1. What is Elrond?

Elrond is a layer-1 blockchain infrastructure project, similar to Ethereum, Cardano and Polkadot, to name a few. It brings the underlying technology over which decentralized applications (or Dapps) can be built over. It uses the proof-of-stake protocol for achieving consensus and securing the network and the underlying coin is EGLD (or eGold).

2. What problem does it solve?

Elrond is described on the official website as “a highly scalable, fast and secure blockchain platform for distributed apps, enterprise use cases and the new internet economy". They aim to bring blockchain architecture into a single project that is able to power the whole economy of the world, operated entirely through smart contracts. Rightfully so, since they currently support 15,000 transactions per second (TPS) and claim that the network can handle more than 100,000 TPS, while the Visa TPS is around 1,700 with the potential of up to 24,000.

The project token is named EGLD and has multiple purposes:

• Participate in the Proof-of-Stake (PoS) network consensus
• Pay for transaction fees and gas
• Participate in on-chain governance by voting
• Pay rewards and power various adoption events

The network is secured by both validator nodes and delegators. The former are full nodes that stake large amounts of EGLD for securing the network in exchange for substantial annual returns on their locked coins. They represent the backbone of the system and respect several well-defined rules set in place by the community. The delegators are network users who delegate smaller amounts of EGLD to validators for less profit. However, their responsibilities are almost non-existent as they can delegate and withdraw EGLD at will with no penalties, except a withdrawal delay.

The Elrond blockchain supports the execution of both regular transactions and smart contracts. In the case of the former, fees are paid directly by the senders to the validators, who have the equivalent role of miners in a Proof-of-Work protocol (e.g. Bitcoin). For the latter, however, validators earn their rewards from the users of the smart contracts in the form of “gas fees”. The gas paid is an EGLD amount proportional to the code executed within the smart contract.

Let’s clear up what exactly the Elrond network takes pride in:

• Adaptive state sharding is an optimisation that divides the network into multiple sub-networks that run independently of each other to achieve more processing power. Shards are dynamically created and destroyed as needed, depending on the load. The information in these shards is synced and further validated by a special shard called “Metachain”, responsible for aggregating all the data in the network and contributing to the consensus mechanism.
• Secure proof of stake is an improvement over the classic proof of stake mechanism. The Elrond team introduces a very efficient random selection of the validator nodes and a rating factor that decreases the probability for a node to be selected as a validator if it acts in malicious ways. Both of these procedures increase the security of the network significantly.
• The network is developer-friendly as anyone can issue their own token and create smart contracts. They introduced native support for non-fungible tokens (NFT), along with their own standard for digital tokens, similar to Ethereum’s ERC20, called ESDT. Smart contracts can be developed in Rust or C/C++, while they provide libraries in many programming languages (Python, JavaScript, Golang, Java) for other purposes, such as executing smart contracts. For comparison, Ethereum smart contracts can be developed using more specific programming languages such as Solidity or Vyper.

Ultimately, the speed of the Elrond network scales with the number of shards. When the network is in its infancy, there is little reason to split it up into many shards. Once the demand rises, the network will be able to adapt and accommodate a higher number of transactions, with the potential of reaching the 100,000 TPS the team estimated. More information about the technical aspects of the project can be found in the official whitepaper of the project.

Needless to say, the use case of a project such as Elrond was demonstrated time and again to be of interest in the blockchain space. A well-performing infrastructure project enables other projects to be efficiently and scalably built on top of it. For instance, ERC20 tokens are limited by the performance of Ethereum which, right now, is a hindrance. Building a smart contract over a fast and secure layer-1 infrastructure, that Elrond claims to be, means people will be more willing to use your service. They want to build a platform where anyone can contribute, that will power the world’s services, much like the vision Ethereum had when it was launched.

Relevance Score: 8.5/10

Layer-1 technology solutions form the infrastructure of decentralized applications built on blockchain. When designing a good product in this space, performance is perhaps the most critical discussion point. While features can be implemented organically with consensus from the community, the underlying architecture is very difficult to upgrade and in most cases the overall performance of the network is dictated by its initial design. This is why Elrond gets points in this category as it stands out with a solid technical approach.

3. Team

Image source: https://elrond.com/team/

Elrond is originally a Romanian startup and it is no surprise that all of the members on the team come from Romania as well. They became a unicorn in January 2021, surpassing $1 billion market cap. Beniamin Mincu, one of the co-founders, is for the most part the face of Elrond when it comes to promoting the product and discussing the state of adoption. He is a former member of the NEM core team, which grants him additional credibility. NEM is another infrastructure project that aims to develop a more technologically-advanced blockchain. Two of the team members previously worked on ICO Market Data, an ICO tracker, while Beniamin and Lucian Mincu, founded MetaChain Capital. The latter is an investment fund for crypto projects, taking pride in their strategic investments in Binance, Tezos, Polkadot, BAT and Zilliqa, while Lucian Todea has been an angel investor for more than 7 years. This can be an indicator for their ability to attract funding when needed. Unfortunately, it is very hard to find any other relevant information about the current state of the MetaChain fund.

An important thing to note is that more than half of the team consists of software engineers, further proving that they are able to deliver on the technical side of things. In fact, only a handful of people handle their outstanding marketing and communication strategies, making their priorities set on having a strong product first and foremost.

To assess the technical expertise of the Elrond team against their competition, here are some statistics about the largest repositories for each project on June 1, 2021:

Their advisors are also well-prepared. Two of the business advisors, Andrei Pitis and Alex Iskold co-founded, advised and invested in successful businesses previously. However, their lineup of technical advisors is even more impressive, consisting of: an Ethereum core developer, 2 co-founders of another crypto project called Nash, and a computer science professor that was also a former scientist at NASA.

From the information available to the public, Elrond had a total of 5 investors:

• Binance Labs, a social impact fund led by Binance to empower blockchain projects
• Maven 11 Capital, which invested in many other important altcoins such as Ethereum, Aave and Uniswap
• Electric Capital
• Woodstock
• NGC Partners

Team Score: 9/10

Elrond definitely has one of the most ambitious teams in the space. Engineers, researchers, and entrepreneurs, with PhDs and backgrounds at top companies work together to build a highly performant, scalable and secure blockchain. They have excellent Github activity, but not too many stars. This can imply that even though the internal development team is strong, there is not enough traction from the outside coding community just yet. Besides, their financing needs are backed up by big names in the crypto space. However, they don’t seem to have too many blockchain legends in their team, while other new and popular crypto projects (e.g. Polkadot, Cardano, Solana etc.) do.

4. Competition

Since the Elrond project features primarily a layer-1 blockchain, the underlying architecture over which smart contracts and other tokens can be developed, its main competition consists of other popular layer-1 solutions, namely Ethereum, Polkadot, Cardano etc. Aside from these, there are other interesting projects that showcase the same performance differentiator that Elrond leverages, such as Algorand and Solana. Let’s take them in order.

Ethereum. When it comes to Ethereum, an established giant in the world of crypto, it makes sense to focus more on the Ethereum 2.0 update. Ethereum 1.0 uses the proof-of-work mechanism that limits the TPS (10-15 in this case), and has a high energy consumption. The update is set to bring numerous improvements to the network, including the proof-of-stake mechanism and sharding, a mechanism which Elrond already has. As of June 1, 2021, the alternate proof-of-stake chain was launched, but it will have to be merged to the mainnet and ultimately, integrate sharding. The whole process is planned to be finished sometime in 2022. From a technological standpoint, Elrond has the clear advantage, with a network that has all the Ethereum 2.0 features and more. Additionally, these features are all fully functional at the moment. As an old-timer, however, Ethereum has a huge ecosystem with many popular Dapps available on the network, which is why Elrond wants to mitigate this and make it as easy as possible for developers to create Dapps on their network. However, Elrond has way smaller transaction fees - around $0.01 as opposed to Ethereum’s $5.86 per transaction. These were the numbers recorded on June 1, 2021.

Polkadot. The differentiators for Polkadot are the heterogenous chains. A chain is basically another word for shard, but while in the case of Elrond, the shards are just a way of scaling the singular main network, in Polkadot’s case, each chain can handle any type of data, independent of the others, while still being validated by a central “relay chain.” Take for example a chain that stores academic records. This data is not accessible from the outside but its validity can be proven to other chains through smart contracts. This way, the Polkadot network focuses on handling generic data, while Elrond is more inclined towards powering economic services. Tests showed a TPS of 1,000 with one co-founder estimating 1,000,000 if all the features that make Polkadot scalable are to be included. The Polkadot network is currently host to a decent number of Dapps, with Chainlink being the most popular.

Cardano. Cardano is a project that has been growing very much over the last few years, but is not particularly fast when it comes to technological advances. One reason for that may be the evidence-centric approach they take, modeling their implementation mathematically and having it thoroughly audited. They make up for the slow development pace with transparency to the community. They also use proof-of-stake consensus and had a TPS of 257 in a test from late 2017. Cardano’s roadmap lists five main phases corresponding to important blockchain features. Currently, the mainnet is in the process of integrating phase 3, introducing smart contracts. Scalability features which will improve the TPS are part of phase 4.

Algorand. Algorand is an infrastructure project that claims to solve the blockchain trilemma of achieving speed, security and decentralization. Elrond is heavily inspired by Algorand and its implementation is ultimately better in every sense. Algorand lacks sharding and Elrond’s method of validator selection is both faster and more secure. While Algorand provides support for smart contracts, there don’t seem to be a whole lot of known faces building over it. On their official page, the vast majority of partners are venture capital funds with no mention of Dapp partnerships.

Solana. Solana is another blockchain that focuses on performance, just as Elrond does. As a fair warning, however, their mainnet is still in beta from March 16, 2020, with rewards and inflation disabled. As of June 1, 2021, the blockchain processes 1,266 TPS, with the possibility of handling 50,000. A huge advantage Solana has is its developed ecosystem, with Chainlink, Terra and Tether being among the integrations. A crucial difference between the Solana and Elrond implementations is the block time. That is the time it takes for a block of transactions to be confirmed in the blockchain. While Elrond’s block time is 5 seconds, Solana’s is 0.5 seconds currently. This is the reason why the Serum DEX, one of the first decentralised exchanges based on order books, is built over Solana.

Competition Score: 8.5/10

Infrastructure projects are very crowded and we don’t expect them to slow down given the crypto space is barely a decade old and improvements are done constantly. Elrond manages to excel at achieving its goals and meeting deadlines. This and the fact that the project delivers at the moment what it initially promised, sets itself apart from the competition.

5. Tokenomics

The Elrond project was started in September 2017, its testnet was launched on June 5, 2019 and its mainnet on July 30, 2020.

The network started with 20 mil. tokens with a maximum supply of 31.4 mil. that will be achieved in 2030 at the earliest. The Elrond team chose to take a deflationary approach for their coin. The inflation in a year decreases by the amount of transaction fees, as explained in their economic model. The maximum issuance rate decreases every year. However, If there is enough adoption, the maximum supply will never be reached as the tokens issuance rate is decreased with the TPS demand. On June 1, 2021, there were 21.8 mil. total tokens, with 17.5 mil. of them circulating.

Image source: https://elrond.com/assets/files/elrond-economics.pdf

Image source: https://elrond.com/assets/files/elrond-economics.pdf

Elrond’s initial offering campaign was built on their previous token, ERD. All ERD was converted to EGLD at a 1000:1 rate as part of their new economics plan. Their initial ERD offering was an Initial Exchange Offering (IEO) on Binance Launchpad on July 2, 2020, where the first coins were made available for the public to purchase. 25% of the initial supply was up for sale and 1 ERD was bought for $0.00065 (or, 1 EGLD for $0.65). 19% of the supply was sold privately and 19% was held by the team. The entire initial token allocation is depicted in the following chart:

The vesting period of the team was extended to 3.5 years, with the following schedule:

• 10% — 6 months after IEO
• 10% — 12 months after IEO
• 15% — 18, 24, 30 and 36 months after IEO
• 20% — 42 months after IEO

The private investors have a vesting period of 1.5 years, with the following schedule:

• 7.5% — unlocked at IEO
• 15.42% — every quarter over 18 months

This address is the account where the EGLD for the core team is vested, and this address is the private investors’ account. Note that all investors’ EGLD has already been moved out of that account. More detailed information about the tokenomics can be found in the official economics whitepaper.

As of June 1, 2021, EGLD can be bought on the following centralised exchanges:

• Binance
• Bitfinex
• Gate.io
• Liquid
• OKEx
• Bithumb Global
• Crypto.com
• AscendEX (Bitmax)
• WazirX
• eToroX
• CoinDCX
• Bilaxy
• OpenOcean
• DragonEX
• Bitpanda

As you can see, the coin is not yet available on Coinbase and Kraken, but it is also available on the following decentralised exchanges:

• PancakeSwap
• ZeroSwap

A reason for the short selection of DEXes may be the launch of their own DEX, Maiar Exchange.

On June 1, 2021, the minimum amount of EGLD required to participate in the legacy delegation was 10 EGLD. If one wants to run a full validation node, 2500 EGLD (approx. $250,000 as of June 1, 2021 and approx. $600,000 at the previous all-time high) is needed. However, the legacy delegation is getting replaced with a generic “staking” process in which users can stake their tokens, with a minimum limit of only 1 EGLD, through staking providers. These are Elrond partners that run full validation nodes and require fees to let users stake through them. On June 1, 2021, the approximate legacy delegation APY was 16.7%, the validation APY was 21.45% and the generic staking APY ranged from 9.04% to 17.66% depending on the staking provider and its fees.

Tokenomics Score: 7.5/10

The token has a nice deflationary structure, with a substantial amount of EGLD already in circulation.The vesting periods are long enough, but some may argue that too many tokens are reserved for the team, advisors and investors (40.5% of the initial supply). It remains to be seen how the EGLD price will be affected, when the rest of the vested tokens come into circulation, but as intrinsic deflation works its way, the impact of such inflationary events should be diminished.

6. Adoption

On June 1, 2021, there were more than 604,000 Elrond addresses and more than 5.4 million transactions in the ledger. 63% of the tokens were staked to 3,200 validators. While they have 98 repositories under their belt, the one containing the official implementation of the protocol, in the Go programming language, has the most Github stars. The user base grew a bit over 1% and close to 6% over the month of May 2021. Live network data can be inspected in the official Explorer page and various statistics are available in the Growth page.

An important medium for their growth is their mobile app, Maiar. With it, users can easily purchase EGLD for fiat with 0 fees (as part of their partnership with Ramp Network), store it, stake it and send it to other users. The app has a very nice and intuitive interface, promoting “hero tags'' as a more appealing alternative to classic wallet addresses. It is similar in features and feel to the modern fintech applications such as Revolut, N26 or Monese, whose clean UX, ease of use and convenience made them so successful. In the future, the team will integrate their own DEX into the ecosystem, called Maiar Exchange, introducing MEX as a new token for providing liquidity. The initial annual percentage yield (APY) for staking MEX was very high to encourage users to provide liquidity and bootstrap the DEX.

Image source: https://twitter.com/beniaminmincu/status/1362074544274608128

Another adoption mechanism introduced by Elrond is the Maiar Launchpad powered by another token called MAPD. Using it, crypto startups selected by the Elrond team will be featured on Maiar, be able to get help and raise funding from the community. More details on how this platform will function and its economics are to be shared in the future, so keep an eye out for that!

Elrond is proposing a complete ecosystem where various solutions can be built and easily integrated with each other. They are calling it DeFi 2.0 and you can read more about it in their official blog post.

Some notable Elrond partners are:

• Dapps: DSLA Protocol, Cere Network, ARPA
• NFTs: Curate, Polkamon, Terra Virtua
• DeFi Integrators: Binance Smart Chain, Pancake Swap, Reef Finance, Tidal Finance
• Stablecoins: Binance USD, Bidao, e-Money
• Oracles: Chainlink, Band Protocol, Umbrella
• Infrastructure Integrations: Bluzelle, BitGo, Cartesi
• End-User Onboarding: Binance Pay. Samsung, Travala, Shopping.io
• Fiat Onramps: MoonPay, CoinSpot, Changelly, Ramp Network
• Wallets: Ledger, NGravvve, Trust Wallet
• Staking Infrastructure: Binance Staking, ANKR, Just Mining
• Research Partners: HoloChain, Polygon (ex Matic)
• Privacy: Suterusu, Dusk, HOPR
• Transparency: Messari
• Collaborative Consortiums: Binance Chain Alliance
• Media Partners: Contentos

On June 1, 2021, their Telegram group had an impressive number of 39,000 members, but their forums were not quite as active, with 4 of the top-10 most active members being part of the Elrond team and no member aside from 2 having over 50 posts or comments.

As of June 1, 2021, the following table shows the relevant numbers for Elrond’s social media presence:

If you want to be in touch with the latest announcements and developments of the Elrond network, we suggest you to follow these Twitter accounts:

• Beniamin Mincu, Founder & CEO of Elrond and Maiar
• Elrond Network
• Maiar Application
• Lucian Todea, co-founder of Elrond and Maiar
• Lucian Mincu, co-founder of Elrond and Maiar, he is more involved in the technical side of the project
• The Coiniac - we provide updates on the projects we assess and Elrond is no exception

Adoption Score: 7/10

While Elrond enjoyed quite some adoption since inception, the pace seems to have slowed down in Q2 2021, with the user base not growing much week-to-week. Partnerships are announced at a regular pace by the team, but few of them are high-profile ones. Their Twitter activity is promising and the community they managed to gather around their Telegram group is also impressive. There is still a lot of work to do in order to achieve massive adoption, but they might be on the right track with their continuous focus on simplifying the onboarding process and making building on top of the Elrond network easier and easier.

7. Regulations

While the team consists almost entirely of Romanian members, Elrond Ltd. is incorporated in Malta, since it is one of the first jurisdictions that passed legislation around the space of cryptocurrencies, blockchain and distributed ledger technology. Its Initial Coin Offering (ICO) was regulated and they went through every legal step they had to achieve this. They take pride in their transparency to the community as it can be seen from their Twitter activity. Some of it is PR, but at the end of the day they keep the people that follow Elrond developments up-to-date with everything, which is commendable.

In their quest for massive adoption, Elrond partnered with BitGo for qualified and insured custody services for their token, EGLD. This means that EGLD satisfies all regulations required by institutional investors and can be integrated into platforms adhering to strict regulations. BitGo is, in its own right, a reliable provider of digital asset financial services, including custody, security and compliance. It is backed by, among others, Goldman Sachs, JumpCapital and DRW Venture Capital. The customers of BitGo include Coinbase, Binance, Ledger, Nexo and many others.

Regulations Score: 10/10

Elrond went the extra mile to have their coin regulated and the team is very transparent with the community, so it is hard to find any objection here.

8. Conclusion

The Coiniac Score: 8.5/10

Elrond is a strong candidate in the space of layer-1 blockchain solutions with a strong technical team, great business strategy and well-thought social media presence. Their most important advantage is their ability to deliver. The team looks strong, with emphasis on the technical aspect of the project, the advisors look capable and the investors have successful crypto projects in their portfolios. In most cases, the Elrond team finishes the promised features on time and the performance of their network is not a mere promise. The network is fully operational and ensures high throughput, security and actual scalability.

The toughest challenge they have yet to overcome is the level of adoption. Even though there are numerous staking partners, dapps creators, layer-2 solutions and integrators that have already joined the ecosystem, there is definitely room for growth. In order to fulfil their mission to create the ultimate “internet scale blockchain”, more projects and individuals should be drawn in. However, the launch of the Maiar ecosystem might be the starting point of this mass adoption, as the Elrond team plans to use the intuitive UX of the app and attractive fees to onboard seamlessly as many people as possible.