Key points

• Elrond is a blockchain platform that implements sharding in its architecture. It uses the Secure Proof-of-Stake (SPoS) consensus algorithm.

• Depending on load, the Elrond blockchain can split into multiple parts, or shards. Each shard functions as a separate network operated by its own group of validators.

• For cross-shard interaction, each block is divided into three parts. A transaction can also be split between shards, with each part confirmed in parallel. Network segments synchronise in several stages, after which elements from all chains are included in a so‑called “metablockchain”.

• The Elrond mainnet went live in July 2020, with a stated maximum speed of 263,000 transactions per second.

Who founded Elrond, and when?

The project was created by brothers Beniamin and Lucian Mincu together with Lucian Todea. Development began in 2017. The Elrond token sale was held on Binance Launchpad in 2019. The mainnet launched in July 2020.

Elrond is led by Beniamin Mincu, who previously worked on the NEM blockchain platform. From 2014 to 2015 he ran its marketing and community efforts.

The Mincu brothers also ran the MetaChain Capital investment fund. Todea previously led Soft32.

What problem does Elrond address?

The project proposes its own answer to the the blockchain trilemma: achieving high throughput, decentralisation and security at the same time. High performance under heavy load is achieved through the blockchain’s particular structure.

The Elrond whitepaper says the network should reach throughput comparable to centralised payment systems, while maintaining strong decentralisation and resilience to attacks.

Elrond’s design aims to reduce computation and minimise data volume. It is compatible with modern smart‑contract platforms. As stated on the Elrond website, this boosts performance by a factor of 1,000 versus peers.

The creators say the platform is highly scalable. After testing, the developers launched the mainnet with a declared peak speed of 263,000 transactions per second.

How does the Elrond blockchain work?

To process transactions, the network is split into fragments—shards—each served by a set of validators. Elrond features three kinds of sharding: network, transaction and state.

Network sharding forms groups of validators to reach consensus. Transaction sharding distributes transactions among validator committees. State sharding means each fragment processes and stores part of the state resulting from executed transactions. Completing operations requires periodic synchronisation between segments.

Elrond uses adaptive sharding. The network splits into a variable number of fragments depending on current load. This flexibility helps optimise throughput and security.

Shards are also laid out as network segments in the leaf nodes of a binary tree. Initially, all nodes are split into two groups. If needed, the network is divided into four, six or more shards.

In each segment, transactions are executed in parallel. Shards build blocks independently, avoiding external delays. Fragmentation substantially increases throughput.

How are Elrond’s shards joined into a single network?

The network divides consensus into rounds and epochs. Epochs last 24 hours. A round takes a few seconds, after which the shard’s validator group is reshuffled at random.

During an epoch, the number of nodes and shards is stable. After it ends, the shard count may change to optimise performance. A new epoch is also when fresh nodes are added. A new validator begins processing transactions after 24 hours.

Each shard includes a set of user addresses, but transactions can also cross fragments. Elrond tackles this by grouping transactions into three types of “miniblocks”:

• the first bundles transfers between addresses within the same fragment;

• the second contains transactions addressed to a user from another shard;

• the third includes transfers sent by addresses from a different fragment.

Cross-shard interaction proceeds in several stages. The algorithm synchronises fragments and forms a “metablockchain”, the main chain whose blocks finalise transactions from all shards. Metablockchain elements include block headers received from the segments, preventing changes to confirmed transfers. The network’s structure and key elements are available in the Elrond block explorer.

Does Elrond support smart contracts?

The Elrond platform supports smart contracts and lets developers build decentralised applications. It uses an EVM‑compatible Elrond virtual machine built on WebAssembly (WASM). Smart contracts can be written in Solidity, C, C++ and Rust, then compiled into WASM. The virtual machine uses a special adapter to handle transactions across shards.

How does the Secure Proof-of-Stake consensus work in Elrond?

Block production is based on Proof‑of‑Stake. Validator nodes that have staked funds participate in processing transactions.

Each shard is served by its own validator group, which reaches “local” consensus. Group composition is random to deter malicious attacks. The aggregated signature of the last block is used as an argument in the function that selects group members.

One validator is randomly chosen to propose a block; the rest attest to its validity. The probability of selection depends on stake and rating. A validator’s rating reflects uptime and past performance. If it falls below a threshold, the node incurs a penalty and may be excluded from the candidate set. Misbehaviour can lead to slashing.

An Elrond node can run on a computer, smartphone or server, depending on its role:

• Observer — a node that stores network data and has no EGLD stake. An observer is full if it stores the entire blockchain, or light if it stores data for the last two epochs. Such nodes can relay messages but receive no rewards.

• Validator — a staked node. It participates in consensus, confirms transfers and produces blocks. It earns network fees for its work.

• Fisherman (Eng. “fisherman”) — a node that checks the correctness of blocks proposed by validators. These nodes reject invalid blocks and receive rewards. Fishermen cannot join consensus committees.

How has Elrond’s tokenomics changed?

Elrond’s original native asset was the ERD token, issued on BNB Chain. Its supply was 20bn tokens. Early investors bought 19% of the total ERD supply, and a further 5bn tokens were sold via Binance Launchpad.

In September 2020, ERD was transformed into EGLD, issued on the Elrond network and becoming the project’s native coin. The team carried out a “denomination”, exchanging 1,000 ERD for 1 EGLD.

EGLD is used for payments and transaction fees, and for staking. At the time of writing, the supply of Elrond’s cryptocurrency is over 22m coins.

How is the Elrond ecosystem developing?

The creators say the blockchain’s performance surpasses centralised systems. Elrond’s throughput scales linearly with the number of fragments. This allows higher speed by splitting the network into more shards; however, mainnet operation requires synchronisation between segments, which increases confirmation times.

The flagship app is the Maiar wallet, which supports transfers and staking. In December 2021 the Maiar DEX launched on Elrond. Later, a liquidity‑incentive programme worth $1.29bn was announced to attract users and capital to the ecosystem, with rewards paid in Maiar DEX (MEX) tokens.

In June 2022, an attacker stole $113m from Maiar DEX by exploiting a bug in the exchange’s code. The DEX was temporarily taken offline and the vulnerability fixed.

The Elrond team plans to issue regulated stablecoins in the European Union. To that end, in early 2022 it acquired the payment‑services provider Twispay, which holds a licence to issue virtual assets.

In April 2022, the Skynet EGLD Capital crypto fund was created to support the ecosystem; it has raised over $40m.

In summer 2022, Romania’s research institute ICI announced an NFT marketplace and a decentralised domain‑name system built on Elrond.