Elrond Network Review: part 1 :
(by Midgard Research)PROBLEM & SOLUTIONElrond is creating a highly Scalable Public Blockchain with Adaptive State Sharding and Secure Proof of Stake
Let’s debunk what is Elrond and how it aims to get adoption.
In general, there are several ways in which blockchain and cryptocurrency developers are trying to improve transaction speed in the blockchain, and sharding is one such method. Sharding is a scaling technique inspired by traditional concepts of database optimization. Sharding divides the data into several pieces placed on different environments to be processed.
In general, the more validators and shards, the more transactions the network can process. Elrond introduces a novel state sharding scheme, called Adaptive State Sharding, with a dynamic model that allows the network to adapt to population and demand changes without compromising security, availability and decentralization.
Such architecture enables linear scalability, meaning that scalability of the network is designed to grow with the number of shards(and nodes) in the network.
The obvious questions are: What are all these features about? How one can use Elrond?
Elrond team has an answer to these questions, unlike a lot of other projects that propose outstanding (on paper) “public-good” alike solutions, that will eventually die missing use cases.
Out of multiple theoretical use cases, we would like to choose three that will be applied to practice right after the mainnet launch.
Decentralized exchanges: DEX is the most obvious use case for high throughput blockchain since it needs to be faster and more secure than centralized competitors.
Payments: Elrond has the Netopia payments partnership, Netopia has around 400M in annual turnover and 6000+ merchants. Just imagine, the number of transactions that payment processor like Netopia needs to handle every day, even every hour.
Team also recently mentioned that they are in talks regarding the partnership with a second payment processor from Switzerland.
Peer to Peer Smart grids solution: Elrond working with Distributed System Research Laboratory on this.
MVPElrond team has already showcased its prototype and opened their GitHub in November (the prototype was actually finished in July 2018), but because of serious limitations of Java team has made a decision to re-write everything from scratch in GO for the testnet. Testnet is yet to be open to the public, the team states that they have achieved a 30x performance improvement. As per words of Elrond`s team, their goal is to make such user interface that the average user will be able to set up a node in a few clicks. What we want to highlight here is that the whole development was self-funded by the team for more than one and a half years. They literally did not open any funding rounds until they had concept validated and tested.
mvp here: =>
https://i.imgur.com/uIW5Bbn.gif
PEER ANALYSISThe market for new scalable and secure blockchain infrastructures is saturated with different solutions but Elrond`s team is prepared to compete in the race. Let`s take a closer on what Elrond brings to the table and how their solution differs from others.
Zilliqa (MarketCap ~ $180M) is a public blockchain platform that implemented sharding and achieved a throughput of 2828 transactions per second in its test net.
Key differences:
+ Zilliqa still uses PoW in order to prevent Sybil attacks, while Elrond uses PoS, a much more energy efficient way to prevent Sybil attacks.
+ Zilliqa stores all the Smart Contracts in a single shard, while Elrond will distribute Smart Contracts among all shards in order to be able to parallelize Smart Contract execution.
+ Zilliqa tries to solve scalability by addressing half of the problem, and that is by doing network and transaction sharding – so they bring some of the solution and they can process about 2500 TPS (2828 TPS with 3600 nodes). They do not solve the hardest of the problem which is state sharding.
Algorand (Total Funding Amount $66M) – Algorand’s first-of-its-kind, permissionless, pure proof-of-stake protocol supports the scale, open participation, and transaction finality required to build systems for billions of users.
Key differences:
+ In Elrond the selection is based on a randomness source that is easy to verify, but made available only at the beginning of the round to all members. (takes ~4 seconds)
In Algorand selection can take much longer (up to 12 seconds) due to how VRFs work (you might end up with multiple leaders, or none at all, depending on the threshold set)
+ Scalability is higher in Elrond as throughput can increase with the number of shards. In Algorand it can only decrease with usage, as it will first reach storage and communication limitations.
Ethereum Serenity (2.0) (MarketCap ~ $17,5B) – Serenity -The Vision of Ethereum 2.0
Key differences:
+ In Serenity forks are likely to happen in the shard chains, while in the beacon chain the blocks are finalized with a high probability (for finality there is still a dependency on the PoW blocks referenced by the beacon blocks)
Elrond uses a pBFT like consensus. The pBFT is done on a randomly sampled consensus group smaller than the size of the shard.
+ Serenity is still using the PoW chain, where the registration smart contract resides, meaning that even though it implements also PoS chains, as a whole it is still wasting energy for the time being. Elrond is fully PoS so energy efficient.
+ Some parts of Serenity sharding model are similar with Elrond’s proposal. In Elrond there is one shard maintaining the notarization of block hashes from all shards, which looks similar to what the cross-links are doing. In Serenity right now there is no clear incentive to run a beacon node, also beacon nodes have much higher requirements so it might be possible that running a beacon node may not be very attractive for users.
Multivac (raised $18,6M) – a high-throughput and flexible blockchain platform based on trusted sharding computing.
Key differences:
+ Multivac employs a UTXO model, while Elrond uses an account model, this could be the biggest difference. The first method is called the UTXO (Unspent Transaction Output) Model and the second one is the Account/Balance Model. The UTXO model is employed by Bitcoin, and Ethereum uses the Account/Balance Model.
+ Multivac’s design is required to broadcast all shard headers to all shards, whereas Elrond has the metachain shard aggregating this information and broadcasting only the aggregation, which leads to less communication.
+ For consensus group sampling Multivac employs VRFs, which would lead to slower consensus, because forming the groups will be harder.
ROADMAPElrond Network, as a blockchain project, began in October 2017 with the early hypothesis validation. Since that time the team has done a lot:
-Developed prototypes of the node, wallet, core structure of the blockchain;
–Expanded its community by participating in meetups, conferences and entered into partnerships with merchants to accept Elrond token through payments;
-Updated technical whitepaper and released an open-source prototype.
ALREADY REACHED MILESTONES
The roadmap for 2019 is divided into 4 phases:
-Inception
-Fundamentals
-Launch
-Expansion
The roadmap on the 2019 year is designed pretty well. It starts from the Private Testnet launch with sPoS and Sharding and finishes with MainNet consolidation with a real-world integration. During this time the project will develop its products: mobile wallet, dApp store, API+SDK and much more. More detailed roadmap:
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