compromise on the foundations of blockchain technology. 

The wallet is non-custodial and users have complete control of their money. In addition to that, every transaction on the platform is transparent and decentralized, which means no third party can deny access to financial services to any user at any point in time. 

LEVERAGING MAIAR FOR DEFI

Through Maiar’s intuitive, simplistic, and smooth UX, Elrond will onboard mainstream users onto the application. And by doing so, introduce them to the world of decentralized finance. 

Source: Elrond DeFi Module 2.0 

Elrond introduced its DeFi 2.0 module in February 2021 with the goal of providing access to a billion users, globally. It’s a community-focused effort that will feature: 

  • Automated swaps
  • Liquidity pools
  • Borrowing and lending 
  • Maiar launchpad 
  • Synthetic assets

Participants of DeFi on Elrond can generate yields using quick and inexpensive transfers. These transfers will be powered by the Elrond blockchain, using Maiar’s interface. 

RIGOROUS TESTING BEFORE LAUNCHING

Many crypto users are used to participating in unaudited applications, primarily due to lack of knowledge. This method has proved costly many times – millions of dollars stolen or lost to hacks – over the last few years. As a result, the conventional users will not feel the same affinity to take these risks. 

Applications must be extremely stress-tested for regular non-tech savvy users to have a smooth and secure experience on blockchain applications. This will keep the risk of losing funds to hacks and bugs to a minimum, furthering Elrond’s goal of reaching a billion users globally.

When Elrond launched Maiar DEX on testnet in September 2021, the team introduced a “Battle of Yields”. Security researchers, DeFi experts, and eager testers participated in this incentivized stress-testing event. A prize pool of US$ 100k was kept for those who came up with Maiar Exchange-related security findings, tool development, guides, documentation, and strategies. 

This isn’t the first time for Elrond though. In October 2019, the team launched “Battle of Nodes” – another incentivized pre-mainnet testnet of the whole Elrond architecture. Test node operators battled it out and were rewarded for improving the network’s security by attacking it. Also, the battle brought forth several learnings. The participants discovered the node operations process, and put the network through a trial by fire, subsequently improving the architecture. 

Stress-testing applications before the launch helps build more reliable and trustworthy applications for the community.

BUILDING ELROND’S ECOSYSTEM

Other than onboarding mainstream users through Maiar, Elrond is also focusing on building a robust ecosystem of applications to spur innovations and stay ahead of competitors. Elrond Research has also made strategic investments in projects that are building on Elrond’s current capabilities. 

Elrond has expanded its ecosystem through applications in diverse sectors. 

Elrond adoption map, as of September’21; Source: Elrond Warriors

ENABLING INTERNET-SCALE BLOCKCHAIN TECHNOLOGY

Elrond has developed a unique approach to solving the trilemma. Without compromising on decentralization and security, it maintains scalability and energy efficiency

NOVEL APPROACH TO SHARDING

Elrond has innovated its platform using Proof-of-Stake (PoS) consensus and adaptive state sharding.

Let’s take the example of Ethereum 2.0. Eth 2.0 will have a fixed number of shards on the chain, increasing the risk of breaking the security protocol if there’s an imbalance in the number of validators, as the number of validators in the shards will decrease, which will make the shard more prone to hacks

Elrond’s novel approach is more dynamic, creating a network that’s highly scalable and secure. Elrond shards the blockchain as a binary tree that adapts to the number of validators. If this number reaches the specified threshold, a new shard is generated. Thus, it increases the throughput of the blockchain by parallelizing transactions. Similarly, if some validators leave the network, the number of shards consequently decreases.

The result?

Elrond achieved speeds peaking at 260,000 TPS on testnet, which are 150x higher than the Visa Payment Network, while not compromising on the decentralization of the network. After Eth 2.0, it is the blockchain with the highest number of validators on the chain, with 3200 active validators, over 3 times the number of validators on Solana and 12 times the number of validators on Polkadot, two leading Layer 1’s with the highest market caps.

As of 13th Oct, 2021

COLLABORATING WITH DEVELOPERS

To maintain a robust ecosystem and solve technical challenges, Elrond consistently collaborates and works closely with the developers in their ecosystem. The team has built an extensive toolkit for developers, easing the process of integrating Elrond’s unique capabilities in decentralized developer applications.

The toolkit’s primary purpose is to enhance developer productivity and efficiency. It includes a smart contract development framework, a Visual Studio (VS) code extension for debugging and testing, and access to local development environments. The framework also provides support for programming languages like Java, Python, and Go to interact with the blockchain and JavaScript utilities for front-end development and integration.

Smart contract developers are rewarded for their work. Elrond gives developers the option to charge up to 30% royalty fees for smart contracts with them. The technical specifications combined with the incentivisation and the comprehensive tooling offered by Elrond is very impressive and has led to the creation of a strong developer community.

In an ecosystem where developers are in high demand, Elrond is trying to capture the right developer talent and build long-lasting relationships.

LEVERAGING TOKEN-ECONOMICS AND COMMUNITY

With live internet-scale blockchain, user-friendly applications, and developer collaboration, Elrond is focused on attracting and onboarding a global user base, far beyond the relatively small crypto native user base which most other chains are fighting for. Amidst this, its community is strongly positioned to capture immense value from the EGLD token.

ELROND’S TOKEN-ECONOMICS MODEL

EGLD is Elrond’s native token that powers its entire ecosystem. It’s scarce, secure, and easily transferable across the world. 

Here are some features of the model:

  • Philosophy: Elrond’s token-economic model wants token holders to not be taxed, by keeping the inflation low, but large enough to cover staking costs (for running nodes). Collusion among validators is unlikely if the monetary supply staked is large enough. At the same time, it should be small enough for money velocity to remain unaffected.
  • Supply: At Elrond’s token launch, the supply was 20 million. In the project’s first few years, staking incentives come from the newly issued supply. As wide-scale adoption kicks in, inflation is substituted with transaction fees to cover rewards. While other Proof of Stake (PoS) networks have an infinite and uncapped new issuance, Elrond’s theoretical supply is capped at 31.4 million EGLD.
  • Minting Function Limits: If the cumulative sum of fees during one year is higher than the minimum guaranteed rewards to validators, the inflation rate becomes zero. This may lead to the network never reaching its limit of 31.4 million tokens, which will likely be the case.
Elrond EGLD Supply Model, Source: Economic Paper
  • Deflationary Model: As the network crosses a specific threshold (zero inflation transaction volume), any additional network volume directly accrues value to the token. With this economic design, EGLD can act as a store of value and sound money – comparable to value propositions offered by Bitcoin and Gold.

ELROND’S COMMUNITY

More than 300,000 people follow the Elrond network on Twitter and Telegram. 

The team has fostered the growth of this community through regular AMAs and open discussions. Plus, any application launched by the Elrond team, such as Maiar DEX, is wholly community-owned. In addition to this, Elrond also hosts trading competitions and stress tests to engage actively with the community, and reward them for their participation.

Their community-building strategy has been so effective that a significant number of Maiar’s 500,000+ users have downloaded the application through community efforts, in less than 9 months since its launch (Jan’21).

Ethereum’s success has provided valuable lessons in community management for any blockchain. Elrond’s team understood that user sentiments and financial incentives are as important as technical proficiency. Fair distribution of tokens and belief in the financial upside are ideal ingredients for the right community engagement mix. 

ELROND’S GROWTH METRICS

ValueMoM Gr%YoY Gr%
Total Market Cap (in US$ bn)4.5-17.1%+3817.4%
Total Users822.1K+8.1%+3881.1%
Total Staked Value (in EGLD)12 million-0.9%+121.2%
As of 13th Oct’21
Total Users (since Jul’20)
Staked Value (since Jul’20)
Daily transactions (since Jul’20)

WRAPPING IT UP

Elrond is, what some people might consider, a dark horse in the world of blockchain. The Elrond team is focused on solving the right problems to drive mass global adoption. 

Elrond’s novel approach to sharding has propelled the platform on a path of explosive growth. And through its intuitive applications and superior UX, Elrond is focused on capturing the global audience. Stress testing these applications before launch further minimizes the risks of hacks and bugs, bettering user engagement. Through these steady innovative efforts, the network has gathered impetus for growth and is effectively moving up the blockchain ladder. 

With visionary leaders like Beniamin Mincu, Lucian Mincu, Lucian Todea, and many less celebrated ones within their team, and with love and support from independent analysts like Wesley Kress etc, Elrond’s team and community have aligned themselves with a purpose and a mission, which goes far beyond individuals. Quoting Sever Moldovean (Project Manager at Elrond) from his recent interview, “Everyone in the Elrond team puts in a crazy amount of work hours. I don’t even consider Elrond as work anymore and I think this is true for everyone. It’s a mission in life, it’s a goal in life and when you see the amount of time everyone is putting in and the seriousness, like when a colleague asks you for something it’s not like it’s something from work, it’s more like a friend needs something. Whatever Elrond does is in permanent on-site hackathon mode….. All these guys (at Elrond) want to change the world with code, this is not a team that wants to make money but rather to change money.“ 

Elrond is building at an astonishing pace and is on track to bring billions of users to the world of blockchain, which will position them to become one of the top three (or the top) layer-1 platforms in this decade. 

LEARN MORE ABOUT ELROND

Website Telegram Github LinkedIn Youtube Blog Medium

Developer documentation: https://docs.elrond.com/ 

A recent episode of Elrond talks: Watch


AuthorsVanshaj Kandhari and Vokkant Thakkar

Disclosure & Risk Warning

Woodstock Fund is an investor in Elrond. We also run a validator node on the network (Link). Every financial product, asset class, or investment has risk. A cryptocurrency (also known as digital tokens, digital coins, or crypto(s)) is no different. That is why it is important for users to be aware of the potential risks present in cryptocurrency and blockchain projects. You should not invest funds in the cryptocurrency market that you are not prepared to completely lose; i.e., only allocate risk capital to digital tokens. Furthermore, we will not accept liability for any loss or damage that may arise directly or indirectly from any such investments.

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