Elrond: Killer 1000x Speed Blockchain with Staking!

So for the past few weeks, I've been looking very in-depth at Elrond. And kind of one of the few reasons is because not only is it a highly scalable blockchain, but also my other interest in it is the staking element, because this project offers 36% annual percentage yield. So yeah, it kind of fulfills one of my dreams of creating value and also earning a little bit of money whilst I sleep. So I've actually done quite a lot of research into what this project is. And I want to make sure, of course, that this project is legit going forward. If I want to stake anything and if I earn anything, I want to make sure it's worth quite a bit in the future. So this video is really about kind of what Elrond is and what I think is interesting about Elrond. And also we have an interview with the CEO and co-founder, Benhamin, So I guess I hope you guys enjoy this video about what Elrond is. And of course, if you guys like videos introducing different projects, make sure you subscribe to the subscribe button to keep up to date. And obviously, of course, tell me what you want to see as well. Starting off with staking, Elrond offers two options. So you can be a validator or a delegator. The validator is the one that worth the most rewards. It's also the most complicated one. So this is where all the black stuff is over here. This is running a validator node. You got to learn how to set it up. And you become an active participant of the network. You're actually doing your jobs, approving transactions, validating blocks and communicating with the rest of the system. They also offer another option called delegator. The returns are less. So it's around 29% per year. So 7% less than the validator at 36. But what it means is that you don't have to do anything. You can just delegate it to someone. You can say, yo, here's my votes. Take my votes. You guys can vote. And you still earn a passive income on that. So what did I learn from this? Was it interesting? I definitely think so. So I went full in, head deep, and created and started a few validator nodes to figure out what is happening and joined in a lot of the discussions about the validation process. For me, it was very much an educational experience because I wanted to know what this kind of validation system is like. Reason being is because I've been in mining. I mean, whole channel is called box mining for a long time. But mining does require you to buy expensive machines. We know it kind of works, but it's expensive not only on a pocket supply of those machines, but also on the environment as well. It's very energy inefficient. So moving into these modern blockchains with proof of stake means they rely on a stake and also on these validator nodes to be very stable. And something that I've learned from this was I've just seen people try to attack these validator nodes. This is at the stage where we're trying to prove that validators are just as good or proof of stake is just as good as mining is. And it's just as stable and I can carry on the network for the future. So I've learned a lot about what happens during attack when running this node. And I would definitely say it's worth the experience. So if you guys are interested in running one of these validator nodes, I think it's actually relatively easy to set up. If you know some basic commands, it's pretty much copy-paste into this interface and then chatting with the community about it. And I definitely encourage you to do so. So you learn a lot more. Okay, now we move to the important stuff, which is state sharding. So this is what makes the LRM project interesting and worth looking at because it is fully state sharded. And I think it's very exciting to see one of these first projects with full state sharding coming into play. So what makes sharding interesting or important is because it allows a blockchain to dramatically scale. The way you can think about it and the way the terminology came about is that a wizard holding a crystal split it into many different shards. And each of these shards can be as powerful as the original one. So you're just infinitely increasing and you can infinitely increase that power and scalability of the network. And this is where it all becomes very important in blockchain because right now, one of the biggest complaints about blockchain is obviously it's too slow. I mean, currently on Ethereum, if you're using all these DeFi projects, it literally costs almost $5 sometimes to interact with it once. And I feel like right now with that DeFi coming in, with more people being interested, it's extremely necessary to explore options to increase the speed of the network. So first of all, it's faster and it's also cheaper as well. And with sharding, you can achieve that. And being able to see one of these first fully deployed networks is actually pretty amazing. And I feel like we're at a point right now of testing. And I think something that I talk about with Benjamin in the interview is also about how they ensure stability of this. Why sharding took so long to implement is because it's not easy. It's not easy to do it perfectly. And something that they've done was with their really crazy-ass team of engineers worked their asses off for the last few years to develop a sharding solution that works and can be regularly tested right now. So anyways, guys, without going too much into it, I have an interview with the CEO, Ben Amin, to talk a little bit about Elrond and a lot more detail about how everything works here. So I hope you guys enjoy that interview. So I guess just for a starter, Ben, how do you describe Elrond? What would you be the elevator pitch? What would be the best way to summarize Elrond? First of all, really, really great to have this conversation. So thanks for inviting me. And I'll just go ahead and give the best idea of Elrond. So we started Elrond because we want to essentially give anyone, anywhere easy access to the digital economy. And what this actually means is we're focusing on specifically two things. First of all, we're building this new layer one protocol that brings a 1000x improvement in throughput, scalability, execution speed, and transaction costs. So that Elrond can now process more than 10,000 transactions per second with five seconds latency and 100x less cost than Bitcoin or Ethereum. This is the first step. We have a second step where we discovered that this is not enough and that in order to bring tens of millions of new people into the space, we essentially have to take all this great technology, make it invisible, and bring it to the average internet user in a way that they interact with it just like they interact with the email. Not knowing that they use the SMDB protocol, but rather using its benefits to send money anywhere in the world in an instance and at a negligible cost compared to all the other options. So first, it's this layer one architecture that is very, very scalable, performant, and a lot more cost effective. And then it's this user interface that we've secretly built, have not discussed too much about, and people will soon see and be able to test for themselves. That's really exciting. So it's actually a two-front approach. And two things. So one thing recently I've been using Ethereum, and obviously you've seen scaling issues. I mean, transactions for an ERC-20 token can cost like a dollar, which doesn't really make a lot of sense sometimes. And obviously if you want to be cheap on gas, you can have a slow transaction. So definitely quite excited for 1,000 transactions per second. It's 10,000, not 1,000. 10,000. Thank you. Missing a zero there. So I think the second aspect is interesting. So you're talking about how blockchain, it's a little bit hard to understand. And let me explore a little bit into that as well. Like what kind of techniques are you building? What do you want to be integrated into this to kind of become more user-friendly? The first part essentially is brought forward, this kind of 1,000x improvement is brought forward by two important breakthroughs that we've been working on for more than two and a half years now. The first one is adaptive state sharding. So the idea that you can parallelize transaction processing so that the network can effectively process significantly more throughput. And then the second thing that is really, really interesting and effective over time is that you can start with a network that has only two shards and in real time grow the number of shards so that you can effectively grow the number of transactions that you can process from 10,000 to tens of thousands, hundreds of thousands if they're needed. Now, if they're not needed, on the other hand, you do not have the costs of running multiple shards and wasting energy and so forth. So you're not only scalable, but also super efficient as an architecture. And the second component is secure proof of stake. With proof of stake, the first point is obviously that you take away the energy and computational waste problem that comes with proof of work that becomes unsustainable the larger you grow. And the second and third components are you can process these transactions really fast, not having to wait for minutes as in Bitcoin or Ethereum. And then the third point, which is critical for the Elrond architecture, is security. So we have this consensus that is based on random sampling of the consensus group. So out of 500 validators in every round, you have 61 validators that are randomly chosen. They propose and validate a block, and then they are reshuffled so that in any one round, you have a different random group that is created. And this prevents you from attacking the network very effectively because you do not know who will be in the consensus group. And once you know, you only have a very, very short time frame. Now, together, this tool not only gives you the scalability I was mentioning where you can process more than 10,000 transactions per second, but you can do it in a very efficient manner at a very low cost and then with pretty high security so that you can preserve the structure of the network and use it in a real-world setting. Going to the second part that you mentioned, we essentially understood that even if you solve this very, very important performance problem, which can be viewed by maybe the users as the transition from dial-up to broadband that happened in the internet era, you still have a much larger elephant in the room, which has not been properly tackled yet. It's like most people do not even see how large this elephant is, and this is user experience. So for as long as the normal user barely can use passwords, so what we essentially do, and I don't want to spoil the launch of the interface, obviously, is we try to make everything related to blockchain invisible. So you don't have to interact in any way with private public keys. You don't have to interact in any new way with security. You don't have to waste energy on anything related to blockchain specific. All you should be able to focus on, just as you do with email, is doing your stuff. In the case of email, you just send a message to whoever you want super easily. In Elrond's case, with the interface, you'll be able to send money anywhere in the world in an instant with 100x less cost. So that's very interesting. Very interesting proposition. I think there's a lot of secrecy there. I do want to just turn gears, shift gears a little bit, and just talk about the speed. And my biggest question, my biggest concern, I think, going into this is not just speed, but also stability. How have you dealt with this issue? Is it stable? Is it safe? Have you tested it? We've spent more than one year now improving the structure of the sharding architecture that we built. I would add that Elrond is perhaps the most advanced state sharded architecture. We've seen, even in the blockchain space, some sharding architectures, but they have not been state sharded. And the state sharding problem is extremely difficult to solve. But once solved, the most important thing is to refine the final details. So we've had the sharded architecture that was working with cross-struct transactions for more than one year. And during all this period of time, we just spent a lot of time rethinking different components, making sure that it gets super, super stable over time, that we stress tested in different scenarios. And actually, so... So you're at that stage, you're at the stage of the mainnet right now. So you've done part of the trial by fire. You've fixed the issues. You optimized over a year already. So now your true mainnet launch, what's happening? We are super, super excited because we have more than 1,700 people, nodes from all over the world, already part of the network. The structure of the mainnet launch usually, not usually, but will go out with two shards plus meta chain. Why this specific charge, this specific structure? It's because you want to have 10,000 transactions per second possibility from day one. So we want to achieve this. And to do this, we've taken the time to educate and discuss, communicate with the validators, help them get familiar with the network, help them stress test it. And they, in turn, have helped us tremendously to improve it, to discover things that were not clear or could be actually improved even further. And so right now, we're just preparing after all this time where the progress has been building up. We're just preparing for this official mainnet launch. And we'll have a few more days of network testing. What we said with the battle of nodes is specifically this idea where once the network runs for 15 days without any interruption, any kind of downtime and so forth, and you cannot take it down anymore because no bugs, you cannot find any more bugs. At that point, we know empirically by testing it that the network is robust enough to really go live. And so with each new day, we basically discovered a few more things. We made probably one or two releases, new releases a day, with different small things that we've discovered. We also have already four attacks, really interesting attacks, from more sophisticated people that try to take the network down and discover some particular things. And I would say that we have $60,000 that we've put specifically in bounties for people that help us through this process, take the network down. And the more bugs we discover, the more problems we discover during this time, we will be super excited because this means that there will not be as many bugs or super, super few bugs during the mainnet. Once the mainnet is live, and this is the goal with the battle of nodes. Awesome. That's great. Congrats for the success of that. It was really fun to be participating. Now, moving on. So once you have a node, I think a lot of my audience, we've been talking about passive income a lot, and you'll be actually able to generate Elrond as part of the validator or as a part of a delegation. So I've seen the rewards for that, and that's actually quite huge. So this is good and bad, obviously, for the hodler. It's always great to have more and more income, but also it creates a pressure on the system. I mean, the more Elrond that gets distributed to stakeholders, obviously, there's more cell pressure there potentially can be. So how did you arrive to this number? Why do you think it's perfect and why did you choose it? The idea here is that you have different phases in the lifetime of a network. The first phase is particularly very important because it's the bootstrapping phase. If you cannot pick up sufficient interest, then there will not be a future. So then it becomes super critical that you pick up sufficient interest, given so many different options, become interesting as an option for larger and curious validators, and then after that optimize for the second step, which is becoming sustainable. So given these ideas in mind, we set some very specific targets, and there will be an economics paper that will come out very soon. But Elrond will be the optimal architecture to give you not only initial very competitive interests for the validator you're running and rewards there, but also a fixed supply that will not go beyond a certain number so that everything is super predictable. And if you're the type of guy who understands what a deflationary economic model brings as an effect, then you'll be super excited to see that Elrond has not only thought about the bootstrapping process, but then it will have a rapidly decaying reward such that we move from a point where validators are in to an adoption and growth model via adoption, right? Because we have the system where you start with an issuance per year, and then as you pass from year one to year three and then year five and so forth, the issuance decreases gradually and then reaches a point where there's no issuance anymore. And this will happen during a timeframe of 10 years. But during the same timeframe, we assume something very specific to happen. Adoption to pick up. And we have a model where through each, if you have enough adoption, let's say for year one, for a specific issuance of 7.5% per year as reward rate, we require a necessary throughput of about 1,000 transactions per second, roughly, to cover all these issuance out of fees. So this is something that where you do not only have a fixed supply with a deflationary economic model, then staking applied on top of it, but then you also have a model to transition from the issuance to sustainability, which in the case of, let's say, Bitcoin, it does not exist after the issuance is done. Bitcoin doesn't for now have a model through which it will keep the incentives flowing for the validators. So in L-Rod... I don't know the fees. I don't know the fees. I mean, there are fees. I don't know the fees. Exactly. I would still say just two things for the validators. Maybe what they're interested in is the minimum stake for becoming a validator, at least at first, is 2.5 million L-Rods. This is super easy to have in mind. And then rewards are 36% APR if you're a validator, at least at the beginning, and then 29% if you're a delegator. And then coming back to the future of L-Rod, I think this is the point where L-Rod will differentiate itself very, very much from the alternatives, because we're trying to see, essentially, coming back to the vision, how we could give everyone, anyone, anywhere, easy access to the digital economy. So during the next few years, we'll see three directions that we will focus on. First of all, this kind of user experience direction will be super core to what we do at L-Rod, and we indeed try to target 1 million users for this user interface that we are going to ship very soon. So we are super, super excited. It's a target for ourselves. Nice. Nice. How do you achieve that, Tucker? 1 million. All right. Cool. Sounds great. But how? But how, guys? Yeah. Yeah. You'll soon see how. The second point is for the network to really pick up adoption, we've prepared a few really important things. First of all, you have the performance layer, and you'll be able to build almost anything you want from a use case or application standpoint. More than that, we've built two frameworks that will enable a lot more developers to come in. First, we have a Rust framework that allows you to build smart contracts in many different languages and allows you to build them on L-Rod really fast. This is the first starting point, and then we also have a TypeScript framework that will come out during the next period. Again, making the smart contract idea available to a lot larger pool of developers, just because it's not about Solidity anymore or something close, but TypeScript, which is very close to JavaScript, and then allows a lot more developers to interact with it. To tie into this, we'll also have 30% royalty fees built in for all smart contracts, so that any developer that can build something which is cool and picks adoption, will make, with each transaction through process by his smart contract, start making money, so that they don't have to come up with a token. Go ahead. That sounds very interesting. So it's almost like a developer reward, right? So if they make a contract that just blows up, it's really fun, whether it be a fun game, a DeFi project, or anything, the transactions on there, 30% of that will go to the developer. But does that mean it's almost like developer taxed in? Does it punish the user in that case? No, not at all. The idea is to split the transaction that would go among the network participants, the validators and so forth, and put the incentives in a way that there's a super strong incentive for developers to come in, build something cool, and have the feedback loop immediately show up. Because you don't need any kind of approval. You don't need any kind of discussion. If you think you can build something that could have adoption, and it really does, then you're making money from day one, as soon as the first transaction comes in, which is, I think, super important for developers. Definitely, definitely. So it's always about incentives right there. And so you have that built in to drive adoption. You have as many languages as possible, and you have quite a lot of various incentives that just allow the project to grow. So in that sense, what about partnerships? I've seen a few partnerships in there. How strong are these partnerships? What do they actually mean? Exactly. We have a few really large partnerships, and then a lot of very ambitious projects that are trying to bring something new to the market. Among the large partnerships, there's Samsung. Obviously, Samsung is one of the largest companies in Korea. With them, we have an integration of the Elrond token in the Samsung wallet, and then an integration of a game we've developed with the Elrond token that is already present in the Samsung DApp Store. Nice. This is super exciting because it opens up the door for a lot more fruitful collaborations with them. In addition to Samsung, we also have Binance, with which we've done a lot of things, but specifically the Binance BUSD stablecoin will be present on the Elrond mainnet as soon as the mainnet is live. Oh, nice. Now, we already have the smart contract written and deployed on Elrond, already testing it. So this is just a matter of launching the mainnet and then starting to see how an architecture like Elrond would allow them to process everything at a much cheaper transaction cost and then a lot faster. And beside Samsung and Binance, we also have some collaborations with Dubai and maybe 30 other projects and startups that are trying to either build on Elrond, integrate some of the components that Elrond has, and we're also working with a few projects that will likely maybe even do an initial coin offering on Elrond and then integrate the Elrond token into their ecosystem. So we are excited about that as well. So it looks like you've been working hard to get those partners up. So once the mainnet launches, there's a lot of activity there. That's actually really exciting. So guys, definitely take the time to check out the Elrond network and check out the stating status. And I'll give you guys a mini look at what it is kind of composed of. So guys, thank you guys so much for watching this episode. If you guys have any questions as well, leave them in the comment section below. We'll be having a great discussion. And join, of course, the Telegram channel as well to check out the battle of the nodes and the mainnet deployment. So Ben, thank you so much for coming in today. I'll see you next time. Super. Thanks a lot. Thanks a lot. And guys, that wraps up the Elrond video. So I would say as a conclusion, I think it's extremely important to look at this technology going forward. I definitely felt like the time I've spent looking and researching to this is well invested, not only because of the staking element where I can earn and create a validator, but also learning about how this technology works. Because at the end of the day, this could mean a huge explosion, almost, of speed for potential blockchains. And I feel like we actually quite need that right now. Especially with the rise of decentralized finance, DeFi, we really have a lot more going on. And we need to scale to meet that demand. So I'd love to hear what you guys think about Elrond and what you guys think about staking. Have you guys tried it out and this validator system? Are you participating? Tell me what your experience is like. I'd love to hear that in the comment section below. And of course, I've been doing more project overviews and blockchain overviews. So if you have a recommendation, leave that down on the bottom below as well. And I'll create videos on that. And with that, guys, thank you guys so much for watching this video. Remember to click the like and subscribe button. See you in the next one.