Through an architecture that relies on Adaptive State Sharding, we achieve practical scalability thanks to the processing capacity of the system that increases proportionally with the number of participants.
Preliminary tests and simulations show that Elrond brings a three-orders-of-magnitude or 1000x improvement in throughput and processing capacity compared to Bitcoin or Ethereum, effectively out-scaling Visa, as our number one centralized counterpart.
1) Security through multi signing - This scaling technique can be used in blockchains to partition states and transaction processing, so that each node would process only a fraction of all transactions in parallel with other nodes. As long as there is a sufficient number of nodes verifying each transaction so that the system maintains high reliability and security, then splitting a blockchain into shards will allow it to process many transactions in parallel, and thus greatly improving transaction throughput and efficiency. Sharding promises to increase the throughput as the mining network expands, a property that is referred to as horizontal scaling
2) Randomness source - Each node from the list E can be selected as part of j an optimally dimensioned consensus group, by a deterministic function, based on last block’s aggregated signature, the round r and a set of variation parameters. The random number, known to all shard nodes through gos-sip, cannot be predicted before the block is actually signed by the previous consensus group. This property makes it a good source of randomness and prevents highly adaptive malicious attacks. We define a selection function to return the set of chosen nodes
3) Performance - Sharding approach shows a linearly increasing throughput.
4) Shard storage pruning - To reduce storage requirements and bootstrapping time.
Elrond’s dynamically adaptive sharding mechanism enables shard computation and reorganizing based on necessity and the number of active network nodes. The reassignment of nodes in the shards is progressive and nondeterministic, inducing no temporary liveness penalties. For additional security, Elrond randomly samples a new consensus group at the beginning of every round. Furthermore, Elrond refines its consensus mechanism by adding an additional weight factor called rating and uses the Bellare and Neven (BN) multisignature scheme. Lastly, Elrond considers formal verification for the critical protocol implementations (e.g. SPoS consensus mechanism) in order to validate the correctness of our algorithms.
Attention. There is a risk that unverified members are not actually members of the team
Strength and Opportunities:Elrond’s objective is it to achieve a better compromise for the conflicting goals of scalability, decentralization and security. This is the holy grail of cryptocurrency and the blockchain that can find the best compromise among these conflicting goals may take a lead over competitors. The team had significant previous blockchain exposure and experience, particularly in the areas of marketing and community management. Several developers and researchers are already working for Elrond.Weaknesses and Threats:Both major blockchain platforms, which are Bitcoin and Ethereum, that Elrond wants to outperform recognize their current scalability constraints. Ethereum is close to release its Casper update. In combination with sharding Ethereum plans to be able to process 100,000 transaction per second. This is an order of magnitude higher than the proposed transactions per second by Elrond. At the same time the Lightning Network will soon get ready and will provide a solution for Bitcoin’s scalability constraints. Since both Ethereum and Bitcoin are already widely used and accepted, with large developer communities and a proven record of immutability, it will be very hard for a new blockchain to overtake these platforms. This is particularly because blockchain adoption comes with a network effect, which gives an advantage to first movers. Current blockchain platforms are aware of their weaknesses and are working hard to solve them while still remaining decentralized. Besides the mentioned dominant blockchain platforms there is a large number of more recent blockchain projects trying to solve these problems. They were created in a response to the shortcomings of Bitcoin and Ethereum and are proposing different solutions to solve their problems such as EOS, Cardano and Neo to name just a few. The Proof of Stake consensus mechanism that is presented as novel by Elrond is already applied by these blockchains and some of them have launched their mainnet and have billions of USD in market capitalization. Most of the blockchain development happens with open source code. This means the knowledge in blockchain research is easily shared and can be duplicated. This setup gives the blockchains that were created earlier an advantage because of network effects. Cryptocurrencies are free to change their consensus mechanism and adopt their protocol. What is critical for the success of a blockchain is its number of adopters. Blockchain projects that were started earlier and have already gained a large number of investors and a solid developer base have a significant advantage.Verdict:It feels like the proposed solution by Elrond comes at least one year too late. Elrond essentially wants to dethrone Bitcoin and Ethereum from their current cryptocurrency dominance. An analogy would be a startup that wants to replace Google as the default search engine. While this is not an impossible endeavour, it is still a highly unlikely outcome. For all the investors that do not have an incredibly high risk tolerance it is better to let this ICO opportunity pass.
Currently, we feel that it is too early in order to determine whether the team will be able to produce an outstanding project. With that said, the main team is promising and based on their network and previous relevant experience, there is a relatively high probability that they will be able to give their competitors at least some things to think about. We believe Elrond’s team needs to move quick in order to seize a place in the competitive field they are running in. Lastly, it is important that the team deploy their marketing and business strategy efforts as soon as possible, and do not wait too long before attracting interesting parties into their community. We will keep a close eye on this project, and are curious how it will progress in regard to its development and hype.
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